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The issue here is that the FDA and Abbot didn't treat it as an emergency when the Abbot facility was forced to close in the first place. Had they acted as if it
by jonahhorowitz 4y ago
The issue here is that the FDA and Abbot didn't treat it as an emergency when the Abbot facility was forced to close in the first place. Had they acted as if it was an emergency, they would have mobilized all available resources to clean and disinfect the facility, replace the faulty milk drying equipment, and get the facility back up and running. Here we are, months later and it's now an emergency. Sure, importing from other countries will help, but like toilet paper, it's a product that has a pretty consistent demand and there isn't a lot of surge capacity out there, even in other countries, so we really need to get the facility back online.
The issue isn't bad government policy - infant formula is strictly regulated for very good reasons, it's a lack of urgency from the government and private sector to make sure a medically critical product is available.
Also, of course, we shouldn't have let such a critical product mostly be made by 3 companies, but that's another rant.
- rilezg 4y agoAlthough the linked article does not address it, the FDA is certainly working to mitigate any fallout from the plant closure. Much of the complexity is that WIC is administrated at the state level, so the FDA must work with each state individually to address the shortage. Of particular note: >more infant formula has been produced in the last four weeks than in the four weeks that preceded the recall, despite one of the largest infant formula production facilities in the country being offline during that time. https://www.usda.gov/media/press-releases/2022/05/13/usda-continues-urgent-actions-address-infant-formula-shortage https://www.usda.gov/media/press-releases/2022/05/13/usda-co...
- landemva 4y ago>>> FDA is certainly working to mitigate any fallout from the plant closure. This should not be the role of the regulator. Let the FDA set standards and check for compliance.
- rilezg 4y agoMy mistake. The press release is actually from the USDA, and this is the only mention of the FDA: >USDA has been working closely with FDA to ensure program participants and stakeholders have the information they need to keep infants safe I apologize for any confusion.
- bko 4y ago> infant formula is strictly regulated for very good reasons > Also, of course, we shouldn't have let such a critical product mostly be made by 3 companies, but that's another rant. Do you think these two are related?
- MichaelZuo 4y agoWas just about to say as well. The more regulated an industry is the more consolidated it will become and the higher the costs will have to be, which either get passed on to consumers and/or in cutting capacity.
- frankbreetz 4y agoI don't think that's true. Look at banks, to are highly regulated and there are almost 5000 of them[0] https://en.m.wikipedia.org/wiki/Banking_in_the_United_States https://en.m.wikipedia.org/wiki/Banking_in_the_United_States
- MichaelZuo 4y agoMost of the 'banks' in that count serve as the local monopoly, or as part of a duopoly, or triopoly in their region and are protected by and regulated primarily by state laws as well. Many state banking regulations are significantly more lax than federal banking regulation. The handful of banks in the U.S. that serve multiple states and fall under federal banking regulation seem even more consolidated than the baby formula industry on a variety of metrics. Certainly more consolidated per dollar of cash flow. Probably more consolidated per dollar of net profits. etc. Which would be the expected outcome of the theory if the baby formula industry in the U.S. were less regulated than federal banks but more regulated than state banks.
- caylus 4y agoThere may be thousands of banks, but all but a few manage their funds at one of the big few, essentially acting as resellers of the big banks' services. For example, I my bank is "Ally Bank", but if I ask them for instructions on how to receive a wire transfer, they instruct me to direct it to "JP Morgan Chase Bank, N.A.", the largest bank in the U.S. I previously used the brand "Simple Bank", which provided accounts via "The Bancorp Bank", the 5th largest. It's a similar case to cell phone providers: although there are hundreds in the U.S., all but four do not operate their own network, but rather resell the network of one of the big four. It's an interesting question, though, how much this consolidation is due to regulation versus being a result of a natural monopoly, i.e. high barrier to entry for the type of business.
- arcticbull 4y agoThey also left out a another key point. Trumps renegotiation of NAFTA into USMCA created significant restrictions on importing formula from Canada. > Absurdly, provisions were added to the United States‐ Mexico‐ Canada Agreement (USMCA) to restrict imports of formula from Canada, supposedly because China was investing in a baby food plant in Ontario, and this new production might eventually enter the U.S. market (heaven forbid!). [1] [1] https://www.cato.org/blog/rock-bye-trade-restrictions-baby-formula https://www.cato.org/blog/rock-bye-trade-restrictions-baby-f...
- IG_Semmelweiss 4y agoThey did not left the point out. It is at the end of the 4th paragraph >>>>>"(Note to my MAGA readers: Trump's renegotiation of NAFTA helped make these products worse in an effort to "protect" American formula producers from Canadian producers"
- arcticbull 4y agoOh I’m sorry I must have missed that. Thanks for pointing it out.
- ngcc_hk 4y agoReally want a chinese infant formula… you guys are not joking.
- arcticbull 4y agoWhat an absurd statement. It's a factory in Ontario with a foreign investor, subject to Canadian CFIA oversight. Literally everything you rely on to live your life is made in China, this is a very strange place to draw the line as children are dying.
- lr4444lr 4y agoWhy don't we stockpile it, though, like other critical items like petroleum and medicines, for temporary shorateg relief? Surely that's a government failure.
- Manuel_D 4y agoIt's easy to see in hindsight that a certain item should have been stockpiled in anticipation of a shortage. What's hard is predicting what's going to be a shortage years into the future. Petroleum is an easy choice since energy is almost always in demand.
- elcritch 4y agoAnd then there's cases where there was good foresight in stockpiling certain essentials in some wiser countries, but then they go and decide to stop stockpiling. The craziness! ;) (see https://www.bbc.com/news/world-europe-50402048 https://www.bbc.com/news/world-europe-50402048 https://www.economist.com/europe/2019/11/21/defending-switzerlands-coffee-stockpile https://www.economist.com/europe/2019/11/21/defending-switze...)
- yen223 4y agoWhat are we going to be short of in 5 years' time, that we should start stockpiling now?
- chiefalchemist 4y ago> it's a lack of urgency from the government and private sector to make sure a medically critical product is available. Yes and no. But mostly no. It's that we're optimized for the best case scenario. We're in love with theory, of economies of scale and a world with no pot holes (so to speak). That's profitable. But it's also ridiculous and stupid. If Abbot being compromised can lead to this then that smells like a monopoly. Or at least a bad case of cronie capitalism. Three companies is not a rant. It's The Root Problem.
- sigstoat 4y ago> If Abbot being compromised can lead to this then that smells like a monopoly. where "Abbot" means "one facility". what are you going to do, break up the one facility?
- chiefalchemist 4y agoSo you believe the status quo is the best possible answer? You're suggesting we opperate a mission critical application without a disaster plan. We all know that's foolish.
- refurb 4y agoHad they acted as if it was an emergency, they would have mobilized all available resources to clean and disinfect the facility, replace the faulty milk drying equipment, and get the facility back up and running. But why wasn’t it a priority for Abbott? They don’t care about sales or making money?
- skywal_l 4y agoThey spent a lot of money on stock buybacks [0]. Maintaining production capacity was not a priority. Never forget what Milton Freedman said, the first priority of a company is to increase profits for its shareholders. With the recent evolution of finance, that priority term is getting shorter. The value must be brought for the next quarter. What happens 6 months from now is becoming less and less relevant. [0] https://www.abbott.com/corpnewsroom/strategy-and-strength/abbott-announces-share-repurchase-program.html https://www.abbott.com/corpnewsroom/strategy-and-strength/ab...
- refurb 4y agoThat makes zero sense. They either had a profitable product line or not. If it was profitable, they had every incentive to fix the problem. Stock buybacks don't change any of that - in fact, they need profit to actually do buybacks. And not thinking long term? I mean Abbott has been making formula for decades? You're telling me their CFO is like "meh, who care if that multi-billion dollar business goes under in 6 months"?
- apatters 4y agoThe issue is absolutely bad government policy. The Reason article isn't very good but its premise is correct. I'm surprised to find myself saying this, but Truthout wrote a much better investigative piece almost a month ago: https://truthout.org/articles/company-responsible-for-tainted-baby-formula-has-monopoly-over-aid-program-sales/ https://truthout.org/articles/company-responsible-for-tainte... This is why government policy is at fault: - Around two thirds of all infant formula is purchased through a single government program - The government requires that there only be a single supplier of formula for this program in each state - Through the natural tendencies of capitalism this has led to consolidation where one provider, Abbott, enjoys government-mandated monopolies in 34 states and a controlling share of the formula produced in the US - Through the natural tendencies of monopolies which are unchallenged by competition, they sought to maximize margins above all else, concentrated their production and poisoned their own product, leading to the production shutdown and the shortage. The government screwed up. Rather than blaming the problem on hoarding moms, Vladimir Putin or whatever next week's appallingly self-serving disinformation will be, they should amend the law which maintains a monopoly in the formula market. If the industry was not so consolidated by the government's addiction to picking winners, Abbott's screwup would have been more disastrous for Abbott and less disastrous for moms.
- deepsquirrelnet 4y agoWell it’s not like they were compliant with regulations anyway. The only reason they got pinned here is that they killed multiple babies too quickly from their negligence. https://www.foodsafetynews.com/2022/04/former-employee-blows-whistle-on-baby-formula-production-plant-tied-to-outbreak/ https://www.foodsafetynews.com/2022/04/former-employee-blows...
- cplusplusfellow 4y agoIt’s worth noting that Abbot claims to have sequenced the bacteria and disputes the claim that their facility caused the infant deaths.