FTC launches investigation into infant formula shortage
Target Annapolis in Maryland is where a mother shops for baby food on May 16, 2022. The nationwide shortage of formula has been exacerbated by supply chain problems linked to the coronavirus pandemic.
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On Tuesday, the Federal Trade Commission launched an investigation of infant formula producers to determine if corporate mergers led to nationwide shortages by concentration.
Lina Khan (FTC Chair) stated that they would investigate formula producers and distributors for illegal economic discrimination, which limited the availability of certain retailers.
Khan released a statement on Tuesday stating that discriminatory terms could lead to the inability for certain grocers, pharmacies and other stores source product in limited supply. It can also impact rural and inner city communities.
After Abbott Nutrition closed its Sturgis plant, Michigan facility in February because of bacterial contamination, parents across America have had difficulty finding formula for their children at local stores. Two infants died after they were infected with bacteria from formula that was made at the facility. Four other children received treatment. Abbott said that there is no conclusive evidence to support the claims.
Four manufacturers — Abbott, Mead Johnson Nutrition, Nestle USA and Perrigo — control 90% of the U.S. market. If one plant closes, the entire domestic supply chain can be easily interrupted.
Abbott and the FDA reached an agreement with Abbott to allow the Michigan plant to be reopened to ease the shortage. However, the conditions must be met to ensure that the plant is compliant with U.S. safety standards. Federal courts are able to enforce this consent decree. If the company fails to adhere, it will be subject to $30,000 per day fines.
The President Joe Biden requested the FTC to examine the shortage of infant formula earlier in the month. This was to determine if manufacturers were contributing to the problem by keeping formula away from small retailers. Biden also demanded that the commission stop parents from price gouging by taking advantage the shortage.
Khan claimed that Khan would bring the FTC to justice against any person who tries to deceive families by selling formula online, or through bots that purchase formula and then resell it at outrageous prices.
Khan explained that although reselling such products is legal and can serve a useful purpose, Khan claimed that the FTC Act may make it illegal to use ‘bots or other automated instruments to divert large quantities of life-sustaining product supply from normal retailers in an attempt at preying on families who are desperate. Khan also stated that Khan was not against the law.
FTC requested that the public submit any comments. federal websiteAsk about the possibility that any federal agency or state may have taken an inadvertent action to contribute to this shortage.
Biden invoked the Defense Production Act as a response to the Korean War to boost manufacturing by ordering suppliers prioritize delivery of formula ingredients. According to the White House, the U.S. also plans on airlifting 1.5 million eight-ounce formula bottles from overseas.
A public hearing will be held Wednesday by the U.S. House Energy and Commerce Committee’s Oversight and Investigations Subcommittee on baby formula shortage. This hearing will be attended by Robert Califf (FDA Commissioner) and senior executives of formula manufacturers Abbott Gerber, Reckitt.