Baxter Healthcare Corporation has reached agreement on a consent decree with the US Food and Drug Administration (FDA) regarding the company's Colleague and Syndeo infusion pumps. The agreement has been approved by the US District Court for the Northern District of Illinois.

The agreement, which is limited to Baxter's Colleague and Syndeo infusion pumps, outlines the steps the company must take to resume sales of new pumps in the United States. The steps include obtaining FDA approval of Baxter's plan to resolve issues with the pumps currently in use in the US, third-party expert reviews of Colleague and Syndeo operations and other measures to ensure compliance with the FDA's Quality System Regulations.

The agreement resolves a court action by the FDA that began with a seizure of pumps in Baxter's northern Illinois warehouses in October 2005, which followed field corrective action notices about Colleague and Syndeo that had been issued by the company, a Baxter release stated.

"Patient well-being and safety are Baxter's top priorities," said Robert L. Parkinson, Jr., Baxter's chairman and chief executive officer. "The agreement we've reached with FDA provides a clear path to resolving the Colleague and Syndeo issues, so that we may continue to serve patients and medical professionals by delivering the quality, reliability and innovation they expect from Baxter."

Before resuming sales in the US, the agreement allows the company to continue to service pumps currently in use and supply additional pumps to customers when medically necessary. No financial penalties have been imposed. The company will post a $20 million letter of credit which will be cancelled upon FDA's verification that Baxter has successfully reconditioned or destroyed the seized Colleague and Syndeo pumps. The agreement also allows the FDA to take additional actions it deems necessary to ensure compliance.

Within 20 days, the company will submit for FDA review and approval a corrective action plan describing proposed upgrades and modifications for pumps currently in use. When authorized, the company will immediately begin deployment of the plan. Pumps currently in the market continue to be safe to use when operated according to the user manual and instructions contained in previous customer communications. Once certain requirements outlined in the agreement are satisfied and FDA grants marketing clearance, Baxter may resume sales of Colleague and syndeo pumps in the US.

Currently, more than 200,000 Colleague infusion pumps are in use in US hospitals. Approximately 50,000 are used abroad and are not affected by this agreement. Deployment of Colleague modifications outside of the US has already begun in 30 countries and is expected to be substantially completed by the end of this year.

For certain customer accommodations and to adjust reserves previously established for remediation costs, the company expects to record a second quarter after-tax charge of up to $70 million (or $.11 per diluted share). Excluding this charge, the announcement does not affect the company's financial outlook for the second quarter or full-year 2006.