Royal Philips (NYSE:PHG) said yesterday it inked a settlement deal with the US Dept. of Justice and the FDA relating to quality issues during production of automated external defibrillators at its Andover, Mass. and Bothell, Wash.-based facilities
Through the agreement on a consent decree, Philips said it will suspend manufacturing and distribution of AEDs at those facilities, with some exceptions, until the FDA certifies them post-inspection.
The deal will allow Philips to continue manufacturing and distributing certain AED models and to service its emergency care & resuscitation devices and offer accessories to “ensure uninterrupted availability of these highly reliable life-saving devices in the US,” the company said in an SEC filing.
The decree will become effective once approved by the US District Court for the District of Massachusetts.
The company said it expects a $23.7 million impact to its EBITA in the 4th quarter as a result of the decree, with an additional approximate $71.1 million in 2018, primarily due to suspended production, profit disgorgement payments and incremental costs as it prepares for regulatory inspections.
“We are committed to delivering high quality, innovative products and solutions, and we take this matter very seriously. We are fully prepared to fulfill the terms of the decree, and we hope to resume the suspended defibrillator production in the course of 2018. Over the last years, we have made significant investments in our quality management system, with the change in our company-wide quality leadership and the launch of new standards and initiatives across all our businesses and markets. We will continue this program to further enhance our quality management throughout Philips,” Philips connected care & health infomatics chief biz leader Carla Kriwet said in a prepared statement.
Philips said that defibrillators currently in use are cleared to remain in use and should not be taken out of service.