Some Actual Progress In The Infant Formula Shortage?

With Sturgis Plant Restarting, How Much Longer Will Shortage Last?

After tolerating the virtual disappearance of infant formula from American store shelves literally for months, Abbott Nutrition finally restarted their Sturgis plant today.

Abbott is starting production of EleCare and other specialty and metabolic formulas, with initial EleCare product release to consumers beginning on or about June 20. We're also working hard to fulfill the steps necessary to restart production of Similac and other formulas and will do so as soon as we can.

While the resumption of production at the Sturgis plant is a significant positive development—the facility accounted for approximately one-fifth of infant formula sold in the US prior to its closure—the practical reality is that it will be weeks before any output from the plant can reach store shelves. The initial production of EleCare and other specialty formulas won’t make it to store shelves until after June 20 at the earliest. Abbott’s full infant formula product line from Sturgis won’t be available in stores until sometime in July.

Why Was Plant Closed?

Close inspection of the FDA’s timeline of events and statements made by FDA Commisioner Robert Califf raise questions about why the plant was closed down.

Ostensibly, the Sturgis plant was closed after FDA inspections revealed contamination with a food-borne pathogen, Cronobacter sakazakii. Separately, between September, 2021, and February 2022, four cases of Cronobacter infection among infants fed with formula produced at the Sturgis plant were reported to the CDC.

In his testimony before Congress on May 25, Commissioner Califf made the following statement:

The CDC receives reports on foodborne disease outbreaks from state, local, and territorial health departments. On average, CDC receives two to four Cronobacter case reports annually; however, because Cronobacter infection is not reportable in most states, the total number of cases that occur in the United States each year is not known. Thus, the four cases that came to our attention between September 20, 2021, and February 17, 2022, raised concerns. Despite this very unusual combination of events, we do not have definitive evidence proving that insanitary conditions of the Sturgis facility actually caused the Cronobacter illnesses of these infants.

While FDA inspections unquestionably found a number of sanitation problems at the Sturgis plant, the one thing that has never been documented has been a causal link between the identified sanitation problems at the Sturgis plant and the reported Cronobacter cases.

According to the FDA, after each of the three initial Cronobacter cases came to light, product testing at the Sturgis plant failed to find any contaminated formula (despite the media attention made about four Cronobacter cases, the last one did not emerge until after the FDA initiated both the February product recall and the plant closure).

As the FDA itself acknowledges, it was never able to link the reported Cronobacter strains to strains detected at the Sturgis plant during their January “for cause” inspection.

Moreover, there are two to four cases of Cronobacter reported to the CDC and the FDA each year—meaning the reports made regarding Abbott products were not at all unusual in either their number or their timing.

Was the plant closure a reaction by the FDA not to the reported Cronobacter cases but rather a CYA response to the October, 2021, whistleblower report detailing numerous sanitation and product safety control issues at the plant?

Abbott Had No Contingency Plan

The Sturgis plan produces one-fifth of all infant formula sold in the United States. Despite this, Abbott had no contingency plan on how to transfer production to other facilities in the event of a plant disruption or closure.

While plant closure for lack of regulatory compliance and sanitation might not be the sort of event a typical business continuity plan envisions, had production been disrupted due to a major fire, act of sabotage, or other event generally classified as an “act of God”, the supply shock to the US infant formula market would have been the same. Disruptions to plant operations were easily foreseeable; there should have been contingency plans and there were not.

The lack of any business continuity preparations for a disruption to the operations of the Sturgis plant is all the more remarkable because Abbott is quick to tout its efforts to build a more “resilient, diverse, and responsible supply chain” on its website. An inability to transfer production to other facilities makes their supply chain brittle, monolithic, fragile, and irresponsible.

There Will Be An “Investigation”

In true Washingtonian CYA form, the Department of Health and Human Services is preparing to investigate the FDA’s handling of Abbott’s problems at the Sturgis plant, the whistleblower report, and the plant closure and product recall, to determine if the FDA handled the matter “correctly”.

The Department of Health and Human Services announced on Thursday that it would specifically review whether or not the FDA correctly conducted inspections of Abbott's Sturgis, Mich., manufacturing facility at the center of the recall and if it correctly oversaw Abbott's initiation of the infant formula recall.

The answer to that question is, of course, already known. Whether one uses Datasembly’s nationwide out-of-stock rates for baby formula, which show the percentage at the end of May to be 73.58% or market research firm IRI’s much lower but still distressful 23%, the reality is that the FDA abruptly terminated one-fifth of the domestic supply of infant formula in February and made no significant efforts to organize a replacement of that supply until months later.

The reality of the government’s “all available resources” effort to import formula on an emergency basis amounted to a total roughly 9 million 8-ounce bottles of formula, which will arrive beginning next week, when the weekly consumption of formula across the country is over 50 million 8-ounce bottles.

There is nothing “correct” about terminating one-fifth of the food supply for millions of formula-fed infants and not addressing how to replace that supply for three months, then failing to source enough formula to satisfy infants’ needs on an ongoing basis rather than a one-time event such as “Operation Fly Formula”. For HHS to feel the need to even ask the question indicates the “investigation” will be a typical government exercise in wasted time, wasted money, and wasted effort.

The Real Question: Will The FDA Give Up Control?

From the diffident and lax inspections by the FDA, to the identified sanitation and managerial problems with the Sturgis plant, including allegations by the whistleblower of deliberate coverup and concealment of safety control problems at the plant during a previous audit by the FDA, it is quite clear that FDA’s regulatory control of the infant formula market in the United States has been an abysmal failure. Not only has the FDA failed to ensure product safety—its primary reason for existence—but it failed to address the inevitable supply shock that closing Sturgis has had on that market.

Both the Datasembly and IRI out-of-stock rates agree on the trend, which is that the out-of-stock problem grew steadily and substantially worse from the end of February through May, and little if anything was done until May to resolve the matter.

When government has near total control over a market, as the FDA has over infant formula, the normal operations of the free market are suspended. It becomes impossible for new suppliers to enter into the market to fill the void left by Abbott Nutrition’s Sturgis plant closure. It becomes difficult if not impossible for existing vendors to ramp up production sufficient to fill that void. It becomes cumbersome for the monopolistic WIC programs to allow recipients of WIC benefits sufficient flexibility in purchasing formula to find suitable substitutes for Abbott’s products.

As I have noted previously, a fixture of WIC programs is the mandatory requirement that a state’s WIC program source formula to a single supplier.

Infant Formula Shortage Is A Tragedy In Two Acts

Infant formula is, for all intents and purposes, a tightly regulated monopoly marketplace. The government makes all the rules for that marketplace and thus sets all the prices and creates all the conditions under which infant formula is delivered to nursing mothers.

If such monopolistic practices are to be defended, government must be able to respond to supply shock events in a timely fashion. This did not happen.

If such monopolistic practices are to be defended, government must have continuity and disaster recovery plans for ensuring ongoing supply even when large portions of the infrastructure are disrupted for whatever reason. This did not happen.

If such monopolistic practices are to be defended, government must police its own regulations constantly and competently, so as to stop the sorts of corporate malfeasances that have been an ongoing fixture of Abbott’s management of the Sturgis plant before they get so large and out of control. This did not happen.

If the FDA’s monopolistic control over the infant formula market is indefensible—which it clearly is—then the resolution is equally clear: that monopolistic control must be ended. It is time for free market forces to be allowed to operate once again in that market (ideally, in all markets where they are curtailed by government regulation). Suppliers must be able to enter and exit the market easily, and even welfare recipients must have the benefits of choice in selecting which formula products they purchase for their children.

If recommendations and a plan to make this happen were to be the outcome of the upcoming HHS investigation, then it might actually be a productive effort and worth the expense. Given the extreme unlikelihood of HHS actually recommending that government surrender even fraction of its power over markets, their investigation into the FDA’s handling of the issues at Sturgis is likely doomed to irrelevancy even before it begins.

Government is Still The Problem, Not The Solution

The infant formula shortage is yet another example in the endless litany of examples of government making a problem, then making it worse. It is yet more proof that government more often than not simply does not work.

Whether such dysfunction is the intended outcome, as some suggest (and not entirely without reason), the important point is the dysfunction is the outcome. Government breaks things. It does not fix them.

While this can in many cases be considered an evil we by and large consider sufferable, when that dysfunction produces infant hunger, that is never a sufferable evil. The justification for all government is ultimately the protection of people; government which harms those most in need of protection, vulnerable and defenseless children, is government that can no longer be justified.

Time for the FDA to step aside.