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Baby formula shortage: Abbott needs to be 'held accountable,' Rep. DeLauro says

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As the White House and policymakers work to address the baby formula shortage, Representative Rosa DeLauro (D-CT) is calling for Abbott Laboratories (ABT) to be "held accountable" for its role in the limited supply of formula.

“This is an issue of supply and food safety,” DeLauro told Yahoo Finance Live (video above). “Abbott has really been a bad actor.”

DeLauro, citing a 34-page whistleblower report she received from a former Abbott-plant employee, alleged that the nation’s largest manufacturer of baby formula "sold knowingly a contaminated product. They cut corners. They falsified records. They didn't test the cans themselves. They tested bottles. They lied to the FDA and audit reports. So [there's] a whole list of particulars that they need to be held accountable for.”

Shelves normally meant for baby formula sit nearly empty at a store in downtown Washington, DC, on May 22, 2022. - A US military plane bringing several tons of much-needed baby formula from Germany landed on May 22, 2022, at an airport in Indiana as authorities scramble to address a critical shortage. (Photo by Samuel Corum / AFP) (Photo by SAMUEL CORUM/AFP via Getty Images)
Shelves normally meant for baby formula sit nearly empty at a store in downtown Washington, DC, on May 22, 2022. (Photo by SAMUEL CORUM/AFP via Getty Images)

Abbott closed its Sturgis, Michigan, plant in February after four babies were hospitalized due to bacterial infections. While no direct link has been established between those infections and the Michigan plant, Abbott’s decision to suspend production led to a deep disruption of the industry’s supply chain.

Abbott CEO Robert Ford apologized for the role his company played in the nationwide formula shortage in a recent op-ed for the Washington Post and vowed to ramp up production as soon as possible.

"We're sorry to every family we've let down since our voluntary recall exacerbated our nation's baby formula shortage," Ford wrote. “By the end of June, we will be supplying more formula to Americans than we were in January before the recall.”

In DeLauro's view, the FDA isn't blameless either: "I would just say to the FDA, they dragged their feet," she said. "They got a whistleblower report in October. And they did nothing."

'There needs to be competition'

The shortage has exposed the weaknesses of a market dominated by just four players. Abbott, Mead Johnson Nutrition, Nestlé USA, and Perrigo control about 90% of the U.S. baby formula market.

“We need to look very carefully at sole-source contracts,” DeLauro said. “We should not be in a position where there are only four domestic producers of infant formula. There needs to be competition. We have to address that underlying issue… when looking to the future and preventing it from happening again.”

FDA officials and executives from Abbott, Reckitt, and Gerber are also scheduled to testify before the House Energy and Commerce Oversight and Investigations panel this week. And the Biden administration and Congress have taken action to boost the supply of formula.

INDIANAPOLIS, IN - MAY 22: A pallet of formula is seen near a U.S. Air Force C-17 carrying 78,000 lbs of Nestlé Health Science Alfamino Infant and Alfamino Junior formula from Europe at Indianapolis Airport on May 22, 2022 in Indianapolis, Indiana. The mission, known as Operation Fly Formula, is being executed to address an infant formula shortage caused by the closure of the United States largest formula manufacturing plant due to safety and contamination issues. (Photo by Jon Cherry/Getty Images)
A pallet of formula is seen near a U.S. Air Force C-17 carrying 78,000 lbs of Nestlé Health Science Alfamino Infant and Alfamino Junior formula from Europe at Indianapolis Airport on May 22, 2022 in Indianapolis, Indiana. (Photo by Jon Cherry/Getty Images)

Last week, President Biden launched Operation Fly Formula and invoked the Defense Production Act to speed the production and delivery of formula. Meanwhile, lawmakers took action on two pieces of legislation to provide emergency funding to the FDA and expand access to baby formula.

H.R. 7790, a bill put forward by DeLauro that would provide $28 million in emergency funding to the FDA, passed the House on Thursday. DeLauro said that her piece of legislation works in tandem with President Biden’s launch of Operation Fly Formula to help restore the nation’s supply of safe infant formula.

“The issue is about getting a product, getting it quickly, and making sure it is safe,” DeLauro said. “We are going to be all over the FDA… and closely monitor what they are doing.”

Seana Smith anchors Yahoo Finance Live’s 3-5 p.m. ET program. Follow her on Twitter @SeanaNSmith

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