Baxter to pay $18 million over mold at North Carolina plant

[January 13, 2017]  By Eric Beech and Sarah N. Lynch

WASHINGTON (Reuters) - Baxter International has agreed to pay $18 million to resolve its criminal and civil liability over claims its unit ignored mold in air filters at a plant where sterile intravenous solutions were made, the U.S. Justice Department said on Thursday.

The resolution includes a deferred prosecution agreement and penalties and forfeiture totaling $16 million and a civil settlement under the False Claims Act with the federal government totaling approximately $2.158 million, the Justice Department said in a statement.

The government charged that managers at Baxter Healthcare Corp's North Cove plant in Marion, North Carolina, ignored an employee's warning that mold was found in air filters in the ceiling of the room where sterile intravenous solutions were manufactured, the statement said.

There was no evidence, however, that the mold affected the quality of the IV solutions, which were manufactured from July 2011 to November 2012, the department said.

A Baxter spokeswoman said the handling of the mold concerns "was not consistent with Baxter's standards" and the company had made some changes as a result.

"We took a number of actions to address these issues, including terminating several members of the facility’s management team and enhancing the training and compliance processes for employees throughout the facility," Baxter spokeswoman Deborah Spak said in a statement.

Problems with mold in Baxter's air filters were revealed several years ago, after FDA inspectors issued the company a warning letter about the problem.

"We are especially concerned that you have not identified the root cause that allowed the mold to proliferate" to a level that was too numerous to count, the FDA said in its May 2013 letter.

The letter also said the mold problem represented a "repeat violation" from a 2012 inspection.

The civil portion of Thursday's settlement came about after Christopher Wall, a Baxter employee, blew the whistle and filed a False Claims Act lawsuit.

He will recover a little more than $431,500 from the case.

While the quality of the IV solutions were not affected by the mold in this case, the company has had a number of recall product recalls over the last few years in connection with quality problems.

Some lots of IV solutions, for instance, were previously recalled after a customer discovered an insect.

Baxter also in 2014 recalled some of its dialysis products due to mold.

(Reporting by Eric Beech and Sarah N. Lynch; Editing by Diane Craft and Cynthia Osterman)

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