Abbott CEO Apologizes for Baby Formula Shortages; Experts Weigh in on Crisis

Grocery store shelves where baby formula is typically stocked are locked and nearly empty in Washington, D.C., on May 11, 2022. (Stefani Reynolds/AFP via Getty Images)

Abbott Laboratories CEO Robert Ford apologized for the nationwide baby food formula shortages in a Washington Post op-ed on May 21.

“And yes, we take great pride in manufacturing nutrition and formula to feed America’s infants, including our most vulnerable,” Ford wrote. “But the past few months have distressed us as they have you, and so I want to say: We’re sorry to every family we’ve let down since our voluntary recall exacerbated our nation’s baby formula shortage.”

Ford attributed the widespread shortages to the company’s recall of formula manufactured at the Abbott Nutrition plant in Michigan. Earlier this year, federal health officials found a potentially deadly bacteria at the facility, which produces up to one-quarter of the country’s baby formula. However, the Food and Drug Administration (FDA) later revealed that the bacterial strains in the infants did not match the ones they came across at the Abbott factory.

Four children who consumed the formula were hospitalized with bacterial infections, and two of them died.

Still, Ford noted that the voluntary recall was necessary and “the right thing to do.”

Soldiers at Ramstein Air Base in Germany load up boxes of baby formula ready for the first shipments from Europe to the United States, on May 21, 2022. (Erol Dogrudogan/Reuters)

“[T]he FDA’s investigation did discover a bacteria in our plant that we will not tolerate. I have high expectations of this company, and we fell short of them,” he wrote.

The CEO explained that Abbott would be undergoing substantial investments to prevent the same thing from happening again. In the meantime, Abbott has prioritized ready-to-feed liquid infant formula output, converting production lines for its adult nutrition items. The company has also made EleCare, a hypoallergenic formula, its top priority when manufacturing restarts. Abbott has established a $5 million fund to help with living and healthcare expenses for families that have been impacted by the scarcity of EleCare.

Washington has scrambled to address this issue, too.

President Joe Biden signed the Access to Baby Formula Act, making it easier for families to be eligible for the Special Supplemental Nutrition Program for Women, Infants, and Children for low-income households.

Biden also enacted the Defense Production Act (DPA). This measure requires suppliers to ship ingredients to baby formula makers before any other companies who might have purchased the same products.

Moreover, 132 pallets of baby formula arrived in Indiana on May 22 from Germany. More pallets of infant formula are expected to arrive in the United States this week.

The president has allowed the increase of imports from foreign markets. The FDA is streamlining the review process to ensure foreign makers can ship formulas to the United States as soon as possible. Companies that can offer the biggest shipments and prove that their products are compatible with American nutrition standards will be prioritized.

‘Formula for Embarrassment’

But the administration and the FDA should have done this to begin with, says Peter Pitts, the former FDA associate commissioner.

“What the FDA did not, and what they should have done, was put plans in place for importation of foreign baby formula,” Pitts told The Epoch Times. “And they didn’t do that. They did it basically just last week. So, they could have made it happen quicker.”

Since the baby formula shortage story made national headlines, there has been a discussion surrounding four companies controlling about 90 percent of the country’s supply. In this environment, Pitts noted, the FDA needs to plan for when a plant goes offline, be it for safety issues or natural disasters that trigger shortages.

“The FDA could identify all the products that it regulates, whose manufacturing is consolidated, and create a strategy and a plan for what happens when a plant goes offline,” he stated, adding that this can ensure the supply chain remains stable.

A quick solution to prevent problems in the future is to conduct “more and robust inspections,” Pitts urged.

Meanwhile, he does not believe invoking the DPA for baby formula will achieve much success, calling it instead “a formula for embarrassment.”

“The main ingredients of baby formula (protein derived from cow’s milk, rice starch, and corn syrup) are commodities. Not a single serving of formula has been delayed because of ingredient shortages,” Pitts said. “These smoke-and-mirror soundbites are political theater and are insulting to American parents. Also, a military airlift of formula? From where? To where? How will it be distributed?”

A Lack of Competition?

Economists have also weighed in on the paucity of competition in the U.S. baby formula market.

Some have pointed to how the Department of Agriculture’s WIC program has contributed to the issue. When states sign an exclusive contract with one of the formula makers, the government receives a discount, and the company garners a greater share of the market. Therefore, because WIC is a massive customer, the manufacturer winning a contract will gain more of a presence on supermarket shelves and recommendations from local pediatricians.

“Because the WIC program is such a large purchaser, it buys about half of the formula on the market,” Claire Kelloway, an economist at the Open Markets Institute, told NPR. “Once a company has an exclusive deal to service a state, competitors don’t have a financial incentive to compete in that state.”

Others also argue that regulatory barriers and higher taxes make it harder to import baby formula. The objective is to ensure the safety of children, but economists say that it benefits U.S. suppliers with less competition.

That said, the panic unfolding in the United States has prompted shortages north of the border.

Health Canada issued a shortage alert on May 19, announcing that supplies of extensively hydrolyzed formulas are dwindling. This is eating away at the already limited inventory of amino acid-based products, which are made for babies at risk of severe allergic reactions.

“This can be a distressing situation for parents, and Health Canada is doing everything it can to mitigate the situation to provide parents with safe and healthy alternatives,” the agency said in a statement.

While smaller businesses are trying to step up to the challenge, experts aver that this is a wake-up call to the industry.