Abbott Laboratories has agreed to pay nearly $385 million to resolve US government and civil claims linked to the production and sale of powdered infant formula at facilities in Michigan and Arizona. The settlement follows a major 2022 recall that contributed to a nationwide baby-formula shortage.
Settlement Resolves Government Claims
The US Justice Department said Abbott will pay $384,999,040 to resolve allegations involving formula and nutritional products manufactured at its Sturgis, Michigan, and Casa Grande, Arizona, facilities.
The government alleged that Abbott produced products in conditions that created an unacceptable risk of contamination and then sold some of those products through federally funded programs, including the USDA’s nutrition programs and Medicaid.
The agreement resolves claims brought under the False Claims Act. Abbott has not admitted wrongdoing or liability as part of the settlement.
2022 Formula Recall at Center of Case
The dispute is closely connected to Abbott’s 2022 recall of powdered infant formula from its Sturgis, Michigan, facility.
The plant was shut down during an investigation after authorities found traces of potentially dangerous bacteria and identified sanitation problems. The resulting recall and factory closure worsened an already serious nationwide shortage of infant formula caused in part by pandemic-era supply disruptions.
Abbott has maintained that no unopened, distributed Abbott infant formula has ever tested positive for the bacteria linked to the investigation.
Criminal Investigation Closed
The settlement also brings an end to a related criminal investigation into Abbott’s handling of the formula controversy.
Federal prosecutors had examined whether the company could face criminal charges, but the Justice Department ultimately resolved the matter through a civil settlement instead. The criminal investigation has now been closed.
The decision represents a significant financial resolution for Abbott while avoiding a criminal prosecution against the company.
Government Programs Were Affected
The Justice Department’s allegations focused partly on products purchased using government funds.
According to the settlement, some Abbott formula was sold through programs funded by the US Department of Agriculture and state Medicaid programs. These programs help provide nutritional assistance and medical support to eligible families.
The government argued that Abbott should not have received those payments for products allegedly manufactured under conditions that failed to meet required safety standards.
Abbott Continues to Defend Its Products
Abbott said the settlement does not represent an admission that its products caused harm or that the company violated the law.
The company has continued to defend the safety of its infant formula and said it remains committed to maintaining the confidence of parents, caregivers and healthcare professionals.
The company had also previously reached a separate $670 million agreement in August to resolve claims involving approximately 2,000 premature infants over allegations concerning specialized formulas and necrotizing enterocolitis, a serious intestinal condition. Abbott again denied liability in that matter.
Baby Formula Shortage Had National Impact
The 2022 Abbott recall had consequences far beyond the company itself.
The Sturgis facility was one of the largest infant-formula plants in the United States. Its closure and the recall of products including Similac contributed to shortages across the country, leaving many parents struggling to find formula for their children.
The shortage prompted the US government to take emergency measures, including easing some import restrictions and increasing efforts to bring formula into the country from overseas.
Abbott Faces Other Infant Formula Litigation
The latest settlement does not resolve all legal disputes involving Abbott’s infant-formula business.
The company disclosed in August that roughly 1,700 lawsuits involving claims on behalf of about 12,700 infants remained pending in federal and state courts in connection with specialized formulas for premature babies.
Those cases involve allegations concerning necrotizing enterocolitis, or NEC. Abbott strongly disputes the claims and says there is no reliable scientific evidence establishing that its products cause the condition.
What Happens Next
The $385 million agreement closes a major federal dispute arising from one of the most significant infant-formula recalls in US history.
For Abbott, the settlement removes a substantial legal uncertainty while allowing the company to continue focusing on its healthcare and nutrition businesses.
For US regulators, the case underscores the importance of safety standards for products supplied through government programs, particularly when those products are intended for infants.
The settlement also serves as another reminder of how manufacturing failures at a single major facility can quickly affect families and supply chains across the entire country.
