WASHINGTON — An investigation released Friday by House Democrats says President Donald Trump’s administration overpaid by up to $500 million on ventilators as the coronavirus pandemic first struck the United States.
In a a review of thousands of pages of internal administration documents, Democrats on the House Oversight Committee said Phillips North America was contracted to deliver 43,000 ventilators to the federal government for a significantly higher price than it did under previous contracts for functionally identical ventilator models delivered under contracts dating to President Barack Obama’s administration.
“The American people got ripped off, and Donald Trump and his team got taken to the cleaners,” said Rep. Raja Krishnamoorthi, D-Ill., whose subcommittee led the investigation. “The Trump Administration’s mishandling of ventilator procurement for the nation’s stockpile cost the American people dearly during the worst public health crisis of our generation.”
Democrats called for Phillips to return the amount of money they said the government was overcharged.
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Phillips denied the report’s findings, saying the company did not raise prices in relation to the pandemic, and argued the increased price of the ventilators actually represented a “discount.”
Frans van Houten, CEO of Royal Philips, said in a statement the company did “not recognize the conclusions in the subcommittee’s report, and we believe that not all the information that we provided has been reflected in the report.”
“I would like to make clear that at no occasion has Philips raised prices to benefit from the crisis situation,” van Houten said.
According to Phillips, the list price of the ventilator ordered under the contract is $21,000 and was supplied to the Trump administration for $15,000, which the company called a “discount” given the rushed production schedule.
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The report, however, disagreed with Phillips’ claim. A functionally identical ventilator was delivered to the Obama administration under a 2014 contract for $3,280. Based on the report’s review of purchases between December 2019 and May 2020, other small purchasers, even those that purchased only one ventilator of the same model, secured them for as low as $9,327.
“No American purchaser paid more than the U.S. government,” the report said.
White House Deputy Press Secretary Judd Deere told USA TODAY in a statement the report was “misleading and inaccurate.”
“Because of the President’s leadership, the United States leads the world in the production and acquisition of ventilators. No American who needed a ventilator was denied one, and no American who needs a ventilator in the future will be denied one.”
The Trump administration has frequently touted the production of ventilators as evidence of its response to the coronavirus pandemic.
“When you look at the United States response, you look at the fact that we were supposed to have a ventilator shortage. In fact, we had a ventilator surplus,” White House Press Secretary Kayleigh McEnany said at a Friday briefing.
Phillips had first signed a contract with the Obama administration to deliver 100,000 ventilators in the event of a pandemic by June 2019, but the delivery date was pushed back, eventually to June 2021, as the company missed deadlines, the report said. Phillips approached the Trump administration about moving up the delivery date in January 2020, when the first coronavirus cases were reported in the United States, but the Trump administration ignored the offer, according to the report.
Then, in March 2020, the Trump administration agreed to extend the ventilator delivery deadline to September 2022, but did not ask Phillips to produce more ventilators or move up delivery times. Instead, in April 2020, the Trump administration negotiated a new contract with Phillips to deliver 43,000 ventilators at a price of $15,000 per ventilator.
According to the report’s review of documents, “the Administration accepted Philips’ first offer without even trying to negotiate a lower price.”
According to emails released by the committee, White House trade adviser Peter Navarro, who served as the lead negotiator with Phillips, offered to prepay half of the total cost, or over $323 million, to Phillips before a single ventilator was even delivered. Department of Health and Human Services staff later reduced the amount prepaid to 10% of the total cost of the contract, or about $65 million.
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