Why baby formula is still hard to find months after the shortage

This story was originally published by The 19th.

It’s been nearly 10 months since the largest infant formula manufacturer in the country, Abbott Nutrition, recalled its popular Similac powder and two lines of specialized formula, shutting down one of its plants due to bacterial contamination. The shutdown, which came during a pandemic that exacerbated U.S. supply chain issues, quickly escalated into a national formula supply crisis.

Grocery store shelves across the country were empty, and parents, particularly those in rural and low-income parts of the country, scrambled to find ways to feed their babies — some turning to strangers on social media. The U.S. Food and Drug Administration (FDA) issued new guidance that would make it easier to import formula from other countries and help domestic manufacturers enter the market. Congress passed an emergency spending bill to provide the FDA with more resources. And President Joe Biden invoked the Defense Production Act, a 1950 law first enacted in response to the start of the Korean War, to expedite supplies needed “to promote national defense.”

Still, months after the worst point in the crisis, many families are reporting having trouble finding formula. The 19th spoke with government officials, domestic formula manufacturers and supply chain experts to better understand why.

Yes, though supply has improved overall. Industry insiders said they are seeing a more “spotty” shortage based on location and product type.

According to the FDA, things are nowhere near as dire as they were at the height of the infant formula shortage when more than 40 percent of all formulas were out of stock across the country. As of November 20, about 12.5 percent of formula baby powder was out of stock across the country — which is very close to pre-shortage levels, according to data from IRI, a Chicago-based market research firm.

“We aren’t in a place to declare mission accomplished, but we’ve made tremendous progress,” an FDA spokesperson told The 19th. “The supply chain has gotten stronger with more products available to parents and caregivers. We recognize that while supplies are improving, there are still parents struggling to find formula or find their specific type of formula on store shelves. We understand their frustration and continue to do everything we can to make sure parents can get safe and nutritious infant formula whenever and wherever they need it.”

Jimmy Chen, an associate professor of analytics and operations management at Bucknell University, said the lingering formula shortage is still a major concern for many parents, which has an impact on demand and the tendency to induce panic-buying behavior.

“While supply has increased, so has demand,” Chen said. “Similar to toilet paper, infant formula has no substitute. So the baby formula is yet another perfect product to trigger panic buying amid shortages. Unsure of a sustainable future formula supply, parents who emphatically fear the worst will overfill their cupboards with the products for fear of running out.”

This panic buying, he said, could quickly deplete retailers’ shelves.

At the height of the shortage, many of the big box stores limited the amount of formula product each customer could purchase at one time in an effort to keep their shelves stocked. As of November, several still had quota policies in place, forcing some customers to drive to several stores to get what they need for their children. CVS Health and Walgreens, for example, maintain a three-product limit per customer. Walgreens has also expanded its supply to now include popular European brands in its inventory, according to a company spokesperson.

Jamila Taylor, an advocacy leader for the federal Special Supplemental Nutrition Program for Women, Infants and Children (WIC), said that she is hearing from parents across the country that certain specialty formulas are still hard to find. Those are often formulated for people with allergies, sensitive digestion or specific nutritional needs.

“At this point, the formula crisis has become hyper-localized: One county might be fully stocked while the county next door only has 20 percent of their shelves filled,” said Taylor, who is president and chief executive of The National WIC Association (NWA), the nonprofit advocacy group for WIC. “New manufacturers have entered the market and other competitors have stepped up their production capacity, but ongoing distribution challenges continue to impact regions differently.”

The U.S. Department of Agriculture (USDA) issued waivers in February to provide low-income families with additional formula options, including alternate sizes and brands.

The Biden administration invoked the Defense Production Act in May, which required suppliers to prioritize formula manufacturers over manufacturers of other goods and launched a directive to use military aircraft to get formula from overseas. The House passed a $28 million emergency spending bill to help the FDA increase supply, while leaders from the country’s top formula manufacturers testified before the Committee on Energy and Commerce.

That same month, the FDA eased federal import regulations, allowing millions of pounds of powdered formula to be shipped in from other countries. The policy was initially set to expire in November, but was later extended to January 2023. In September, the FDA announced that the recent entrants to the U.S. market under the FDA’s relaxed guidance will have until October 2025 to fully comply with all of the agency’s requirements — including those related to safety, nutrient adequacy, labeling and packaging — which apply to every product sold in the United States.

“The burdens of the continued formula shortages are not borne equally.”

“We understand that the continued availability of infant formulas brought in through enforcement discretion is important for infants who started on a specific formula during the shortage and now are accustomed to that formula as an essential source of nutrition,” Susan Mayne, the director of the FDA’s Center for Food Safety and Applied Nutrition, said in a statement in September.

In addition, the USDA partnered with the Department of Health and Human Services and the General Services Administration to launch Operation Fly Formula, a federal effort to import infant formula not typically offered on U.S. shelves. As of the end of September, at least 74 flights had imported the equivalent of nearly 98 million 8-ounce bottles of formula — an amount that comes to about three months of sales. Pallets of product came from New Zealand, the United Kingdom, Australia, Switzerland, the Netherlands, Germany, Mexico and Singapore.

The pandemic tanked the economy, disrupted the global supply chain and contributed to rising inflation. Women, especially, bear the brunt of rising costs at the grocery store. According to a 19th analysis of Bureau of Labor Statistics data, single women spend as much as 30 percent more than single men on most grocery items — items that are most impacted by inflation increases.

The average cost of baby formula products increased by 18 percent in the past year alone, according to the Center for American Progress, a progressive think tank.

More than 80 percent of infants consume formula at some point in the first year of their lives. Low-income parents, particularly women of color, rely on formula to feed their babies at higher rates and continue to be most impacted by the shortage, according to data from the Centers for Disease Control and Prevention. As much as 65 percent of all formula in the United States is purchased by families through WIC, the assistance program for low-income women and children.

The NWA has been encouraging all WIC families seeking formula to reach out to their local WIC clinics for support, resources and educational materials on what practices to avoid to keep infants safe.

“The burdens of the continued formula shortages are not borne equally,” Taylor said. “A single mom with two jobs will have a harder time checking the shelves at four different stores to find the specific formula that her baby needs. A family that doesn’t have reliable access to transportation can’t necessarily go to the store in the next town over if the shelves at their regular grocery store aren’t stocked.”

Carla Cevasco, an assistant professor of American studies at Rutgers University, told The 19th at the height of the crisis that “race and class inequities play a huge role” in who suffers. Women of color, for instance, are much less likely to have access to paid family leave. Parents who work lower-income jobs often need to rely on formula because they cannot afford to establish regular breast-feeding habits — assuming a parent can otherwise produce enough milk.

Cevasco said a cycle of work not conducive to raising families and formula dependence has deep roots in American history. And the problem is felt most acutely in rural areas, where there are fewer stores, fewer options and parents are at the mercy of only one or two grocery stores. To make things more difficult for these families, WIC recipients historically could only use their benefits in stores, not online or through delivery.

The formula industry has long been dominated by three U.S. companies — Abbott, Reckitt and Gerber Products Company — that contribute to the vast majority of production in the country. Collectively, these companies operate nine domestic facilities and produce about 95 percent of all infant formula sold in the United States.

It’s been difficult for other companies to break through, given the extensive and expensive barriers to entry. Infant formula is one of the most regulated food products on the market, and it’s the only food product in the United States that requires a clinical study to be able to go to market.

Laura Katz in 2019 founded Helaina, an infant formula company, with the goal of adding proteins that so far are only available in breast milk. The company’s product is not on store shelves yet, Katz said, as it works its way through the lengthy research process, safety studies and clinical tests required by federal regulations. Katz said she faced several barriers while trying to get her company off the ground, from obtaining venture capital dollars as a woman founder to finding and building a relationship with a manufacturer that is accredited to make formula.

“The entire industry needed to be reformed, and we really are at that moment.”

“Being able to follow all of the regulatory guidelines requires a lot of work, capital, infrastructure and time,” Katz said. “So it’s not a category for the faint of heart. You have to have a lot of conviction. Seeing two or three players taking up most of the market, it’s very easy to let them dominate. To innovate requires a team, a whole village of people who are looking to overcome these barriers — which is possible but takes time.”

According to current FDA regulations, domestic and international manufacturers must include in their formulas 30 nutrients, in specified amounts; ensure every ingredient is “safe and suitable”; provide directions for preparation and use, including a pictogram showing how to prepare the formula at each step; and an expiration date. Every facility is also subject to inspection, according to the agency.

“We’ve made important progress toward improving the infant formula supply in the U.S. and paving the way for a more robust and diverse marketplace for the future,” FDA Commissioner Robert M. Califf said in a statement in September. “However, the FDA can’t do it alone. We’ll need to work with all stakeholders to evaluate what other steps could be taken to encourage a more diverse and resilient infant formula marketplace.”

When Laura Modi, a mother of three, started her own infant formula company in 2018, she warned investors and stakeholders that a supply crisis was a serious possibility if the industry didn’t change. She saw too few players dominating the market, a product that parents were disappointed with and a system rife with inequities and stigmatizations. She hoped her new company, Bobbie, could help change all of that.

“The entire industry needed to be reformed, and we really are at that moment,” said Modi, one of the only women executives in the infant formula industry. “We have to stop thinking about what we are doing to get out of the shortage and instead what we are doing to fix this industry. And fixing this industry isn’t going to happen in the next year — it could take five to seven years.”

Chen said the Biden administration’s immediate responses to the crisis were effective short-term solutions, but broader changes need to happen for a more sustainable future. The government needs to improve its resources and conduct more frequent inspections of existing formula manufacturers to detect potential problems earlier. In addition, there should be a continued effort to create flexible regulations that encourage more players in the industry, he added.

“Critical products such as infant formula need to build resilience into their supply chains, which may come from manufacturing capacity buffers or a diverse, highly-competitive formula marketplace,” Chen said. “Putting all our eggs in a few baskets can be risky.”

Smaller formula manufacturers like Bobbie and Helaina had already started making inroads before the formula shortage. As products by the big three companies grew scarce, customers were more willing to turn to these smaller companies. Bobbie is now the fifth-largest formula company in the country, serving nearly 5 percent of the market, and is working with WIC to get its product into the hands of those who need it most.

Modi said there is a noticeable shift happening in the industry and increased interest from lawmakers to make changes. She recently spent a few days on Capitol Hill talking to members of Congress about how to increase the number of domestic manufacturing centers, improve FDA nutritional standards that haven’t been meaningfully updated in four decades and review the WIC contractual bidding process.

“The formula industry is not set up to equally serve every baby out there,” Modi said. “I believe if we build resiliency in this industry that parents are going to be better off. It takes a lot more than one company to speak out on this. It’s going to take all of us to come forward to actually change it. We need more competition.”