Feds terminate ventilator contract with Philips Respironics that had drawn criticism
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The U.S. Department of Health and Human Services recently terminated multiple contracts to add ventilators to the country’s Strategic National Stockpile.
And, while federal health officials say they now have enough ventilators to meet maximum national capacity in a crisis, one of the terminated contracts — awarded to Philips Respironics, with locations in Pittsburgh, Murrysville, Monroeville and New Kensington — drew sharp criticism from the U.S. House Subcommittee on Economic and Consumer Policy for both the company and the federal officials who negotiated it.
A series of time extensions for Philips’ original 2014 contract to supply the stockpile with ventilators by June 2019, combined with what congressional investigators called “mismanagement” of the contract by the Trump administration, led to Philips ultimately delivering 12,300 of a requested 43,000 Trilogy EV300 ventilators, according to a subcommittee report.
The report is based on emails and communications between Philips and the Trump administration, and the company’s 2014 and 2020 federal contracts.
Philips received three additional time extensions, the last of which allowed final delivery of the ventilators to be delayed until June 2021.
“Had the Trump administration held Philips to the terms of the Obama-era contract, the country would have had 10,000 ventilators that it needed when the coronavirus crisis struck,” the report reads.
Philips officials from both the company’s U.S. and global corporate offices did not respond to multiple requests for comment.
On Jan. 21, when the first covid-19 case was reported in the U.S., a senior project manager for Philips approached the administration about accelerating the delivery of ventilators under its existing contract. The administration did not respond for nearly a month-and-a-half, according to redacted emails attached to the congressional report.
When members of the Trump administration did respond in March, Philips was granted another extension until September 2022, followed by the negotiation of a new contract in April, according to the report. That April contract would have paid Philips nearly five times the price for what investigators said was essentially the same ventilator model in the original 2014 contract.
Between December and May, Philips took orders for more than 5,300 Trilogy EV300 ventilators from 92 U.S. purchasers. While the federal government paid $15,000 per unit, other purchasers, buying as few as one unit, were able to negotiate prices as low as $9,237, according to documents attached to the congressional report.
“No American purchaser paid more than the U.S. government,” the report stated.
The federal government was not relying solely on Philips, however. Under the Defense Production Act, the national stockpile has amassed more than 125,000 ventilators available for deployment from a variety of contractors, according to the Department of Health and Human Services. Two other ventilator contracts with Vyaire and Hamilton were also terminated early. Neither faced the same criticism as Philips.
“Philips was able to secure a financial windfall to which it clearly is not entitled, and these funds should have been dedicated to obtaining desperately needed (personal protective equipment) and other critical medical supplies during this pandemic,” the report reads.
Rep. Raja Krishnamoorthi, D-Illinois, chair of the Subcommittee on Economic and Consumer Policy, characterized the Trump administration’s negotiations with Philips as “incompetent.”
“American taxpayers deserve to have their money well spent,” Krishnamoorthi said. “This week, we clawed back more than $400 million from pandemic profiteers, and we’re coming for more.”
A spokesperson for the U.S. Department of Health and Human Services said the Philips contract is “subject to an internal HHS investigation and legal review” but declined to comment further.
The Subcommittee on Economic and Consumer Policy is part of the U.S. House Committee on Oversight and Reform.