Philips’ U.S. sales of sleep apnea devices face years-long halt after FDA deal

Dutch health technology company Philips will halt the sale of new sleep apnea devices in the U.S. for the next few years as part of a settlement with the Food and Drug Administration (FDA). This agreement comes in the wake of the 2021 recall of millions of breathing devices and ventilators used for sleep apnea treatment due to concerns about potentially toxic foam. 

The FDA settlement, known as a consent decree, outlines the improvements Philips must make at its Respironics plants in the U.S. Until these conditions are met, no new Respironics devices will be sold in the U.S. Philips shares fell by 8.5% in response to the news, and analysts express concerns about the company's ability to recover its U.S. market position for Respironics devices.

Specific conditions were not disclosed by CEO Roy Jakobs, but he suggested that it typically takes five to seven years for medical equipment companies to comply with such decrees. The costs associated with the agreement amounted to 363 million euros ($393.5 million) in the fourth quarter of the previous year, with expectations that it would be about 1% of total revenues in 2024. 

Despite the settlement, Philips is still facing legal cases from patients claiming health issues due to device usage and an ongoing U.S. Department of Justice investigation into the recall handling. The company maintains that the agreement does not alter its financial targets for 2025. In the fourth quarter, Philips reported stable core profit and a 1% decline in comparable sales. Analysts had anticipated higher adjusted EBITA and sales growth in a company-compiled poll.

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