"When It's Stiff, It Breaks": How Federal Regulations and Market Domination Caused Wisconsin's Infant Formula Shortage (2023)

time to read: 8 Protocol

Wisconsin SurveillanceIt is a non-profit and non-partisan newsroom. Subscribe to our ourInformative reportfor our investigative stories and Friday's news roundup.

Over a weekend in mid-June, Raquel Urbina made seven trips to supermarkets around Milwaukee in search of the hypoallergenic formula she needs to feed her 10-month-old daughter.

He had little time left. Her monthly supplemental nutrition benefits under the state WIC (Women, Infants and Children) program expired within days.

That Sunday, he finally got what looked like a "treasure hunt." She found four cans of Reckitt Mead Johnson's Enfamil Nutramigen formula at a Walmart in Greenfield, Wisconsin, about 10 miles from her home.

The stressful search for baby food has defined the lives of millions of parents and caregivers who depend on feeding their children for months.

"When It's Stiff, It Breaks": How Federal Regulations and Market Domination Caused Wisconsin's Infant Formula Shortage (1)

The formula shortages were due to pandemic-related supply chain issues and two closures of an Abbott Nutrition factory in Sturgis, Michigan, the first amid a crisis.Investigating reports of bacterial infectionsand morerecently due to flooding🇧🇷 Federal guidelines require WIC programs to select a provider to provide the formula, and Abbott is the sole provider in most states.

The shortage affects parents of all backgrounds, but Urbina and others who buy formula through the WIC face particular challenges. Not all retailers accept the WIC, and before trying to find the formula in stores, parents should first make sure what products the state allows them to buy with its benefits.

Limited options on WIC

UnderWisconsin contract with AbbottAs of 2021, WIC participants can typically only spend their benefits on five Abbott-made Similac formulas unless they request a specific medicinal formula.

The Wisconsin Department of Health Services, which administers the WIC, allowed parents to purchase itother formula brands and sizesshortly after Abbott's retirement, but even finding a close replacement has proven difficult.

Some parents have started online communities to help, including theMilwaukee's Formula 1 parentsFacebook group of which Urbina is the administrator. She helps approve posts in the group, where more than 3,000 members share tips, offer extra doses and post pictures of supermarket aisles to alert parents to what's in stock.

More on this topic

The lack of baby food is decreasing. Here's what parents and caregivers in Wisconsin need to know.

The search for concise formulas is worse for rural households in the WIC

Pool activity suggests that Nutramigen is particularly hard to come by. This complicates life for Urbina, who switched brands on her doctor's recommendation after Abbott recalled the doses of Similac Alimentum she was previously using.

But the only state-approved alternatives to Nutramigen are larger containers, not other brands, which Urbina only learned about weeks after the replacement was announced. If I had stayed with the Abbott brand, I would have had more options.

"It was disheartening because as far as I know Similac parents were affected, I was once a Similac parent and had to switch to Nutramigen. And now I'm affected too," Urbina said. "They don't give me options, they don't give me alternatives."

roots of a crisis

How could a factory's troubles affect the national supply of infant formula so badly? The challenges are rooted in market consolidation, WIC officials and experts say.

"If a factory is closed for a few weeks, you shouldn't have the level of supply threat that our parents are facing right now," said Camen Haessig, chair of the WIC Association of Wisconsin and chief of the Wisconsin County Health Department. WIC program.

"When It's Stiff, It Breaks": How Federal Regulations and Market Domination Caused Wisconsin's Infant Formula Shortage (4)
"When It's Stiff, It Breaks": How Federal Regulations and Market Domination Caused Wisconsin's Infant Formula Shortage (5)

States began signing exclusive contracts with formula providers decades ago to secure high reimbursements, a trend that began amid concerns about rising formula costs. Three companies in each state have contracts to supply infant formula through the WIC, which accounts for about half of all infant formula purchases in the state.

Abbott, which did not respond to requests for comment, supplies the formula exclusively to WIC programs in two-thirds of the states. Reckitt Mead Johnson and Gerber serve the other states.

Although there was consolidation in the formula market prior to the contract system, smaller companies struggled to compete.

The fallout from Abbott's default highlights market vulnerabilities and prompts policymakers to consider how to avoid a future downturn.

Exclusive contracts bring savings and risks

Since 1989, the federal government has required states to select a formula provider for WIC or find an alternative way to save on WIC costs. States continue to choose only one provider, limiting options for registrants. They place orders with the manufacturer offering the lowest net price: the wholesale price of the formula minus rebates for each package of standard formula purchased by WIC families.

Discounts allow Wisconsin to serve all eligible registered attendees without a waitlist.

"When It's Stiff, It Breaks": How Federal Regulations and Market Domination Caused Wisconsin's Infant Formula Shortage (6)

"For over 20 years, the WIC has not rejected suitable applicants or placed them on a waiting list for lack of funding."according to the Center for Budget and Policy Priorities, a group of experts with a progressive orientation.

In Wisconsin, nearly 84,000 people attended WIC in April. Nutritional risk, family size, and income level all determine eligibility: A Wisconsin family of two earning up to $33,874 per year may qualify under the latest DHS standards.

In 2021, the Abbott contract saved the state $20.3 million in reimbursements. According to the US Department of Agriculture, annual rebate savings are approximately $1.6 billion nationwide, supporting one in four subscribers each month.

Even manufacturers who offer the most generous discountsbenefit from government contractsthat increase your brand's visibility, reputation and availability, give products more shelf space and even increase sales to parents who are not registered with WIC.

Abbott is offering Wisconsin a range of savings, up to 134% off the wholesale price of Similac Advance powder form, a base formula. The company is also offering discounts of up to 186% on replacement products through August 31st.

But alongside the economic benefits of refunds, the current shortage shows that exclusive deals "posed a lot of challenges," Haessig said.

"When a few companies with highly centralized operations control the overwhelming majority of the nation's infant formula supply, closing a single factory for a few weeks can have catastrophic effects," DHS spokeswoman Elizabeth Goodsitt wrote in response to questions emailed were submitted.

Changing the bidding process could give bidders more options, Goodsitt wrote, but "the financial payout is unknown."

Experts warn that giving up exclusive contracts could increase programming costs and affect the state's ability to serve all beneficiaries.

Splitting up part of the contract or allowing a second company to bid could help diversify the industry, said Steven Abrams, a professor of pediatrics at the University of Texas Dell Medical School in Austin.

"But I think everyone has to be honest, it's going to cost money because companies probably won't offer the same level of reimbursement," Abrams said.

Explore consolidation, prevent future bottlenecks

federal officials haveconcerns expressedabout the lack of competition and supply vulnerabilities in the infant formula industry.

In May, the Federal Trade Commission launched an investigation into issues including the impact of state WIC contracts on the formula market, the experiences of families buying formulas through the WIC, and the impact of mergers and acquisitions.

The FTC said it will evaluate the results of its USDA consultation to consider actions to bolster market resilience.

"When It's Stiff, It Breaks": How Federal Regulations and Market Domination Caused Wisconsin's Infant Formula Shortage (7)

The agency also investigated the formula industry in the early 1990s.the district court ruled in favor of Abbottafter the FTC sued the company, alleging it worked with others to rig the bid for the Puerto Rico contract.two other companiesgave the federal government ÂŁ3.6million formula through a minor claims settlement.

In its new investigation, the FTCrequested public opinionfor a month and by the end of June received just over 300 comments with several suggestions for reviewing bidding practices.

Allowing the WIC to hire more than one company would benefit the program, the Wisconsin WIC Association said. The National WIC Association called for "stronger, more consistent terms" in contracts to ensure manufacturers are prepared for supply issues.

In May, President Joe Biden signed the Baby Formula Access Act, which requires new or renewed WIC contracts to include the manufacturer's contingency plans for recalls, including how a manufacturer would protect babies.

However, this protection does not immediately impact the Wisconsin WIC program, whose contract will not be renewed until 2026.

Goodsitt said DHS is reviewing intermediate steps, such as B. Modifying the contract to include contingency plans.

"If it's rigid, it breaks"

While formula replacements will be available through at least August, proponents hope the WIC will extend flexibility to other foods and services that the federal government has allowed during the pandemic.

The WIC "quickly adjusted" within months to ensure access to the formula during the shortage, the National Association of WIC wrote to the FTC. "This significant change in program services should result in long-term stability."

In addition to infant formula, nutritional services, and health care referrals, WIC provides access to nutritious fruits, vegetables, and other foods. During the pandemic, federal waivers allowed Wisconsin to expand access to food, including milk with any fat content and bread and juice in various sizes.

"When It's Stiff, It Breaks": How Federal Regulations and Market Domination Caused Wisconsin's Infant Formula Shortage (8)

The pandemic has shown that people need the flexibility to access the food they need, said Maureen Fitzgerald, vice president of government relations at Feeding America Eastern Wisconsin.

“WIC is a very prescriptive program. It's great for new moms and babies to get the nutrition they need. But sometimes it's also difficult because you have to have the specific brand and the specific size of that brand," Fitzgerald said. "When it's rigid, it breaks a lot. And that's what happened."

In the event of future emergencies, disasters, and supply chain disruptions, the Baby Formula Access Act allows the USDA to adjust WIC program requirements so long as the changes maintain nutritional quality.

The USDA has extended most pandemic waivers until 90 days after the end of the national public health emergency, which is expected to last beyond mid-July.

The National WIC Association wants flexibility to remain, including the ability to register or re-register by phone or video. At the start of the pandemic, the USDA lifted the “physical presence” requirement for applicants in all states. A bipartisan proposal in Congress to make remote appointments permanent has yet to be heard.

"Having this flexibility was really important for our families to be able to find our WIC items because they are so specific," Haessig said. “We defend and wait for them to spread. There's a lot going on in Congress right now to advocate for these changes."

Available resources during infant formula shortages

The Wisconsin Department of Health has aList of tipsavailable for families with formula shortages. This includes checking smaller stores and pharmacies for formulas. The DHS also warns against diluting the formula to make it last longer.

Camen Haessig, chairman of the Wisconsin WIC Association, said families shouldn't make their own formula or feed babies cow or goat's milk before they're a year old.

"If families have questions about feeding their babies, they should contact their pediatrician or the WIC Clinic," Haessig said. "I just worry and wonder at all the families hearing misinformation that they don't communicate."

WIC also offers breastfeeding support, including peer counselors and access to breast pumps. More information on breastfeeding is availableby DHSit's himAcademy for Breastfeeding Medicine.

The current list of WIC replacements is availablehere.

Find additional information and resources, including information on finding infant formula and accessing breastfeeding support services.here.

The non-profit Wisconsin Watch (www.WisconsinWatch.org) collaborates with WPR, PBS Wisconsin, other media and the School of Journalism and Mass Communication at the University of Wisconsin-Madison. Any work created, published, published or broadcast by Wisconsin Watch does not necessarily reflect the views or opinions of UW-Madison or any of its affiliates.

"When It's Stiff, It Breaks": How Federal Regulations and Market Domination Caused Wisconsin's Infant Formula Shortage (9)

Publish our articles online or in print for free under a Creative Commons license.

  • The spray-painted home in Janesville, Wisconsin depicts the crisis in affordable housing

  • Pregnancy Surveillance: Wisconsin's fetal protection law, one of the toughest in the country, forces women to seek treatment or be arrested

  • Did Donald Trump stop campaigning for gubernatorial candidate Tim Michels in Wisconsin because he believed Michels would win?

  • Wisconsin Judge Jennifer Dorow called a pro-LGBTQ ruling 'the worst legal activism'?

  • Wisconsin law on substance use in pregnancy is wrong, top doctors say

Top Articles
Latest Posts
Article information

Author: Jeremiah Abshire

Last Updated: 03/24/2023

Views: 5773

Rating: 4.3 / 5 (74 voted)

Reviews: 81% of readers found this page helpful

Author information

Name: Jeremiah Abshire

Birthday: 1993-09-14

Address: Apt. 425 92748 Jannie Centers, Port Nikitaville, VT 82110

Phone: +8096210939894

Job: Lead Healthcare Manager

Hobby: Watching movies, Watching movies, Knapping, LARPing, Coffee roasting, Lacemaking, Gaming

Introduction: My name is Jeremiah Abshire, I am a outstanding, kind, clever, hilarious, curious, hilarious, outstanding person who loves writing and wants to share my knowledge and understanding with you.