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The ongoing shortage of baby formula is pulling back the curtain on the how government policies have led to certain manufacturers dominating the market, the harm from a slow-moving Food and Drug Administration (FDA), and federal regulations that stymy competition.
Case in point, Abbott had a 40 percent market share before it shut down months ago after a dangerous bacteria outbreak.
Abbott shut down its Michigan plant because of the outbreak, which resulted in the death of two infants and the recall of most of its products.
But Abbott’s fate and the formula supply crisis is linked not only to disease but also the federal government’s policy to force states to pick one baby formula supplier. And the FDA is not exactly pro-active in allowing the free market to thrive, according to Yahoo Finance:
Since 1989, federal law narrowed competition by requiring each U.S. state to choose a single company to supply formulas available to low-income families under the Special Supplemental Nutrition Program for Women, Infants, and Children, known as WIC. The program provides food for about half of all U.S.-born infants, and today has only three market participants, Abbott, Reckitt and Nestle.
In an interview with Yahoo Finance ahead of Wednesday’s [congressional] hearing, Rep. Cathy McMorris Rodgers (R-WA) expressed concern about consolidation and FDA “red tape” limiting new manufacturers from coming to 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 put the FDA on a deadline to respond to requests from new manufacturers.
In all, just a handful of manufacturers, including Abbott, control 90 percent of the baby formula supply in the United States, according to Yahoo.
Meanwhile, the Biden administration is addressing the problem by temporarily tweaking federal laws and import restrictions to try to get more product to consumers.
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