Philips device recall leaves sleep apnoea sufferers in distress
In 2015, Welsh entrepreneur James Koash began treatment for sleep apnoea, a condition that causes him to briefly stop breathing hundreds of times when asleep.
To assist his breathing while sleeping, he has used a Royal Philips respiratory device that in June was subject to a vast recall after the Dutch manufacturer detected a faulty component.
The 31-year-old has suffered from inflammations, persistent breathlessness and kidney dysfunction in recent years, forcing him to stand back from running his customer experience consultancy.
“After starting to use the device I kept going back to my doctor saying that not only was my health not improving but many new symptoms had started,” Koash said. “These health issues have ruined my life for several years and I still have no idea when I’ll be able to return to business.”
Koash is one of thousands of patients who believe they may have been harmed by inhaling particles or toxic chemicals that can be released by the sound abatement foam used in about 3.5m Philips continuous positive airway pressure (CPAP) and other machines.
The faulty component has plunged the 130-year-old electronics conglomerate, which has pivoted over the past decade towards focusing on medical technologies, into crisis after it issued a voluntary recall in the US and notified regulators in all other markets.
In late July, the US Food and Drug Administration identified the CPAP devices as a Class I recall, the most serious type, having received more than 1,200 complaints and reports of more than 100 injuries.
The company has put €500m aside for replacements and repairs. But it has suffered a €10bn drop in market cap since first announcing the problem in April, while shares in rivals have soared.
“[Investors] have been fairly traumatised by the Bayer Monsanto situation and the Johnson & Johnson talc litigation,” said Bernstein analyst Lisa Clive, referring to two recent multibillion-dollar payouts emanating from consumer products blamed for causing cancer. “People are looking at those as the doomsday scenarios.”
A wave of class action suits have already been launched against the company in the US. Neil Shouse, lawyer at Shouse Law Group, is representing more than 100 people who claim that Philips’ machines caused problems ranging from mild asthma to lung cancer.
“We think there may be tens of thousands of potential plaintiffs, but some of it is going to depend on what the scientific studies validate about what injuries were caused,” he said.
One large investor said: “The biggest concern is if there’s a conclusion it increases the risk of cancer.”
Frans van Houten, chief executive of Philips, has downplayed the litigation risks. Philips said 10 people reported mild symptoms up to April this year, receiving complaints in 2020 regarding just 0.03 per cent of machines shipped that year.
While unable to rule out that the foam particles may cause cancer, Philips said “we do not have any test results that indicate that the particles are actually carcinogenic”.
Some investors and analysts regard the share price collapse as unjustified. Financial settlements for medtech product defects such as hip and cochlear implants rarely exceed $3bn.
Mark Phelps, chief investment officer of an AllianceBernstein fund that holds a 2 per cent stake in Philips, said: “There’s a very good chance that when we look in the rear view mirror in three years’ time it turns out not to be anywhere near the problem that the market is saying it could be.”
But others have accused Philips of a worrying lack of transparency that has hampered attempts to establish the scale and severity of any harm caused.
“I don’t think we’ve been given enough information to make decisions,” said Joseph Ojile, chief executive of the Clayton Sleep Institute, an independent research institution, arguing that a lack of guidance and clinically relevant information provided to doctors by Philips had made it difficult to calculate the risk to patients.
Speaking to the Financial Times, one NHS consultant estimated that 20 per cent of their sleep apnoea patients had reported distress from symptoms that sufferers believed resulted from use of the device, machine failure or refusal to use the machine.
The consultant said Philips had demonstrated arrogance in failing to address what could be potentially grave consequences for sufferers. “They have been shabby with the NHS. They have abdicated responsibilities. They have left the patients hanging.”
Sufferers of sleep apnoea have described to the FT their anxiety over whether to continue to use a device that could potentially harm them, or to stop using the device and in so doing elevate the risk of heart attacks, high blood pressure and chronic tiredness that can prevent them from working or driving. The UK medicines regulator has recommended their continued use unless otherwise instructed.
In a statement, Philips said that “while our efforts may not be flawless, our colleagues in the UK have been working extremely closely with the local regulator, hospitals, trusts and patients in order to deliver the global repair and replacement program”.
Some investors fear a permanent dent in sales for Philips in a growing market — only a small percentage of the world’s almost 1bn sleep apnoea sufferers have been diagnosed.
Despite shortages of key components such as semiconductors, Mick Farrell, chief executive of California-based rival ResMed, predicted sales growth of $300m to $350m in the current year from July due to “unprecedented demand”.
“ResMed is clearly a beneficiary,” said Phelps, noting that Philips would likely bounce back given that distributors would be reluctant to rely too heavily on one supplier.
Meanwhile, sufferers who cannot afford an alternative must wait until Philips is able to provide repairs and replacement devices, a process that is likely to take a year to complete.
Laurie Kloss in Indianapolis, who reports suffering from swollen eyelids, pressure in the head and a chest full of phlegm, cannot afford a replacement machine. “I’m supposed to wait for an email from Philips and continue to use this machine even though it might kill me,” she said.