Monday, May 16, 2022

Infant Formula Crisis

The infant formula crisis continues in the United States as covered by Reuters and numerous media outlets. Here's a look at the cities in which supplies are the most depleted from Bloomberg. Consumer safety groups and pediatricians are warning consumers not to try to make products at home. Attention is focused on what the government can do to offer support. Reuters previews: 

The U.S. Food & Drug Administration (FDA) will announce new steps in the coming days regarding importing certain infant formula products from abroad, the White House said, and Biden has asked the Federal Trade Commission (FTC) to probe reports of predatory conduct such as price gouging.

The House will also hold a hearing on the crisis  on May 25.  

The Atlantic Monthly does a deep dive on what is behind the shortage and the role of law and policy. 

FDA regulation of formula is so stringent that most of the stuff that comes out of Europe is illegal to buy here due to technicalities like labeling requirements. Nevertheless, one study found that many European formulas meet the FDA nutritional guidelines—and, in some ways, might even be better than American formula, because the European Union bans certain sugars, such as corn syrup, and requires formulas to have a higher share of lactose. * * * 

U.S. policy also restricts the importation of formula that does meet FDA requirements. At high volumes, the tax on formula imports can exceed 17 percent. And under President Donald Trump, the U.S. entered into a new North American trade agreement that actively discourages formula imports from our largest trading partner, Canada.

America’s formula policy warps the industry in one more way. The Department of Agriculture has a special group called WIC—short for Special Supplemental Nutrition Program for Women, Infants, and Children—that provides a variety of services to pregnant and breastfeeding women and their young children. It is also the largest purchaser of infant formula in the United States, awarding contracts to a small number of approved formula companies.  As a result, the U.S. baby formula industry is minuscule, by design. A 2011 analysis by USDA reported that three companies accounted for practically all U.S. formula sales: Abbott, Mead Johnson, and Gerber.

 

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