US pays for R&D, company sells ventilators overseas.

https://www.propublica.org/article/congress-is-investigating-whether-a-ventilator-company-is-gouging-the-us-and-why-the-government-is-letting-it-happen

I thought Trump was the master deal maker. It seems this deal wasn’t one of the top 100. Another corporate welfare recipient paints “Sucker” on our backs. This is truly class warfare.

33 thoughts on “US pays for R&D, company sells ventilators overseas.

    1. “Once Philips’ Respironics division received clearance for that ventilator from the Food and Drug Administration last year, BARDA ordered 10,000 of them for $3,280 each — a price agreed upon when Philips entered into the original deal in 2014.

      As ProPublica previously reported, Philips never produced any of those devices for the stockpile. Instead, as the coronavirus spread, the company manufactured commercial versions of the ventilator at its factory outside Pittsburgh and sold them for far higher prices overseas. Then, rather than pushing the company to accelerate the delivery of the ventilators developed for the stockpile, HHS this month agreed to buy 43,000 of the commercial version at a price of $15,000 per ventilator.”

      My question is “where was HHS up until this month. This was a contract signed in 2014 so it was in force when the present regime took power.

      Liked by 1 person

      1. RE: “My question is ‘where was HHS up until this month?'”

        Good question. Maybe you can do some research and tell us.

        It certainly appears that Phillips violated its contract, but ProPublica doesn’t actually assert that a sales contract even existed, much less that any terms were breached. The original deal for $13.8 million appears to have been an R&D contract that Philips completed successfully.

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        1. Did you miss this paragraph in the article?

          “Once Philips’ Respironics division received clearance for that ventilator from the Food and Drug Administration last year, BARDA ordered 10,000 of them for $3,280 each — a price agreed upon when Philips entered into the original deal in 2014”

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          1. Perhaps you missed your own paragraph.

            “Once Philips’ Respironics division received clearance for that ventilator from the Food and Drug Administration”

            And there’s your problem. The FDA must license the production of ventilators.

            If other potential manufacturers only had to satisfy their product liability insurers and not the FDA, Philip’s would have dozens of competitors and the market could work to provide supply and lower prices.

            You continuously blame the market for failures of government.

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          2. You conveniently left off the last part of the quote which was “last year”.

            So it was licensed, ordered and should have been put into production then for the stipulated price.

            Last year.

            Instead Trump’s HHS waited until the last minute to find that the contract had been broken, or they never put a proper one into place.

            Liked by 1 person

          3. I believe the article is about the order last year and the purchases of the expensive units during the virus.

            In 2014 the parent company got the R&D money.

            “ Once Philips’ Respironics division received clearance for that ventilator from the Food and Drug Administration last year, BARDA ordered 10,000 of them for $3,280 each — a price agreed upon when Philips entered into the original deal in 2014.

            As ProPublica previously reported, Philips never produced any of those devices for the stockpile. Instead, as the coronavirus spread, the company manufactured commercial versions of the ventilator at its factory outside Pittsburgh and sold them for far higher prices overseas. Then, rather than pushing the company to accelerate the delivery of the ventilators developed for the stockpile, HHS this month agreed to buy 43,000 of the commercial version at a price of $15,000 per ventilator.”

            Liked by 1 person

        2. RE: “Did you miss this paragraph in the article?”

          No. In fact I covered it by writing: “ProPublica doesn’t actually assert that a sales contract even existed.”

          BARDA may have placed the order, but ProPublica doesn’t show that Phillips was under any obligation to fulfill it. It is also likely that the order was a sole source acquisition, which is strongly frowned upon in government contracting and would have been easy for a competitor to challenge. Again, ProPublica doesn’t offer sufficient details to know what actually happened, only inferences that look bad.

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          1. Semantic blind bullshit. If the price is agreed upon, that IS a fucking contract. Even Judge Judy would tell you that.

            And don’t start the sole source thing. That is a well known fact. BUT it has been overlooked repeatedly in crises. Including THIS one.

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          2. The FDA is in the business of “sole sourcing” products. It gains its power by granting monopolies.

            The one thing Trump failed to do that would have made a difference would have been to order a drone strike on FDA headquarters in January.

            Come to think of it, make that January 2017.

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          3. RE: “Even Judge Judy would tell you that.”

            Judge Judy tells me that a contract has four specific elements, of which the price is only one. One of the others is a description of the work or the product to be provided, which I take to be the issue here.

            RE: “And don’t start the sole source thing. That is a well known fact.”

            It may be (well known), but it has consequences, as I pointed out. Even if Phillips accepted the order, and we don’t know that it did, a sole source order could have been withdrawn prior to fulfillment (which we also don’t know).

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          4. Your assumptions are off base. I read it clearly what occurred.

            Maybe you should work on comprehension instead of practicing game playing semantics like some doped up philosophy professor.

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          5. Whatever the circumstances of a bad contract, a bad order, a pulled order or any other reason, it happened last year and was never followed up on by Trump’s BARDA.

            So now they have ordered 43,000 at $15,000 each which won’t be delivered for months.

            Just one more in a long line of screw ups by this regime because they have no good administrative skills.

            IMHO

            Liked by 1 person

          6. RE: “The FDA is in the business of ‘sole sourcing’ products. It gains its power by granting monopolies.”

            That’s an interesting point. Ventilators have been around so long, the technology is fully commoditized. It is hard to imagine how, given current acquisition regulations, the government could get away with designing and procuring its own proprietary ventilator product. It wouldn’t surprise me to learn that that’s what stopped this particular procurement.

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          7. Perhaps the point of small, portable and easy to operate ventilators have no market outside of the government SNS. So if the gov specs are not what is being made, someone has to design it. Or, as in this case, get R&D money for a specific product.

            Meanwhile, if the article says “ordered” and you think it is not a contract, then until you prove otherwise, I say it was a contract.

            Liked by 1 person

          8. If, in 2014, the government paid for R&D for these ventilators and DID NOT have a production contract attached to the R&D funds. the regime in charge at the time was populated by crooks or idiots.

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          9. Honestly, the specifics are missing. But if the article stated that last year the order was placed for the contracted amount from 2014, the crooks and liars might be in 2019.

            Liked by 1 person

          10. If you remember this was not the only case. I’ll look back down the blog and see what the other company was that was released from its production contract.

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          11. A couple of things.

            This still doesn’t explain how private industry would have provided a solution.

            Nor why Phillips was able to change the contract from July of 2019 for $3,000 units to the new one for $15,000 last month.

            Liked by 1 person

          12. RE: “But if the article stated that last year the order was placed for the contracted amount from 2014, the crooks and liars might be in 2019.”

            You assume too much. You may not be aware that R&D money CANNOT be used for production. Congressional overseers would go ballistic if that happened.

            So, the production procurement HAD to be separate from the R&D procurement. But how are you going to have a “fair and open” competition when only one supplier knows how to produce the product?

            It is possible that the acquisition authority issued a sole source solicitation, but never awarded the contract. Or awarded the contract, but ran into protest. Either way, ProPublica might say that the order was placed when, in fact, it really wasn’t in any practical sense.

            One thing you can’t do legitimately is blame the current administration. Malformed acquisitions like this one seems to be are more common than you might think.

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          13. I know, Trump has already told us he takes no responsibility. And the current regime has only been in office a little over 3 years. And Obama is to blame for everything anyway.

            Besides, we have plenty of plastic trash bags for our frontline medical staff PPE’s.

            What’s not to like?

            Liked by 1 person

          14. Yes, the production procurement was separate from the R&D component. However, there was a sales price established in the original agreement. If that wasn’t in there, then it would have been OK (shitty, but OK) to increase the production/purchase price.

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          15. The Pro Publica piece is a poorly worded mess of second and third hand statements, so I looked elsewhere for information on the issue.

            https://www.businessinsider.com/us-paid-royal-philips-nv-millions-ventilators-unavailable-national-stockpile-2020-3

            In 2014, Philips got a $13.8million R&D contract, and an OPTION to produce 10,000 for $32million.

            The approval of the device languished in the FDA swamp for 5 years, getting approval to produce them in July 2019. A lot can change in 5 years and Philips declined to exercise its option immediately. It did, however, use the R&D to produce a commercial version of the same ventilator, the Trilogy EVO, which the FDA approved for sale the same day it approved the stockpile version.

            The FDA approved Philips plan to mass produce the commercial version first. Since the commercial version sells for what the market will bear, and not the 2014 price, naturally Philips is producing the commercial version, and we are buying it because it is immediately available.

            So, the villain here is not not Trump, or Obama, or even Philips, this is just another FDA bureaucratic foul up.

            First, there is no reason to take 5 years to approve a ventilator that comes with an 8 year warranty. Timely approval would have made it profitable to produce the ventilators for the stockpile at a time when demand was low.

            But the FDA had to know that if they approved the stockpile version the same day as the much more profitable commercial version, the commercial version would get built first.

            Of course, the FDA actually serves no purpose in this that the product liability insurers and medical journals could not perform better, faster, and because time is money, cheaper.

            Just another reason the FDA must be disbanded, and replaced with nothing.

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          16. But July 2019 was not a hot time for ventilator sales. So why wait until now to cut a deal?

            I know you hate the FDA, but at some point the administration of the moment has responsibility. You were quick to blame Obama for FDA screwups and bad contracts earlier.

            Azar was in charge. It was up to him to make sure the various department were operating and checking such things as the SNS. If he was a pick of the “disrupter-in-chief” then that was his job.

            This administration was busy stripping coal industry reps to streamline effluent into rivers. Or mercury levels into already destroyed fisheries.

            No time for streamlining the FDA for American health?

            Trump is just doing lobby work that gets votes. FDA improvement doesn’t.

            Liked by 1 person

          17. “This administration was busy stripping coal industry reps to streamline effluent into rivers. Or mercury levels into already destroyed fisheries.”

            Cite?

            Why would Trump be suspicious of the FDA at a time when only Libertarians were raising the alarm?

            Absent hindsight, were you concerned about ventilators or PPEs in July 2019?

            In case you have forgotten, at that time, Trump was pretty busy defending himself against false accusations of everything up to treason, so was that the time to take on one of the largest bureaucracies, one which enjoyed wide public support, based on ignorance, of course?

            Seriously, everyone thinks the FDA is protecting them, but can you name anything the FDA has protected you from?

            Expecting Trump to have dealt with the FDA, before slaying a hundred other less well entrenched dragons first, is nothing but hindsight.

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          18. In July Trump was defending nothing. That was a couple of months before his extortion call the Ukraine came to light. Long after Barr trashed the Mueller Report.

            My job is not to police the administration’s various agencies. That is Trump’s. And he appoints the best people to do just that.

            You are excusing the administration from not doing its job in administering. If the FDA was so bad, are you telling me none of the Big Pharma powerhouses told anyone?

            If this had happened under Obama you would be screaming about the lies, false information, inattention to preparedness, delays, more lies about testing availability, demanding Americans compete against each other for supplies and saying he had absolute power.

            Well, this is not Obama (who declared a national health emergency 2 days after the first case of Swine Flu in the US, BTW). So you blame China, the WHO, the FDA, the media, the Democrats…everyone but the man we elected to be in charge of the nations security and its administration.

            That is the Trump playbook and the GOP, FOX and supporters are following it to the letter.

            IMHO

            Liked by 1 person

          19. As you point out, I detest the FDA, but even I realize that restructuring it or better, eliminating it, was a second term project.

            The FDA’s power almost makes it a separate arm of government, and you know full well that if Trump had tried to rein it in, you would have been among the first to accuse him of being in cahoots with Big Pharma.

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          20. https://www.vox.com/2017/2/2/14488448/stream-protection-rule

            https://www.usatoday.com/story/news/politics/2018/12/28/mercury-rule-rollback-epa-plan-could-help-weaken-other-regulations/2379874002/

            Except for the coal industry, which can make a better profit if they can pollute downstream, there is no upside to the allowance of increased mercury emissions except for more special needs teachers and onocologists.

            Our fish are already so toxic that pregnant women are told to avoid many popular ones and limit the rest.

            Liked by 1 person

          21. The only fish I know of that pregnant women are warned against are ocean apex predators like tuna and swordfish. I don’t think you will find such restrictions on US stream fish.

            And Congress killed the Obama stream protection rule, Trump just signed it.

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