Abbott Laboratories (ABT) decided to skip the appeals process and just write a big check. On Friday, the healthcare giant reached a deal with three law firms to settle the Gill lawsuit and claims from roughly 2,000 other individuals. The total tab: $670 million.
The disputes revolve around Abbott's specialty infant formulas for premature babies and allegations linking them to necrotizing enterocolitis (NEC), a severe inflammatory intestinal disease that can devastate underdeveloped infants.
This saga started in July 2024, when a St. Louis jury hit Abbott with a $495 million verdict in the Gill trial. The company appealed, but the Missouri Court of Appeals denied that appeal in December 2024. That left Abbott staring at roughly $600 million in damages plus accrued interest. Rather than keep fighting, Abbott decided to settle the main lawsuit and the additional 2,000 NEC claims for $670 million.
No Admission of Guilt, But a Big Payout
Abbott was quick to point out that this settlement is not an admission of wrongdoing. Executives still insist their preterm infant formulas are safe. Major health organizations, including the Food and Drug Administration and the Centers for Disease Control and Prevention, have said there's no reliable scientific link between these medical products and NEC.
This sweeping agreement comes on the heels of some legal wins for formula makers. In July 2026, a federal appellate court upheld a pretrial judgment in Abbott's favor. Courts in Illinois and Florida also recently dismissed claims or reversed a $60 million verdict against competitor Mead Johnson, using the learned intermediary doctrine, which deals with a manufacturer's duty to warn.
While Abbott's leaders believe this settlement is in the company's best long-term interest, the fight isn't over. Roughly 1,700 lawsuits representing about 12,700 infants are still pending. Abbott is actively trying to whittle down those numbers, arguing that many claims have overlapping jurisdictions, lack NEC diagnoses, or don't specify which company's formula was used.
What Analysts Think
William Blair analyst Brandon Vazquez sees the Gill settlement as a potential template for resolving the remaining cases. He expects Abbott's ultimate exposure to be less than the full 12,700 cases, but timing is uncertain.
"We expect Abbott will ultimately end up with outstanding exposure to something less than the total 12,700 remaining cases," Vazquez said. "Abbott noted it still needs to verify things like which infants had Abbott formula (instead of Mead formula) or which cases of NEC were diagnosed before they had formula, among other things."
As for the stock, Abbott shares were down 0.12% at $114.00 during premarket trading on Friday, according to market data.
