Abbott Laboratories, the nation's largest maker of medical laboratory tests, agreed yesterday to pay a $100 million fine for failing to correct defects in its manufacturing processes despite six years of warnings. The penalty was the largest ever levied by the Food and Drug Administration.
The Abbott Park, Ill.-based company also agreed to stop manufacturing 125 of its 300 test kits in 30 days and to pay as much as $10 million more if it fails to comply in timely fashion with FDA-mandated procedures for making 175 other products deemed to be medically necessary.
The consent decree signed in Chicago does not mean that patients have been harmed or should be retested because of defective products, said David Feigel, director of the FDA's medical device division. "We have not recalled the tests," Feigel said. "What the issue is all about is that the products must be well manufactured, and there must be a level of quality for products that the law requires."
Abbott, he said, was not in compliance and had never been in compliance despite six years of warnings and inspections as recently as July: "It's a little bit baffling to us why some of these problems haven't been corrected," he said.
Abbott spokeswoman Rhonda Luniak said that the company thought it had made "sufficient progress" in changing its quality control system for test kit manufacture over the past several years, but she acknowledged that "obviously we haven't done enough."
Abbott Chief Executive Officer Miles D. White, who signed the consent decree, said in an open letter to "stakeholders" that the company "absolutely" shared FDA concerns for "the quality of medical products" and was "committed to addressing all elements of the agreement systematically."
Abbott, a multinational pharmaceutical and medical supply giant with 1998 sales of $12.5 billion, makes a wide range of health products, including infant formula, AIDS drugs and home pregnancy test kits. Abbott Diagnostics Division, which manufactures medical devices and machines along with lab tests, had sales of $2.8 billion in 1998.
Abbott's troubles began in 1993, when the FDA began pressing the company to modify quality control procedures for its test products. Today Abbott Diagnostics makes more than 300 kits to test for pregnancy, AIDS, hepatitis B, thyroid deficiency, cardiac enzymes and a host of other conditions.
Feigel explained that the FDA regulations require a procedure known as "process validation," whereby a company monitors and controls medical device manufacture with system checks on variables such as water quality, temperature and design tolerances on a continuous basis. The idea is to "know when you have a problem as it happens."
Abbott's Luniak said the company used spot checks, "testing the product at different intervals," while process validation "verifies that a process will deliver the same products time after time."
For six years the FDA warned Abbott that it was not in compliance: "Certainly they didn't undertake corrective action expeditiously," said one senior FDA official. "And even more than that, the nature of all of the problems were such that we needed to take an action that would really get their attention."
Under yesterday's consent decree, Abbott will make a one-time payment to the federal government of $100 million, described by the FDA as the biggest penalty ever paid by a regulated firm in civil violation of the Federal Food, Drug and Cosmetic Act.
The company also agreed to stop manufacturing 125 of its test kits in 30 days, to give clients enough time to find new suppliers. The decree treats these products--which include items such as the pregnancy kit--either as "not medically necessary" or as readily substitutable.
The decree allows the company to continue manufacturing 175 other tests. Some of these, such as those for AIDS and hepatitis A and B, are blood screening tests subject to independent FDA verification.
Others are "medically necessary" tests that use proprietary technology or cannot otherwise be duplicated, such as Abbott's thyroid test procedures. The exceptions also cover tests that are implanted in larger machines and cannot be readily swapped out.
Despite allowing sales to continue for these products, the decree imposes additional fines for failure to implement new quality control procedures for them in compliance with an agreed-upon schedule.
The fines are capped at $10 million. In addition, Luniak said, the company will lose $250 million in sales next year if it cannot bring the banned products back into production.