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Economic Policy


BIDEN INVOKES DEFENSE PRODUCTION ACT TO BOOST BABY FORMULA SUPPLY


THE HOUSE ON WEDNESDAY ALSO PASSED TWO BILLS TO ADDRESS THE SHORTAGE. ONE WOULD
ADD $28 MILLION IN FUNDING FOR THE FDA.

By Tony Romm
Updated May 18, 2022 at 9:58 p.m. EDT|Published May 18, 2022 at 3:12 p.m. EDT

A sign advises customers at a Target in Stevensville, Md., that they can
purchase only limited quantities of baby formula. (Jim Watson/AFP/Getty Images)
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President Biden on Wednesday invoked the Defense Production Act to address a
nationwide shortage of baby formula, tapping a Korean War-era law to ramp up
domestic manufacturing rapidly as parents are scrambling and store shelves are
running bare.

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The White House said the directive requires the suppliers of key formula
ingredients to prioritize the delivery of those resources to formula producers,
adding that the administration will simultaneously launch a new operation to
ensure faster flights of imports using Defense Department air cargo contracts.

The moves reflected the magnitude of the current shortage, which has seen some
parents driving for miles on end to locate formula, including specialty products
that are critical to infants’ health. The U.S. government previously tapped the
same 1950 law in the early days of the coronavirus pandemic, racing then to
ensure the speedy production of key equipment as the public health crisis
worsened.

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The new White House orders arrived just hours before Congress late Wednesday
took its own steps to try to ease the supply crunch. The House overwhelmingly
approved a bill that would expand access to formula for low-income Americans.
Democrats then drove the adoption of $28 million in new funding for the Food and
Drug Administration, hoping to prevent future disruptions and enhance safety
inspections in the wake of a major plant shutdown in Michigan over sanitation
concerns.

Tell The Post: How has the formula shortage impacted you?

The closure of that plant, operated by Abbott Laboratories, drew fresh scrutiny
earlier in the day from a wide array of top Democrats. Party lawmakers including
Sens. Ron Wyden (Ore.), Cory Booker (N.J.) and Elizabeth Warren (Mass.) fired
off sharply critical letters questioning the company’s business practices —
including its decision to spend recent record revenue on stock buybacks rather
than safety improvements.

“As Abbott spent billions buying back its own stock, it appears that it failed
to make necessary repairs to fix a critical manufacturing plant of infant
formula located in Michigan,” charged Wyden, the chairman of the tax-focused
Senate Finance Committee, in a missive to the company that marked the start of a
panel probe.

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Vicky Assardo, a spokeswoman for Abbott, stressed in response that the company
is a “responsible and transparent taxpayer, paying all of its taxes owed in
every country in which it operates.” She added that stock buybacks “are not
impacting our ability to invest in or reopen” the facility, located in Sturgis,
Mich., as the company’s “strong balance sheet helps us respond more quickly to
the current challenge.”

Democrats propose funds to ease formula shortage as kids are hospitalized

The flurry of efforts illustrated the growing sense of urgency in the nation’s
capital, where Democrats and Republicans alike have felt voters’ ire in recent
weeks about the shortage. The trouble also has compounded parents’ broader
economic anxieties as the costs of gasoline, groceries and other goods are
rising amid the fastest uptick in inflation in roughly 40 years.

Much of the disruption is tied to the halt in production at the Abbott facility,
since the company is one of four manufacturers that together produce about 90
percent of the country’s supply. In February, Abbott recalled its formula amid
reports that bacteria sickened two children and led to the deaths of two others,
though the company has maintained there is no definitive link between the cases
and its products.

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In recent days, the U.S. government has worked with Abbott on a way to reopen
the plant safely. But the process could take months, leaving lawmakers and White
House officials scrambling for ways to get formula back on store shelves more
quickly. That included the president’s decision on Wednesday to invoke the
Defense Production Act, a law that even some Democrats initially felt might not
cover food security issues. Biden coupled his announcements with a public letter
formally requesting key federal agencies “take all appropriate measures
available to get additional safe formula into the country immediately.”

On Capitol Hill, meanwhile, some lawmakers focused their scrutiny on the FDA,
arguing the top safety agency should have acted more aggressively — and sooner —
to prevent the supply crunch. A whistleblower even tried to warn the FDA about
safety concerns at the Abbott plant last October, according to Rep. Rosa L.
DeLauro (D-Conn.), the top lawmaker on the House Appropriations Committee, who
has been in touch with the still-unnamed individual. But the FDA did not
interview the source until late December, the congresswoman has said, prompting
her to join other lawmakers in blasting the agency this week as failing to
conduct proper oversight.

To boost the agency, DeLauro chiefly crafted the measure provisioning $28
million in new FDA funding, which the House approved on a largely party-line
vote of 231 to 192.

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“The bill is really essential because the FDA plays such a critical role, and
what we want to do is get the product on the shelf and make sure it’s
manufactured in the safest way,” she said in an interview.

Lawmakers also overwhelmingly adopted a separate bill that aims to ease the
burden on low-income parents by allowing the federal Women, Infants and Children
(WIC) Program — a major national purchaser of formula — to source it from more
foreign suppliers. That passed on a vote of 414 to 9.

“WIC recipients utilize formula at roughly double the rate of their
nonparticipating families, ensuring this crisis has had a disproportionate
impact on communities and families with the highest needs,” said Rep. Jahana
Hayes (D-Conn.), the author of the bill. She stressed in a speech on the House
floor that its approval would assist low-income families during the current
shortage and in the event of future recalls.

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Democrats have promised additional actions to come: At a news conference earlier
this week, they teased a forthcoming hearing featuring witnesses from the FDA
and top formula manufacturers, including Abbott, Gerber and Reckitt. And party
lawmakers said they had asked for a federal investigation into the specific
causes of the current crunch that has depleted store shelves nationally.

The fate of those legislative efforts hinges on the Senate, where Majority
Leader Charles E. Schumer (D-N.Y.) said Wednesday he hoped to act swiftly in
response to the shortage. Noting the bipartisan nature of the House bill to
expand formula access for low-income Americans on WIC, Schumer called on
lawmakers to send it to Biden’s desk soon without a lengthy floor fight.

But the House debate on the $28 million in FDA funding telegraphed a tougher
battle on the horizon, since Democrats need GOP support to forge ahead in the
narrowly divided Senate. Late Wednesday, House Republicans teed off on the
measure, which Rep. Kay Granger (Texas), the party’s top lawmaker on the
Appropriations Committee, said “does nothing to force the FDA to come up with a
plan to address the shortage.”

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In recent days, aides to Senate GOP leadership have expressed further skepticism
about the need for such spending. Many of the party’s top lawmakers also have
assailed the Biden administration, arguing it should have anticipated the crisis
and acted sooner to address it.

“We need to help families solve it. It should have been foreseeable. And it’s
unfortunate. And I’m willing to look at any solution,” Sen. Roy Blunt (R-Mo.)
said this week.

But, he added of the Democrats’ new bill: “I’m not sure it’s a solution. You
know, every problem can’t be solved with immediate money.”

Mike DeBonis and Laura Reiley contributed to this report.

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