Baby formula maker Abbott Labs agrees to settlement over closure of largest US plant

Abbott Laboratories will pay $385 million to resolve legal claims arising from a contamination inquiry at its baby formula manufacturing plant in Sturgis, Michigan, the nation's largest, which triggered severe supply shortages in 2022.

Concerns regarding the facility resulted in a lawsuit by the Justice Department alongside a sweeping recall of powdered formula products.

Affecting multiple major lines such as Similac, the recall further strained inventory already burdened by supply chain bottlenecks and stockpiling during COVID-19 shutdowns.

The settlement covers litigation initiated by specific relators as well as the Attorneys General of multiple states, though Abbott stated the resolution contains no finding of fault or liability.

Abbott stated on Monday that regulatory tests on unopened formula retrieved from homes of infants investigated during the 2022 recall were negative for Cronobacter sakazakii, a bacterium that can cause illness in infants. Furthermore, the company emphasized that no unopened, distributed Abbott formula products have ever tested positive for the bacteria.

A criminal investigation into the matter conducted by the Justice Department under President Donald Trump has since been closed.

To address the shortage, the Biden administration relaxed import rules for foreign manufacturers, airlifted formula from Europe, and invoked federal emergency regulations to prioritize U.S. production.

Abbott closed the Sturgis facility in February 2022 following the start of an investigation by the Food and Drug Administration, before reopening it in June of that year.