This must be some of that endless winning and good dealmaking that Donald Trump promised us. Agreeing to buy ventilators for 4x the list price—a ventilator design that the U.S. government funded a decade ago as a low-cost option.
The federal government is backing out of a controversial $646.7 million deal to buy ventilators from Royal Philips N.V., acting before the company had delivered a third of the order.
This week, the House Committee on Oversight and Reform’s Subcommittee on Economic and Consumer Policy announced it is expanding its probe to look at other coronavirus-related deals negotiated by Peter Navarro, the president’s trade adviser, who served as the point man on the Philips deal.
In addition, the U.S. Department of Health and Human Services, which oversaw the Philips contract, confirmed that the deal is the subject of an internal investigation and legal review.
The congressional investigation determined that the deal would have resulted in the U.S. overpaying for the ventilators by as much as $500 million, thanks to “inept contract management and incompetent negotiating by the Trump Administration.”
ProPublica first wrote about the U.S. government’s relationship with Philips in March, detailing how a decade ago government planners had paid Philips millions of dollars to develop a low-cost ventilator that could be stockpiled and deployed if ever there were a pandemic. The U.S. ordered 10,000 once the company received clearance from the Food and Drug Administration.
But when COVID-19 cases overwhelmed hospitals in New York in the spring, Philips hadn’t delivered any. Instead, ProPublica found, Philips was selling a commercial version of that ventilator — manufactured at its Pennsylvania factory — overseas at far higher prices.
Rather than force production of low-cost ventilators, a White House team led by Navarro cut a new deal for more ventilators, agreeing to pay more than four times the price.
ProPublica in April revealed that this new deal boosted the price of what appeared to be similar ventilators from $3,280 each under the Obama administration deal to $15,000 under the Trump administration. Neither Philips nor HHS would explain how the two models were different.
In its investigation of the deal, the House subcommittee asked Philips to turn over a trove of records and discovered that the more expensive ventilators were “functionally identical” to the cheaper ones.
Navarro and his team “appeared gullible” and there was no evidence that they even tried to negotiate a lower price, the House investigators found.
The U.S. government paid the highest price for the ventilators among American buyers, the investigators found. The company’s records show that Philips had sold more than 5,000 of that model at far lower prices before May 27.
As coronavirus sweeps the globe, there is not a single Trilogy Evo Universal ventilator — developed with government funds — in the U.S. stockpile. Meanwhile, Royal Philips N.V. has sold higher-priced versions to clients around the world.