Philips recall update: Call-out, lawsuits, consent decree

AMSTERDAM – Philips has clarified that, as of April 14, it has produced 2.8 million new devices and repair kits for the U.S. market, of which 2.2 million are in the hands of DME providers and patients. 

The company is working to get the remaining devices and kits to providers and patients in the second quarter, said CEO Roy Jakobs during a conference call on April 24 to discuss the company’s financial results for the first quarter of 2023. 

“What the call-out was from the FDA is to be very explicit on how many are with patients and that we clarified in our dialogue with them, as well as on the website,” he said. 

The FDA on April 13 published a safety communication that sought to clarify the number of devices and kits that Philips has actually shipped to patients in the U.S. The FDA stated the number was “considerably less” than the 2.46 million devices and kits the company had posted on its website at the time, because the company included repair kits shipped internally to its repair facilities. 

Globally, Philips has delivered about 4 million devices and kits, Jakobs said. 

“So, 95% of the total recall units have been produced and, of that 95%, 4 million are with patients, so we’re making good headway,” he said.  

In another step forward in remediating the recall, Philips has also recorded a EUR 575 million provision in the first quarter for the anticipated resolution of an economic loss class action. 

“The provision was booked as Philips expects to submit a negotiated settlement agreement to the court for preliminary approval in the second quarter of 2023,” said CFO Abhijit Bhattacharya. “While I cannot go into much detail at this moment, it's important to note that the economic loss resolution is being negotiated with the assistance of a court-appointed mediator as a potential class action settlement. That will resolve the economic claim loss claims of all device users, hospitals and private insurers in the U.S., whether they've filed a lawsuit or not. Subject to final court approval, payments to class members under the settlement are not expected to begin until the first quarter of 2024 at the earliest.” 

Philips, however, still has other legal matters to settle. A medical monitoring class action and personal injury claims are “in much earlier stages,” Jakobs said. 

“Clarity around personal injury and medical monitoring most likely will only be there from 2024 onward,” he said. 

Additionally, Philips is still in the process of negotiating a consent decree. 

“We’re in active dialogue on that and we also have next meetings planned,” Jakobs said. “I would still hope for a quick resolution; that that could be in Q2. Now, that’s still something we want to work toward, but we’re not in control of that timeline and that’s something, of course, that works together with the FDA.”