The competitive effects of these sole-source contracts have been researched for years. Abbott is the leader, with 34 state contracts.
Today, all 50 WIC contracts are held by three companies: Abbott, Reckitt and Nestle, according to the association. The effect is that contract winners quickly squeeze out much of the competition on store shelves. market, providing formula for more than 1.2 million babies, according to the National WIC Association, which represents state and local administrators who run the benefit.īeginning in 1989, federal law has required states to award contracts to a single formula company, based on whichever one can offer the biggest discounts. The WIC program accounts for more than 50% of the U.S. market, by far, is a massive federal nutrition program that provides formula and other foods to lower-income women and children.
The products are expected to begin arriving in U.S. In a related move, the FDA said Tuesday it would allow the importation of 2 million cans of Kendal Nutricare formula from the U.K to boost supplies. Responding to political pressure, the Biden administration has begun airlifting shipments of formula from Europe. has long imposed tariffs and quotas on dairy imports from abroad, including Canada, in order to shield American milk producers from competition. There are other hurdles for foreign manufacturers looking to compete. “You have to have a lot of expertise, a lot of resources and a lot of research dollars,” White said. And would-be competitors have little incentive to enter the field, given the declining U.S. The result is only the biggest manufacturers have plants and procedures that comply with federal rules. and America has some of the strictest guidelines in the world,” said Wendy White, a food safety expert at Georgia Tech.Ĭompanies must consult with the FDA before selling a new formula, altering ingredients in an existing one or making major manufacturing changes. “They are pretty much the strictest food safety guidelines in the U.S. The changes came after some babies were sickened by deficient formulas in the 1970s. 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.įood experts say strict formula regulations set by the Food and Drug Administration have long limited competition.īeginning in 1980, Congress gave the FDA authority to rigorously enforce the nutritional content of all formula sold in the U.S., imposing extra research and manufacturing standards that have few equivalents worldwide. The Federal Trade Commission announced Tuesday that it has launched an inquiry into the formula shortage, seeking information on any deceptive or fraudulent business practices related to it. That consolidation mirrors similar trends across the food industry.īut infant formula wasn’t part of a Biden administration initiative last year spotlighting dangerously concentrated industries, including prescription drugs, airlines, hearing aids and internet services. Four companies account for roughly 90% of the market: Abbott, Reckitt, Nestle and Perrigo, according to industry figures. manufacturers that are capable of navigating the complex requirements.īaby formula is one of the few American products essentially unaffected by globalization, with 98% of the supply manufactured domestically. The attention could spur changes to government safety and contracting rules that have been in place since the 1980s and favor big U.S. Lawmakers will hold three hearings on the issue this week, calling on company executives, government regulators and outside experts to testify. The product was not part of a February recall. The company also said it received permission from regulators to release 300,000 cans of its EleCare specialty formula for babies with allergic and digestive disorders.
and has been closed since February, hobbling supplies of popular formulas and specialty formulas for children with rare medical conditions. The factory is the largest of its kind in the U.S. “We’ve created this problem by not setting up an infrastructure for imports.”Ībbott Nutrition said Tuesday it expects to restart its shuttered Michigan plant June 4 and begin shipping new formula to stores about three weeks later. We just don’t have access to it,” said Bindiya Vakil, CEO of Resilinc, a supply chain analytics firm. “There’s perfectly good and safe baby formula available around the world.