‘4 companies have taken over the infant formula market’: Lawmakers and women’s health advocates debate solutions to infant formula shortage
What can be done to prevent shortages of formula, tampons and other consumer products?
The U.S. Senate’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights held a hearing this week to examine the U.S. infant formula market and the broader issue of supply chain issues. ‘supply.
A nationwide shortage of infant formula has forced some desperate parents to drive long hours and scour stores and websites to find formula for their babies. In the seven days ending May 29, 73% of infant formula nationwide was out of stock, according to Datasembly, a retail tracking group. And in some states like California and Georgia, out-of-stock rates were over 90%.
Infant formula is not the only product vulnerable to sudden shortages; many industries are too consolidated and too dependent on a few big players, one expert told the hearing.
“There are dozens, if not hundreds, of industries that would have far more devastating effects than what we’ve seen here,” said Barry Lynn, executive director of the liberal think tank Open Markets Institute in Washington, DC. the Senate hearing on the infant formula supply chain shortage.
One example: More than 95% of generic drug ingredients come from China, and their supply could easily be disrupted by diplomatic issues between the United States and China, Lynn said.
Infant formula stock was already low before Abbott Laboratories, which controls 40% of the infant formula market, closed a Michigan manufacturing plant in February. As such, experts say the baby formula shortage was a storm waiting to happen. For decades, the US infant formula market has been controlled by a few major players.
High tariffs and strict labeling regulations from the US Food and Drug Administration have made it difficult for other players to enter the market, analysts said. In fact, the onerous process to become an infant formula manufacturer in the United States has resulted in only one new manufacturer successfully registering with the FDA in the past 15 years, said Scott Lincicome, director of the general economics and trade at the libertarian think tank Cato Institute. , at the hearing.
“The current concentration of producers and all the problems that result from it are primarily the result of federal government policy, not some kind of natural private market failure,” Lincicome told the hearing.
“I’m really frustrated,” Sen. Cory Booker, a Democrat from New Jersey, said during the hearing. “Four companies have taken control of the formulas market through acquisitions. This leads to a lack of innovation and leads to a lack of resilience and a consolidated market.
Mead Johnson Nutrition (owned by Reckitt RBGPF,
), Perrigo PRGO,
and Nestlé USA NSRGY,
are the four major players in the infant formula market in the United States. The Biden administration on May 18 invoked the Defense Production Act to ramp up production of preparations and import preparations from abroad for additional supply.
Abbot, Mead Johnson Nutrition and Nestlé USA did not immediately respond to a request for comment. A Perrigo spokesperson said the company’s products account for about 8% of the total infant formula market. “The company is doing everything possible to provide as much infant formula to its retail partners during this challenging time,” the spokesperson told MarketWatch. “In the three months ending March 31, 2022, we shipped 37% more formula compared to the same period last year.”
While U.S. businesses and consumers have encountered many shortages due to supply chain disruption during the COVID-19 pandemic, infant formula is different from industries such as semiconductors and automobiles: only 2% of infant formula is imported into the United States.
Customs duties on the range of infant formulas can reach 17.5%.
“Offer, diversity, economic openness [and] low trade barriers really help to have a better and more stable market,” Lincicome said.
At the same time, increased infrastructure support for breastfeeding would help ease the burden of infant formula demand, said Ginger Carney, director of clinical nutrition at St. Jude in Memphis, Tennessee during the Senate hearing.
Carney said breast milk is the optimal choice for infant nutrition, but not all mothers are able to support their babies this way. Many mothers have decided to breastfeed but find it difficult to do so, either due to a lack of educational support or other obstacles, such as returning to work.
“Many mothers can start breastfeeding and then they breastfeed for a few weeks while they have maternity leave,” Carney said. “And I’ve noticed a huge drop once mothers have to go back to work.”
Most employers and workplaces don’t provide mothers with a private, clean place to pump, Carney said, and mothers may feel embarrassed or worried about retaliation if they take breaks during labor to pump. milk. Low-wage mothers can face discrimination, Carney said.
It is also a logistical challenge; Breast milk should be refrigerated and stored in special storage bags or clean, food-grade containers, according to the US Centers for Disease Control and Prevention. Moms who want to express their milk at work and get the milk back to their babies need to have all of this equipment with them, as well as a place to plug in the breast pump and keep the milk cool.
Carney used the example of a new mother working in a fast food restaurant. “What are you going to do if you have to go take a break and say, ‘Oh, look out the window. I have to go pump my milk?’ They just can’t do it. It’s just not accepted as the norm,” Carney said.