Shipment insurance

Abbott CEO apologizes for formula shortage as first overseas shipment arrives

The CEO of Abbott, the company whose voluntary recall of several widely sold infant formula brands helped spark a nationwide infant formula shortage, has apologized for the crisis, as the first delivery foreign infant formula approved by President Biden arrived in the United States on Sunday.

“We are sorry for all the families we have abandoned since our voluntary recall exacerbated the shortage of infant formula in our country,” CEO Robert Ford wrote in an op-ed published Saturday in The Washington Post.

The nationwide shortage has its roots in supply chain disruptions and a market characterized by limited competition, exclusive contracts and few large suppliers.

But it was thrown into overdrive in February when Abbott, the nation’s largest infant formula maker, voluntarily closed a major factory in Michigan after four children fell ill with bacterial infections.

“We believe our voluntary recall was the right thing to do. We will take no risks with regards to the health of children,” Ford wrote.

In the months since the recall, parents have reported empty shelves and limits on purchases at places where the formula is in stock.

Children in Tennessee, Georgia, Wisconsin and other states have reportedly been hospitalized due to formula shortages. Some of the products affected by the shortage are hypoallergenic formulas designed for children with milk allergies or other difficulties digesting food normally.

Abbott will establish a $5 million fund to help these families cover their medical and living expenses until the supply crisis is relieved, Ford said.

Last week, President Biden invoked the Defense Production Act to boost formula production and authorized the Department of Defense to help bring in formula from overseas. The first of those shipments – 70,000 pounds of Nestlé hypoallergenic formulas – arrived in Indianapolis on Sunday morning, the White House said.

Abbott’s factory in Michigan will reopen the first week of June. The company reached an agreement with the Food and Drug Administration last week to reopen the closed plant.

Production of Elecare and other hypoallergenic formulas will be prioritized, Ford said. “By the end of June, we will be providing more formula to Americans than in January before the recall,” he said.

Why is there a shortage?

After four babies fell ill with bacterial infections after consuming Abbott products made at a Michigan factory, Abbott temporarily closed the facility and issued a voluntary recall for products made there.

But this factory – based in Sturgis, Michigan – is the largest formula factory in the United States and is said to have supplied about 20% of the country’s formula.

The shutdown, along with the pandemic-related supply chain disruptions that were already causing a pinch on infant formula, has become a crisis in its own right in part because of the idiosyncrasies of the U.S. infant formula market.

The vast majority of formula in the United States is produced by just four companies, including Abbott. High tariffs and FDA regulations mean that very little is imported from other countries.

Much of the nation’s infant formula is sold through the WIC, the government program that provides subsidized groceries to low-income families. States providing the service sign exclusive contracts with formula manufacturers. Abbott holds this exclusive contract in about two-thirds of the states, and their closure has made it difficult for families in those places to shop.

As a result, many families struggle to find formula on grocery store shelves. According to Datasembly, a grocery industry data company, the nationwide out-of-stock rate was 43% for the week ending May 8. Shortages were most severe in San Antonio, Minneapolis and Des Moines, the company said.

“I want to reassure all Americans that we at the FDA are very concerned about this and are doing everything we can and are working 24/7 to put this right,” the official said. FDA Commissioner Dr. Robert Califf in an interview this week with NPR.

Copyright NPR 2022.