Philips ‘recovery subject to consent decree’ 

AMSTERDAM – Philips has established a “recovery trajectory” for its sleep and respiratory care business, but discussions with the U.S. Department of Justice on a proposed consent decree to resolve identified issues could impact the company’s plans.

The company’s trajectory includes an estimated EUR 600 million in sales of Respironics sleep systems by 2025, up from an expected EUR 200 million in 2022 and more in line with the EUR 700 million in 2019, pre-recall. 

“This trajectory is based on the completion of the field action by Q1 2023 and assumes a gradual resumption of sales and of our profit toward 2025,” said Roy Jakobs, chief business leader, Connected Care, during a July 25 conference call to discuss financial results for the second quarter of 2022. “This also takes into account that the market has been short of supply, resulting in a substantial pent-up demand, including undiagnosed patients. The recovery trajectory of the business through 2025 is subject to consent decree.” 

Philips received the proposed consent decree from the DOJ, which is working on behalf of the U.S. Food and Drug Administration, on July 18. The proposed consent decree follows a subpoena from the DOJ in April asking for information related to the events leading up to the recall and an inspection in 2021 of certain facilities in the U.S. 

Company officials were unable to provide additional details on the proposed consent decree at this time. 

“While we understand you may like to know more about it, we are in confidential discussions with the DOJ on the terms of the consent decree and cannot speculate on the outcome, the content or the timing of any agreement,” Jakobs said. “It’s still early stages and Philips Respironics is committed to transparency and providing stakeholder updates when and as appropriate.” 

Philips already has baked in about EUR 40 million in remediation costs each quarter this year to address the findings in a Form 483 filed by the FDA last year, but the consent decree has not been included in its outlook. 

“To the extent that (the consent decree terms) would exceed the remediation already put in place and in motion by us since December of last year – that could change the scope,” said Frans van Houten, CEO. “But I want to be clear that a significant effort is already underway that remediates the 438 findings.”