MIL-OSI USA: Rep. Cleaver Calls For Action to Secure Infant Formula Supply Chain, Address Market Consolidation in Formula Industry


Source: United States House of Representatives – Congressman Emanuel Cleaver II (5th District Missouri)

(Washington, D.C.) – This week, U.S. Representative Emanuel Cleaver, II (D-MO) called on President Biden to secure infant formula supply chains by addressing the growing consolidation in the formula industry, as market monopolization has led to rising costs and regional shortages. Joined by 38 other lawmakers in a letter to President Biden, Congressman Cleaver urged the White House and relevant federal agencies to use every tool at their disposal to restore competition in the formula industry and increase resiliency to secure this vital supply chain and prevent the potential for future shortages.

In the letter to President Biden, Congressman Cleaver and colleagues wrote:

“Across the country, parents are struggling to find adequate, reliable sources of baby formula. In particular, families with children who require specialty formulas due to allergies or disabilities find it nearly impossible to locate these products,” the members wrote. “The problem is so pronounced that the nationwide out-of-stock rate for baby formula has hit 43% — up from between 2-8% in the first half of 2021—and is continuing to climb. Shortages exacerbated by global supply chain disruptions and inflation have resulted in the average cost of the most popular baby formula brands rising 18% in the last year. Resale prices in the secondary market are often marked up at extraordinary rates, with online sellers on eBay and Craigslist listing products for double or triple their retail prices. Price hikes and supply shortages have left parents at a loss for how to feed their children. In some instances, parents are taking desperate and even dangerous measures, such as rationing supplies or brewing their own baby formula.”

The lawmakers continued:

“Increased supplier concentration in the baby formula market is central to the shortages now facing American families. Just two companies—Abbot and Reckitt—control 80% of domestic baby formula production. This highly concentrated market is incredibly brittle, rendering it unable to absorb supply shocks that a healthy, resilient market can easily weather.”

To address market consolidation in the formula industry, the lawmakers requested that the White House and relevant federal agencies:

  • Use the Defense Production Act (DPA) of 1950 to ramp up production of baby formula, focusing on partnering with smaller regional suppliers to build up their production capacity. President Biden announced last night that he would invoke the DPA to ramp up production of infant formula;
  • Designate baby formula as a scarce product under the Defense Production Act and investigate and prosecute hoarding and price gouging of baby formula under the Act or other relevant laws;
  • Monitor and prosecute reports of “scam formula” flooding the market;
  • Study concentration in the baby formula market, in particular by scrutinizing past mergers, investigating anticompetitive conduct, and looking into vertical market integration that may add to supply chain fragility;
  • Determine whether the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) can make changes to its baby formula procurement program to purchase form a more diverse array of partners and bolster competitors of the largest baby formula producers; and
  • Determine whether, at least in the short term, it is possible to increase production and importation of formula from abroad. President Biden announced last night that he would also begin flying formula from abroad into the United States to increase the supply of formula.

Last night, Congressman Cleaver voted for the Infant Formula Supplemental Appropriations Act, which would provide $28 million in emergency funding to give the FDA the resources needed to remediate the formula shortage and ensure it never occurs again, and the Access to Baby Formula Act, which would provide flexibility so that WIC participants can purchase a wider variety of baby formula that are more readily available.

Joining Rep. Cleaver on the letter to the Biden Administration are Reps. Mary Gay Scanlon (PA-05), Kathy Castor (FL-14), Yvette Clarke (NY-09), Steve Cohen (TN-09), David Cicilline (RI-01), Madeleine Dean (PA-04), Peter DeFazio (OR-04), Val Demings (FL-10), Mark DeSaulnier (CA-11), Dwight Evans (PA-03), John Garamendi (CA-03), Sara Jacobs (CA-53), Pramila Jayapal (WA-07), Hakeem Jeffries (NY-08), Henry C. “Hank” Johnson (GA-04), Ro Khanna (CA-17), Annie Kuster (NH-02), Barbara Lee (CA-13), Teresa Leger Fernandez (NM-03), Zoe Lofgren (CA-19), Kathy Manning (NC-06), Betty McCollum (MN-04), Jerrold Nadler (NY-10), Joe Neguse (CO-02), Marie Newman (IL-03), Eleanor Holmes Norton (DC), Dean Philips (MN-03), Ayanna Pressley (MA-07), Jamie Raskin (MD-08), Lucille Roybal-Allard (CA-40), Brad Sherman (CA-30), Eric Swalwell (CA-15), Rashida Tlaib (MI-13), David Trone (MD-06), Lauren Underwood (IL-14), Bonnie Watson Coleman (NJ-12), Peter Welch (VT), and Nikema Williams (GA-05).

Official text of the letter is available here.

Emanuel Cleaver, II is the U.S. Representative for Missouri’s Fifth Congressional District, which includes Kansas City, Independence, Lee’s Summit, Raytown, Grandview, Sugar Creek, Blue Springs, Grain Valley, Oak Grove, North Kansas City, Gladstone, Claycomo, and all of Ray, Lafayette, and Saline Counties. He is a member of the exclusive House Financial Services Committee; Chairman of the House Subcommittee on Housing, Community Development, and Insurance; member of the Select Committee on the Modernization of Congress; member of the Committee on Homeland Security; and a Senior Whip of the Democratic Caucus. A high-resolution photo of Congressman Cleaver is available here.