Tag Archive for: FDARegulation

The FDA/WIC Role in the Baby Formula Debacle

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Estimated Reading Time: 3 minutes

There have by now been an acute shortage of infant formula in the United States for months. Despite government claims to the contrary, it is unlikely to end anytime soon.

This turn of events was utterly predictable. Indeed, it was all but inevitable, as the government agencies responsible for providing safe, readily available infant formula have been neglecting their mission for decades.

The U.S. Food and Drug Administration (FDA) is a regulatory agency that exists for the purpose of ensuring the safety and availability of certain products. One of the products for which the FDA is responsible is infant formula.

If infant formula causes harm, both the maker of the formula and the FDA are responsible. However, if infant formula is unavailable, only the FDA is responsible. No private entity has a duty to produce or sell formula.

Along with the FDA, the other relevant agency is the U.S. Department of Agriculture’s (USDA) Food and Nutrition Service (FNS). Their self-described mission is “to increase food security and reduce hunger.”

The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is one of the programs that the FNS administers. WIC was established almost exactly 50 years ago. Its remit is to help children under the age of 5, along with pregnant and nursing mothers, to meet their nutritional needs. Currently, over half of American infants participate in the program.

By the 1990s, pregnant women and mothers who came to WIC for help, advice, and support feeding themselves and their children were often confronted with intrusive, irrelevant questions about their personal lives and medical histories, and relentless pressure to vaccinate themselves and their children. Sometimes, access to food was directly tied to immunization status.

In December of 2000, an Executive Memorandum was issued indicating that immunization status should never be used as a condition of eligibility for WIC services, but that efforts should be focused on “increase immunization levels among children participating in WIC programs.”

Ever since WIC has shamelessly been using its position of power and trust to convince women who come seeking food that what they really need is vaccines. Why, if you go to WIC’s website, is there a “spotlight” on “COVID-19 vaccines for children ages 5 – 11”? No children ages 5 – 11 are served by WIC.

WIC does not seem to have devoted as much attention over the years to providing nutritional support as it did to providing vaccination support, but it did leverage its purchasing power and institutional influence to essentially grant 3 companies an oligopoly on the production of infant formula in the United States.

One of these companies is Abbott Laboratories. A 2011 report by the USDA pegged Abbott’s share of the market at over 40%.

In February, The FDA shut down Abbott’s largest plant for manufacturing infant formula. Obviously, this caused a major national formula shortage.

With an Orwellian flourish, the Biden Administration blames Abbott for the shortage, because it is not producing enough formula. But it is the Biden administration itself that is preventing Abbott from producing it.

And besides, Abbott Laboratories is a publicly held corporation that exists for the purpose of making money. WIC, on the other hand, is a government agency that exists for the purpose of feeding mothers and small children.

Furthermore, the government has not only granted an oligopoly to three companies, but has also burdened the entire industry with a myriad of gratuitous, often inscrutable regulations, and has effectively forbidden the importation of formula from abroad. A shortage was only a matter of time.

If the FDA can’t or won’t do its job, it should at the very least get out of the way and let market forces do theirs. Instead, the agency continues to prioritize maintaining its own power and influence and continues to pursue an agenda that is often at odds with its institutional mission, undernourished babies be damned.

If the FDA and WIC did what they were established to do, instead of devoting an inordinate amount of time, money, and energy to self-promotion and vaccine promotion, perhaps there wouldn’t be so many babies in America suffering from malnutrition. 

Perhaps there wouldn’t be so many small children going to bed hungry. Perhaps there wouldn’t be so many desperate mothers, crying themselves to sleep, wondering how they will feed their little one tomorrow.

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This article was published by The Brownstone Institute and is reproduced with permission.

Baby Formula: Thank Protectionists and the FDA for the Shortage

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Estimated Reading Time: 4 minutes

For parents who rely on baby formula—whether by choice or due to medical necessity—the nationwide baby formula shortage has become increasingly difficult to ignore. According to the Wall Street Journal, Walgreens, Target, CVS, and Kroger have all begun rationing supplies of formula.

Covid lockdowns, combined with a product recall by formula manufacturer Abbott Nutrition have created a very real shortage in a product that is key for proper nutrition in many children.

With the shortage has come the usual half-baked bromides about “evil corporations” and how baby formula companies are supposedly not regulated enough. Throw in a few references to “late-stage capitalism” and you’ll get a good taste of the usual “blame capitalism” narrative that accompanies every bout of shortages or rising prices.

Formula Is Heavily Regulated and Subsidized

In reality, federal government intervention in the formula market is rampant. Thanks to the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), formula companies are heavily subsidized by voucher programs which mean that the US government is “provid[ing] more than half of the formula that is used in the US.“

Within these voucher programs, funds are funneled to select corporations through programs that grant a formula company “the exclusive right to have its formula provided to WIC participants in the State.” In practice, this means the largest companies with the most lobbyists are able to dominate the subsidized portion of the market. Since the subsidized portion of the market is so huge, that usually means those companies dominate the market overall. This makes it harder for newcomers to break into the market and offer any real competition. This means the marketplace becomes reliant on a small number of large firms.

[Read More: “Why Are the Feds Subsidizing Baby Formula Companies?” by Ryan McMaken]

The anticompetitive nature of federal WIC policy is just one aspect of how little the formula market has to do with anything we might call “the free market.”

Protectionism Prevents Access to Foreign Formula

Another major and important factor is the restriction on foreign imports enforced by federal law.

The US regime overall is very protectionist when it comes to dairy products in general, and formula is certainly no exception. As one pediatric medical journal states flatly “Infant formula in the United States is highly regulated.” This can be seen clearly in protectionist trade laws imposed on formula in the guise of protecting consumers.

As Derek Thompson at The Atlantic notes, Food and Drug Administration “regulation of formula is so stringent that most of the stuff that comes out of Europe is illegal to buy here due to technicalities like labeling requirements.”

These bureaucratic requirements fall under “non-tariff barriers,” which in many cases present even greater barriers than tariffs.

[Read More: “Thanks to Nontariff Barriers, ‘Free Trade’ Isn’t very Free.” by Ryan McMaken]

But tariff barriers are significant as well. Thompson also notes that

U.S. policy also restricts the importation of formula that does meet FDA requirements. At high volumes, the tax on formula imports can exceed 17 percent. And under President Donald Trump, the U.S. entered into a new North American trade agreement that actively discourages formula imports from our largest trading partner, Canada.

However, those products that jump through all those hoops face further restrictions. The FDA mandates that even qualifying formula manufacturers must wait ninety days before marketing any new formula.

As a result, not surprisingly, 98 percent of all formula consumed in the United States is produced domestically. Moreover, if that supply is ever endangered—as it has been by lockdown-induced logistical problems and corporate recalls, American consumers have few other options.

Trade restrictions function to prevent reliable lines of importation of foreign formula. Thanks to that ninety-day delay on marketing, foreign suppliers can’t introduce new products to the market quickly, either.

So, if you have adopted children, a double mastectomy, or some other reason for needing formula for your baby, you can thank advocates of tariffs and other trade restrictions for shortages.

Protectionists and Their Excuses

Naturally, the baby formula protectionists have plenty of excuses for why their preferred form of central planning and big-government intervention in the marketplace is “necessary.” They’ll insist that FDA regulations are necessary to protect children—as if European baby formula is not already heavily regulated. European infant mortality also tends to be lower than US infant mortality, so the claim that protectionism is “for the children” is clearly baseless.

These facts, however, don’t prevent Trump-style protectionists from claiming government regulations are good “because China.”

Secondly, the protectionists are likely to claim that government control of formula—and all other dairy-based imports—are important because they “protects jobs.” What protectionists are really saying is that you and your family must just do without essential goods in order to protect a small number of corporations that dominate the formula marketplace thanks to US regulations.

Protectionism Means Punishing Entrepreneurs

Finally, there is little doubt that if the federal government actually allowed some true degree of freedom in the formula marketplace that entrepreneurs would step in to import formula to meet the need quickly.

This, of course, can’t happen because these entrepreneurs don’t want to be jailed, sued, and otherwise destroyed by federal bureaucrats. After all, protectionism must be enforced by federal police and federal courts, and that means fining and jailing any importers who run afoul of the law. Protectionism is fundamentally about using violence against Americans who try to bring goods to market in ways that the protectionists don’t like.

Once again, the anticapitalist “fair trade” advocates and advocates of WIC corporatism who caused these shortages will likely escape unscathed. Formula industry lobbyists will deploy and ensure nothing is done to endanger the protection-induced profits at the dominant firms. Welfare-state leftists will ensure that the federal government continues to subsidize these corporations as well. Rightwing protectionists will continue to insist that foreign goods must be kept out to make America great.

Somehow, this is all capitalism’s fault.

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This article was published by the Mises Institute and is reproduced with permission.

How Government Created the Baby Formula Shortage—and a Black Market for ‘Unapproved’ European Imports

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Estimated Reading Time: 5 minutes

Editors’ Note:  As well as the reasons cited below, other news outlets, such as Town Hall report the U.S. government has accumulated a large amount of baby formula and is shipping it to the Southern Border for use by illegal immigrants. As usual, Americans come last in their calculations.

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As Christina Szalinski reported in the New York Times, “baby formula is one of the most tightly regulated food products in the US.”

 

As many know, the US is confronting a shortage in a baby formula that has grown quite serious. What started as complaints on Twitter of “out of stock” messages on Amazon purchases has turned into a national panic.

CBS News reports that at retailers across the country, some 40 percent of the top-selling baby formula products were out of stock as of late April, according to an analysis from Datasembly.

“This is a shocking number that you don’t see for other categories,” Ben Reich, CEO of Datasembly, told the news network.

The story got enough traction to finally get the attention of the White House.

On Monday, Press Secretary Jen Psaki said the government is doing its best to address the shortage, noting that manufacturers say they’re producing at full capacity following a product recall by the Food and Drug Administration (FDA).

“Ensuring the availability is also a priority for the FDA and they’re working around the clock to address any possible shortage,” Psaki said.

Psaki is not wrong that the product recall has made the baby formula shortage worse.

As Eric Boehm pointed out at Reason, part of the shortage stems from a suspected bacterial outbreak at an Abbott plant in Michigan, which prompted the recall of three major brands of powdered formula. Matters were made worse when the plant was subsequently shut down for FDA inspection.

Still, one could be reasonably suspicious of the idea that a single contamination could upend the entire US baby formula market. And for good reason.

A closer look at US trade and regulatory policies reveals the government itself is primarily responsible for the baby formula shortage.

Few may realize it, but baby formula is one of the most regulated food products in America. That’s not me saying it, but the New York Times.

As Christina Szalinski reported in March 2021, “baby formula is one of the most tightly regulated food products in the US, with the Food and Drug Administration (FDA) dictating the nutrients and vitamins, and setting strict rules about how formula is produced, packaged, and labeled.”

Despite these regulations—more likely, because of them—many American parents buy “unapproved” European formula even though, Szalinski notes, it’s technically against the law.

“There are large Facebook groups devoted to European formulas, where parents share spreadsheets and detailed notes on ingredients and how these formulas compare to their US counterparts,” she notes. “Some caregivers report choosing them because European brands offer certain formula options (like those made from goat’s milk or milk from pasture-raised cows), which are rare or nonexistent in an FDA-regulated form in the US. Others seek out European brands because of the perception that the formulas are of higher quality and that European formula regulations are stricter.”

In this black(ish) market, it turns out Americans are willing to pay big bucks for European formula. Szalinski says that on one website selling EU baby formula, you’ll find German imports that run roughly $26 for a 400-gram box, which is about quadruple the price of the top US baby formulas recommended by the Times.

At times, these nefarious black market imports have resulted in high profile busts, like in April 2021 when US Customs and Border Protection agents in Philadelphia seized 588 cases of baby formula (value: $30,000) that violated the FDA’s “import safety regulations.”

Some may contend that the FDA is simply keeping Americans and their babies safe—which is no doubt what regulators want you to believe—but this overlooks an inconvenient fact: despite the FDA’s efforts, Americans are consuming vast amounts of black market baby formula, and the children are doing just fine.

The government’s regulatory war on baby formula imports isn’t the only way it has contributed to the baby formula shortage, however. Tariffs have also played a role. As Cato scholar Scott Lincicome pointed out on Twitter, the US government imposes a stiff levy on baby formula (technically a “tariff rate quota”) that amounts to 18 percent.

There’s general agreement among economists that tariffs create market distortions that harm domestic consumers over time, and there’s every reason to believe these taxes on imports have made it more difficult for Americans to access baby formula during this shortage (and hit their pocketbooks, too).

If the Biden administration is serious about addressing the baby formula, they’d forget about “working around the clock” and simply abolish the protectionist policies and regulations that are making it more difficult to purchase formula.

Some may contend that this would result in more foreign imports of baby formula of “questionable” quality, but it’s a mistake to believe that bureaucrats in Washington, DC (or anywhere else for that matter) have the “proper” formula that meets some universal standard.

Indeed, as Szalinski points out in her Times article, though the EU and the US both require a bunch of the same vitamins and minerals in baby formula, there are some striking differences as well, particularly in iron content and DHA (an omega-3 fatty acid).

Because the EU requires high levels of DHA, something that isn’t required at all in the US, nearly all American baby formulas fail to meet the EU standard.

“Currently, the only US formula that would meet the EU’s requirements for DHA is the new infant formula Bobbie,” writes Szalinski. “As a self-described ‘European-style’ formula, Bobbie is marketed as an FDA-regulated alternative to European formulas.”

Bureaucrats in DC no doubt will tell you their formula is the correct and healthy one, while bureaucrats in the EU almost certainly would contend they have the right mixture of ingredients.

This invites an important question: who actually has the best baby formula for infants, the EU or the US?

Many may think they know, but the economist Thomas Sowell reminds us this is the wrong question.

“The most basic question is not what is best, but who shall decide what is best,” Sowell says.

What Sowell was getting at is that consumers with skin in the game must ultimately decide what product or service is best for them, and government attempts to regulate that choice invariably make it more difficult for consumers to get the best product at the best price.

This is why the economist Ludwig von Mises noted that consumers—not politicians, CEOs, or bureaucrats—are the true captains of the economic ship in a free market.

“The real bosses, in the capitalist system of market economy, are the consumers,” Mises wrote in his book Bureaucracy. “They, by their buying and by their abstention from buying, decide who should own the capital and run the plants. They determine what should be produced and in what quantity and quality. Their attitudes result either in profit or in loss for the enterpriser.”

The baby formula shortage is the latest example that shows most people in Washington, DC need to crack open some Mises and stop trying to provide “solutions” to markets.

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This article was published by FEE, Foundation for Economic Education and is reprinted with permission.