The baby formula crisis is still here, and the latest data shows an alarming sign that it is getting worse. The in-stock rate for powdered baby formula was 76.5 percent for the week ending June 12, according to research firm IRI. That’s down from 79 percent in early May, when the shortage became a major story. In yet another blow, Abbott Nutrition once again had to halt production at its infamous Michigan plant that produces specialty formula after severe thunderstorms caused flooding in the plant.
The key problem at the heart of this mess remains: The United States does not have enough baby formula supply to meet its needs. We need to open up this market to more competition now — and for years to come.
Three companies dominate the nation’s baby formula market. For decades, the United States has put up barriers that have made it pretty much impossible for foreign or domestic manufacturers to break that stranglehold. The Food and Drug Administration has stringent import rules. On top of that, since 1989, Congress has required every state to strike a deal with one company to be the supplier for the state’s “WIC” (Special Supplemental Nutrition Program for Women, Infants, and Children) that serves low-income families. Since WIC purchases account for about half of all baby formula sales, the company that wins any state’s contract is almost guaranteed to have its products commanding the state’s shelves and sales.
The WIC state monopolies have generated substantial savings over the years, enabling the program to serve millions more babies. But there has been a dangerous side-effect: A heavy reliance on three companies and seven production facilities for most U.S. formula. That’s how we ended up in a situation where one prominent Abbott formula factory shutdown led to mass shortages and babies being hospitalized.
This is a wake-up call. Other rich nations don’t have these crises, largely because they have more competition. The FDA and White House finally acted in May to speed up foreign formula imports. Congress also passed the Access to Baby Formula Act to make it easier to temporarily waive WIC monopolies. But these are short-term fixes. We should not allow a return to the old system in a few months when the emergency (hopefully) ends.
First, we need to keep the imports coming. The FDA claims its heavy-handed import controls are about safety, but formula could come from Europe, Australia and Singapore, which are places that have equally good — if not better — health outcomes for kids.
Second, Congress should seriously consider whether it’s time to ditch WIC state monopolies, which would also require additional funding to WIC, at least for a few years, to ease the transition. At a minimum, Congress could make it easier for companies to compete for WIC contracts by passing the bipartisan WIC Healthy Beginnings Act.
Third, the FDA needs to improve its food safety oversight, especially for domestic baby formula.
There’s blame to go around in this crisis. Abbott’s Michigan factory was not up to standards. The FDA failed to respond to red flags in a timely manner, and the FDA and White House should have intervened sooner. But long-standing problems exacerbated this shortage and must be fixed.