Abbott CEO apologizes for the formula shortage as the first overseas shipment arrives

The CEO of Abbott, the company whose voluntary recall of several widely sold baby formula brands helped trigger a nationwide formula shortage, has apologized for the crisis, as the first overseas shipment of formula approved by President Biden arrived in the U.S. Sunday.

"We're sorry to every family we've let down since our voluntary recall exacerbated our nation's baby formula shortage," wrote CEO Robert Ford in an op-ed published Saturday in the Washington Post.

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

But it was kicked into overdrive in February when Abbott, the nation's largest manufacturer of baby formula, voluntarily closed a large plant in Michigan after four children fell sick with bacterial infections.

"We believe our voluntary recall was the right thing to do. We will not take risks when it comes to the health of children," Ford wrote.

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

Children in Tennessee, Georgia, Wisconsin and other states have reportedly been hospitalized as a result of the formula shortage. 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 those families with medical and living expenses until the supply crisis is relieved, Ford announced.

This past week, President Biden invoked the Defense Production Act to boost production of baby formula and authorized the Defense Department to help fly formula in from overseas. The first of those shipments — 70,000 pounds of Nestle hypoallergenic formulas — arrived in Indianapolis on Sunday morning, the White House said.

Abbott's plant 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 shuttered plant.

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

Why is there a shortage?

After four babies became sick with bacterial infections after consuming Abbott products made at a plant in Michigan, Abbott temporarily closed the facility and issued a voluntary recall for products made there.

But that plant – based in Sturgis, Mich. – is the largest formula plant in the U.S. and reportedly supplied about 20% of the nation's baby formula.

The closure, along with pandemic-related supply chain disruptions that were already causing a pinch on baby formula, has become a full-blown crisis in part because of peculiarities about the U.S. baby formula market.

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

Much of the nation's baby formula is sold through WIC, the government program that provides subsidized groceries for low-income families. States providing the benefit sign exclusive contracts with formula manufacturers. Abbott holds that exclusive contract in about two-thirds of states, and their shutdown has complicated purchases for families in those places.

As a result, many families have struggled to find baby formula on grocery shelves. According to Datasembly, a grocery industry data company, the nationwide out-of-stock rate was 43% for the week ending May 8th. The shortages were worst in San Antonio, Minneapolis and Des Moines, the company said.

"I want to reassure all Americans that we at FDA are very concerned about this and doing everything we can and working 24-by-7 to get things righted," said FDA commissioner Dr. Robert Califf in an interview this week with NPR. [Copyright 2022 NPR]