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NAME: Thomas J. Sabatino Jr. TITLE: Senior vice president and general counsel AGE: 43 CRISIS MANAGEMENT: Baxter International Inc. of Deerfield, Ill., built its reputation by making life-saving medical products and services. For the past three months, however, the company has been in the headlines for its role in the deaths of dozens of patients worldwide. In August, the Spanish Health Ministry reported that 11 kidney dialysis patients in Madrid died after undergoing treatments using dialysis filters, or dialyzers, made by a Swedish company that Baxter acquired in March 2000. Baxter recalled its dialyzers in Spain and halted production at the Swedish plant. In mid-October, the dialyzers were linked to the deaths of 21 dialysis patients in Croatia and one in Austin, Texas, prompting Baxter to order a global recall. The death toll has since risen to more than 50, with other patient deaths reported in the United States, Germany, Italy, Columbia, Australia and Taiwan. The tragedy has put Baxter and GC Sabatino at the center of a legal storm. The company’s role in the dialysis deaths is under investigation by the U.S. Food and Drug Administration and several foreign governments. In November, the Spanish health minister announced plans to file a $280 million suit against Baxter in the United States; Swedish prosecutors opened a criminal probe; and attorney Kenneth Moll filed a class action in state court in Chicago. Other plaintiffs’ lawyers are trolling for dialyzer clients on the Web, with San Francisco’s Lieff Cabraser Heimann & Bernstein posting information both in English and Serbo-Croatian. Sabatino’s boss took an unusual step for the CEO of a corporation facing massive products liability exposure: He acknowledged responsibility. In a Nov. 5 statement, Harry Kraemer said that the company had tentatively linked some of the deaths to perfluorohydrocarbon, a processing solution used during the manufacturing of a small percentage of the dialyzers. “We are greatly saddened by the patient deaths and I would like to extend my personal sympathies to family members of those patients,” said Kraemer. Sabatino says he supported Kraemer’s public pronouncements, despite the potential legal ramifications. “When it developed over the weekend of Nov. 3 and 4 that [perfluorohydrocarbon] may have played a role in certain of the deaths, it was clear that we had to do something about it,” he says. “We chose to inform the ministries of health, the FDA and even our competitors that we had discovered this issue. “Sometimes you have to look beyond the narrow litigation strategy to determine what is the right thing to do,” says Sabatino. He says that Baxter intends to act “respectfully and fairly towards the affected families.” On Nov. 28, Baxter reached a settlement with the families of 10 dialysis victims in Spain, with each family to receive $290,000. 9/11 IMPACT: On Nov. 28, U.S. Health and Human Services Secretary Tommy Thompson announced that the federal government had awarded Baxter and British biotech firm Acambis P.L.C. a $428 million contract to develop and mass produce a smallpox vaccine. Baxter’s in-house lawyers swung into action quickly after Sept. 11 to seal the deal, beating out competing bids from Merck & Co. and GlaxoSmithKline to produce 155 million vaccine doses for potential use against bioterrorist threats. Resolving liability issues was a critical objective in negotiations with the government, Sabatino says, citing medical estimates that any smallpox vaccine is likely to kill one in a million individuals. After emergency measures stalled in Congress, says Sabatino, President Bush signed an executive order permitting HHS to indemnify the vaccine makers. ORGANIZATION: Baxter is one of the world’s largest medical products and services companies, with 45,000 employees supporting manufacturing and sales in 110 countries. The company reported revenues of $6.9 billion in 2000. Baxter’s major products include vaccines, wound-management therapies, blood-collection systems, renal dialysis equipment and intravenous solutions and equipment. SABATINO’S SPHERE: In the past decade, as Baxter’s foreign sales have eclipsed its U.S. revenue, the company’s in-house structure has shifted to a global network, says Sabatino. He supervises 70 lawyers: three dozen at Baxter’s Deerfield headquarters, another 10 in other U.S. offices and the rest posted in 12 other countries. All company lawyers report directly to the law department, but most also have “dotted line” relationships with the chiefs of divisional or regional offices where they work, says Sabatino. To keep track of his far-flung staff, Sabatino starts each Monday with a morning conference call with 15 “law managers” who supervise the assistant general counsel throughout Baxter. Sabatino farms out most litigation and IP work to outside firms. Transactional work is more collaborative, with the in-house counsel playing a primary role in negotiations, and sharing due diligence duties with outside lawyers, he said. LINGERING MASS TORT: Baxter has faced huge liability exposure before following an acquisition. In 1985, Baxter bought the American Hospital Supply Corp., which had just divested its Heyer-Schulte division, a manufacturer of silicone breast implants. “We never manufactured a single silicone breast implant; we just got all the liability,” Sabatino ruefully recalls. As of Dec. 31, 2000, Baxter had been named as defendants in 651 lawsuits, brought by 1,696 plaintiffs, alleging injuries from Heyer-Schulte implants. In 1995, Baxter settled with 227 of these plaintiffs in a partial settlement of a class action in Alabama. The breast implant litigation is now winding down, says Sabatino. The company has won 30 of the 36 implant cases it has taken to trial, with three mistrials and three plaintiffs’ verdicts, he says. He explains that his experience with the implant litigation has taught him to press for rigorous judicial evaluation of plaintiffs’ novel medical theories. He intends to apply that lesson in class actions filed this year in Oregon and Massachusetts against Baxter and other makers of childhood vaccines. BIG DEALS: During his tenure as general counsel, Sabatino has overseen the legal work on several major transactions, including this year’s $464 million acquisition of German chemotherapy company Asta Medica Onkologie and the $219 million purchase of Indiana-based Cook Pharmaceutical Solutions, a manufacturer of medication delivery products. OUTSIDE COUNSEL: Baxter relies on three primary outside counsel for litigation and transactional matters: Chicago’s Sidley Austin Brown & Wood, Dechert, and Butler Snow of Jackson, Miss. The Los Angeles office of San Francisco’s Brobeck, Phleger & Harrison coordinates breast implant litigation. ROUTE TO THE TOP: After graduating from Wesleyan University in 1980, Sabatino earned a J.D. in 1983 from the University of Pennsylvania. He then joined Boston’s Testa, Hurwitz & Thibeault as a corporate associate, before moving in 1985 to Chicago’s Ungaretti & Harris. In 1986, Sabatino joined Baxter, serving as in-house counsel for the information systems and cardiovascular product divisions before ending up with the corporate group in Deerfield, doing securities and general transactional work. In 1990, Sabatino was hired as CEO of Secure Medical Products, a medical device manufacturer in Mundelein, Ill. He returned to the law two years later, becoming general counsel of American Medical International Inc., a for-profit hospital chain based in Dallas. Sabatino returned to Baxter in 1995, working first as in-house counsel for the company’s renal division and, since December 1997, as general counsel. FAMILY: Sabatino lives in Lake Forest, Ill., with Joan, his wife of 18 years, and their two dogs and two cats. LAST BOOK READ:“Undaunted Courage: Meriwether Lewis, Thomas Jefferson, and the Opening of the American West,” by Stephen Ambrose.

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