Feds cancel controversial ventilator contract in which US allegedly overpaid Philips by $500M

U.S. federal officials have canceled a controversial ventilator contract with Royal Philips after lawmakers recently slammed the nine-figure contract, alleging gross mismanagement by the White House.

A House Committee on Oversight and Reform investigation into the deal found American taxpayers allegedly overpaid Philips by at least $500 million for some 43,000 ventilators. Amid those concerns, the feds informed the Amsterdam-based manufacturer that it is ending the contract prior to its completion.

In a Monday announcement, Philips said it will deliver 12,300 devices to the Strategic National Stockpile, while reportedly seeking a taker for the remaining 30,700.

“To date, we have delivered on our commitments to [Health and Human Services],” CEO Frans van Houten said in a statement, noting that his company has increased production by fourfold and hired hundreds of U.S. workers in the process. “While we are disappointed in light of these vast efforts, we will adjust our plans and work with HHS to effectuate the partial termination of this contract,” he added later.

The House first released the results of its investigation in late July. Among other things, they determined that the administration mismanaged the deal, negotiating a new contract with a price five times higher than previous agreements. Government officials also failed to address previous delays in delivering ventilators, lawmakers said.

“The American people got ripped off, and Donald Trump and his team got taken to the cleaners,” subcommittee Chair Raja Krishnamoorthi, D-Ill., said in July.

Philips has denied the accusations and maintained that it acted transparently in reaching the agreement. A spokesman told Reuters this week  that Philips expects to find alternative buyers for the excess ventilators.

Marty Stempniak

Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic. 

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