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July 7, 2022

US moves to permanently open infant-formula market to overseas players

The FDA seeks to provide a “pathway” to long-term overseas and domestic entry.

By Simon Harvey

The US is taking steps to permanently open up the domestic infant-formula market to overseas players after shortages linked to a factory shutdown caused an outcry among politicians and consumers.

Abbott Laboratories, one of only three formula producers in the US, along with Nestlé-owned Gerber and Reckitt Benckiser, was forced to temporarily close its Sturgis factory in February following a product recall linked to fears of Cronobacter sakazakii or Salmonella contamination. The shortages were compounded as parents resorted to panic-buying, with Abbott turning to shipments from its factory in Ireland.

President Joe Biden rushed to enact the Defense Protection Act in May to prioritise local production, along with Operation Fly Formula to bring in emergency supplies from overseas. The US Food and Drug Administration (FDA) put in place a so-called temporary enforcement discretion order to boost imports, subject to regulatory and health checks.

The fragility of having domestic supply dominate the market was further exposed in mid-June when Abbott had to pause production again, soon after reopening the Sturgis, Michigan, plant due to flooding.

FDA Commissioner Robert Califf, who faced a US House oversight committee grilling in May over the shortages, is now seeking to open up a permanent “pathway” to overseas suppliers beyond 14 November when the discretion order expires.

“The need to diversify and strengthen the US infant-formula supply is more important than ever. The recent shutdown of a major infant-formula plant, compounded by unforeseen natural weather events, has shown just how vulnerable the supply chain has become,” Califf said in a joint statement with Susan Mayne, the director of the Center for Food Safety and Applied Nutrition.

The FDA is “developing [a] new framework for continued, expanded access to infant-formula options”, they explained, a decision welcomed by New South Wales-based Bubs Australia, one of the overseas formula makers cleared to ship into the US, along with local peer Bellamy’s Organic, plus New Zealand’s Fonterra and A2 Milk Co.

“The FDA has determined that a more streamlined pathway that leverages information we have received for the products for which we are temporarily exercising enforcement discretion would help provide for the long-term availability and marketing of many of them,” the US food-safety agency said yesterday (6 July).

However, “companies and their manufacturing facilities must meet rigorous FDA standards that ensure the formula is both safe and nutritious”, it added.

The FDA is also seeking to throw open the market to more domestic players, through a “single technical assistance contact at the FDA for any company aiming to enter the US infant-formula market, making it easier for potential new entrants to navigate the FDA’s regulatory review process”.

At an unspecified date this summer, the agency also plans to have meetings with companies “that import, sell, and/or distribute formula under the FDA’s temporary enforcement discretion policy to determine what additional steps would be needed to provide a pathway to long-term, uninterrupted marketing for safe and nutritious formula”.

Further guidance will be provided in September to outline how formula makers can gain a permanent foothold in the US market.

Bubs Australia, which in June raised its estimates for sales and profits on the back of its temporary US entry, said it welcomes the opportunity to help “diversify and strengthen US infant-formula supply by continuing to serve the American market permanently”.

Founder and CEO Kristy Carr added the company looks forward to “continuing to work with the FDA over the coming months to address any additional steps required to ensure we can supply and market Bubs’ safe and nutritious formulas without interruption beyond November and over the longer term”.

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