Recent Developments
Imports:
The FDA reported (June 22nd) that special imports of infant formula to address current shortages have so far totaled an estimated 17 million cans, or about 365 million full-size, 8-ounce bottles.
The FDA says that these supplies "have already started to hit the U.S. market and more will appear on store shelves over the coming weeks and months."
U.S. Production:
Abbott Nutrition's Sturgis, Michigan facility was apparently forced to close again on June 13th after severe weather caused flooding within some parts of its manufacturing complex. The facility, which closed earlier this year due to consumer safety concerns over its products, had only reopened on June 4th after addressing the FDA's sanitation concerns. The closure of this facility is widely considered to be one the key reasons for current infant formula shortages in the United States. Abbott claims it is "working quickly to assess the damage and will be reporting its progress to the agency in the days ahead."
Oversight
Key Members of Congress sent a letter (Jun 13th) to the Federal Trade Commission (FTC) raising concerns about third party vendors on online platforms like Facebook, eBay, and Amazon regarding exploitative and deceptive practices on sales of infant formula. The letter asks that the FTC emphasize with online marketplaces that they should take actions to protect users from price gougers and scammers.
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WIC Program Flexibility
The Agriculture Department began its implementation (May 25) of WIC program flexibilities enacted within the Access to Baby Formula Act (H.R.7791). The Act provides waiver authority in the Women, Infants, Children (WIC) program that, among other things, will enable a State’s WIC participants to secure infant formula from additional manufacturers outside of those through which the State has a negotiated contract (i.e., States contract with one of three manufacturers -- Gerber, Abbott, and Mead Johnson). The Department estimates that WIC program participants consume 56% of U.S. formula.
The Department says it will provide States with the cost difference of participants using out-of-contract formula of Gerber and Mead Johnson products. The Department says that Abbott is covering the cost difference for its products purchased out-of-contract.
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Federal Trade Commission (FTC) Actions
The FTC announced (May 25) that it has launched an "inquiry" where they will seek public input concerning "the nature and prevalence of any deceptive, fraudulent, or otherwise unfair business practices" including "factors that have led to concentration in the infant formula market and the fragility of the supply chains for these crucial products."
In addition, the Chair of the FTC in a statement said that:
The FTC will investigate and seek to fully enforce the law against anyone who deceives, exploits, or scams formula consumers, including through online “bots” to automatically purchase and then resell formula at exorbitant prices.
The FTC will examine if formula manufacturers and distributors are engaging in any unlawful forms of economic discrimination that may be limiting the availability of formula at certain retailers.
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Congressional Oversight Hearing
A key hearing on the infant formula shortage was held (May 25) within the House of Representatives Energy and Commerce, Oversight and Investigations Subcommittee. You can watch the hearing and read the testimony here.
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Defense Production Act
The Biden Administration announced (May 22) the first two actions using Defense Production Act (DPA) authorities to help enhance baby formula supply in the United States. The President announced (May 18) use of the DPA to require manufacturers to produce products that are consistent with the authorities of the Act; for example, requiring infant formula suppliers to prioritize necessary resources for infant formula manufacturers over other customers.
The two DPA actions:
(1) Abbott Nutrition can receive priority orders of raw materials like sugar and corn syrup for infant formula. The Administration claims that by helping Abbott receive its full allotment of needed raw materials, it will be able to rapidly increase production by one third over where it stands today; and,
(2) Reckitt/Mead-Johnson can receive priority orders of consumables such as single-use products like the filters necessary to generate certain oils needed to produce infant formula. The Administration claims this will help enable Reckitt facilities to operate at maximum capacity.
While there may be some question as to the authorities of current law use of the DPA for baby formula production, these generally will come into play only if a company either does not comply with a DPA request or if it is challenged in court. Neither scenario seems likely at this time. _______________
FDA Powder Formula Recall & Abbott Nutrition
The FDA announced (May 24) that it "is not objecting" to the release of about 300,000 cans of Elecare amino acid-based infant formula produced at Abbott Nutrition’s Sturgis, Michigan facility that was the focus of the FDA recall in February. The FDA says that although some EleCare product was included in Abbott Nutrition’s infant formula recall, those to be released were in different controlled lots, have never been released, and have been maintained in storage under control by Abbott Nutrition. The FDA says that this group will undergo enhanced microbiological testing before release, anyway.
The formula recall at the Sturgis facility began was issued by the FDA on February 17, 2022. The FDA said it received four consumer complaints related to Cronobacter sakazakii or Salmonella Newport in infants who had consumed powder infant formula manufactured in this facility. During facility testing, the FDA said it only found evidence of Cronobacter sakazakii but not Salmonella Newport. No testing of final products found either pathogen. Still, the FDA issued a recall of the powder formula manufactured in the facility. No Abbott liquid formulas, powder formulas, or nutrition products from other facilities were impacted.
Inspectors, in subsequently released results, found numerous problems with sanitary conditions at the facility. CBS news reports (May 11) that the company now says it is improving its facility systems and protocols including water, cleaning, and maintenance procedures, and that it is upgrading to more sanitary floors that are nonporous and easily cleanable.
On May 10th, the FDA announced it had informed Abbott that the agency “has no objection to the company immediately releasing product to individuals needing urgent, life-sustaining supplies of [certain] ...specialty and metabolic formulas" on a case-by-case basis as "the risk of not having certain specialty and metabolic products available could significantly worsen underlying medical conditions and in some cases pose life-threatening risks for infants and individuals who rely on these products.”
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Companies Producing and/or Marketing Products in the United States
Abbott Nutrition (e.g., Similac, PediaSure)
Mead Johnson - a subsidiary of Reckitt (e.g., Enfamil, Enfagrow)
Nestle U.S.A (e.g., Gerber, Cerelac)
Nutricia North America (e.g., Neocate, Anamix)
PBM Nutritionals (e.g., Neosure, Tippy Toes)
Prolacta Bioscience (Prolact products)
Perrigo (e.g., Cotsco/Kirkland)
Other Large Manufacturers Producing or Marketing Products Overseas
Danone (Paris, France)
FrieslandCampina (Amersfoort, Netherlands)
Bellamy’s Organic (Launceston, Australia)
Kraft Heinz (Chicago, USA)
HIPP (Germany)
Arla (Viby, Denmark)
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