Baby-Formula Shortage Hits Aid-Dependent Families, Prompting Revamps

U.S. baby-formula makers and lawmakers are working to resolve a formula crisis that has deepened in recent weeks. A February recall of Similac powdered infant formulas left grocery shelves largely bare in many states where that brand was dominant. Other manufacturers, such as Enfamil supplier

Reckitt Benckiser Group

RBGLY -0.95%

PLC, haven’t been able to make up the difference after Similac’s owner,

Abbott Laboratories,

ABT -1.57%

paused production at the factory that made the recalled formula.

President Biden said Wednesday that he is requiring suppliers to send ingredients to infant-formula makers before other customers, invoking the Defense Production Act. The White House also directed government agencies to use Department of Defense commercial aircraft to pick up from overseas infant formula that meets U.S. standards.

Government officials have said the shortage is especially acute for families who rely on subsidies from the government’s WIC program, which provides food and health assistance. Under WIC, which is federally funded but administered by the states, each state contracts with a single infant formula manufacturer to supply the program at a discount, and WIC recipients aren’t able to switch to a different brand if the state-contracted provider’s brand is sold out.

Michelle Richter, 35, receives WIC baby-formula vouchers for her 9-month-old son. In Nebraska, where she lives, she said she hasn’t been able to find formula at WIC-approved retailers even after the program added more brands and sizes.

As a result, Ms. Richter said, she has had to shop online for formula with her own money. Over the past month, Ms. Richter said, she ordered three cans of Enfamil formula for about $150 total from

Amazon.com Inc.

“My mother has been helping a lot,” Ms. Richter said. “My boss actually gave me money to buy a can. I’ve had help here and there.”

About 21% of powdered baby formula was out of stock in U.S. stores as of early May, according to research firm IRI. More retailers, including Giant Eagle Inc. and Stop & Shop Supermarket LLC, are introducing purchase limits on formula, joining bigger chains such as

Kroger Co.

and

Walgreens Boots Alliance Inc.

Supporting about half of the nation’s infants, WIC is the largest buyer of infant formula in the U.S., making up more than half of annual formula sales, according to the U.S. Department of Agriculture, which oversees the program. Of the $6 billion total program, roughly $1 billion is typically used on infant formula after rebates, according to market research and USDA data.

“Over the last several months, the federal government has worked round the clock to address the production shortfall brought about by the recall…and offer maximum flexibility, information, and support to WIC participants,” USDA officials said in a statement.

In response to the shortage, the USDA began working with states in February to allow WIC recipients to purchase alternative formulas, such as store brands, as well as different sizes or varieties that aren’t normally covered by WIC.

But the USDA said last week that not all states have enacted all of the waivers, which expire in August. The Biden administration last week called on the remaining states to adopt these changes and offered technical assistance to states’ WIC offices.

Abbott has contracts for supplying WIC in 34 states, all of which have adopted the waivers, according to the USDA.

Lawmakers are proposing longer-term changes to the program that would require manufacturers that win state WIC contracts to provide backup plans in the event of a recall, aimed at preventing future shortages.

Lawmakers in the House of Representatives and Senate are introducing bipartisan bills this week that would require WIC-approved manufacturers to specify in their contracts how they would protect against future supply disruptions. The bills would also give the USDA expanded, permanent authority to offer flexibility on which products WIC recipients can buy in a crisis.

Historically, the system has created a greater reliance on WIC-approved formula manufacturers by requiring states to contract a single supplier, thus giving the winning company a majority of market share. The program requires retailers to stock more of WIC-approved brands, which leads to greater sales among non-WIC consumers, too.

The arrangement saves states money by incorporating volume discounts. In fiscal 2021, the rebates totaled $1.6 billion, the USDA said. But it leaves the system at risk of a meltdown if one of the few suppliers with these contracts can’t meet demand, lawmakers said.

Erin Harris, nutrition supervisor at Missouri’s Columbia and Boone County program for WIC, said Missouri switched to Abbott as its sole WIC provider from Reckitt Benckiser last year following a contract bidding process.

In response to the recall, Missouri in late February added larger sizes and other brands including Enfamil, Gerber and Parent’s Choice for WIC users, Ms. Harris said, adding that there have been also discussions to include nongrocery retailers such as pharmacies and dollar stores to the program.

“It has helped alleviate some of the crunch,” Ms. Harris said.

In Tennessee, Macie McGill, a WIC recipient, said she has been budgeting around formula for her 7-month-old infant as she pays for extra gas to drive around to secure formula. She said it got easier when WIC approved more products, and said it would have helped if she had learned about the flexibility around sizes sooner.

“I’m scared I’m buying formula with my money,” she said. Her friends and family have been looking for formula on her behalf, Ms. McGill said, and she has enough to last through June, when she plans to start looking for more.

WIC staff in Missouri have been monitoring formula availability on Facebook groups and other online resources, so that families don’t need to drive farther and spend additional money on gas, Ms. Harris said. In Wisconsin, WIC nutritionists are sharing information on which stores have stock and are calling retailers to find products for families, said Camila Martin, pediatric dietitian at UW Health in Madison, Wis.

Liliana Cardona said she is buying whatever formula she can find near her home in Waterbury, Conn., sometimes purchasing products at stores like

Rite

Aid not covered by her WIC benefits. She said she has spent about $150 of her own money in one month on formula and is sometimes letting her monthly benefits expire unused.

She said that it has been nerve-racking trying different formulas with her 4-month-old son, and that the shortages have prompted her to try to reproduce breast milk again.

“I’m excited for him to be 6 months [old], so he can start eating solids,” Ms. Cardona said.

Write to Annie Gasparro at [email protected] and Jaewon Kang at [email protected]

U.S. baby-formula makers and lawmakers are working to resolve a formula crisis that has deepened in recent weeks. A February recall of Similac powdered infant formulas left grocery shelves largely bare in many states where that brand was dominant. Other manufacturers, such as Enfamil supplier

Reckitt Benckiser Group

RBGLY -0.95%

PLC, haven’t been able to make up the difference after Similac’s owner,

Abbott Laboratories,

ABT -1.57%

paused production at the factory that made the recalled formula.

President Biden said Wednesday that he is requiring suppliers to send ingredients to infant-formula makers before other customers, invoking the Defense Production Act. The White House also directed government agencies to use Department of Defense commercial aircraft to pick up from overseas infant formula that meets U.S. standards.

Government officials have said the shortage is especially acute for families who rely on subsidies from the government’s WIC program, which provides food and health assistance. Under WIC, which is federally funded but administered by the states, each state contracts with a single infant formula manufacturer to supply the program at a discount, and WIC recipients aren’t able to switch to a different brand if the state-contracted provider’s brand is sold out.

Michelle Richter, 35, receives WIC baby-formula vouchers for her 9-month-old son. In Nebraska, where she lives, she said she hasn’t been able to find formula at WIC-approved retailers even after the program added more brands and sizes.

As a result, Ms. Richter said, she has had to shop online for formula with her own money. Over the past month, Ms. Richter said, she ordered three cans of Enfamil formula for about $150 total from

Amazon.com Inc.

“My mother has been helping a lot,” Ms. Richter said. “My boss actually gave me money to buy a can. I’ve had help here and there.”

About 21% of powdered baby formula was out of stock in U.S. stores as of early May, according to research firm IRI. More retailers, including Giant Eagle Inc. and Stop & Shop Supermarket LLC, are introducing purchase limits on formula, joining bigger chains such as

Kroger Co.

and

Walgreens Boots Alliance Inc.

Supporting about half of the nation’s infants, WIC is the largest buyer of infant formula in the U.S., making up more than half of annual formula sales, according to the U.S. Department of Agriculture, which oversees the program. Of the $6 billion total program, roughly $1 billion is typically used on infant formula after rebates, according to market research and USDA data.

“Over the last several months, the federal government has worked round the clock to address the production shortfall brought about by the recall…and offer maximum flexibility, information, and support to WIC participants,” USDA officials said in a statement.

In response to the shortage, the USDA began working with states in February to allow WIC recipients to purchase alternative formulas, such as store brands, as well as different sizes or varieties that aren’t normally covered by WIC.

But the USDA said last week that not all states have enacted all of the waivers, which expire in August. The Biden administration last week called on the remaining states to adopt these changes and offered technical assistance to states’ WIC offices.

Abbott has contracts for supplying WIC in 34 states, all of which have adopted the waivers, according to the USDA.

Lawmakers are proposing longer-term changes to the program that would require manufacturers that win state WIC contracts to provide backup plans in the event of a recall, aimed at preventing future shortages.

Lawmakers in the House of Representatives and Senate are introducing bipartisan bills this week that would require WIC-approved manufacturers to specify in their contracts how they would protect against future supply disruptions. The bills would also give the USDA expanded, permanent authority to offer flexibility on which products WIC recipients can buy in a crisis.

Historically, the system has created a greater reliance on WIC-approved formula manufacturers by requiring states to contract a single supplier, thus giving the winning company a majority of market share. The program requires retailers to stock more of WIC-approved brands, which leads to greater sales among non-WIC consumers, too.

The arrangement saves states money by incorporating volume discounts. In fiscal 2021, the rebates totaled $1.6 billion, the USDA said. But it leaves the system at risk of a meltdown if one of the few suppliers with these contracts can’t meet demand, lawmakers said.

Erin Harris, nutrition supervisor at Missouri’s Columbia and Boone County program for WIC, said Missouri switched to Abbott as its sole WIC provider from Reckitt Benckiser last year following a contract bidding process.

In response to the recall, Missouri in late February added larger sizes and other brands including Enfamil, Gerber and Parent’s Choice for WIC users, Ms. Harris said, adding that there have been also discussions to include nongrocery retailers such as pharmacies and dollar stores to the program.

“It has helped alleviate some of the crunch,” Ms. Harris said.

In Tennessee, Macie McGill, a WIC recipient, said she has been budgeting around formula for her 7-month-old infant as she pays for extra gas to drive around to secure formula. She said it got easier when WIC approved more products, and said it would have helped if she had learned about the flexibility around sizes sooner.

“I’m scared I’m buying formula with my money,” she said. Her friends and family have been looking for formula on her behalf, Ms. McGill said, and she has enough to last through June, when she plans to start looking for more.

WIC staff in Missouri have been monitoring formula availability on Facebook groups and other online resources, so that families don’t need to drive farther and spend additional money on gas, Ms. Harris said. In Wisconsin, WIC nutritionists are sharing information on which stores have stock and are calling retailers to find products for families, said Camila Martin, pediatric dietitian at UW Health in Madison, Wis.

Liliana Cardona said she is buying whatever formula she can find near her home in Waterbury, Conn., sometimes purchasing products at stores like

Rite

Aid not covered by her WIC benefits. She said she has spent about $150 of her own money in one month on formula and is sometimes letting her monthly benefits expire unused.

She said that it has been nerve-racking trying different formulas with her 4-month-old son, and that the shortages have prompted her to try to reproduce breast milk again.

“I’m excited for him to be 6 months [old], so he can start eating solids,” Ms. Cardona said.

Write to Annie Gasparro at [email protected] and Jaewon Kang at [email protected]