Following Fischer-led request, GAO plans to investigate sole-source infant formula contracts

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At the request of U.S. Senator Deb Fischer (R-NE) and eight of her Republican colleagues, the Government Accountability Office (GAO) recently confirmed that it will investigate the impact of sole-source contracts in the Special Program of supplementary nutrition for women and infants. , and Children (WIC) may have had on recent infant formula shortages.

Senator Fischer and her colleagues told the GAO that the temporary closure earlier this year of the Abbott Laboratories infant formula manufacturing plant in Sturgis, Michigan, “has resulted in predictable shortages of certain infant formula for WIC participants, but also affects non-WIC formula buyers, retailers and grocers,” according to an Oct. 3 letter they sent to U.S. Comptroller General Gene Dodaro.

“Because the infant formula shortage required a federal response from Congress and the administration, an assessment of WIC’s sole-source contracts and its impact on all market participants is warranted,” the senators wrote.

According to their letter, states in 1989 were required to implement cost containment systems under the Infant Nutrition and WIC Reauthorization Act to deal with the high cost of infant formula under the WIC.

As a result, all states have sole-source contracts with infant formula manufacturers, which pay rebates to state WIC agencies. The rebates have saved the WIC program between $1 billion and $2 billion a year, according to the senators’ letter.

“While these savings have allowed the WIC program to further expand funding, some stakeholders have expressed concerns about the unintended market consequences of these contracts,” wrote Senator Fischer and her colleagues, including US Sens. Shelly Moore Capito (R-WV), Susan Collins (R-ME) and Thom Tillis (R-NC).

The senators requested that the GAO analysis address several issues, including how the price of infant formula has changed for WIC and non-WIC customers as a result of the introduction of single-source rebates, and the impact sole-source contracts and minimum infant formula storage requirements. independents and small retailers, among others.

Senator Fischer and her colleagues also want the GAO to recommend any legislative or regulatory changes that might improve sole-source contracts.

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