US FDA Relaxes Imported Infant Formula Requirements Reacting to Domestic Shortages Sparked by Abbott Recall

So far, more than half infant formula stock has been sold out in Iowa, South Dakota, North Dakota, Missouri, Texas, and Tennessee. According to Datasembly's data, the baby formula out-of-stock (OOS) percentage is now as high as 43% for the week ending May 8th, a month-on-month increase of 10%, while the regular OOS rate is below 10%.

Measures taken by US government

To improve the supply of infant and specialty formula products in the U.S., FDA announced that they would continue to take following significant actions to help increase the current supply of infant formula in the U.S.

• Meeting regularly with major infant formula manufacturers to better understand their capacity, thus to increase the production of various types of infant formulas and medical foods.

• Helping manufacturers bring safe products to the market by expediting the review of manufacturing change notification that will help increase supply, particularly for specialized formulas for medical needs.

• Monitoring the infant formula supply by using FDA’s 21 Forward food supply chain continuity system, combined with external data.

Notes: 21 Forward was developed during the COVID-19 pandemic to provide a comprehensive data-backed understanding of how COVID-19 is currently impacting food supply chains.

• Compiling the data of in-stock rate trends at both national and regional levels to help understand whether the right amount of infant formula is available in the right locations, and if not, where it should go.

• Expediting necessary certificates to allow for flexibility in the movement of already permitted products from abroad into the U.S.

• Offering a streamlined import entry review process for certain products coming from foreign facilities with favorable inspection records.

• Exercising enforcement discretion on minor labeling issues for both domestic and imported products to help increase the volume of products available as quickly as possible.

• Reaching out to retailer stakeholder groups to request their members to consider placing purchase limits on some products in order to protect infant formula inventories for all consumers.

In addition, according to the notification of The White House, President Biden also announced Operation Fly Formula to speed up the import of infant formula. Under Operation Fly Formula, the U.S. will use Department of Defense contracted commercial aircraft to pick up overseas infant formula that meets U.S. health and safety standards so it can get to store shelves faster.

What caused the shortage?

1. Tense market environment

Due to COVID-19, all links of the supply chain have been affected. The formula milk powder industry has also been hit hard. The shortage of milk powder in the United States was already warned in 2021.

2. Safety problem of Abbott

In February this year, four infants are suspected of suffering serious bacterial infections due to using Abbott's milk powder manufactured in the Michigan plant. What’s more unfortunate, two of them died. Later, Abbott, the largest U.S. infant formula manufacturer, recalled infant formula products from three of its brands, including Similac (used by millions of households in the U.S.), Alimentum, and EleCare, and even closed its manufacturing facility in Sturgis, Michigan.

And then, on May 16, 2022, the U.S. Food and Drug Administration (FDA) pointed out that they commenced a for-cause inspection at Abbott Nutrition’s Sturgis facility and did discover Cronobacter sakazakii, a bacterium that can potentially cause severe foodborne illness primarily in infants.

The impact of this recall has a wide range covering 30 countries, involving Australia, Canada, Chile, China, Egypt, India, Indonesia, etc. Even the U.S. tried to obtain products from neighboring countries, it soon discovered that some retailers in these countries had begun to restrict sales of related products in response to the demand surge.

3. Industry giant monopoly

The imported infant formula amount is minimal due to the strict supervision and the high tariff. In the United States, 98% infant formula consumed by infants and young children is produced by local manufacturers. Furthermore, it is monopolized by three American companies (including Abbott). They control 95% of the formula supply in the United States.

Abbott's baby formula accounts for about 40% of the domestic market in the United States. Its Michigan plant carries about half of the company's domestic production capacity. The recall was definitely the last straw for the shortage.

4. Inadequate Supervision

Abbott is indeed responsible for this incident, but the government's failure to take timely measures in the face of the infant formula crisis is also a significant factor. In particular, FDA did not take substantive steps until May, that is, allowing overseas infant formula to enter the U.S. market to improve the domestic shortage.