Sun Sentinel Palm Beach Edition
Lawmakers set to review US baby formula policies
Experts: Long-standing rules that favored handful of firms set stage for 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 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 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.
Food experts say strict formula regulations set by the Food and Drug Administration have long limited competition.
Beginning 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 changes came after some babies were sickened by deficient formulas in the 1970s.
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 only the biggest manufacturers have plants and procedures that comply with federal rules. And would-be competitors have little incentive to enter the field, given the declining U.S. birth rate.
There are other hurdles for foreign manufacturers looking to compete. The U.S. has long imposed tariffs and quotas on dairy imports from abroad, including Canada, in order to shield American milk producers from competition.
Responding to political pressure, the Biden administration has begun airlifting shipments of formula from Europe.