Asia Business

Philips pays $1.1bn to settle respirator case

Dutch medical products maker Philips says it has reached a $1.1bn (£877m) deal to settle lawsuits in the US relating to potentially faulty breathing devices.

The settlement is expected to go some way towards drawing a line under a controversial and deeply damaging episode for the company, which has hurt its finances and its reputation.

In 2021, it emerged that foam fitted in breathing machines used to treat sleep apnoea and other disorders could degrade, releasing potentially toxic particles into masks worn by patients.

Philips said it did not “admit any fault or liability, or that any injuries were caused” by the devices.

The settlement was much lower than many analysts had expected, and the company’s share price rose more than 40% after the announcement.

‘Significant milestones’

The machines were made by the company’s US subsidiary Philips Respironics. Users reportedly complained of black particles and dust appearing inside their masks.

More than five million machines were ultimately recalled worldwide.

In January this year, the US Food and Drug Administration said it had received 116,000 reports of problems, while 561 deaths had been linked to the devices.

The affair led the departure of Philips’ chief executive Frans van Houten in 2022.

Earlier this month, Philips Respironics reached an agreement with the Department of Justice in a US court, a “consent decree” under which it will face regular inspections of its US facilities for the next five years.

It will also have to pay part of its revenues to the US Treasury, and be prevented from selling a range of respiratory devices on the US market until it meets a range of conditions related to the repair or replacement of older models.

The latest settlement covers a class action lawsuit as well as individual personal injury claims in the US.

It has come sooner than had been expected, and the total cost is considerably lower than many analysts had forecast, with some having previously predicted it could be worth as much as $4.5bn (£3.5bn).

The company’s chief executive, Roy Jakobs, described the agreements as “significant milestones” that would “provide further clarity on the way forward for Philips”.

Lawyers who brought the case on behalf of victims told the BBC that they were “pleased” to have reached a resolution.

“The agreements with Philips will provide compensation to those users of the now-recalled CPAP and other respiratory devices who suffer from significant physical injuries and important research for the treatment of those injuries,” a statement said.

“Ultimately, these combined agreements accomplish what we sought to achieve when this litigation began – holding Philips accountable by obtaining care for those with physical injuries and compensation for those needing new respiratory devices.”

Share the Post:

Related Posts