FDA and Abbott agree to reopen baby formula facility in Michigan

Abbott Laboratories said on Monday it had reached an agreement with the U.S. health regulator to resume production of baby formula at its troubled Michigan plant, marking a major step toward resolving a nationwide shortage of the product.

The company said once the U.S. Food and Drug Administration confirms that the initial requirements have been met, the site could be restarted within two weeks.

“This is a major step toward re-opening our Sturgis facility so we can ease the nationwide formula shortage. We look forward to working with the FDA to quickly and safely re-open the facility,” said Robert Ford, chief executive officer of Abbott.

The FDA began looking into the facility after complaints about bacterial infections in infants who had consumed the products.

Abbott Laboratories logo is displayed on a screen at the New York Stock Exchange (NYSE) in New York City, U.S., October 18, 2021. REUTERS/Brendan McDermid/File Photo

Abbott, the biggest U.S. supplier of milk formula, in February recalled Similac and other baby formula made at the Michigan facility. That has driven a shortage across the country, forcing many leading retailers to limit purchases.

The agreement between Abbott and the FDA, called a consent decree, is subject to court approval.

Under the proposed decree, Abbott will take corrective actions and will be required to retain an independent expert to review the Sturgis facility’s operations to ensure compliance with the law, the FDA said in a statement.

The agreement also requires the implementation of a sanitation plan, environmental monitoring plan, employee training programs, and testing of products, the FDA said.

It added that Abbott would also be required to cease production and promptly notify the FDA if any contamination is detected.

The company said it would incur one-time specified charges for expenses related to the consent decree, which have not yet been quantified. However, Abbott reiterated its 2022 adjusted profit forecast of at least $4.70 per share.

(Reporting by Mrinalika Roy in Bengaluru; Editing by Amy Caren Daniel)