US safety, savings rules set stage for baby formula shortage

WASHINGTON — A massive recall is getting most of the blame for the U.S. baby formula shortage, but experts say the products have long been vulnerable to this type of crisis due to decadesold 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 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.”

Federal regulators are expected to soon allow Abbott Nutrition to reopen the Michigan plant that’s been closed since February due to contamination problems. The factory is the largest of its kind in the U.S. and its shutdown — combined with pandemic-related supply chain problems — hobbled supplies of popular formulas and specialty formulas for children with rare medical conditions.

Lawmakers will hold 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 big U.S. manufacturers that are capable of navigating the complex requirements.

Baby formula is one of the few American products essentially unaffected by globalization, with 98% of the supply manufactured domestically. Four companies account for roughly 90% of the market: Abbott, Reckitt, Nestle and Perrigo, according to industry figures. That consolidation mirrors similar trends across the food industry.

But 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.

Food experts say strict formula regulations set by the Food and Drug Administration have long limited competition.