Challenges in Supply, Market Competition, and Regulation of Infant Formula in the United States (2024)

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Challenges in Supply, Market Competition, and Regulation of Infant Formula in the United States Barbara O. Schneeman, Patricia Cuff, and Katherine M. Delaney, Editors Committee on Challenges in Supply, Market Competition, and Regulation of Infant Formula in the United States Food and Nutrition Board Health and Medicine Division Consensus Study Report PREPUBLICATION COPY—Uncorrected Proofs 

NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001 This activity was supported by a contract between the National Academy of Sciences and the Food and Drug Administration. Any opinions, findings, conclusions, or recommendations expressed in this publication do not necessarily reflect the views of any organization or agency that provided support for the project. International Standard Book Number-13: 978-0-309-XXXXX-X International Standard Book Number-10: 0-309-XXXXX-X Digital Object Identifier: https://doi.org/10.17226/27765 Library of Congress Control Number: 2024941650 This publication is available from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu. Copyright 2024 by the National Academy of Sciences. National Academies of Sciences, Engineering, and Medicine and National Academies Press and the graphical logos for each are all trademarks of the National Academy of Sciences. All rights reserved. Printed in the United States of America. Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2024. Challenges in supply, market competition, and regulation of infant formula in the United States. Washington, DC: The National Academies Press. https://doi.org/10.17226/27765. PREPUBLICATION COPY—Uncorrected Proofs 

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COMMITTEE ON CHALLENGES IN SUPPLY, MARKET COMPETITION, AND REGULATION OF INFANT FORMULA IN THE UNITED STATES1 BARBARA O. SCHNEEMAN (Chair), University of California (emeritus) RAVI M. ANUPINDI (Vice Chair), University of Michigan STEVEN A. ABRAMS, University of Texas at Austin SUSAN S. BAKER, University of Buffalo WENDY L. JOHNSON, All Things Healing, LLC REYNALDO MARTORELL, Emory University ZOË NEUBERGER, Center on Budget and Policy Priorities DEBORAH L. O’CONNOR, University of Toronto JENNIFER L. POMERANZ, New York University KATHLEEN M. RASMUSSEN, Cornell University (emeritus) KATHERYN RUSS, University of California, Davis MELISSA A. SIMON, Northwestern University BRIDGET E. YOUNG, University of Rochester MARTA E. WOSIŃSKA, The Brookings Institution Study Staff KATHERINE M. DELANEY, Study Co-Director PATRICIA CUFF, Study Co-Director MELANIE ARTHUR, Senior Program Assistant JENNIFER STEPHENSON, Research Associate MELISSA MAITIN-SHEPARD, Science Writer MICHELLE DELFAVERO, Science Writer ANN L. YAKTINE, Food and Nutrition Board Director 1 See Appendix B, Disclosure of Unavoidable Conflict of Interest. v PREPUBLICATION COPY—Uncorrected Proofs 

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Reviewers This Consensus Study Report was reviewed in draft form by indi- viduals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical com- ments that will assist the National Academies of Sciences, Engineering, and Medicine in making each published report as sound as possible and to ensure that it meets the institutional standards for quality, objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We thank the following individuals for their review of this report: DAVID DAVIS, South Dakota State University ROBERT GREENSTEIN, The Brookings Institution MICHAEL C. LU, University of California, Berkeley SUSAN MAYNE, Food and Drug Administration (retired) RUSSELL J. MERRITT, University of Southern California ANGELA ODOMS-YOUNG, Cornell University NITYA PANDALAI-NAYAR, University of Texas at Austin RAFAEL PÉREZ-ESCAMILLA, Yale School of Public Health and Yale-Griffin CDC Prevention Research Center DONALD W. SCHAFFNER, Rutgers University JAMILA K. TAYLOR, Institute for Women’s Policy Research vii PREPUBLICATION COPY—Uncorrected Proofs 

viii REVIEWERS Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the conclu- sions or recommendations of this report nor did they see the final draft before its release. The review of this report was overseen by HUGH TILSON, The University of North Carolina at Chapel Hill, and CATHERINE E. WOTEKI, Iowa State University. They were respon- sible for making certain that an independent examination of this report was carried out in accordance with the standards of the National Acad- emies and that all review comments were carefully considered. Respon- sibility for the final content rests entirely with the authoring committee and the National Academies. PREPUBLICATION COPY—Uncorrected Proofs 

Contents PREFACE xiii ACRONYMS AND ABBREVIATIONS xvii GLOSSARY xxi SUMMARY 1 CHAPTER 1 INTRODUCTION 21 THE COMMITTEE’S TASK AND APPROACH 23 SCOPE OF THE REPORT 24 ORGANIZATION OF THE REPORT 25 REFERENCES 26 CHAPTER 2 METHODOLOGY 29 COMMITTEE’S INTERPRETATION OF THE TASK 29 COMMITTEE’S APPROACH 30 REFERENCES 38 CHAPTER 3 THE INFANT FORMULA REGULATORY FRAMEWORK BEFORE THE 2022 SHORTAGE 41 U.S. GOVERNMENT FRAMEWORK FOR INFANT FORMULA 41 INTERNATIONAL FRAMEWORK FOR INFANT FORMULA 58 ix PREPUBLICATION COPY—Uncorrected Proofs 

x CONTENTS FINAL REMARKS 63 REFERENCES 64 CHAPTER 4 INFANT FORMULA DEMAND AND SUPPLY BEFORE THE 2022 SHORTAGE 69 CHARACTERIZING THE DEMAND FOR INFANT FORMULA 69 CHARACTERIZING THE SUPPLY CHAIN 87 SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN 108 FINAL REMARKS 128 REFERENCES 131 CHAPTER 5 2022 INFANT FORMULA SHORTAGE AND RESPONSE 147 EVENTS LEADING UP TO THE 2022 INFANT FORMULA SHORTAGE 147 U.S. GOVERNMENT RESPONSE TO THE 2022 INFANT FORMULA SHORTAGE 150 CHARACTERIZING SUPPLY DURING AND AFTER THE SHORTAGE 175 CHARACTERIZING DEMAND DURING THE SHORTAGE 181 INTERNATIONAL IMPACT 187 FINAL REMARKS 188 REFERENCES 190 CHAPTER 6 VULNERABILITIES AND RECOMMENDATIONS 201 RISK MANAGEMENT PLANNING 203 CONCENTRATION OF PRODUCTION AND SALES 208 SPEEDY SUPPLY RECOVERY 214 GOVERNMENT’S MANAGEMENT OF ADVERSE CONSUMER IMPACT 218 PROTECTION, PROMOTION, AND SUPPORT OF BREASTFEEDING 222 AREAS FOR FURTHER RESEARCH 223 FINAL REMARKS 226 CHAPTER 7 CONCLUDING REMARKS 227 OVERARCHING PERSPECTIVES 228 SOLUTIONS TO ADDRESS IDENTIFIED VULNERABILITIES 229 PREPUBLICATION COPY—Uncorrected Proofs 

CONTENTS xi ALIGNMENT WITH ONGOING FEDERAL GOVERNMENT EFFORTS 231 VALUE OF USING A VULNERABILITIES FRAMEWORK 233 FINAL REMARKS 234 APPENDIXES APPENDIX A COMMITTEE MEMBER BIOGRAPHIES 237 APPENDIX B DISCLOSURE OF UNAVOIDABLE CONFLICT OF INTEREST 245 APPENDIX C THE 2022 INFANT FORMULA SHORTAGE TIMELINES AND ACTIONS 247 APPENDIX D INFORMATION-GATHERING PUBLIC SESSIONS 327 APPENDIX E OTHER COMMITTEES’ CHARGES RELEVANT TO INFANT FORMULA 337 APPENDIX F INFANT FORMULA REGULATORY REQUIREMENTS IN THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, AND THE EUROPEAN UNION, AND HOW THEY COMPARE TO CODEX 341 APPENDIX G DESCRIPTION OF THE INTERNATIONAL CODE OF MARKETING OF BREAST-MILK SUBSTITUTES 351 APPENDIX H EXEMPT INFANT FORMULAS MARKETED IN THE UNITED STATES BY MANUFACTURER AND CATEGORY 355 APPENDIX I SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN BREASTFEEDING SUPPORT 361 APPENDIX J SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN PARTICIPANTS’ EXPERIENCES DURING THE FORMULA SHORTAGE 367 APPENDIX K COMMITTEE RECOMMENDATIONS TO HHS, USDA, AND CONGRESS BY VULNERABILITY CLASSIFICATION 373 PREPUBLICATION COPY—Uncorrected Proofs 

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Preface The infant formula shortage in 2022 was considered by the U.S. Food and Drug Administration (FDA) to be a “perfect storm” in that the sup- ply chain challenges associated with the COVID-19 pandemic, an infant formula recall, and a plant shutdown all contributed to creating a short- age in the supply of infant formula in the United States. The shortage required an extraordinary response from many branches of government and the private sector to address the needs of infants and other vulner- able populations. The shortage and response to it have also illustrated the need for reforms to reduce the risk of triggering future shortages and put safeguards in place to expeditiously mitigate the effect of any future shocks to the supply chain for these critical foods. In this context, the com- mittee focused on the vulnerabilities that were revealed during the short- age, the steps taken by various stakeholders to remediate the crisis as it evolved, and the changes that were made to the system for managing the production and supply chain of infant formula with the goal of identify- ing areas that still must be addressed in the “supply, market competition, and regulation of infant formula in the United States.” Because of the response to the shortage, infant formula and medi- cal foods (as defined in section 5(b)(3) of the Orphan Drug Act) are now designated as critical foods. The response highlighted challenges in the FDA organizational structure contributing to FDA undergoing a major reorganization of the Human Foods Program. The U.S. Department of Agriculture (USDA) has new authorities to manage access to formula for participants in the Special Supplemental Nutrition Program for Women, xiii PREPUBLICATION COPY—Uncorrected Proofs 

xiv PREFACE Infants, and Children (WIC). FDA has commissioned an additional National Academies of Sciences, Engineering, and Medicine (National Academies) study to examine the quality factors used for infant formula notifications, and the U.S. Department of Health and Human Services (HHS) has commissioned a National Academies study on breastfeeding. A study by the National Advisory Committee on Microbiological Criteria for Foods Subcommittee on Cronobacter spp. has also been commissioned by FDA. Congress directed FDA to use the current report by the Committee on Challenges in Supply, Market Competition, and Regulation of Infant Formula in the United States to update the Immediate National Strategy to Increase the Resiliency of the U.S. Infant Formula Market (March 2023) and our report addresses many of the issues identified in that report, including understanding how breastfeeding relates to the analysis of vulnerabilities in the infant formula market. In addition, government as a whole is focus- ing on vulnerabilities within the supply chain and the need to improve preparedness, resiliency and risk management. The committee applauds these actions and hope that our report contributes to building the needed safeguards. The committee was frequently told, in public session and via writ- ten input, that the government and industry responses were ultimately effective, they simply took too long to be initiated. By capturing what was learned from the 2022 shortage and investing in steps to address vulnerabilities, as well as coordinated planning, government and industry can be better prepared to respond quickly in the future and mitigate the impact of a shortage, no matter what the cause. In this context, several of our recommendations focus on how the new authorities granted to FDA and USDA are being implemented. However, the committee also identi- fied roots of some of the challenges in the pre-shortage framework mecha- nisms for regulating, producing, and distributing these products prior to the shortage that need to be addressed to improve overall preparedness and response capabilities for the infant formula sector. The committee received valuable input from the public sessions and written comments. These sessions provided the committee with insights on the many facets that are important for understanding the production, use, and regulation of these products as well as the needs of caregivers who use these products. The committee is grateful for the openness and information these participants provided. The committee also acknowledges that while this report was in review, FDA announced the approval of the reorganization to establish the Human Foods Program that is referenced in the report as a proposed reorganization. The committee anticipates that this program will have an important role in the committee’s recommendations directed at FDA. PREPUBLICATION COPY—Uncorrected Proofs 

PREFACE xv As chair and vice chair of this committee, we are grateful for the commitment and dedication of committee members (see Appendix A) to gather and analyze relevant information and to respect the different areas of expertise among committee members. Consequently, the committee has developed a report that reflects the analysis and insights in the findings, conclusions, and recommendations in a very demanding timeline. The committee had outstanding support for our work from the National Academies’ study staff, including Katherine Delaney and Patricia Cuff (co-directors for the study), Jennifer Stephenson (research associate), Melanie Arthur (senior program assistant); in addition, we appreciate the assistance of Melissa Maitin-Shepard and Michelle DelFavero (science writ- ers) in preparing the final report. FDA served as the sponsor of the study. Barbara O. Schneeman, Chair Ravi Anupindi, Vice Chair Committee on Challenges in Supply, Market Competition, and Regulation of Infant Formula in the United States PREPUBLICATION COPY—Uncorrected Proofs 

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Acronyms and Abbreviations AAP American Academy of Pediatrics ABFA Access to Baby Formula Act of 2022 AI adequate intake ARA arachidonic acid ASPR Administration for Strategic Preparedness and Response CACFP Child and Adult Care Food Program CAC Codex Alimentarius Commission Caco-2 colorectal adenocarcinoma cell CDC Centers for Disease Control and Prevention CFR Code of Federal Regulations CFSAN Center for Food Safety and Applied Nutrition CMS Centers for Medicare & Medicaid Services CODEX Codex Alimentarius CRS Congressional Research Service CSTE Council of State and Territorial Epidemiologists DHA docosahexaenoic acid DOC U.S. Department of Commerce DOD U.S. Department of Defense EBT electronic benefit transfer ERS Economic Research Service xvii PREPUBLICATION COPY—Uncorrected Proofs 

xviii ACRONYMS AND ABBREVIATIONS FAO Food and Agriculture Organization FCN Food Contact Substance Notification FDA Food and Drug Administration FDCA Food Drug and Cosmetic Act FDORA Food and Drug Omnibus Reform Act of 2022 FEMA Federal Emergency Management Agency FNS Food and Nutrition Service FOS fructo-oligosaccharides FPG federal poverty guidelines FPL federal poverty level FSANZ Food Standards Australia New Zealand FSMA Food Safety Modernization Act FTC Federal Trade Commission GAO Government Accountability Office GOS galacto-oligosaccharides GPO group purchasing organization GRAS Generally Recognized as Safe HBMEC human brain microvascular endothelial cell HHS U.S. Department of Health and Human Services HMO human milk oligosaccharide HS Harmonized System Classification ITO Indian Tribal Organization MFGM milk fat globule membrane mPINC Maternity Practices in Infant Nutrition and Care survey MT metric tons NLEA Nutrition Labeling and Education Act NTM Non-tariff measures OECD Organisation for Economic Co-operation and Development OSA on shelf availability PER protein efficiency ratio PIR Poverty Income Ratio PKU phenylketonuria R&D research and development RBMJ Reckitt Benckiser-Meade Johnson RIA regulatory impact analysis PREPUBLICATION COPY—Uncorrected Proofs 

ACRONYMS AND ABBREVIATIONS xix RRMP redundancy risk management plans RTF ready to feed SNAP Supplemental Nutrition Assistance Program STR Special Trade Representative TANF Temporary Assistance for Needy Families UPC Universal Product Code USDA United States Department of Agriculture USITC U.S. International Trade Commission USTR Office of the United States Trade Representative WHA World Health Assembly WHO World Health Organization WIC Special Supplemental Nutrition Program for Women, Infants, and Children PREPUBLICATION COPY—Uncorrected Proofs 

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Glossary Brand—A type of infant formula made by a particular manufacturer and sold under a particular name. Breast milk—Human milk produced by the breast that is inclusive of mother’s own milk, parent milk, and breast/chest milk. Breastfeeding—The act of feeding breast milk to an infant that is inclu- sive of chest feeding. Buffers—Policies or practices that mitigate the impact of a supply disruption. Distributors—Intermediaries in the supply chain that move infant for- mula product from manufacturers to the point of sale (e.g., a store) or point of administration (e.g., a hospital). Exempt Infant Formula—An infant formula that is exempt from certain federal requirements (e.g., nutrients, labeling) and is for use by infants who have inborn errors of metabolism or low birth weight, or who otherwise have unusual medical or dietary problems. Hospitals—Non-retail vendors that administer and provide infant for- mula directly to infants. Manufacturer—A company that produces infant formula and includes manufacturers of finished infant formula products and manufacturers of upstream supply chain products. Non-exempt Infant Formula—Infant formula that meets specific federal nutrient requirements and is intended for use by healthy, term infants. Potentiators—Factors that exacerbate the shock to the system, either by affecting more people or by worsening the shock for those affected. xxi PREPUBLICATION COPY—Uncorrected Proofs 

xxii GLOSSARY Redundancy Risk Management Plan—As defined by FDA using lan- guage from the U.S. Code “a redundancy risk management plan iden- tifies and evaluates risks to the supply of the food, as applicable, for each establishment in which such food is manufactured” and “may identify mechanisms by which the manufacturer would mitigate the impacts of a supply disruption.” Retailer—A person, shop, or business that sells infant formula to include both brick-and-mortar retailers and online retailers. Triggers—Events or actions that disrupt the supply of a key ingredient or infant formula. Vendors—Include retailers and other entities, such as hospitals, that pro- vide infant formula directly to consumers. PREPUBLICATION COPY—Uncorrected Proofs