White House calls for crackdown on price gouging as baby formula crisis deepens

On February 17, the largest US infant formula manufacturer, Abbott Nutrition, recalled several lines of infant formula from circulation. It also stopped production at its factory in Sturgis, Michigan. The precautionary action was due to concerns about bacterial contamination at the facility after four infants became ill and two died in late 2021 and early 2022. This situation has sparked a major shortage of baby formula supply in the United States, and forced the White House to take action.

The shortages are not new – the country has been struggling with this issue since the beginning of 2021 – but it has reached crisis levels due to the voluntary closure of the Abbott Nutrition facility and the disruption of supply chains, which has also been an ongoing problem since 2021.

The national out-of-stock rate hit 40% in April and now stands at 43%, according to data released this week by Datasembly. Thousands of parents have been forced to travel for miles in search of baby formula, particularly in the hardest-hit states – Missouri, Tennessee and Iowa –, while online prices have soared.

Amid the deepening crisis, the White House announced on Thursday additional steps aimed at addressing the shortages. According to a government briefing, President Joe Biden has been meeting with retailers and manufacturers, including the CEOs of Walmart and Target, to urge them to “do all they can to help families purchase and access infant formula.” The president also discussed with retailers how they are addressing shortages in regional areas, which is one of the government’s priorities.

Other steps announced on Thursday include simplifying product offerings to increase the speed and scale of production, calling on the Federal Trade Commission (FTC) and state attorney generals to crack down on price gouging – including the resale of products online “at a markup several times the retail price” – and increasing imports. The United States typically produces 98% of the infant formula it consumes, with the rest coming from Mexico, Chile, Ireland and the Netherlands.

“As a result of our ongoing work, more infant formula has been produced in the last four weeks than in the four weeks that preceded the recall [of Abbott Nutrition],” a senior administration official said in a teleconference with the press. “But we also know that families across the country remain concerned about the availability of infant formula, especially families that rely on specialty products that are harder to substitute and some of which are only produced at the Michigan facility.”

Abbott Nutrition said on Wednesday that it could resume production at the Michigan facility within two weeks, while two manufacturers in the industry have increased their activity by up to 50%, working 24 hours a day, seven days a week.