Alibaba settles U.S. drug sales case for $600 million without felony admission

The Justice Department resolved an eight-year investigation into Alibaba and its U.S. payment subsidiary by imposing $600 million in penalties and forfeitures. The companies admitted only to misdemeanor violations of the Food, Drug and Cosmetic Act rather than the felony charges prosecutors had prepared.

The case began during President Trump's first term and continued through the Biden administration. Investigators examined sales of counterfeit, adulterated, and misbranded drugs, chemicals, and pill presses that reached American buyers despite internal compliance warnings.

Other health and safety cases affected Federal prosecutors in Philadelphia and Washington, D.C., had been examining a Philips unit over millions of recalled CPAP and ventilator devices whose foam could release cancer-causing particles. The Criminal Division later withdrew support for that joint investigation.

The Justice Department also directed prosecutors to close a long-running criminal inquiry into Abbott Laboratories concerning Cronobacter contamination at a Michigan baby-formula plant. The plant had prompted a 2022 recall of Similac and other products after reports of infant illness.

A department spokesperson stated that ensuring food-supply safety remains a priority but that the agency does not favor regulation by prosecution. Career prosecutors had recommended deferred prosecution agreements that would have required felony admissions in the Alibaba matter.

"There was egregious conduct by a Chinese-owned company. An NPA is not even a slap on the wrist," one person familiar with the evidence said. Lisa Gilbert, co-president of Public Citizen, said the lighter settlements reduce accountability when health and safety are at stake.