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# Baxter False Claims Act Settlement ‘Unusual:’ Attorney
- URL: https://www.fdaweb.com/baxter-false-claims-act-settlement-unusual-attorney/
- Published: 2017-02-13T12:00:00.000Z
- Updated: 2026-09-14T22:06:16.000Z
- Author: David McFarland
- Tags: Drugs, #legacy-id-D5137959

A False Claims Act settlement last month ([see earlier story](https://www.fdaweb.com/baxter-paying-18-million-for-sterile-products-charges/)) by Baxter Healthcare is being characterized as unusual because it was not an off-label promotion or kickback activity-related action typically seen in such settlements. “Instead the Baxter case was based on an allegation that Baxter manufactured products in violation of current good manufacturing practices (cGMP), which violates the Federal Food, Drug, and Cosmetic Act (FDC Act),” writes Hyman, Phelps & McNamara attorney **Anne Walsh** in a [blog posting](http://feedproxy.google.com/%7Er/FdaLawBlog/%7E3/LpJW9PBPjzw/rare-basis-for-false-claims-act-settlement.html?utm%5Fsource=feedburner&utm%5Fmedium=email). “Because Baxter sold these products to the Department of Veterans Affairs (VA) under contracts that required compliance with the FDC Act, the government alleged that Baxter submitted false claims to the government and violated the FCA.”

Under the settlement, Baxter agreed to pay $18.158 million to resolve criminal and civil liability charges arising from its failure to follow GMPs when manufacturing sterile drug products in North Carolina. A department [statement](http://www.fda.gov/ICECI/CriminalInvestigations/ucm537635.htm?ref=fdaweb.com) says the resolution includes a deferred prosecution agreement and penalties and forfeiture totaling $16 million and a civil False Claims Act settlement with the federal government totaling $2.158 million. A Baxter employee allegedly reported to management the presence of mold on HEPA filters at the firm’s North Cove manufacturing facility clean room, but Baxter continued to manufacture IV solutions in that clean room for months while the filters the employee had identified as moldy remained in place, the government contends.

According to attorney Walsh, the case hinged on whether the company addressed an employee’s complaints about whether some filters needed replacement. “The company conducted testing throughout the time period on how much mold was present in the air and on surfaces in the clean room,” she writes. “There were no ‘out of limits’ results. Nor did testing of the products themselves identify any ‘out of limits’ mold in the IV solutions before sterilization; because the products all were sterilized before release, there was no mold contained in products distributed from the company.”

Walsh points out that GMP compliance should be solely under FDA’s purview, which it oversees by inspecting hundreds of facilities each year. “FDA has the authority to issue Warning Letters, ban products from importation, or enjoin companies from making product until FDA is satisfied with the company’s cGMP compliance,” she writes. “Thus it is disturbing to see another governmental agency reviewing and enforcing the same conduct.

  
“We can only recall two other FCA settlements,” Walsh continues, “that involved cGMP violations, and both involved product that was negatively impacted by the company’s failure to follow cGMP. The settlement by GlaxoSmithKline in 2010 involved product that had no active ingredient or no controlled release mechanism, higher or lower amounts of the active ingredient, non-sterile product, or product that contained microorganisms. Similarly, the FCA settlement with Ranbaxy involved the manufacture of drugs ‘the strength of which materially differed from, or the purity or quality of which materially fell below, the strength, purity, or quality which they purported or were represented to possess.’ Yet in this most recent settlement with Baxter, there was ‘no evidence of impact’ on the products and no harm to patients.”