Dive Brief:

• A Democrat-led House subcommittee wants to know if the Department of Health and Human Services' cancellation of "wasteful" ventilator contracts with Philips, Hamilton and Vyaire included generous termination settlements involving "payoffs" to the three medical device companies. 
• The House Oversight Committee's Subcommittee on Economic and Consumer Policy wrote HHS Secretary Alex Azar this week seeking documents showing the total amounts paid to the three manufacturers under their now-terminated contracts, including any payments that might reflect a termination settlement. 
• HHS on Sept. 2 said it ended ventilator contracts with Hamilton and Vyaire earlier than planned because of an adequate supply of the breathing machines in the Strategic National Stockpile. Philips on Aug. 31 announced the company received an HHS contract termination notice, a month after a subcommittee report found the agency overpaid for the medtech's ventilators by as much as $500 million in taxpayer money. 

Dive Insight:

The awards to the three medtechs were among the more than half a dozen contracts HHS awarded in April intended to provide a total of more than 187,000 ventilators to the Strategic National Stockpile by the end of the year. Those companies included GM, General Electric, Hillrom, Medtronic, ResMed and Zoll.

Philips' $646.7 million HHS contract for 43,000 ventilators was the largest by far in terms of dollar value and quantity. Hamilton's $552 million contract for 25,574 ventilators was the second largest by dollar amount. Vyaire's $407.9 million contract with the agency for 22,000 ventilators was the fourth largest.

Rep. Raja Krishnamoorthi, D-Ill., chair of the subcommittee, wrote in the letter to Azar that the HHS decision to terminate the ventilator contracts with the three medtechs "took an important step by publicly acknowledging and remedying hundreds of millions of taxpayer dollars-worth of waste, fraud, and abuse."

However, the lawmaker noted that termination settlements can involve payouts to companies whose contracts are canceled and the subcommittee must ensure that the "waste of taxpayer dollars on these ventilator contracts is truly addressed."  

HHS has until Sept. 24 to provide the documents to the subcommittee, including complete and unredacted contract files related to the 2020 ventilator awards to Philips, Hamilton and Vyaire.

HHS issued a statement earlier this month claiming that it terminated the Hamilton and Vyaire contracts to balance federal stockpile requirements with commercial market demand for ventilators, thereby saving U.S. taxpayers millions of dollars in unneeded medical devices. However, at the time, an agency spokesperson said they could not comment on the Philips contract termination because "it is subject to an internal HHS investigation and legal review."

A subcommittee hearing on the Philips contract was scheduled for Wednesday. However, panel chairman Krishnamoorthi announced Monday that it was canceled after the Trump administration refused to allow Peter Navarro, assistant to the president and director of trade and manufacturing Policy, to testify.

Navarro's "inept deal-making" with Philips led to an "astonishing" scale of waste in the contract, more than $500 million in taxpayer funds, as a result of overpaying for ventilators, according to Krishnamoorthi. 

"Negotiations to secure Peter Navarro’s testimony broke down when President Trump’s White House lawyers stepped in, sending a terse letter that they would be blocking his testimony," said Krishnamoorthi, who added that while Wednesday's hearing had been canceled the subcommittee is expanding its probe into the administration's ventilator contracts and related termination settlements. 

A Philips spokesperson reiterated the company's contention that it does not "recognize" the conclusions of the subcommittee’s July 31 report on its HHS ventilator contract, which found that the medtech took advantage of the administration’s "incompetence" and "was able to secure a financial windfall to which it clearly is not entitled."

"We have been transparent about our production ramp up plans, pricing, and allocation policies," the company spokesperson said. "We have cooperated and will continue to cooperate with the Congressional inquiry."

Hamilton and Vyaire were not immediately available for comment on the subcommittee's expanding probe.