Grassley, Fischer and Republican colleagues seek answers on foreseeable infant formula shortages, call for GAO study
“We have heard concerns expressed regarding the impact of the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) on the infant formula market, particularly in light of the current supply shortages,” the senators wrote. “The closure of the Abbott manufacturing plant has resulted in predictable shortages of certain infant formula for WIC attendees, but also affects non-WIC infant formula buyers, retailers and grocers.”
“To deal with the high cost of infant formula under the WIC, states had to implement cost containment systems in 1989 under the Child Nutrition Act and WIC Reauthorization. As a result, all states have sole-source contracts with infant formula manufacturers, who then send rebates to the state agency WIC. These rebates have saved the WIC program between $1 billion and $2 billion annually. While these savings have allowed the WIC program to further stretch funding, some stakeholders have expressed concerns about the unintended market consequences of these contracts,” senators continued.
The senators requested a GAO analysis that answers the following questions:
How has the price of infant formula changed for WIC and non-WIC customers after the introduction of sole-source discounts?
How have particular market characteristics such as market concentration, marketing methods, and barriers to entry impacted the size of rebates offered by manufacturers?
How have sole-source contracts and minimum infant formula stocking requirements impacted independent retailers and small retailers?
What legislative or regulatory changes could improve sole-source contracts? What other measures could address infant formula cost containment under the WIC?
Other co-signers of the letter include Sens. John Boozman (R-Ark.), John Cornyn (R-Texas), Shelly Moore Capito (RW.Va.), Susan Collins (R-Maine), Roger Marshall (R-Kan.), Thom Tillis (RN.C .) and James Risch (R-Idaho).