Philips DreamStation Foam Problems Were Disclosed To Investors Before Users Were Warned to Stop Using CPAP Machines

Weeks before consumers were told to immediately stop using Philips DreamStation CPAP and BiPAP machines, which may be causing them to inhale or ingest toxic materials, the manufacturer provided information about the potential risks to investors, indicating it had already developed a new version of the popular sleep apnea machine which did not experience the same foam degradation problems.

Koninklijke Philips, also known as Royal Philips, first announced a massive CPAP, BiPAP and ventilator machine recall on June 14, involving an estimated 3.5 million devices distributed with unsafe and defective sound abatement foam, which may degrade and release black particles or toxic chemicals directly into the air pathway.

Exposure to the toxic particles and gases released by a polyester-based polyurethane (PE-PUR) foam inside has been linked to reports of cancer, severe respiratory problems and other health complications, according to allegations raised in a growing number of Philips DreamStation lawsuits filed over the past few weeks.

However, it is becoming increasingly clear Philips knew about the foam problems with DreamStation sleep apnea machines long before it told consumers to stop using the products, yet it appears the the company prioritized profits over consumer safety by developing a new version of the popular sleep apnea machine and reassuring investors before actually disclosing the risk to individuals who were using the CPAP and BiPAP breathing machines every night.

In an quarterly earnings report (PDF) provided for investors on April 26, weeks before the recall notice was issued, the company provided information to investors about the Philips DreamStation foam problems in a subsection titled “Regulatory Update”.

Philips confirmed at that time it had determined, through user reports and its own testing, that there were possible risks related to the sound abatement foam used in the machines, but reassured investors a new “next-generation CPAP platform”, known as DreamStation 2, had been introduced a few weeks earlier, which was not affected by the issue

The report raises serious questions about why Philips waited weeks, or possibly longer, between confirming this risk and warning actual customers.

On June 30, the FDA issued a safety communication, urging consumers who were not relying on the devices for life-sustaining therapy to immediately stop using the recalled sleep apnea machines and contact their doctors to decide on alternative treatments for the condition.

For individuals reliant on recalled Philips ventilators, which provide mechanical breathing assistance that is often life-sustaining, the FDA indicates consumers should not stop using the device until they speaking with a doctor, and recommended that inline bacterial filters be used to help catch the foam particles before they enter the air pathway. However, even this may pose risks, since it is unclear whether the filters are safe or effective, and may increase the resistance of airflow through the device.

Koninklijke Philips, N.V. generated over $23 billion in revenue last year, and is expected to face massive liability from lawsuits and CPAP machine settlements over the next few years. In the earnings report issued prior to announcing the recall, the company advised investors it had taken a provision of about $295 million to cover the costs of the recall, which will likely only cover a small fraction of the compensation and damages the company will ultimately be required to pay.