The key problem at the heart of this mess remains: the United States does not have enough infant formula to meet its needs. We need to open up this market to more competition now – and for years to come.
Three companies dominate domestic infant formula market. For decades, the United States has erected barriers that have made it virtually impossible for foreigners or domestic manufacturers to break this stronghold. The Food and Drug Administration has strict import rules. In addition to that, since 1989, Congress required that each state enter into an agreement with a company to be the provider of the state’s “WIC” (Special Supplemental Nutrition Program for Women, Infants, and Children) that serves low-income families. Since WIC purchases represent approximately half of all infant formula salesthe company that wins a state contract is almost guaranteed that its products will dominate the state’s shelves and sales.
Our View: The FDA Must Be Held Accountable for the Infant Formula Crisis
WIC’s state monopolies have generated substantial savings over the years, allowing the program to serve millions of other babies. But there was a dangerous side effect: a heavy reliance on three companies and seven production facilities for most US formulas. This is how we ended up in a situation where the closure of a major Abbott formula factory led to massive shortages and babies to be hospitalized.
It is an alarm signal. Other rich countries don’t have these crises, largely because they have more competition. The FDA and the White House finally acted in May to expedite imports of foreign formulas. Congress also passed the Infant Formula Access Act to facilitate the temporary lifting of WIC monopolies. But these are short-term solutions. We should not allow a return to the old system in a few months when the emergency (hopefully) ends.
First, we must continue to import. The FDA says its tough import controls relate to safety, but the formula could come from Europe, Australia and Singapore, which are places that have just as good, if not better, health outcomes for children. .
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Second, Congress should seriously consider whether it is time to abandon the WIC state monopolies, which would also require additional WIC funding, 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 enacting the bipartisan WIC Act for a Healthy Start.
Third, the FDA needs to improve its oversight of food safety, especially for domestic infant formula.
There is blame for everyone in this crisis. Abbott’s Michigan plant was not up to standard. The FDA did not respond to the red flags in a timely manner, and the FDA and the White House should have intervened sooner. But long-standing issues have exacerbated this shortage and need to be addressed.