Empty formula shelves (Samuel Corum/Getty Images)
A dystopian formula for success… As US parents scramble to feed their kids amid an ongoing baby formula shortage, British health giant Reckitt is raking in cash. Lysol-maker Reckitt and three other companies — Abbott, Nestlé, and Perrigo — produce 90% of US baby formula. Similac-maker Abbott (which also makes Covid tests) halted some formula production in February due to contamination, exacerbating supply shortages.
Food for thought… To ensure all US babies get enough nutrition, the formula biz is heavily regulated. But the federal program that subsidizes baby food — called Women, Infants, and Children (WIC) — limits competition in the industry. That may have worsened the shortage.
Emergency responses could create permanent changes… Biden temporarily invoked the Defense Production Act (DPA) to boost domestic formula production. The FDA also lifted limits on formula imports, temporarily allowing more foreign-made formula into the US. But some analysts expect the shortage to lead to reform of restrictive WIC rules, which could create more US formula competition — and shrink the big formula four's market share.