A massive recall is getting most of the blame for a US baby formula shortage, but experts have said that these products have long been vulnerable to this type of crisis due to decades-old policies that have allowed a handful of companies to corner the market.
Those government rules — aimed at assuring safe, affordable formula — are getting renewed scrutiny as US President Joe Biden’s administration rushes to import formula from Europe.
“There’s perfectly good and safe baby formula available around the world. We just don’t have access to it,” said Bindiya Vakil, CEO of Resilinc, a supply chain analytics firm. “We’ve created this problem by not setting up an infrastructure for imports.”
Illustration: Mountain People
Abbott Nutrition said on Tuesday that it expects to restart its shuttered Michigan plant on Saturday next week and begin shipping new formula to stores about three weeks later. The factory is the largest of its kind in the US and has been closed since February after an inspection found sanitation problems and its products were recalled.
The circumstances hobbled supplies of popular formulas and specialty formulas for children with rare medical conditions. The company said it received permission from regulators to release 300,000 cans of its EleCare specialty formula for babies with allergic and digestive disorders. The product was not part of the recall.
Lawmakers are holding three hearings on the issue this week, calling on company executives, government regulators and outside experts to testify. The attention could spur changes to government safety and contracting rules that have been in place since the 1980s and favor large US manufacturers that are capable of navigating the complex requirements.
Baby formula is one of the few US products essentially unaffected by globalization, with 98 percent of the supply manufactured domestically. Four companies account for about 90 percent of the market: Abbott, Reckitt, Nestle and Perrigo. That consolidation mirrors similar trends across the food industry.
However, infant formula was not part of a Biden administration initiative last year spotlighting dangerously concentrated industries, including prescription drugs, airlines, hearing aids and Internet services.
The US Federal Trade Commission said on Tuesday that it has launched an inquiry into the formula shortage, seeking information on any deceptive or fraudulent business practices related to it. The agency said it also aims to shed light on what led to the concentration in the baby formula market and the weak supply chains.
Food experts have said that strict formula regulations set by the US Food and Drug Administration (FDA) have limited the competition for decades.
Beginning in 1980, The US Congress gave the FDA authority to rigorously enforce the nutritional content of all formula sold in the nation, imposing extra research and manufacturing standards that have few equivalents worldwide.
The changes came after some babies were sickened by deficient formulas in the 1970s.
“They are pretty much the strictest food safety guidelines in the US, and America has some of the strictest guidelines in the world,” Georgia Institute of Technology food safety expert Wendy White said.
Companies must consult with the FDA before selling a new formula, altering ingredients in an existing one or making major manufacturing changes. The result is that only the largest manufacturers have plants and procedures that comply with federal rules, and would-be competitors have little incentive to enter the field, given the US’ declining birth rate.
“You have to have a lot of expertise, a lot of resources and a lot of research dollars,” White said.
There are other hurdles for foreign manufacturers looking to compete. The US has long imposed tariffs and quotas on dairy imports from abroad, including Canada, to shield US milk producers from competition.
Responding to political pressure, the Biden administration has begun airlifting shipments of formula from Europe. In a related move, the FDA on Tuesday said it would allow the importation of 2 million cans of Kendal Nutricare formula from the UK to boost supplies. The products are expected to begin arriving in US stores early next month.
The most significant driver of the US market, by far, is a massive federal nutrition program that provides formula and other foods to low-income women and children. The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) program accounts for more than 50 percent of the US market, providing formula for more than 1.2 million babies, said the National WIC Association, which represents state and local administrators who run the benefit.
US federal law since 1989 has required states to award contracts to a single formula company, based on whichever one can offer the best discounts.
The effect is that contract winners quickly squeeze out much of the competition on store shelves. Today, all 50 WIC contracts are held by three companies — Abbott, Reckitt and Nestle, with Abbot leading with 34 state contracts, the association said.
The competitive effects of these sole-source contracts have been researched for years. A 2011 study by the US Department of Agriculture found that whichever company wins a state’s WIC contract typically experiences an average market share growth of 74 percent, as WIC recipients switch to their brand.
However, not everyone supports overhauling the system. National WIC Association senior director of public policy Brian Dittmeier said that eliminating sole-source contracts would jeopardize the savings that allow the plan to serve so many Americans.
Manufacturers should instead be held accountable for not investing in their own capacity, he said.
“This is a manufacturing failure,” Dittmeier said. “The fact is, there just is not enough product to fulfill the demand that manufacturers have drummed up over the years.”
His group supports calls by some lawmakers for a federal antitrust investigation into the industry.
WIC contracts are generally presented for new bidding every four years, and market share swings back and forth between a handful of players who compete.
University of Texas at Austin pediatrician Steven Abrams said that Congress should re-evaluate the WIC program.
“We need to take a comprehensive look at where the failures happened and where we can fix them,” Abrams said. “We need to consider whether we really want to have a situation where there’s that much dominance in the program.”
Why is Chinese President Xi Jinping (習近平) not a “happy camper” these days regarding Taiwan? Taiwanese have not become more “CCP friendly” in response to the Chinese Communist Party’s (CCP) use of spies and graft by the United Front Work Department, intimidation conducted by the People’s Liberation Army (PLA) and the Armed Police/Coast Guard, and endless subversive political warfare measures, including cyber-attacks, economic coercion, and diplomatic isolation. The percentage of Taiwanese that prefer the status quo or prefer moving towards independence continues to rise — 76 percent as of December last year. According to National Chengchi University (NCCU) polling, the Taiwanese
US President Donald Trump is systematically dismantling the network of multilateral institutions, organizations and agreements that have helped prevent a third world war for more than 70 years. Yet many governments are twisting themselves into knots trying to downplay his actions, insisting that things are not as they seem and that even if they are, confronting the menace in the White House simply is not an option. Disagreement must be carefully disguised to avoid provoking his wrath. For the British political establishment, the convenient excuse is the need to preserve the UK’s “special relationship” with the US. Following their White House
It would be absurd to claim to see a silver lining behind every US President Donald Trump cloud. Those clouds are too many, too dark and too dangerous. All the same, viewed from a domestic political perspective, there is a clear emerging UK upside to Trump’s efforts at crashing the post-Cold War order. It might even get a boost from Thursday’s Washington visit by British Prime Minister Keir Starmer. In July last year, when Starmer became prime minister, the Labour Party was rigidly on the defensive about Europe. Brexit was seen as an electorally unstable issue for a party whose priority
After the coup in Burma in 2021, the country’s decades-long armed conflict escalated into a full-scale war. On one side was the Burmese army; large, well-equipped, and funded by China, supported with weapons, including airplanes and helicopters from China and Russia. On the other side were the pro-democracy forces, composed of countless small ethnic resistance armies. The military junta cut off electricity, phone and cell service, and the Internet in most of the country, leaving resistance forces isolated from the outside world and making it difficult for the various armies to coordinate with one another. Despite being severely outnumbered and
RSS