The US paid millions of taxpayer dollars to a company for thousands of much-needed ventilators. But the company is busy selling more expensive models abroad.

A nasal ventilator is pictured as a patient suffering from COVID-19 is treated in a pulmonology hospital in Vannes, France, March 20, 2020. Reuters/Stephane Mahe
  • Millions of taxpayer dollars were spent on developing portable, easy-to-use ventilators to prepare for a national health crisis like the coronavirus pandemic – but not a single one is in the federal stockpile.
  • The US Department of Health and Human Services signed a $US13.8 million contract with health technology giant Royal Philips N.V. to produce portable, easy-to-use ventilators to add to the federal stockpile.
  • Although HHS ordered 10,000 units of the ventilator in September 2019, the company began selling two higher-priced commercial versions of the same ventilator around the world.
  • The bombshell investigation from ProPublica comes as the nation faces a severe shortage of ventilators and other medical supplies that are critical to treating COVID-19 patients.
  • Visit Business Insider’s homepage for more stories.

With over 75,000 confirmed cases in New York state alone, a desperate Gov. Andrew Cuomo pleaded with the federal government to release 20,000 ventilators from the national stockpile to the state.

“Where are the ventilators?” New York Governor Andrew Cuomo asked at a press conference last week, claiming New York requires 30,000 ventilators to treat all the COVID-19 patients in the state.

Despite using millions of taxpayer dollars to produce an additional 10,000 units of the critical medical equipment for a global pandemic such as the coronavirus outbreak, not a single one is in the national stockpile. In fact, according to a new ProPublica investigation, these critical medical devices have yet to be made.

The federal government ordered 10,000 ventilators from a health tech giant – but not a single one is in the national stockpile.

Ventilators – a medical device that helps patients breathe – have become critical to treating COVID-19 patients whose lungs are assailed by a respiratory illness. In New York, where 1,550 Americans have died from the novel virus, Cuomo said having enough of the device is the “the difference between life and death.”

The US Department of Health and Human Services (HHS) signed a $US13.8 million contract with a Pennsylvania manufacturer called Respironics to produce portable, easy-to-use ventilators called the Trilogy Evo Universal ventilator in 2014, Steve Klink, a spokesperson for Philips confirmed to Business Insider.

With the help of an HHS office called the Biomedical Advanced Research and Development Authority (BARDA,) which was established to prepare the country for a pandemic or new infectious diseases, the Food and Drug Administration approved the ventilator in July 2019.

HHS ordered 10,000 units of the Trilogy Evo Universal ventilator in September- but the investigation found not a single one is in the national stockpile.

Instead of making the stockpile ventilators for the US, Royal Philips N.V., the Dutch corporate health technology giant that owns Respironics, began selling more expensive commercial versions of the same ventilator abroad.

The FDA gave Philips the green light to sell commercial two versions of the Trilogy Evo on the same day it approved the lower-cost, stockpile version of the ventilator. The company began shipping the more expensive commercial model of the hospital ventilator overseas from its Pennsylvania factory.

However, as it became evident that the novel coronavirus was quickly sweeping across the country, officials overseeing the Strategic National Stockpile pleaded with the company to start production immediately.

According to a spokesperson from the HHS, Philips agreed to begin making the stockpile ventilators “as soon as possible” – but a statement from Philips contradicted their claim. Royal Philips N.V., told ProPublica it does not even plan to begin production of the ventilators this year.

Philips claimed they are within their rights to produce commercial ventilators first – and a spokesperson for HHS agreed.

As health care systems across the world strain under the weight of COVID-19 patients flooding their hospitals and the critical demand for ventilators remains on the rise, Klink told ProPublica that Philips aims to produce to 4,000 ventilators of all types every week in the US by October.

The health tech giant will prioritise “those communities and countries that need it the most,” Klink told the outlet.

However, current selling prices for the breathing device show their priorities may be profit-driven. A small medical supply company in Staten Island told ProPublica that it bought 50 ventilators from Philips in March. An unidentified woman from the Staten Island company said her company’s prices are determined by what the manufacturer charges – the small company increased its online price for the Trilogy Evo ventilator from $US12,495 to $US17,154.

Meanwhile, a regional government purchased 10 Trilogy Evo ventilators from a Spanish medical supply company for about $US11,000 each.

The low-cost, easy-to-use ventilator Philips agreed to make for the US stockpile were meant to be $US3,280 each. While the company is committed to making the medical equipment for the US, the contract the company entered into with the US government only required Philips to fulfil the order of 10,000 ventilators by August 2020.

“Philips is fully committed to fulfil the contract with the HHS for the delivery of 10,000 Trilogy Universal units. Philips is working closely with BARDA to accelerate delivery to the Strategic National Stockpile,” Klink told Business Insider.

As for the allocation of its ventilators, Klink added that the company is “prioritising those communities and countries that need it the most, using a fair and ethical approach to allocate supply to acute patient demands based on data such as the COVID-19 risk-classification of a country or region.”

A spokesperson from HHS walked back her initial statement about securing an agreement with Philips to produce the ventilators immediately, instead claiming to ProPublica that the health tech corporation is only required to deliver the breathing devices “as they are completed.”

Instead, President Donald Trump’s son-in-law, Jared Kushner is negotiating with Philips to produce a more expensive ventilator to get devices to American hospitals overwhelmed by COVID-19 patients.

“There are going to be risks like that when you partner with businesses,” a former senior BARDA official told the outlet. “It’s a problem that we at BARDA had encountered before, where a company changed hands and changed priorities.”

HHS did not immediately respond to Business Insider’s request for comment.

The federal stockpile does not have enough ventilators or other medical equipment to meet the demands of the coronavirus

Klink told ProPublica that the medical device company was producing 1,000 ventilators a week earlier this year. If HHS had pushed the medical device company to produce the Trilogy Evo ventilators, the federal government could have already sent the critical breathing device to states hard-hit by the coronavirus like New York, according to ProPublica.

Gov. Cuomo has criticised the US government for not being more proactive in sending more ventilators to the state, which has become the epicentre of the US outbreak.

“You want a pat on the back for sending 400 ventilators? What are we going to do with 400 ventilators when we need 30,000 ventilators?” Cuomo said at a March 24 press briefing. “You’re missing the magnitude of the problem.”

Although FEMA shipped an additional 4,000 ventilators from the national stockpile to New York, Cuomo said the state needs at least 30,000 to battle the novel virus. However, Trump later attempted to downplay the dire need for ventilators in the state.

“New York is a bigger deal, but it’s going to go, also,” Trump told Fox News. “But I have a feeling that a lot of the numbers that are being said in some areas are just bigger than they’re going to be. I don’t believe you need 40,000 or 30,000 ventilators.”

The reality is, the federal government does not currently have enough supplies to answer New York’s needs. After facing demands to invoke the Defence Production Act, which would employ private companies to manufacture needed medical supplies, Trump enlisted General Motors to mass-produce another company’s ventilators. The president later attacked GM on Twitter after they allegedly asked for $US1 billion for production.

Other state governors have raised further issues with the equipment coming from the national stockpile. California Governor Gavin Newsom claimed 170 ventilators that the state received from the stockpile were “broken” and needed to be refurbished before they could be used in hospitals overwhelmed by COVID-19 patients.

Read the full investigation from ProPublica here>>>