Abbott Laboratories has agreed to pay nearly $385 million to settle allegations involving infant formula manufacturing and government-funded purchases, more than four years after a recall and factory shutdown worsened a nationwide formula shortage.
The Justice Department announced the $384,999,040 civil settlement on Monday, September 14. The agreement resolves allegations that Abbott caused false claims to be submitted to federal and state programs between January 1, 2018, and December 31, 2022.
Abbott denies wrongdoing. The settlement includes no determination of liability.
What The Government Alleged
The case concerns powdered infant formula and nutritional therapy products manufactured at Abbott’s facilities in Sturgis, Michigan, and Casa Grande, Arizona.
Federal authorities alleged that manufacturing conditions increased contamination risks and that Abbott failed to adequately test products or notify regulators about positive tests. Government funding for the products included U.S. Department of Agriculture and Medicaid money, according to Reuters.
The Justice Department’s announcement described allegations of recurring roof leaks at Sturgis that allowed water to drip over equipment. The complaint alleged that Abbott used temporary measures to divert the leaks despite corporate leaders’ awareness that moisture increased contamination risks.
The case involved whistleblower claims brought by three Abbott employees under the False Claims Act. The department said they will receive $69 million as their share of the federal settlement.
Abbott’s Response
Abbott said a related criminal investigation had been closed. The company also maintained that no unopened, distributed Abbott infant formula had tested positive for the bacteria involved in the investigation, Reuters reported.
“Nothing matters more than the safety and quality of Abbott’s products,” the company said in a statement reported by Reuters.
Abbott closed the Sturgis plant in February 2022 during a federal contamination investigation and recalled several powdered formula products, including products sold under its Similac brand.
The disruption compounded shortages already linked to pandemic-era supply chain problems. The plant reopened in June 2022, according to The Associated Press.
The shortage prompted emergency federal measures, including easing import restrictions and arranging formula shipments from Europe.
Provided by Dallas Express
