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Although the Philips stock price (the main concern of the Philips board) got the traditional bump as a result of the news of the CEO's departure, more recent news of the accelerating problems that likely lead to his forced departure is causing the Philips stock price to decline further.  The fact that Philips recently received double the MDRs (Medical Device Reports) in the preceding 3 months, compared to a lengthy 12 month period before that, was alarming to many - including the FDA.  Strategically, Philips might have been better to dismiss the (past) CEO after the new negatively damaging news was released, rather than before.  Stock owners don't like unanticipated negative "surprises".

For the FDA, and all Recalled device owners, we'll want to learn more about the dramatic increase in MDRs.  It may be that more Recalled device users are now recognizing possible links between the Philips faulty foam and their negative health issues during the time that they used their defective Philips devices.  Earlier reporting may have resulted from much stronger links between the faulty foam and health consequences.  

It may also be that more Recalled device owners are more aware of possible health issues as a result of the increase in media releases, rather than purely focusing on the official Philips press releases and owner e-mails that were further supported by doctors, DMEs and insurance companies.  Perhaps more respondents will be more cautious about endorsing all future official Philips press releases.  Continuing to do so might open the door for a negative reaction towards them for their perceived endorsement.  We're now beginning to view media reports that are paying more attention to covering more sides and concerns related to the Recall.  That's a welcome change.

"FDA says faulty Philips device reports accelerating as CEO departs"
Reuters  |  August 17, 2022

Quote:AMSTERDAM, Aug 17 (Reuters) - The U.S. Food and Drug Administration (FDA) said reports of faulty Philips (PHG.AS) ventilators and sleep apnea machines had risen in the past quarter, underlining problems facing the Dutch company, which has just announced plans to replace its CEO.

"U.S. FDA gets over 48,000 reports of faulty Philips respiratory devices in May (2022) - July (2022)"
Reuters  |  August 16, 2022

Quote:The FDA said on Tuesday it had received 48,000 reports associated with breakdown or suspected breakdown in the foam used in Philips respirators over the three months ending July 31, 2022, more than twice the number of such reports it received between April 2021 and April 2022.  This was more than twice the number of reports it had received in over a year until April, the agency said on Tuesday.

The FDA said its review of these new MDRs will include examining the possible reasons for the increased number of reports during this time.  A wide range of injuries have been reported in these MDRs, including cancer, pneumonia, asthma, other respiratory problems, infection, headache, cough, dyspnea (difficulty breathing), dizziness, nodules, and chest pain, the FDA said in an Aug. 16 release.
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RE <above>

Additional Information


FDA says faulty Philips device reports accelerating as CEO departs

The U.S. Food and Drug Administration (FDA) said reports of faulty Philips ventilators and sleep apnea machines had risen in the past quarter, underlining problems facing the Dutch company, which has just announced plans to replace its CEO.

A spokesperson for Philips on Wednesday said the timing of the Aug. 16 FDA update -- the same day that Philips announced longtime CEO Frans van Houten would depart the company -- was coincidental.

Van Houten will be replaced by Roy Jakobs, the Philips executive who is heading the company's recall operation, on Oct. 15.

Spokesman Steve Klink said the increase in reports was due to increased public awareness of the problem after its recall began in June 2021.

"Over the past three months we were still going through what you would call a backlog of the complaints," he said.

"Now we need to work through them and see which are justified and which not."

Shares of Royal Philips (NYSE: PHG) hit a 52-week low on Thursday of $18.75.

Year to date, shares are down 50%.

FDA says faulty Philips device reports accelerating as CEO departs (yahoo.com)
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(08-18-2022, 01:21 PM)btreger Wrote: Shares of Royal Philips (NYSE: PHG) hit a 52-week low on Thursday of $18.75.

Year to date, shares are down 50%.


At Philips, they are grateful to Van Houten for his efforts. Feike Sijbesma, the chairperson of the supervisory board, says. “On behalf of the entire supervisory board, I would like to thank Frans for his leadership over the past twelve years. Through his vision and execution, he has successfully led the company from a diverse industrial conglomerate to a company specifically focused on health technology”.

The recall is costing the company a lot of money. Shareholders were therefore also outraged by the fact that Van Houten received a bonus from the company. The payment of that bonus was not reversed, despite 80% of the shareholders voting against it.

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August 18 Email from David Ferguson - Philips
I received two (2) of these emails. I'm going to have to reach out to Philips to find out why I'm not getting three (3) since I have three devices registered...

Quote:I am personally reaching out to those who have been affected by our voluntary recall. Since announcing the voluntary recall in June 2021, our goal has been to replace affected devices as quickly as possible while keeping patients, customers and clinicians up to date. It’s a significant task: we need to remediate 5.5 million devices across more than 100 countries.
We recognize that this process may have been challenging at times for our patients and realize how important it is for you to know when your replacement device will arrive. We are striving to do better and sincerely apologize for the frustration this voluntary recall has created. In June, our CEO Frans van Houten and Chief Business Leader Roy Jakobs explained how we’re responding to the recall and some of the issues that impact timelines. I wanted to share some additional information on what makes this voluntary recall different and what we’re changing based on patient feedback.
A complex task: why this recall is different from others                                                                                  
To deliver safe and effective therapy devices as quickly as possible, our plan is guided by patient needs, specifically the prescribed care established between patients and their doctors and fulfilled by Durable Medical Equipment (DME) providers. To learn more about the process, please click here.

This means that instead of a first-come, first-serve system that you often experience and expect when ordering online, we have a highly personalized order process that depends on:
  • Access to patient prescribed settings

  • Supply availability and manufacturing capacity
We need these prescribed settings because a CPAP is a medical device and cannot be sold without a valid prescription (the FDA describes a CPAP as “a prescription non-invasive ventilatory device”). Therefore, if we do not have your prescribed settings, we will be reaching out to you in the coming weeks with information and instructions on how we can obtain them.
Ongoing testing and research
Working with third party labs, we’ve tested 60,000 devices that have been returned to us by patients and DMEs. The results of these tests are technical, so we’ve created a summary of these studies for patients. You can find all patient updates on our website.
What we're changing                                                                                                                       
Based on your feedback, we’ve made the following changes:
  • Being clearer on timing: Since introducing the patient prioritization program early this year, we have a better understanding of how long an average order delivery takes for different prioritization groups. However, we can only view the supply chain for the next four weeks. This means that we know for the next four weeks what we can produce and what we can ship to you and our DME partners. We will now start to share an estimated shipping date, once your order has processed, through the Patient Portal. If your estimated shipping date changes, we will notify you via email and on the Patient Portal.

  • Increasing our manufacturing speed: We have a dedicated team of over 1,000 people with many thousand more supporting across the company. This has allowed us to more than triple our weekly production output compared to 2020, despite the ongoing global supply chain challenges, and we expect to continue at this pace until the remediation is complete. To date, we have produced more than 3 million repair kits and replacement devices.
About the foam in replacement devices
We know how important it is to feel confident that your therapy device is safe to use and have received questions about the foam in replacement devices. While affected devices contained a polyester-based polyurethane (PE-PUR) sound abatement foam component, the sound abatement foam in new and recertified CPAP, BiPAP and Trilogy devices is a silicone foam that has met all applicable industry testing standards, including particulate and Volatile Organic Compounds (VOCs) emissions testing. In addition, all replacement devices include a 2 year warranty.
We understand the profound impact this recall has had on you waiting for a repaired or replaced device, this progress can’t come quickly enough. I want to personally emphasize our commitment to completing the recall as soon as possible.
Please be assured that we are committed to being transparent with you throughout this process and will continue to share regular update by email and on the Information Hub.  
We thank you for your understanding.
David Ferguson
Business Leader, Sleep and Respiratory Care, Philips Respironics
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Philips’ financial declines have indeed become significant.  One year after the Philips Recall was announced, stock owners (individuals, pension investment funds, etc.) find themselves with a stock price decline from about $60 at the start of the Recall down to about $20, wiping out 10 years of stock price gains.  With about 885M shares issued, that’s a decline in stock value of $35.4 billion since the Recall was announced.

[Image: Philips_stock_Aug_RZ.png]

Moody’s credit rating service just lowered Philips’ credit rating to “Negative”.  

For the current Philips’ Board to continue to provide praise for its outgoing CEO, being replaced in October, throughout the past 12 months, should be alarming to its investors.  Should an investigation unveil additional deliberate corporate negligence in not appropriately responding to early reports of its faulty carcinogenic foam, the company could get into additional difficulties not currently reflected in its stock price.

Philips stock owners should replace much of its current Board to promote some integrity and quality, instead of purely stock promoting.  It’s interesting to learn who’s been steering the company and supporting its outgoing CEO.  After viewing the Board members, we shouldn't be too surprised at these fellow retired executives' ongoing financial support and praise for the outgoing Philips CEO (Frans van Houten).  It's what they would want for themselves as retired corporate executives.  It won't be long before Mr. van Houten himself will be nominated to a corporate board, perhaps even Philips' own board.  

Philips’ Board members (https://www.philips.com/a-w/about/superv...board.html):
  • Former CEO of Philips
  • Former CEO of Singapore Telecom
  • Former CFO of consumer health & hygiene products (Durex, Clearasil, etc.)
  • President of Intermountain Healthcare (Utah)
  • Former CEO of Siemens
  • Former CEO of PepsiCo
  • Former COO of SAP
  • Former CEO of Allergan
  • Former COO of Johnson & Johnson
  • Former CEO of a Netherlands’ courier service
Philips’ future does look difficult, and the Philips stock price may currently reflect what the markets believe is the worst-case situation (currently).  This may be the worst that it gets for Philips.  However, future disclosures and events may be discovered that force a more dramatic re-organization than merely replacing the CEO (with praise).  Philips has mostly maintained (on paper) its market share of ventilator devices (by giving away free product replacements), however ResMed has recently stated that it’s finally seeing dramatic changes in its supply chain shortages (chips) that will improve its 12-month inventory production backlog.

Philips’ main problem is credibility.  No one can say confidently that all the worst information has already been disclosed and current quality processes have been corrected to ensure these problems don’t repeat.  When something goes wrong, companies gain substantial credibility by coming clean with the facts and disclose exactly where they went wrong, possibly dismissing those who errored, ignored, or deceived.  In the case of Philips, little of that has yet to occur.  If those people are continually praised, existing leadership processes continued and no faults are disclosed, the faulty existing corporate culture continues and the confidence in the company is significantly tarnished.  

Years from now, some business schools will look back at the $35 billion stock losses (so far) that was a result of many years of ignoring the quality of a small piece of foam with a volume production cost of under $1 - and no senior manager or executive was publicly and punitively punished for that.  Regular employees are punished and dismissed all the time for reasons that didn't significantly impact the company.  Yet this mistake cost Philips' stock owners $35.4 billion and likely contributed to some declining health of many ventilator users around the world.
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Philips respirator lawsuit builds as plaintiffs’ attorneys outline lengthy recall delays

New filings allege Philips took years to disclose the risk of foam used in recalled sleep apnea machines and respirators

Attorneys who filed a class action lawsuit against Philips over its now-recalled respiratory devices filed additional court papers on Monday detailing what they called delays in the company’s response to alleged health risks leading to the recall of millions of its breathing support devices.

The suit alleges that Philips knew of the risks of using polyester-based polyurethane foam to quiet its respiratory devices years before it warned customers and issued a recall. 

Philips respirator lawsuit builds as plaintiffs’ attorneys outline lengthy recall delays | MedTech Dive
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(08-24-2022, 08:03 AM)btreger Wrote: << above >>

Good to see them focus on the root issues that have impacted all Recalled device owners.  In the beginning, they seemed to only focus on those that had serious health issues.  There are many others who may have only had minor health issues (so far) as a result of the Philips faulty foam.  Regardless, there is the subject of neglect (deliberate or otherwise) that needs to be addressed, as well as the out-of-pocket additional costs absorbed by many Recalled device owners.

Quote:The plaintiffs are accusing Philips of negligence, design defect, negligent design, failure to warn, and negligent failure to warn. Royal Philips ...are listed as defendants in the lawsuit, as well as Polymer Technologies, the company that provided Philips with the PE-PUR foam in the devices. 
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Well my replacement Dreamstation BiPAP finally arrove today. All that was in the box was the PAP machine, no humidifier, no modem, no data card. I never had the modem installed in the old one, and the humidifier was always turned off and never had water in it, so who cares? I took the data card out of the old machine and put it into the new one, and the new one read the data, but the user information on the new machine was not updated; everything was still at -0-. The instructions that came with the new device said to wait five minutes for it to get the data from the old one, but that didn't happen. Oh well. Tomorrow morning the card will have new data on it, so I'll put it in the computer and see if OSCAR can read the new data.

The only thing the new machine came with was a regular filter, not the ultrafine filter that I use to keep my miserable hay fever at bay during the night. The filter in the old machine was due for replacement anyway, so I just gave the new machine a new ultrafine filter.

The new machine was set to pressures of 4-8 cmH2O, where I have the old machine set to 15-25. But note that Respironics did not have access to the data from my old machine, as not even my provider (Kaiser Permanente HMO) has that information. On a couple of occasions I mailed Kaiser the data card and they claimed that there was no data on the card. That's because they slid the tab to read/write before inserting it into their Windows computer, and Windows altered the data so Kaiser's software couldn't read it. I tried to explain to them not to change the tab, but all I got was "we have rules that require us to do it this way." OK, fine. Like I care. But the local sleep center people know that I use OSCAR, so they just asked me to send them the data from OSCAR as a PDF, so they're now happy. Smile As is typical, all they really care about is compliance.

I should add that the people at the local sleep center know about OSCAR and have indicated to me how impressed they are with it. Unfortunately Kaiser's computer people won't allow it on any of their computers, although one of their sleep center people told me that he has it on his personal computer at home.

I note that the box included a "User manual," containing a warranty on the back page. A quick scan revealed that my warranty on the replacement machine is just two years.

There was a FedUp mailing label to use the box for returning the old machine, but that's not gonna happen. Smile

So now I'm all set for a while. Smile
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JJJ, how much time elapsed between when you registered your machine on the recall website and when you received it?

Do you remember your registration date?

I registered my DreamStation in early Nov. 2021 and haven't gotten a replacement yet.
Apnea Board Administrator


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Off the top of my head I don't recall when I registered it, but that was my only communication with Respironics, i.e., there was never any additional communication from Kaiser. If I recall correctly, it was shortly after the registration link or e-mail to Respironics was posted here. I keep all sent e-mails, but to search my e-mail client I need the 'to' address or the subject, or at least an approximate date. If it was via their website, I have no way to remember the date. Sorry to be such a klutz with record keeping. Sad
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