U.S. Offers Transport, Logistics Support To Ease Baby Formula Shortage

(Bloomberg) -- White House officials are working to provide government transportation and logistics support to baby formula manufacturers as President Joe Biden seeks to address a shortage that has left shelves empty of the vital products across the nation.

The administration has also contacted suppliers who provide raw materials to formula manufacturers to encourage them to prioritize their production and delivery, according to a White House official who requested anonymity to detail the efforts.

The administration effort came after Biden spoke Thursday with major formula manufacturers and retailers and pledged federal assistance to address the crisis. 

The shortage started with supply chain issues during the pandemic and was exacerbated by a recall stemming from a September complaint, when infant formula made by Abbott Laboratories was first linked to a case of a rare bacterial infection. While the source of infection with the pathogen, called cronobacter, still hasn’t been determined, the lack of formula has mushroomed into a crisis, as Republicans assail Biden over the issue. 

Earlier Monday, Food and Drug Administration Commissioner Robert Califf told CNN that he expected to announce “by the end of the day” new steps to help ease the imports of baby formula.  

Meanwhile, Abbott said last week that it’s flying in formula daily from its Ireland plant and has changed over some factory lines that make its Ensure nutrition drink to produce ready-to-drink infant formula. Additional international sources may be difficult to find, said Scott Lincicome, director of general economics and trade for the Cato Institute, a Washington-based libertarian think tank.

“For the largest international producers, particularly because they probably already have contracts and capacity that’s dedicated to pre-existing sales, it’s going to be difficult for them to just hop to it and sell to the US,” Lincicome said in an interview. 

Trade restrictions on formula imports could pose a hurdle. About 98% of baby formula consumed in the US is made domestically, according to the White House. That’s partly because the FDA has strict rules about how formula is made, from nutritional and vitamin content to labeling.

Tariffs on formula imports pose another obstacle, with most ranging from 7% to 18%. Large shipments can be slapped with even higher levies.

Since Biden’s calls on Thursday, the White House has held conversations with Abbott, Reckitt Benckiser Group Plc, Gerber Products Co. and Perrigo Co. to identify transportation, logistical, and supplier hurdles to increasing production, according to the official. The administration has also spoken to retailers including Target Corp., Amazon.com, and Walmart Inc. to identify regions where supply may be critically low.

The administration announced Thursday that it’s asking more states to relax rules on sizes and types of formulas eligible for government benefits, allowing parents to use subsidies for whatever products are in stock. 

The White House also called on the Federal Trade Commission and state attorneys general to crack down on price gouging for formula products. 

(Adds details starting in fourth paragraph)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.