Key Takeaways:
Abbott Laboratories agreed to pay $670 million to settle lawsuits alleging its preterm infant formula causes a deadly bowel disease, the company said Wednesday.
"There is no evidence that the formulas cause NEC. That is why these court cases make no sense to the folks who understand the actual science," Dr. Mark Corkins, division chief of pediatric gastroenterology at the University of Tennessee Health Science Center, said.
The agreements with three law firms resolve the Gill case and claims involving approximately 2,000 individuals. In July 2024, a St. Louis jury awarded $495 million in damages to the plaintiff in the Gill case. Abbott appealed to the Missouri Court of Appeals in December 2024, but the appeal was denied. Rather than paying approximately $600 million — the Gill judgment plus accrued interest — Abbott entered into the settlement agreements.
Following the agreements, roughly 1,700 lawsuits remain pending in federal and state courts involving claims on behalf of approximately 12,700 infants. That population includes claims naming both Abbott and Mead Johnson without identifying which formula was administered, and individuals who appear in multiple lawsuits across jurisdictions.
Abbott maintains its formulas are safe and essential for preterm infants, citing the FDA, NIH, CDC, American Academy of Pediatrics and the NEC Society, which have stated there is no reliable scientific evidence that preterm infant formula causes necrotizing enterocolitis. The company said the agreements are a compromise of disputed claims and not an admission of liability.
The settlement follows a series of favorable rulings for preterm formula manufacturers. In July 2026, the U.S. Court of Appeals for the Seventh Circuit affirmed a pretrial judgment for Abbott in the first federal Multidistrict Litigation bellwether case. In June 2026, the Illinois Appellate Court reversed a $60 million verdict against Mead Johnson, finding the trial court failed to properly apply the learned intermediary doctrine — the principle that a manufacturer's duty is to communicate risks to doctors, not directly to patients, because physicians are best positioned to evaluate risks and benefits. In March 2026, a Florida state court dismissed preterm formula claims on the same grounds.
Medical groups have warned that continued litigation threatens access to preterm formula. In a brief filed Aug. 7 to the U.S. Supreme Court, the AAP, March of Dimes and other organizations wrote that "the substantial verdicts already entered in other cases, together with the thousands of similar claims now pending, pose a grave threat to the preterm formula supply." Abbott is one of only two U.S. companies producing these specialty formulas, which the FDA regulates and has not asked to change.
Abbott shares closed at $113.51, down 0.83 percent.
The settlement removes a portion of litigation uncertainty for Abbott but leaves substantial exposure from the remaining 1,700 lawsuits. Investors will watch for additional rulings on the learned intermediary doctrine and any further settlement agreements as the litigation progresses.
This article is for informational purposes only and does not constitute investment advice.
