The continuing shortage of infant formula pulls back the curtain on how government policies have led some manufacturers to dominate the market, the harms of a slow Food and Drug Administration (FDA), and federal regulations that hamper competition.
For example, Abbott held a 40% market share before shutting down months ago after an outbreak of dangerous bacteria.
Abbott closed its Michigan plant due to the outbreak, which resulted in the deaths of two infants and the recall of most of its products.
But Abbott’s fate and the formula supply crisis are linked not only to the disease, but also to the federal government’s policy of forcing states to choose a formula supplier. And the FDA isn’t exactly proactive in allowing the free market to thrive, according to Yahoo Finance:
Since 1989, federal law has reduced competition by requiring each U.S. state to choose a single company to provide formula for low-income families under the Special Supplemental Nutrition Program for Women, Infants, and Children, known as under the name of WIC. The program provides food for about half of all infants born in the United States and today has only three market participants, Abbott, Reckitt and Nestle.
In an interview with Yahoo Finance before Wednesday [congressional] In the hearing, Rep. Cathy McMorris Rodgers (R-WA) expressed concern about consolidation and FDA “bureaucracy” limiting new manufacturers from entering the market.
“There are companies – other manufacturers that have had to wait years to come to market because of FDA delays,” McMorris Rogers said, explaining that legislation she introduced last week would require the FDA a deadline to respond to requests from new manufacturers.
In total, a handful of manufacturers, including Abbott, control 90% of the formula supply in the United States, according to Yahoo.
Meanwhile, the Biden administration is tackling the problem by temporarily changing federal laws and import restrictions to try to get more products to consumers.
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