[CNN] FDA is ‘working around the clock’ to address baby formula shortage, Psaki says

two pieces in the WSJ this morning, here's the first

https://www.wsj.com/articles/who-ma...-tariffs-nestle-11652480538?mod=hp_opin_pos_1

What Caused the Baby Formula Shortage?
Tariffs, government labeling rules and state welfare monopolies all play major roles.
By The Editorial Board
Updated May 13, 2022 7:08 pm ET

By now you’ve heard that some 40% of the nation’s baby formula is out of stock, causing new mothers to hunt from store to store to feed their infants. This should never happen in America. How did it? Here’s the government part of the story you won’t hear from the political class.

Abbott Laboratories in February recalled several brands and shut down a plant in Michigan after complaints that four infants fell severely ill with a dangerous bacteria after ingesting its powdered formula. The Food and Drug Administration launched an investigation and onsite inspection, noting earlier findings that had detected the bacteria at the plant.

It’s not clear when the FDA was made aware of the problems at the plant and why it didn’t take action sooner. Abbott said this week that “after a thorough review of all available data, there is no evidence to link our formulas to these infant illnesses.” The FDA said Friday the Centers for Disease Control and Prevention closed its investigation after finding no more cases of infant illness.

Some conservatives blame the FDA for causing a scare, but the agency had no choice but to investigate the complaints and warn consumers. The real culprit is government policies that have limited formula options.

Last year Abbott accounted for 42% of the U.S. formula market, about 95% of which is produced domestically. There are only four major manufacturers of formula in the U.S. today: Mead Johnson, Abbott, Nestle, andPerrigo. One reason the market is so concentrated is tariffs up to 17.5% on imports, which protect domestic producers from foreign competition. Non-trade barriers such as FDA labeling and ingredient requirements also limit imports even during shortages.

Canada’s strong dairy industry has attracted investment in formula production. But the Trump Administration sought to protect domestic producers by imposing quotas and tariffs on Canadian imports in the USMCA trade deal. The FDA can inspect foreign plants so the U.S. import restrictions aren’t essential for product safety. They merely raise prices for consumers and limit choice.

Further limiting competition is the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) for low-income mothers. By the Department of Agriculture’s estimate, WIC accounted for between 57% and 68% of all infant formula sold in the U.S. Under the welfare program, each state awards an exclusive formula contract to a manufacturer.

Companies compete for the contracts by offering states huge rebates on the formula women can buy. The rebates equal about 85% of the wholesale cost, according to a 2011 USDA study. Women can only use WIC vouchers to purchase formula from the winning manufacturer. These rebates reduce state spending, but there’s no such thing as free baby formula.

Why would manufacturers give states an enormous discount? Because the contracts effectively give them a state monopoly. Stores give WIC brands more shelf space. Physicians may also be more likely to recommend WIC brands. After 30 states switched their WIC contracts between 2005 and 2008, the new provider’s market share increased on average by 84 percentage points.

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America’s baby-formula shortage illustrates how bigger government can make big business bigger, thereby limiting competition and choice. This is especially worth noting as Democrats push to expand entitlements and government control over the private economy with Medicare for All, free child care, universal pre-K and more.

It also illustrates that global trade has its uses, and there are costs to the faddish drive to produce everything in America. Members of both parties in Congress want to subsidize domestic production, but this can create its own supply-chain vulnerabilities. Globalization nowadays may be a dirty word, but having diverse suppliers is an economic strength.

Appeared in the May 14, 2022, print edition.
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the second

https://www.wsj.com/articles/bidens-baby-formula-shortage-11652467290?mod=hp_opin_pos_3#cxrecs_s

Biden’s Baby Formula Shortage
A Michigan plant has been closed for months, despite no evidence it caused infant illness.
By James Freeman
May 13, 2022 2:41 pm ET

Some lawmakers are asking whether the U.S. Food and Drug Administration has done enough to counter the nationwide shortage of baby formula. An even better question is why the Biden FDA caused it.

In the name of safety, the federal bureaucracy has turned a supply-chain challenge into a full-blown crisis. Few things are as disturbing as being a new parent and learning that your infant child is not thriving. For any number of reasons, some little ones need baby formula, and right now America doesn’t have enough of it. In this era it has sadly become common to see empty market shelves once occupied by various items. But this is not just any other product.

Like many other goods in the era of lockdowns and Covid regulations, baby formula has been subject to supply constraints. But there is one specific event that created the current crisis. On Feb. 17 of this year, the FDA announced:

Today, the U.S. Food and Drug Administration announced it is investigating consumer complaints of Cronobacter sakazakii and Salmonella Newport infections. All of the cases are reported to have consumed powdered infant formula produced from Abbott Nutrition’s Sturgis, Michigan facility. As a result of the ongoing investigation, along with the U.S. Centers for Disease Control and Prevention and state and local partners, the FDA is alerting consumers to avoid purchasing or using certain powdered infant formula products produced at this facility. This is an ongoing investigation, and the firm is working with the FDA to initiate a voluntary recall of the potentially affected product.
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Ever since, while the plant has remained idle, various Washington officials have continued to insist on calling it a “voluntary recall.” But what choice did the manufacturer have after the FDA investigated and decided to warn consumers not to buy the product?

White House economist Brian Deese seems to have given away the game during a Friday morning appearance on CNN. Here’s a portion of the network’s transcript in which Mr. Deese is interviewed by CNN’s Kaitlan Collins:

COLLINS: And I believe the first complaints about this facility happened last fall. I don’t think the FDA started interviewing whistleblowers until maybe December or so. Of course, as you noted, the recall started earlier this year. And so I’m wondering if the sense inside the White House is that the FDA moved quickly enough on this issue?

DEESE: Well, those are independent scientific judgments that I will leave to the FDA. What I can tell you is that they took action to put in place that recall. And we have been working closely on this issue, in the wake of that recall, to try to address the attending impacts of that.
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Sorry, who put in place that recall? And more importantly, why did they put in place a recall given the danger of leaving parents without formula? Finding a common bacteria somewhere in a factory does not automatically mean that babies were ever at any risk. And what about the risk of having no formula when a major producer of a highly regulated product is idled for months?

To this day, while Abbott’s plant remains idle and is awaiting the FDA’s blessing to resume production—and while parents desperately seek formula—the White House remains confused about what exactly the FDA found in Michigan and who exactly initiated that “voluntary” recall.

At a Thursday press conference, White House press secretary Jen Psaki claimed “the issue here is that a manufacturer was taken offline because they did not produce a safe baby formula.” Ms. Psaki added:

This issue is because there was unsafe product that the FDA recalled to save babies’ lives.
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That does not appear to be true. The Journal’s Joseph Walker reports:

In recent weeks, Abbott has strongly denied that the cronobacter infections were caused by contamination at its plant, despite the presence of the bacteria there found by the company and FDA inspectors. Where inspectors did find traces of the bacteria, the areas weren’t in contact with formula products, the company said.

Cronobacter is commonly present in the environment, and has been found on refrigerators, kitchen sinks and countertops, food safety experts have said.The Centers for Disease Control and Prevention performed genetic testing on formula samples from two of the sick infants and found they didn’t match cronobacter strains discovered in Abbott’s plant. “It is possible that the cases included in this investigation occurred due to contamination of the formula after it was opened, which is how cronobacter often gets into powdered formula,” a CDC spokeswoman told the Journal in April.

Abbott said on Wednesday that all finished products made at the Michigan plant tested negative for cronobacter.Open containers from the four infants were tested, and three of them tested negative, Abbott said. One container tested positive for two strains of cronobacter, one of which matched the strain that caused the infant’s infection and the other that matched a strain found on a bottle of distilled water that was used to mix the formula. Neither strain matched those found in Abbott’s Michigan plant, the company said.

“After a thorough review of all available data, there is no evidence to link our formulas to these infant illnesses,” Abbott said.

Yet each time this issue pops up in the news cycle, all Team Biden and its allies on Capitol Hill do is call for more investigation of business.
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Now the president wants the Federal Trade Commission to search for evidence of price-gouging and House Democrats want testimony from formula manufacturers. How about investigating the FDA and letting people who are able to make baby formula feed hungry newborns?

On Tuesday this column noted the work of the Cato Institute’s Gabriella Beaumont‐Smith describing the significant government barriers to the import of baby formula. The FDA has also erected large regulatory barriers to any potential new domestic competitors, so for the moment parents and babies will have to rely heavily on existing producers to end the shortage. Thank goodness the men and women of private U.S. businesses are not moving at FDA speed but instead running factories around-the-clock to end the shortage.

Some product is coming from overseas, but U.S. red tape prevents much needed supply. The Atlantic’s Derek Thompson writes:

FDA 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. Nevertheless, one study found that many European formulas meet the FDA nutritional guidelines—and, in some ways, might even be better than American formula, because the European Union bans certain sugars, such as corn syrup, and requires formulas to have a higher share of lactose.

Some parents who don’t care about the FDA’s imprimatur try to circumvent regulations by ordering formula from Europe through third-party vendors. But U.S. customs agents have been known to seize shipments at the border.
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Perhaps the White House will now refer to them as voluntary seizures. But parents would not have to go to such lengths if government allowed the abundance that willing manufacturers can provide.

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I'm just passing along the articles, most folks here don't subscribe to the WSJ and would otherwise miss out on an alternative perspective

 

this isn't a fair response, ATW's point was about "over-regulation," his actual statement above. Not about regulation per se. There are very good arguments being made that the FDA's own approach on this issue is overly strict, cautious, and counter-productive. Making fun of a critique of OVER-regulation is missing the point

 

from the Atlantic article quoted above:

FDA 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. Nevertheless, one study found that many European formulas meet the FDA nutritional guidelines—and, in some ways, might even be better than American formula, because the European Union bans certain sugars, such as corn syrup, and requires formulas to have a higher share of lactose.

Some parents who don’t care about the FDA’s imprimatur try to circumvent regulations by ordering formula from Europe through third-party vendors. But U.S. customs agents have been known to seize shipments at the border.
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I think one could make a reasonable argument that "labeling requirements" is fairly thin gruel, regulations-wise

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