Topline
The Department of Justice opened a criminal investigation on Friday into an Abbott Laboratories plant in Michigan over unsanitary workplace conditions in its production of baby formula—the latest investigation into one of the country’s biggest baby formula makers after the closure of the plant last year fueled a nationwide shortage.
The Department of Justice is launching a criminal investigation into Abbott Laboratories, over its … [+]
Timeline
A whistleblower who previously worked at the facility sent a 34-page document to the Food and Drug Administration alleging lenient cleaning protocols and falsified records intended to keep the FDA in the dark about issues at the plant, which was made public by Rep. Rosa DeLauro (D-Conn.) in April, 2022.
Abbott Laboratories announced a recall of its products made at its Sturgis, Michigan, plant, including its primary baby formula line Similac, as well as Alimentum and EleCare, following four complaints from consumers over two cases of bacterial infections in infants reported after drinking the powdered formula (the company said it found no evidence of the bacteria in its routine testing).
The FDA, as well as Canadian officials, warned parents and other consumers not to use baby formula made at the facility following Abbott’s recall, with Canadian officials warning formula that contains the bacteria Cronobacter sakazakii “may not look or smell spoiled but can still make you sick.”
The FDA reported two infants were hospitalized and later died after they contracted a bacterial illness from Cronobacter sakazakii after consuming the formula, saying the illness “may have contributed to the infants’ death.”
An FDA inspection found standing water in the facility as well as instances of employees who work directly with the formula not thoroughly washing their hands, while the company said it’s working with the FDA on “corrective actions.”
Abbott denied its formula contained the bacteria following the results of routine testing it conducts before the formula is distributed, saying its focus “has, is and always will be to ensure safe food for families.”
Major retailers, including CVS, Target and Walgreens, limited customer purchases of baby formula as the nationwide shortage intensified and was made worse by supply-chain issues, while Abbott said it was “doing everything” in its power to fix the shortage.
Abbott announced it would restart production of Similac at its Michigan plant, including 8 million pounds of formula that month, with CEO Robert B. Ford acknowledging the shortage had been “difficult for the families we serve” and calling the reopening an “important milestone.”
Contra
An Abbott Laboratories spokesperson told Forbes on Saturday the company is “cooperating fully” with the Justice Department’s investigation, but would not provide further details on the matter. The company had previously denied any relationship between its products and the reported deaths from baby formula, saying routine testing showed “no Abbott formula distributed to consumers” contained either Cronobacter sakazakii or Salmonella.
Chief Critic
In a statement last April, DeLauro criticized the FDA for reportedly waiting two months after the whistleblower released information about the facility to interview them, and for not issuing a recall until last February, four months after she said the whistleblower came forward. “How many infants were fed contaminated formula during this time?” she asked.
Big Number
43%. That’s the share of baby formula market sales made up by Abbott, according to a 2011 USDA report, with Mead Johnson—the producer of Enfamil—making up another 40% and Nestle making up another 15%.
What To Watch For
Market reactions to the news of the investigation, which the Wall Street Journal first reported, citing Biden Administration officials, after markets closed Friday night. Shares of Abbott Laboratories closed on Friday at $112.82, up nearly 1% on the day, although its stock has taken a hit since its peak of $140.74 in December, 2021. Abbott shares have fallen nearly 7% since the recall was issued, when shares were $120.58.
Further Reading
Abbott under criminal investigation over baby formula crisis (Politico)
Baby Formula Shortage: How Safety Concerns At An Abbott Facility Fueled A Crisis (Forbes)
Justice Department Investigating Troubled Infant Formula Plant (New York Times)
Justice Department opens investigation into Abbott over baby formula (The Washington Post)
Source: https://www.forbes.com/sites/brianbushard/2023/01/21/abbott-under-federal-investigation-over-baby-formula-heres-how-the-pharmaceutical-giant-got-here/