Abbott Reaches Agreement With FDA To Restart Baby Formula Production Amid U.S. Shortage

Abbott has reached an agreement with the U.S. Food and Drug Administration to restart production of baby formula at the company's plant in Sturgis, Michigan amid a nationwide formula shortage.

The baby formula maker closed the plant in February after bacterial infections were reported in four babies who consumed formula made at the plant; two of the babies died.

As part of the agreement, which is subject to court approval, Abbott will be required to retain an independent expert to review the Sturgis facility's operations to ensure compliance with the law. It also includes requirements for testing products, as well as ceasing production, and promptly notifying the FDA should contamination be detected. The proposed agreement also requires the implementation of a sanitation plan, environmental monitoring plan and employee training programs.

Abbott said it could restart the plant within two weeks, once the FDA confirms the initial requirements for start-up have been met.

The company noted that it would begin production of EleCare, Alimentum and metabolic formulas first and then begin production of Similac and other formulas. From the time of restart it will take six to eight weeks before product is available on shelves.

The company confirmed its full-year 2022 guidance for adjusted earnings per share from continuing operations of at least $4.70. It will incur one-time specified charges for expenses related to the agreement which have not yet been quantified. However, it does not expect that those expenses will have a material impact on its consolidated financial statements.

Abbott in February had recalled various lots of its most popular powder formulas, including Similac, Alimentum, and EleCare, produced in its manufacturing facility in Sturgis, Michigan after four infants were diagnosed with Cronobacter sakazakii or Salmonella Newport, a rare bacterial infection.

The Centers for Disease Control and Prevention or CDC stated that Cronobacter can cause severe sepsis or meningitis in infants which often becomes life-threatening.

Later, in March, the U.S. Food and Drug Administration added some lots of Similac PM 60/40 Powdered Instant Formula to Abbott recall after another death of an infant was reported. The FDA altogether had reported five cases of related - infant illness, in which 2 infants died.

In April, the FDA had released its investigation report about the Abbott plant, noting that its Sturgis, Michigan, facility failed to maintain sanitary conditions and procedures. The regulator warned the consumers about using the recalled products manufactured at the facility, after it found the plant to be unsanitary.

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