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Business News/ News / World/  Abbott under federal criminal investigation over baby formula
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Abbott under federal criminal investigation over baby formula

wsj

Michigan plant at center of probe was temporarily closed by the company last year after potentially deadly bacteria was found

The investigation signals further scrutiny of Abbott’s operation of the plant, a major source of baby formula in the U.SPremium
The investigation signals further scrutiny of Abbott’s operation of the plant, a major source of baby formula in the U.S

The Justice Department is investigating conduct at the Abbott Laboratories infant-formula plant in Sturgis, Mich., that led to its shutdown last year and worsened a nationwide formula shortage, people familiar with the matter said.

Attorneys with the Justice Department’s consumer-protection branch are conducting the criminal investigation, the people said.

The branch, which has criminal as well as civil authority, was involved last year in a settlement with Abbott that allowed its Sturgis plant to resume operations after Food and Drug Administration inspectors found a potentially deadly bacteria there.

“The DOJ has informed us of its investigation, and we’re cooperating fully," an Abbott spokesman said.

The investigation signals further scrutiny of Abbott’s operation of the plant, a major source of baby formula in the U.S., and perhaps of the more than $4 billion formula industry.

The Justice Department in the past decade has investigated numerous food companies that have shipped contaminated products that resulted in illnesses or deaths.

Several have led to criminal prosecutions under the 1938 Federal Food, Drug and Cosmetic Act of companies or executives involved in producing goods from ice cream to peanut butter. The law allows government officials to prosecute entities or individuals who introduce adulterated food into interstate commerce.

In many recent cases, DOJ has been able to successfully prosecute defendantson misdemeanor charges for introducing contaminated food into the market even without proof that officials acted with criminal intent, according to Bill Marler, a Seattle lawyer who represents victims of food-borne illnesses.

Abbott, based outside Chicago, is one of the biggest manufacturers of baby formula. The company sells Similac, among other brands.

Last January, FDA inspectors found bacteria at the plant after receiving reports of babies who drank the company’s formula and became sick. The inspectors also found standing water, damage to drying equipment and defects in the seams of formula cans, among other problems at the Sturgis plant.

Federal officials couldn’t conclusively link the bacteria at the plant to the infants’ illnesses, however. Abbott has said genetic sequencing of the bacteria in the sick babies didn’t match the strains found at the plant.

Abbott temporarily halted production at the Sturgis factory in February, and recalled baby formula made at the plant. The moves contributed to an infant formula shortage that sent parents and federal officials scrambling for months.

To bolster supplies, the federal government waived regulatory requirements and tariffs to allow more foreign formula into the country, and the White House organized planes to fly baby formula to the U.S.

Abbott last May signed a legal agreement, called a consent decree, detailing the steps it would need to take to reopen the plant.

In the complaint accompanying that civil agreement, the Justice Department said Abbott and several of its employees had caused “adulterated food" to enter interstate commerce.

“Ongoing inadequacies in manufacturing conditions and practices at Defendants’ facilities demonstrate that Defendants have been unwilling or unable to implement sustainable corrective actions to ensure the safety and quality of food manufactured for infants, a consumer group particularly vulnerable to foodborne pathogens," the department said in the complaint.

Also in May, Abbott Chief Executive Robert Ford apologized for the company’s role in the formula shortage, and said it was making investments to avoid a repeat. The company reopened the plant in June.

Limited formula supplies continued into September, however, when adults in roughly one-third of households with infant children on formula had trouble getting it, according U.S. Census Bureau data. By October, in-stock rates had stabilized close to where they had been before the Sturgis plant shut down, federal officials have said.

In 2020, the Justice Department filed criminal charges against Texas ice-cream company Blue Bell Creameries LP and its former chief executive following an investigation into a listeria outbreak tied to three deaths and other illnesses.

Blue Bell agreed to pay $19 million and plead guilty to two misdemeanor charges related to shipments of contaminated ice cream. The former chief executive has pleaded not guilty to the charges.

That same year, Chipotle Mexican Grill Inc. said it would pay a record $25 million to resolve criminal charges stemming from a series of foodborne-illness outbreaks involving its restaurants that sickened more than 1,000 people.

In 2015, Stewart Parnell, the former owner of Peanut Corp. of America, was sentenced to 28 years in prison a year after being convicted of presiding over a coverup that led to a deadly salmonella outbreak.

Write to Liz Essley Whyte at liz.whyte@wsj.com, Dave Michaels at dave.michaels@wsj.com and Jesse Newman at jesse.newman@wsj.com

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