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Baby formula shortage: ‘We’re going to be all over the FDA,’ congresswoman says

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Rep. Rosa DeLauro (D-CT) sits down with Yahoo Finance Live to discuss lawmakers' calls for action regarding the baby formula shortage and regulatory oversights, how families are affected by the shortage, and student loan forgiveness.

Video Transcript

- FDA head Robert Califf testifying on the Hill for the first time about the baby formula shortage, pressed by lawmakers about the FDA'S response to the crisis and whether or not there's any relief in sight.

ROBERT CALIFF: We had to really wrestle this to the ground with Abbott, ending up in a consent decree with the Justice Department to make sure that as we bring the plan up, both the FDA inspectorate and external experts are watching every step of the way. I'm pleased to say today we've already made significant progress. And I think we are on track to get open within the next week to two weeks.

- Dr. Califf's testimony coming shortly after President Biden invoked the Defense Production Act. And also, the fact that the House passed a $28 million emergency funding bill put forward by Congresswoman Rosa DeLauro to help address the shortage and boost supply. We are joined now by Representative DeLauro, the chair of the House Appropriations Committee. And Representative, it's great to see you. Thanks so much for joining us.

This is an issue that we have are covering extensively here at Yahoo Finance, critical affecting millions and millions of Americans. I'm actually the mother of a five-month-old. So I know exactly what so many parents are going through right now. I'm curious. First, there's so much to dive into today. But first, let me get your response to what we heard from Califf on the Hill today. Are you encouraged? Are you confident that we will see some relief soon?

REP. ROSA DELAURO: Well, listen. I think we're pushing to have some relief soon. But I thought it was interesting when Dr. Califf said they had to wrestle to the ground Abbott in order to get the consent decree to be able to inspect the facility and to bring it up to some safety standards. This is an issue of supply and of food safety.

And Abbott Nutrition has really been a bad actor. They 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 a whole list of particulars that they need to be held accountable for.

And also, I would just say to the FDA, they dragged their feet. They got a whistleblower report in October. And they did nothing. They interviewed the whistleblower in December. And then, they did nothing until the recall in February.

So I think we're taking action at the moment. And we passed legislation last night. I was pleased to see that the president talked about the Defense Production Act and also airlifting, if you will, product from overseas. I want to make sure that the overseas facilities that we are going to airlift from are FDA-approved facilities and not ones that have not yet been approved so that we can guarantee the safety.

The issue is about getting a product, getting it quickly, making sure it's safe. So we are going to be all over the FDA and making sure that they can, in fact, do what they say they're going to do and closely monitor what they're doing.

- Congressman, you mentioned your bill, which passed the House, provides $28 million in additional funding to the FDA. Said one Pennsylvania Republican representative, quote, "it does nothing to put formula on the shelves nor hold the FDA accountable." What's your response to that in terms of holding the FDA accountable? And to circle back, you also mentioned holding Abbott accountable. How can we do so?

REP. ROSA DELAURO: Well, first of all, I've been working on this since February to be very, very honest with you. And even before I had a whistleblower's report, what I did was I invoked a inspector general's investigation, and that means that both Abbott for their knowingly putting out a contaminated product and the FDA for not moving for four months.

But that has to be investigated very thoroughly. And in my view, what we see the investigation that we have to hold people accountable for what they have done. And that will come. In the meantime, we're trying to be focused on getting a product on the shelves because think about it. Think about it. You know this.

Seana, you have a five-month-old. Parents are frantic. They're looking for formula for their babies. At the same time, they're scared that this a product that maybe is not safe. So you're really caught. And it shouldn't be that you're caught in this supply and food safety dichotomy. It really is-- it's wrong.

And that's what we have to address right away. But I promise you. The investigations are going to go on for both Abbott and the Food and Drug Administration. Keep in mind, there are only four major suppliers of infant formula in the United States, four. So they have 89% of the market. Abbott has 43%.

So when that is taken out of the equation, you've got the shortage and the crisis that you have now. We need to look very carefully at sole source contracts. We should not be in the position where there are only four domestic producers of infant formula. There needs to be competition. We have to go to that underlying issue as well, when we're trying to look to the future and preventing this from happening again.

- So Representative, I want to drill down into that because that's really at the crux, one of the cruxes of this issue here, the fact that only a couple of firms, four companies to be exact, control by far the majority of the market up to 90%, 89%. Like you said, we actually spoke to some of the smaller players in there, a company called Bobbie, a company called ByHeart earlier this week, who are trying to at least capture a little bit more of this marketplace. What, though, needs to be done? How do we change this system?

REP. ROSA DELAURO: Well, look. There are other facilities. First of all, one, there needs to be FDA approval of these facilities, that they have the wherewithal, that they are safe. We have a standard. The FDA did not apply that standard to Abbott. And they fell down on that

Job. But nevertheless, we have a standard. We need to hold companies responsible. So that was part of the reason for the funding that we did last evening, the $28 million. The bulk of that is for inspection staff, for a staff that can deal with infant formula submissions.

The agency doesn't have the staff that it needs to be able to conduct these investigations of these companies which is why, if we're going overseas, I want to make sure that, in fact, we are going to an FDA-approved facility and not just have some random manufacturer come forward. And we're not holding them to the standard that the FDA has in order to get that approval.

We have to deconstruct consolidation. That can't continue to go on. We need to find out how we got there. And we need to move and for the future. And that's the answer that I am looking for. How do we unravel and deconstruct consolidation? Because that occurs not only in the infant formula space, but also in the meatpacking industry, et cetera.

We should not be beholden to very few corporations or manufacturers when these products need to face scrutiny. And when there is a mistake, it doesn't cause a crisis and a heartbreaking crisis that is surrounding infant formula.

- No doubt it is, not to mention the fact that we're importing almost nothing. But I want to quickly get your take on the current student debt cancellation proposals out there because on the far left, you have Elizabeth Warren and Chuck Schumer, who want the president to go big, up to 50 grand.

And then, on the right, you've got Mitt Romney getting legislation to prevent the president from doing any student debt cancellation. You're the chair of the Appropriations Committee. Should it be up to the president? You control the purse strings.

REP. ROSA DELAURO: Well, the president just-- first of all, the problem itself is a very serious problem that we know with regard to student debt and what it is costing, what is happening to students with debt, outrageous amounts of debt that they face and essentially trying to get an education. So there are a number of proposals that are out there. The president, as I understand it, is going to come forward with a proposal.

We're looking at the various proposals, whether it's Senator Warren's or whether it is Senator Sanders', the president is going to move forward. As a matter of fact, this evening, I'm holding a tele town hall in my community to talk about this issue. What are income repayment plans that we might be able to put in place, which is legislation that I have proposed?

From the Appropriations Committee, what we have done is to increase the Pell Grant so that people have a better opportunity to be able to pay for their education. We have to look at college costs. We have to look at affordability. We have to have access.

We have to take out of the market for-profit colleges, which are charging exorbitant amounts of money. They promise a degree. But it oftentimes is a worthless degree where people cannot get jobs or anything else.

So I think it's a broken system. I'm prepared to fix it. And I'm going to take a look at all of the proposals that are out there because it's going to reflect on an Appropriations Committee.

- Representative Rosa DeLauro, we have to leave it there. But thanks so much for taking the time. We really love having you on the show.

REP. ROSA DELAURO: Thank you. And keep focused on the issue. We need your voices.

- We certainly will. All right. Thank you, Congresswoman.