Quality and Safety

Quality

Baxter's reputation is built on the quality of its products and services. Baxter's quality systems apply across the product life cycle, including design, development, manufacturing, sterilization, labeling, packaging, handling, distribution and promotion.

To assess and facilitate compliance with applicable requirements, the company regularly assesses its quality systems and conducts quality management reviews to identify issues that may affect product and service quality. Baxter also assesses its suppliers of raw materials, components and finished goods.

To more effectively address product quality matters when they arise, Baxter has reviewed and redesigned its corporate quality systems. This includes a significant revamping of the information technology infrastructure and systems to better integrate its quality efforts. As a part of this renewed focus, the company initiated organizational changes in 2005 within the quality, regulatory affairs and medical surveillance functions. The company also increased investments in human and other resources, and has developed product quality improvement plans for the company's device portfolio. Cheryl White was appointed corporate vice president, Quality, in April 2006 to specifically develop a sustainable Quality Improvement Plan.

Baxter identifies and addresses quality issues using Lean Six Sigma, a data-driven approach to improving and managing business processes. "Lean" focuses on items such as waste elimination, standardization and cycle-time reduction. "Six Sigma" emphasizes reducing variation that impedes optimal product and process performance. Organizations throughout the company have achieved significant quality gains and financial savings using the Lean Six Sigma approach.

Occasionally, Baxter may determine that products manufactured or marketed by the company do not meet company specifications, published standards or regulatory requirements. When Baxter identifies a quality issue with one of its products, it investigates and takes appropriate corrective action, such as withdrawal of the product from the market, correction of the problem at the customer location, notice to the customer of revised labeling and/or other actions. For example, in June 2006, Baxter and the U.S. Food and Drug Administration (FDA) reached agreement in the form of a consent decree on steps Baxter needed to take to resume sales of new COLLEAGUE intravenous (IV) infusion pumps in the United States due to quality and design issues. For more information, visit www.baxter.com.

Patient Safety

A focus on patient safety is at the core of everything Baxter does, from innovating new products, to collaborating with hospitals to help redesign processes, to partnering with third-party groups to develop patient and clinician educational materials, to facilitating discussion forums around key safety issues with stakeholder groups.

Baxter has a long history of product innovations that create a safer healthcare environment. The company was founded in 1931 as the first manufacturer of commercially prepared intravenous (IV) solutions, vastly improving the safety of IV therapy in hospitals. The company later introduced the first closed, plastic IV container system, reducing bloodstream and other infections; the first premixed and prepackaged IV drugs, greatly reducing the potential for medication errors; and the first needle-free IV access systems.

Baxter has continued to pioneer products that help improve patient safety through bar-code technology and other advancements that improve the interface between technology and clinicians.

Baxter recognizes, however, that technology alone cannot fully address safety issues. For example, through its Connections Portfolio, Baxter offers a program that provides customers with an onsite clinical assessment of their hospital's IV therapy practices and compares them to nationally recognized standards and guidelines. Identified gaps and potential possibilities for error are then communicated to the customer with recommendations to minimize risks.

Baxter supports and collaborates with other organizations worldwide to improve patient safety and reduce medication errors. For example, in the United States, Baxter continues to partner with the Institute for Healthcare Improvement on its 5 Million Lives campaign, an initiative to protect patients from five million incidents of medical harm in U.S. hospitals through the end of 2008. In the United Kingdom, Baxter, in partnership with the U.K. Government, the National Health Service, the National Patient Safety Agency and the Purchasing and Supply Agency, created pilot projects to improve purchasing for safety.

Government Regulation

Baxter's operations and products are subject to extensive regulation by numerous governmental agencies, both within and outside the United States. In the United States, the federal agencies that regulate the company's facilities, operations, employees, products (their manufacture, sale, import and export) and services include: the United States Food and Drug Administration (FDA), the Drug Enforcement Agency, the Environmental Protection Agency, the Occupational Health & Safety Administration, the Department of Agriculture, the Department of Labor, the Department of Defense, Customs and Border Protection, the Department of Commerce, the Department of Treasury and others.

The FDA in the United States, as well as other governmental agencies inside and outside the United States, administer requirements covering the testing, safety, effectiveness, manufacturing, labeling, promotion and advertising, distribution and post-market surveillance of Baxter's products. The company must obtain approval from the FDA and non-U.S. regulatory authorities before it can market and sell most of its products in a particular country. Even after the company obtains regulatory approval to market a product, the product and the company's manufacturing processes are subject to continued review by the FDA and other regulatory authorities.

One area of recent regulatory activity is related to product integrity and security, where Baxter is developing processes in response to the Pharmaceutical Drug Marketing Act. Regulations enacted in some U.S. states during 2006 stipulated that drugs distributed in the state must be accompanied by a chain of custody document (pedigree) to ensure product authenticity. Countries in other regions of the world, including China and Italy, have enacted similar legislation.

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