Abbott settles for $385M over contaminated baby formula allegations

Abbott Laboratories has agreed to pay $385 million to settle federal allegations that it manufactured infant formula in environments with substantial contamination risks. The settlement resolves claims regarding Abbott's Sturgis, Michigan, and Casa Grande, Arizona, plants, which triggered a massive 2022 recall and worsened a national baby formula shortage. While some prosecutors sought criminal charges, senior Justice Department officials opted for a civil settlement with no admission of wrongdoing, closing the criminal probe.

Abbott baby formula contamination settlement

• ▪Payments for the Abbott Laboratories baby formula products came out of U.S. Department of Agriculture and Medicaid funds, which subsidize formula costs for eligible families
• ▪Abbott Laboratories agreed to pay $385 million to settle allegations it knowingly manufactured infant formula in environments posing contamination risks and sold them to federal and state programs
• ▪The settlement involves no finding of liability or admission of wrongdoing by Abbott Laboratories
• ▪The settlement also pertains to lawsuits filed by certain relators and the Attorneys General of several states
• ▪The settlement resolves claims that Abbott Laboratories knew conditions at its Sturgis, Michigan, and Casa Grande, Arizona, plants increased contamination risks but failed to properly test products or alert regulators

Sturgis Michigan plant conditions

• ▪Abbott Laboratories' Sturgis, Michigan, facility is the largest baby formula plant in the United States
• ▪Abbott Laboratories closed the Sturgis, Michigan, facility in February 2022 after the Food and Drug Administration began an investigation, and reopened it by June 2022

2022 formula recall

• ▪Abbott Laboratories initiated a recall of powdered infant formula products, including Similac, in February 2022 after complaints of contamination with potentially deadly bacteria
• ▪Government tests of unopened Abbott Laboratories infant formula products from the homes of infants under investigation during the 2022 recall were negative for Cronobacter sakazakii
• ▪Abbott Laboratories stated that no unopened, distributed Abbott infant formulas have ever tested positive for Cronobacter sakazakii or other bacteria

National baby formula shortage

• ▪The 2022 Abbott Laboratories baby formula recall and Sturgis plant closure worsened a national baby formula shortage that had begun with pandemic-related supply chain issues
• ▪During the formula shortage, the Biden administration eased import rules for foreign manufacturers, airlifted formula from Europe, and invoked federal emergency rules to prioritize U.S. production

Criminal investigation closure

• ▪The U.S. Justice Department closed its criminal investigation into Abbott Laboratories' baby formula manufacturing practices as part of the settlement
• ▪Some federal prosecutors believed there was enough evidence to bring criminal charges against Abbott Laboratories, but senior Justice Department officials opted for a civil settlement, believing criminal charges would be heavy-handed

Debatable claims

• ▪The Justice Department should have criminally prosecuted Abbott Laboratories
• ▪Abbott Laboratories' baby formula settlement should have required an admission of wrongdoing