Missouri Mother Battles Abbott and Reckitt Over Baby Formula-Linked Illness: What Investors Need to Know
By Brendan Pierson
(Multibagger) - This week, a Missouri mother, alongside her legal team, will make a compelling case to a jury, arguing that Abbott, Reckitt's Mead Johnson, and St. Louis Children's Hospital are accountable for a severe intestinal illness her premature son developed from using the companies' formulas after birth at the hospital.
High-Stakes Trial in St. Louis: A Financial and Health Sector Analysis
The high-profile trial commences with jury selection on Monday at a Missouri state court in St. Louis. This case is a part of extensive litigation that has already resulted in monumental verdicts: $60 million against Reckitt and $495 million against Abbott. Nearly 1,000 similar lawsuits are pending across the United States.
The Allegations and Their Implications
Plaintiffs claim that feeding cow's milk-based formula to premature infants, particularly those weighing less than approximately 1,500 grams (about three pounds), significantly elevates their risk of developing necrotizing enterocolitis (NEC), a condition with an estimated fatality rate exceeding 20%. They also argue that the companies had a legal duty to warn about this risk but failed to do so.
Both Abbott and Reckitt have dismissed the lawsuit's claims as unfounded, asserting that their products are essential for premature infants' survival.
St. Louis Children's Hospital has not commented on the ongoing litigation.
Potential Market Impact
The substantial verdicts from the two concluded cases have incited concerns among medical professionals who fear losing critical products needed for neonatal care. Abbott and Reckitt are the sole providers of these specialized formulas used in newborn intensive care units. In a recent investor call, Abbott CEO Robert Ford suggested that the litigation might render these products unavailable. Reckitt has also hinted at considering "strategic options" for its formula division.
Financially, these specialized products are not major revenue drivers, generating approximately $9 million for Abbott and less than $1 million for Reckitt annually.
Medical Community's Response
Dr. Jonathan Davis, the chief of newborn medicine at Tufts Children's Hospital in Boston, expressed genuine concern over the potential unavailability of these formulas.
While the advantages of breast milk for premature infants—such as lower NEC rates—are well-documented and integrated into hospital feeding protocols, formula remains indispensable when breast milk is unavailable or insufficient.
Dr. Jill Maron, chief of pediatrics at Women & Infants Hospital in Providence, Rhode Island, emphasized, "I would love if every mother could give me breast milk. They can't. If I don't have access to these products, babies will die."
Legal Arguments and Industry Fear
Tor Hoerman, the attorney representing the plaintiff who secured the $495 million verdict, contends that medical professionals are reacting to a "message of fear" propagated by the manufacturers. Hoerman insists that no one is requesting the removal of these products from the market, but rather, a simple warning label about the risk could suffice.
Plaintiff Elizabeth Whitfield will argue that the companies and the hospital were negligent under Missouri law. She claims her son, born at less than 28 weeks in August 2017, developed NEC the following month due to being fed formula and required surgery to remove part of his intestine. Her son continues to endure severe, permanent injuries.
Scientific and Ethical Considerations
The scientific debate around NEC, breast milk, and formula feeding remains unresolved. A recent U.S. National Institutes of Health report suggests that the absence of human milk, rather than exposure to formula, might increase NEC risk.
Manufacturers argue that a label warning about NEC risk would be unsupported and unnecessary, as doctors are already aware of the research.
Several neonatologists expressed concern that a warning label could mislead parents into believing formula is unsafe, even when it is the best available option.
The NEC Society, a patient-led organization dedicated to combating NEC, acknowledges the necessity of formula in certain situations and does not advocate for litigation as part of its strategy.
Jennifer Canvasser, the NEC Society director who founded the organization after losing her own son to the disease, stated, "What I would love for everyone to focus on is how we increase equitable access to mother's milk and pasteurized donor milk."
Conclusion: Breaking Down the Impact
In simple terms, this trial is about whether companies should have warned that their baby formulas could cause a serious illness in very premature babies. The outcome could affect not just the companies but also how hospitals care for premature infants. If these formulas become unavailable, it could lead to higher risks for these babies when breast milk is not an option. For investors, the trial's outcome could impact Abbott and Reckitt's financial health and strategic decisions moving forward.