Abbott, Reckitt Score First Victory in Baby Formula Trial

Abbott Laboratories and a unit of Reckitt Benckiser Group Plc were cleared by a jury over claims they hid risks their premature-infant formulas can cause a bowel disease that severely sickened a baby boy. It was the companies’ first trial win in litigation over the products.

Jurors in state court in St. Louis reached the verdict Thursday, ending the latest trial of more than 1,000 lawsuits alleging the formulas can cause necrotizing enterocolitis, or NEC, a bowel ailment that has been linked to deaths and brain damage. Other juries earlier this year held the companies liable in separate trials, including a nearly $500 million verdict against Abbott in July in the same St. Louis courthouse.

The jury deliberated for less than a day before rejecting claims that formulas made by Abbott and Reckitt’s Mead Johnson caused NEC in Elizabeth Whitfield’s son. Abbott shares rose about 5% in after-hours trading.

Reckitt’s shares jumped as much as 11.7% on Friday, the biggest increase in 24 years, helping to reverse what had been a 13.6% fall this year at Thursday’s close.

The deluge of suits against Abbott and Reckitt have raised concerns among stock analysts that a series of court losses will weigh down shares. Bloomberg Intelligence analysts Holly Froum and Diana Gomes said in an Oct. 29 note that the companies face as much as $2.5 billion in liability exposure over the litigation. The victory Thursday will provide Abbott and Reckitt with some settlement leverage, although the companies may wait to settle federal cases until motions to bar experts are decided, said Froum.

Investors had not been expecting a win, “which makes the outcome that much more surprising,” said JP Morgan’s Robbie Marcus in a note. The win could decrease the total liability for Abbott by $500 million to $1 billion, said Marcus.

Abbott said the panel’s finding was consistent with years of studies that found its preterm baby formula was safe. The verdict reinforces the idea “there is no reliable scientific evidence” the cow’s milk-based formula causes NEC, Scott Stoffel, an Abbott spokesman, said in an emailed statement.

A spokesperson for UK-based Reckitt said in an email that jurors agreed with arguments that there is a “scientific consensus there is no established causal link between the use of specialized preterm hospital nutrition products and NEC.”

Abbott CEO ‘Hopeful’

Abbott said in July it may have to pull Similac for premature infants off shelves if juries continue to reject the company’s arguments. Abbott Chief Executive Officer Robert Ford has said in the past he’s “hopeful” the product can stay on the market.

The trial, which lasted more than a month, was the first time jurors weighed allegations about both Abbott’s Similac formula and Reckitt’s Enfamil in a single case. The hospital where Whitfield’s son was treated was also named as a defendant.

Whitfield’s son was born prematurely at 28 weeks — weighing little more than two pounds — and was diagnosed with NEC after consuming some of both companies’ formulas while in a St. Louis hospital’s intensive-care unit. The child, now seven years old, has been diagnosed with developmental delays and severe gastrointestinal problems.

In addition to the July verdict against Abbott, an Illinois jury in March awarded $60 million to the family of a baby who developed NEC after being fed Reckitt’s product. The companies have appealed the verdicts.

’40 Years’

Rebecca Fitzpatrick, one of Abbott’s lawyers, told the Whitfield jury that Similac for premature babies has been sold in the US for more than four decades. “After 40 years, that formula hasn’t suddenly become a dangerous product,” she said in her closing argument.

Phyllis Jones, a lawyer for the Reckitt unit, told jurors Whitfield’s son got little more than an ounce of the company’s Enfamil formula and that such a small amount couldn’t have caused NEC.

In addition, the child “had a lot going on” with his health before he was diagnosed with NEC, Jones told the panel. He had to deal with in-utero infections, and tests showed that his family may have been genetically pre-disposed to develop the bowel disease, Jones said. Arguments that Reckitt’s product played a role in his disease “simply fail,” she said.

Attorneys for the Whitfield family argued the companies concealed what they knew about the formulas’ risks while they spent millions of dollars marketing their products at hospital intensive-care units and among doctors who treat such at-risk children.

Abbott and Reckitt have been “putting profits over preemies for decades,” Tim Cronin, one of the family’s lawyers, told the jury. “They are preying on premature babies and their parents.”

The case is KW v. St. Louis Children’s Hospital, 2222-CC-06214, 22nd Judicial Circuit of Missouri (St. Louis).

Top photo: An Abbott Nutrition manufacturing facility in Columbus, Ohio, US, on Sunday, July 28, 2024. Abbott Laboratories is considering pulling infant formula for premature babies off the market, Chief Executive Officer Robert Ford said, amid investor concerns about lawsuits over its safety. Photographer: Bing Guan/Bloomberg.