Minnesota Congresswoman Ilhan Omar On Friday, 25 other House Democrats will be joining the fray called for a federal probe of the nation’s concentrated baby formula industry amid a national shortage that has prompted emergency action from lawmakers and the White House.
“We are writing to urge the Federal Trade Commission (FTC) to work with relevant federal agencies to investigate the U.S. baby formula industry and study any unfair or unsustainable practices, like deceptive marketing, price gouging, and stock buybacks, that may be weakening our nutritional formula supply and ultimately harming our constituents,” states the Democrats’ letter to the agency’s chair, Lina Khan.
43% of all formulas are made by Abbott. Its factory was shut down because it gamed safety tests & skipped repairs to cut costs.
Instead, it has spent $10 Billion on dividends for wealthy shareholders over the past year. pic.twitter.com/07C7pDmhRE
— More Perfect Union (@MorePerfectUS) May 20, 2022
While acknowledging that the ongoing Covid-19 pandemic has caused supply chain issues, the letter also suggests that “the gradual consolidation of the baby formula market may be worsening these disruptions and deficiencies,” highlighting that Abbott Nutrition, Nestlé, Perrigo, and Reckitt Benckiser collectively control about 90% of the U.S. market.
“This type of high market concentration may come at the cost of decreasing market redundancy and flexibility while increasing the risk of sector-wide shortages — even if a single plant ceases manufacturing,” the document notes, referencing Abbott’s recent facility closure and recall.
The lawmakers are also concerned about how the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) could be contributing to “such alarmingly high concentration” in the industry, due to exclusive contracts granted for the program, which boosts formula access for low-income families.
“We must make sure that no corners are being cut on any level when nutritional formula is such a necessity for many Americans,” the letter asserts. “That is why we are requesting that the FTC use its 6(b) authority to conduct a wide-ranging study on the consolidation of the nutritional formula industry.”
As the letter points out:
The FTC should work with other federal partners to provide a report on the economic and health impacts of the formula industry’s fragile supply chain and manufacturing capabilities. It should also examine the business and financial practices of these formula firms that could be contributing in any way to declining affordability, consumer choice, or product quality. Finally, the report should include recommendations to Congress and regulators for improving federal programs and regulatory and enforcement actions to strengthen domestic supply and prevent future shortages.
Khan is expected to respond within the next month, according to the Democrats. Within hours, they called for FTC action. The Guardian reporting on financial documents and whistleblower testimony about how Abbott used recent windfall profits to enrich shareholders even as equipment at a factory that was later shut down in connection with bacterial contamination “was failing and in need of repair.”
Wednesday: President Joe Biden invoked The Defense Production Act was passed to increase the U.S. supply for baby formula launched “Operation Fly Formula,” which is using Defense Department planes to speed up imports.
Biden is also expected to sign Access to Baby Formula Act. This Act was passed by Congress. approved This week. The legislation allows The U.S. Department of Agriculture will allow families to continue to buy formula with their WIC benefits.
The House also passedA bill to provide $28million in emergency funding to the U.S. Food and Drug Administration in order to address the shortage of formula and prevent similar events in future, but this measure faces uncertain future in Congress.