Axios: Lawsuits threaten infant formula for preemies

The fragility of the infant formula market is being tested again — this time by legal fights over safety labeling.

The big picture: Two and a half years after supply chain issues and a recall led to a nationwide formula shortage, the only two manufacturers of premature infant formula are threatening to exit amid a flurry of lawsuits from families whose infants got sick or died after taking one of these formulas.

Zoom in: At issue is a bowel disease called necrotizing enterocolitis that mostly affects premature babies. Abbott, which makes Similac, and Reckitt Benckiser, which makes Enfamil, are facing hundreds of lawsuits alleging they failed to warn parents about the risks on product labels.

  • A Missouri state court in July ordered Abbott to pay $495 million in damages in the first jury trial over the claims, sending both companies’ stocks plummeting. Abbott has denied the allegations and intends to appeal. A second trial is set to begin in St. Louis later this month.
  • Reckitt Benckiser — owner of Mead Johnson, which was hit with its own $6o million judgment in the spring — has said it’s considering its options. That includes a potential sale of its formula business, Bloomberg reported this week.
  • Meanwhile, Abbott CEO Robert Ford told Axios “the industry is at risk.”
  • “While we do not want to be in a position to have to take these specialized formulas off the market, it’s not sustainable to face the threat of unending litigation,” Ford wrote in an email.

Read more in Axios