THURSDAY, MAY 26 , 2022. THE WASHINGTON POST EZ RE A
Economy & BusinessLEGAL
Teva, Allergan settle
W.Va. opioid case
Teva Pharmaceutical
Industries and AbbVie’s Allergan
unit reached a settlement worth
$161.5 million to resolve claims
the companies fueled an opioid
epidemic in West Virginia, state
Attorney General Patrick
Morrisey said on Wednesday.
The agreement is the largest
state-negotiated settlement in
West Virginia history, and
consists of $134 million in cash
plus the contribution of drugs
used to treat opioid overdoses,
Morrisey said at a news
conference.
West Virginia had accused
Teva and Allergan of deceiving
prescribers about the risks of
opioids when marketing their
drugs for the treatment for
chronic pain. The misleading
marketing led to an increase in
substance abuse and overdose
deaths, according to West
Virginia’s complaint.
The settlement ended a trial
that had been proceeding for two
months in Kanawha County
Circuit Court. The companies did
not admit wrongdoing as part of
the settlement.
The state’s decision to press
forward at trial helped it secure
more money, Morrisey said.
“ We took lot of risk to do the
right thing, and it has paid off
big for West Virginia,” he added.
Teva said it will pay $
million in cash and provide a 10-
year supply of Narcan, a drug
used to stop opioid overdoses,
which the state valued at $
million. Allergan said it will pay
$51.2 million.
West Virginia has been hit
particularly hard by opioid abuse
and overdoses, with more than
three times the national rate of
overdose deaths in 2020,
according to the U.S. Centers forDisease Control and Prevention.
— ReutersPHARMACEUTICALSPfizer to lower prices
for poor countriesPfizer said Wednesday that it
will provide nearly two dozen
products, including its top-
selling coronavirus vaccine and
treatment, at not-for-profit
prices in some of the world’s
poorest countries.
The drugmaker announced
the program at the World
Economic Forum’s annual
gathering in Davos, Switzerland,
and said it was aimed at
improving health equity in 45
lower-income countries. Most of
the countries are in Africa, but
the list also includes Haiti, Syria,
Cambodia and North Korea.
The products, which are
widely available in the U.S. and
the European Union, include 23medicines and vaccines that
treat infectious diseases, some
cancers and rare and
inflammatory conditions.
Company spokeswoman Pam
Eisele said only a small number
of the medicines and vaccines
are currently available in the 45
countries.
New York-based Pfizer will
charge only manufacturing costs
and “minimal” distribution
expenses, Eisele said. It will
comply with any sanctions and
all other applicable laws.
The drugmaker also plans to
provide help with public
education, training for health-
care providers and drug supply
management.
— Associated PressALSO IN BUSINESS
Amazon is opening its first
physical clothing store on
Wednesday, the latest brick-and-
mortar initiative from theworld’s largest online retailer.
Called Amazon Style, the shop is
located in Glendale, Calif., near
Los Angeles. The new wrinkle is
an app that lets shoppers scan
codes on displayed items, which
employees fetch in the right size
or color and then send to a
fitting room or checkout counter.
(Amazon founder Jeff Bezos also
owns The Washington Post.)Orders placed with U.S. factories
for durable goods rose in April,
highlighting firm and sustained
demand for equipment and
merchandise. Bookings for
durable goods — items meant to
last at least three years —
increased 0.4 percent in April
after a downwardly revised 0.
percent advance a month earlier,
Commerce Department figures
showed Wednesday.Home Depot shareholders voted
Tuesday in favor of proposals
calling for an independent racialaudit and a report on the
company’s links to deforestation
in its wood sourcing, adding to
the wave of companies facing
investor pressure on
environmental, social and
governance issues. The racial-
equity resolution calls for
directors to authorize an
independent audit into the
effectiveness of the retailer’s
practices related to stakeholders
who are Black, Indigenous or
people of color, and to minority
communities. The resolution
flagged an incident in which an
employee at one of Home Depot’s
Minneapolis stores was
suspended when he refused to
remove a Black Lives Matter logo
from his uniform.COMING TODAY
8:30 a.m.: Commerce
Department releases first-
quarter gross domestic product.— From news servicesDIGEST○
DOW 32,120.
UP 191.66, 0.6% ○NASDAQ 11,434.
UP 170.29, 1.5% ○S&P 500 3,978.
UP 37.25, 1.0% ○GOLD $1,852.
DOWN $18.90, 1.0% ○CRUDE OIL $110.
UP $0.56, 0.5% ○10-YEAR TREASURY YIELD 2.75%
DOWN 0.13%CURRENCIES
$1=127.28 Y EN, 0.94 EUROSBY ERIC YODERStarting next month, federal
employees and military person-
nel will have a broad new range of
investment options for their re-
tirement savings program.
The Thrift Savings Plan, which
is the federal government’s ver-
sion of a 401(k), said Tuesday that
it will open a long-planned mu-
tual fund “window” on June 1,
providing investors with access
to some 5,000 funds offered by
about 300 mutual fund compa-
nies, and allowing for targeted
investing in stocks, bonds, com-
modities and other markets in
addition to the index-based funds
the TSP itself offers.
The option will come with
eligibility restrictions and fees,
and several financial advisers
who have counseled federal em-
ployees about their TSP accounts
cautioned that the opportunity
should be handled with care.
The June 1 date was an-
nounced at the monthly meeting
of the program’s governing
board, which previously had said
only that the option would be-
come available sometime in June.
The expansion has been in
development for years, since a
law passed in 2009 to authorize
the more broad options for TSP,
which has more than 6.5 million
account holders and some
$740 billion on investment as of
the end of April. It is part of an
upgrade to the TSP’s operating
platform that also adds new on-
line services and security protec-
tions and a mobile app.
“For those of us who have been
along this entire journey, it’s a
really special moment,” acting
board chairman David A. Jones, a
financial industry veteran, said at
the meeting. “We had a vision of
what the TSP should be... it’s
very much in line with what our
hopes were.”
The mutual fund window will
be available only to those with at
least $40,000 in investments be-
cause of the combination of tworestrictions: The initial invest-
ment through the window will
have to be for at least $10,000,
and no new investments can
bring the outside share above a
quarter of an account’s total.
About 2.3 million of the 4.
million current and former feder-
al workers in the TSP have bal-
ances above that threshold, while
that is the case for only about
350,000 of the nearly 2.5 million
current and former military per-
sonnel with accounts.
Also, because the 2009 law
required that users of the mutual
fund window bear its costs, they
will have to pay annual fees
totaling $150 plus a $28.
p er-trade fee.
“We’re not trying to put up a
hurdle, but we’re trying to make
sure people have thought about it
and researched it a little,” TSP
spokeswoman Kim Weaver said.
“We wanted to make sure the
amount that people were moving
through was substantial enough
so that it wouldn’t be substantial-
ly affected by the fees. We also
wanted to make sure that people
who were using it have some
investing experience.”The TSP traditionally has of-
fered only five funds tracking
broad stock and bond indexes
and government securities, plus
funds that mix shares of those
funds in differing ratios depend-
ing on the expected date to begin
withdrawals. Ahead of the up-
coming change, the most signifi-
cant expansion of options had
been increasing the number of
target-date funds from five to 10
in 2020.
Numerous bills have been in-
troduced in Congress over the
years seeking add investment
funds to the TSP focusing on
certain market sectors or exclud-
ing investments in certain types
of companies. On its own initia-
tive, the program had planned to
widen its fund tracking interna-
tional stocks to include markets
of some two dozen more coun-
tries in 2020, but it retreated
after political opposition arose
because that expansion would
have included stocks of Chinese
companies.
That opposition resurfaced
just hours after the TSP made its
announcement Tuesday when
several congressional Republi-cans urged the TSP to cancel or
postpone the mutual fund win-
dow until it “can ensure that no
TSP funds are invested in danger-
ous, non-compliant or opaque
Chinese securities.” The TSP had
no immediate response.
“We are reviewing the letter,”
Weaver said. “I would note that
the TSP’s mutual fund window
will be entirely voluntary and no
TSP participants will be required
to invest through” it.
Weaver said the TSP expects
that after several years, it will
reach a steady state of 2 to
3 percent of account holders in-
vesting in outside funds. “There
will be people who have been
eagerly awaiting this, and there
will be others who will look into it
and decide later,” she said.
“This is going to open it up to a
lot more choices. That’s great,”
said Ian Arrowsmith, managing
partner of Scarborough Capital
Management in Annapolis, Md.
“However, people have to be care-
ful making the right investment
choices for their age, their risk
tolerance and their time horizon
for when they’re going to retire.”
Jim Musgrave, a financial ad-viser with Research Financial
Strategies in Rockville, Md., said
he has seen many federal employ-
ees transfer their TSP account
money into IRAs after retirement
to get a wider range of invest-
ment choices.
“I think it’s very advantageous
for participants to have the op-
tion to go outside of the funds in
the TSP,” he said. “There’s a lot of
people who are more sophisticat-
ed who would love the opportu-
nity to go beyond those funds.”
“The downside is that a lot of
investors chase returns,” he said.
‘They’ll say, ‘This sector did really
well the last six months. I’m
going to put my money there.’
That hot sector is eventually go-
ing to die down and something
else is going to replace it. They’ll
be heavily weighted in a sector
when they should have started to
trim it.”
Eligible investors will have ac-
cess to the window through their
online accounts, which will in-
clude a screening tool allowing
them to select mutual funds
meeting criteria they choose, in-
cluding what the funds invest in
and what fees they charge.Federal retirement program will expand investment options starting June 1
Long-planned ‘window’
will unlock access to
5,000 mutual fundstration plan to deal with what
should have been a foreseeable
event? It wasn’t until mid-May
that the administration took this
seriously and began to act,” Grif-
fith said.
The Biden administration
launched Operation Fly Formula,
using Defense Department planes
to transport up to 1.5 million eight-
ounce bottles of three hypoaller-
genic formulas from Zurich to
Plainfield, Ind. An airlift deliver-
ing 60 tons of formula from Ram-
stein Air Base in Germany arrived
Wednesday at Dulles Internation-
al Airport.
Abbott announced Tuesday that
it had reached an agreement with
the FDA to release limited quanti-
ties of EleCare hypoallergenic spe-
cialty formulas to relieve the short-
age, offering the product free to
children in need. It also said it will
restart production at the Sturgis
facility on June 4 and will prioritize
EleCare, with the product released
to consumers around June 20.
Biden has also directed ingredi-
ent manufacturers to prioritize
providing supplies to formula
companies and has said there
would be a crackdown on pricegouging or unfair sales practices.
It could be fall before store
shelves are fully stocked with Sim-
ilac and other Abbott products.
Some lawmakers and advocates
have expressed frustration that
the FDA appeared flat-footed in
understanding that Abbott’s Stur-
gis recall and facility closure —
one of the country’s largest manu-
facturers of formula and the big-
gest one to serve low-income fami-
lies — would result in a national
shortage that continues to endan-
ger lives.
The Agriculture Department’s
supplemental nutrition program
for low-income mothers and chil-
dren purchases half of the infant
formula in the United States.
The FDA should have been ask-
ing how its actions might impact
supply, said Jerry Mande, a senior
USDA official during the Obama
administration.
“Formula must be safe, abso-
lutely,” he said. “But this is a com-
plex issue, not only for infants, but
for others who rely on specialty
formula products, where shutting
off supply could cause deaths, too.
You must carefully balance both
and the steps you’re going to take.”Calamari apologized for the for-
mula shortage but defended his
company’s practices. He said the
company has always moved quick-
ly to address any problems, or “ob-
servations,” flagged by the FDA.
“We have a decade of reviews
and inspections at the Sturgis fa-
cility, and in 2019 when there was
an observation, we quickly ad-
dressed it,” he said. “And in 2021,
we took action to address those
observations. We value our rela-
tionship with our regulators; we
have a safety-first [position] and
have prioritized compliance.”
The issues have come to the
surface in the wake of a formula
crisis that has left many parents
scrambling to feed their infants
and medically fragile children.
In October, a whistleblower
submitted a scathing report alleg-
ing unsanitary conditions at the
Sturgis plant, but senior staff at
the FDA did not respond for four
months.
At the hearing, Califf acknowl-
edged that the process took too
long and that “some decisions in
retrospect were not optimal.” He
said senior officials were not
aware of the whistleblower reportuntil Feb. 9 or 10. In his written
testimony, Califf said the delay in
inspecting the Abbott plant was
the result of a coronavirus out-
break at the facility and that the
lag in senior agency officials re-
ceiving the whistleblower’s report
was a “failure in FDA’s mailroom.”
Frank Yiannas, the agency’s top
food safety officer, confirmed at
the hearing that he didn’t receive
the report until “around Feb. 10 or
thereabouts.”
“I’m not sure why the report
wasn’t shared with me. There’s
going to be a review and we’re
going to try to get to the bottom of
it,” he said.
The FDA eventually mounted an
inspection of the Sturgis plant on
Jan. 31 in response to reports that
four infants were sickened or died
after consuming formula pro-
duced at the plant — but not for
three months after the reports sur-
faced. The inspection turned up
allegedly unsanitary conditions.
But nearly four months later, the
facility remains shuttered, leaving
supplies severely constricted.
Califf said the agency had “no
choice” but to shut down the plant,
saying the problems his agencyfound there were “beyond the
pale.”
Califf said he had tapped Steven
Solomon, director of the FDA’s
Center for Veterinary Medicine, to
oversee the investigation of what
went wrong in the handling of the
Abbott facility — not, as he sug-
gested in a hearing last week, Ja-
net Woodcock, the FDA’s principal
deputy commissioner.
Rep. Billy Long (R-Mo.) asked
the commissioner to rate the agen-
cy’s response on a scale of 1 to 10.
“Because of the outcome, I’d
give it at best a 4 or 5,” Califf said. “I
knew before coming in that food
needs to be brought back at the
FDA; it’s a major issue.”
Rep. Diana DeGette (D-Colo.)
said that while “Abbott is not
blameless, one company is not re-
sponsible for the situation and
there is much more to learn about
the agency’s actions.”
Rep. H. Morgan Griffith (R-Va.)
spread the blame more broadly,
saying that President Biden had
flippantly told reporters that the
administration might have done
better if it had been “better mind
readers.”
“Where was the Biden adminis-BY LAURA REILEYLawmakers on Capitol Hill
hammered officials at the Food
and Drug Administration and an
executive of Abbott Nutrition on
Wednesday over wide-ranging
failures that they said contributed
to the nationwide baby formula
shortage, demanding aggressive
measures to increase trust in the
food supply and prevent another
formula crisis.
At a hearing, members of the
House Energy and Commerce
committee reserved particular
criticism for the FDA, which they
said has allowed long-standing
structural flaws to fester. The food
safety part of the agency, accord-
ing to experts, has been chronical-
ly understaffed and underfunded.
Those problems, critics say, have
been exacerbated by poor commu-
nication between its centers. More
broadly, experts say, the agency
has prioritized the drug and medi-
cine side, frequently drawing lead-
ers with medical backgrounds and
not food industry knowledge.
“I’m pretty furious about the
FDA’s lack of food safety leader-
ship, communication and action,”
said Rep. Janice D. Schakowsky
(D-Ill). “Food safety for decades
has been a real problem.”
But committee members also
sought answers from Christopher
Calamari, president of Nutrition
North America for Abbott, about
unsanitary conditions at a plant in
Sturgis, Mich. FDA inspections
turned up evidence of workers han-
dling materials without washing
hands, and pitting in dryers that
could harbor bacteria. The short-
age largely stems from a February
recall and shutdown of the factory,
which produced most of the coun-
try’s supply of powdered Similac
and some specialty formulas.
Lawmakers blast FDA, Abbott over baby formula shortage
JOSE LUIS MAGANA/ASSOCIATED PRESS
Workers at Dulles International Airport unload a 60-ton shipment of baby formula
that arrived from Ramstein Air Base in Germany on Wednesday.House panel focuses
on food safety leadership
and problems at plantSARAH SILBIGER/BLOOMBERG NEWS
Christopher Calamari, president of Nutrition North America for Abbott, said the
company has always moved quickly to address issues flagged by federal regulators.