Since Abbott Nutrition’s voluntary infant formula recall to address health and safety concerns at its Sturgis, Michigan manufacturing plant, the Biden-Harris Administration has been working around the clock to ensure that safe and nutritious infant formula is available to every family that needs it. In light of the recent crisis and new authority provided through the bipartisan Access to Baby Formula Act, the U.S. Department of Agriculture (USDA) is announcing a series of additional steps it will take to strengthen resiliency in WIC, which covers the cost of infant formula for families with limited means. These actions will ensure that the families who rely on the WIC program have safe and reliable infant formula options even in an emergency. Currently 1.2 million infants receive WIC formula benefits, and more than half of infant formula is purchased by WIC participants.
Specifically, USDA will:
- Help ensure that WIC participants can continue to access formula during times of crisis. USDA will require WIC state agencies to include a provision in future infant formula rebate contracts to include remedies in the event of an infant formula recall, including how an infant formula manufacturer would protect against disruption to program participants in the state.
- Ensure WIC state agencies are prepared for future supply chain disruptions. USDA will work with WIC state agencies to have a disaster plan in place, which would include a plan to distribute infant formula during a supply chain disruption, disaster, or emergency period. In addition, USDA will support WIC state agencies in prioritizing resources and developing a separate plan for the distribution of specialty formula for infants with health conditions. Disaster plan actions might include how WIC agencies will coordinate with health care centers to manage the supply of specialty formula or an integrated plan for WIC retailers to share information about infant formula stock with WIC to support a formula locater.
- Test and launch online shopping for infant formula for WIC participants. WIC participants may not currently use their benefits to purchase infant formula or other food items online. This can make it more challenging for families to find formula if their local stores are not carrying it. USDA will use up to $50 million in American Rescue Plan Act funds to test and launch online shopping in WIC, with planning grants announced last month. USDA will also propose rulemaking to address regulatory barriers to online shopping and to expand the types of stores eligible to participate in the program. Online shopping will give WIC families more options. The Administration proposed to further expand online options in the President’s 2023 Budget.
- Increase transparency and competition in WIC infant formula bids. To procure infant formula rebate contracts, WIC state agencies solicit bids from infant formula manufacturers to provide a rebate for infant formula. To ensure all manufacturers have the information they need to compete for state contracts and to support any new qualified companies in the market, this fall USDA will establish a dedicated webpage for state bid solicitations for infant formula, similar to actions called for by both Republicans and Democrats in Congress.
This announcement builds on numerous actions the Biden-Harris Administration has taken to address infant formula supply chain disruptions:
- Provided regulatory flexibility to enable safe, nutritious infant formula from overseas to be imported more easily to the U.S. market.
- Launched Operation Fly Formula to get imported formula to store shelves faster.
- Invoked the Defense Production Act to ensure domestic formula manufacturers have the ingredients they need to ramp up production.
These efforts have resulted in millions of additional bottle equivalents of infant formula being made available to American families. Cumulative sales of infant formula are up around 4 percent this year adjusting for projected increases in the number of births.
USDA continues to work closely with the Administration, HHS, and FDA to support families through this challenging time and to bring to a swift end to the infant formula shortage with a particular focus on the WIC program. USDA has:
- Worked with Congress to enact the bipartisan Access to Baby Formula Act, which gives the Secretary of Agriculture more tools and flexibilities for WIC to respond to infant formula supply chain disruptions and emergencies.
- Provided flexibility and temporarily increased the federal investment in the WIC program to ensure that participants can purchase a wider variety of formula with their WIC benefits.
Through these efforts, USDA’s Food and Nutrition Service (FNS) has worked to ensure WIC participants and stakeholders have the information they need to keep infants safe and to access formula. Following the Abbott plant closure, the agency immediately provided guidance to WIC state agencies and, within days, offered flexibilities including waivers to help them respond to the impacts of the recall. In the months since, FNS has been providing ongoing assistance and support to help states put those flexibilities to best use and adapt to the rapidly-changing situation, approving nearly 500 waivers.
Since 1989, Congress has required WIC state agencies to operate a cost containment system for infant formula, which states are meeting through a competitive bidding process for formula contracts. Contracts are awarded to the manufacturer offering the highest discount on wholesale prices. This 1989 reform has resulted in billions of annual savings for WIC and allowed the program to provide necessary benefits to serve every eligible infant, child and pregnant, postpartum or breastfeeding women.
This 1989 cost containment reform helped ensure that every WIC-eligible family could access nutritious foods and infant formula they needed, and helped to modestly reduce market-wide concentration. Two companies have dominated the infant formula market since the 1950s, and in 1987, three companies controlled 99 percent of the market—a more concentrated market than today in which four companies control 90 percent of the market. While the current system has allowed the program to serve eligible families in a cost-effective way, today’s reforms are an important step towards building more resilience into the system, to protect the health and safety of American infants.