Sept 14 (Reuters) - Abbott Laboratories has agreed to pay more than $384 million to settle allegations it knowingly manufactured infant formula in environments that posed a substantial risk of contamination, then sold the products to federal and state programs, the U.S. Justice Department said on Monday.
The deal resolves claims Abbott knew the conditions and manufacturing processes at Abbott's Sturgis, Michigan, and Casa Grande, Arizona, formula production plants increased the risk of contamination,
but failed to properly test the products or alert regulators to positive tests.
Payments for the products came out of U.S. Department of Agriculture and Medicaid funds, according to the department. The USDA and state Medicaid funds are used to subsidize the costs of baby formula for eligible families.
There was no finding of liability and the company did not admit wrongdoing as part of the settlement. The department closed a related criminal investigation, Abbott said in a statement.
The lawsuit followed a 2022 recall of Abbott baby formula products after complaints they were contaminated with a potentially deadly bacteria.
Abbott initiated a recall of its infant formula products and closed its Michigan plant in 2022 after investigators found traces of a potentially deadly bacteria at that plant. The recall and the plant closure worsened a national shortage of baby formula that had begun with pandemic supply chain issues.
Abbott said that no unopened, distributed Abbott infant formulas have ever tested positive for the bacteria.
"Nothing matters more than the safety and quality of Abbott's products," the company said. "We make infant formula with the same care we would for our own families and are deeply committed to earning and maintaining caregivers' trust."
(Reporting by Daphne Psaledakis and Ryan Patrick Jones; Editing by Katharine Jackson, Alexia Garamfalvi and Aurora Ellis)
