By Leah Douglas
(Reuters) - The U.S. Department of Agriculture will temporarily cover the cost of baby formula for low-income families dependent on government discounts in states contracted with formula makers Nestle SA (SIX:NESN) and Reckitt Benckiser Group's Mead Johnson, the agency said Wednesday.
A nagging shortage of infant formula has limited access to the vital product nationwide, and families participating in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) program administered by USDA have been particularly constrained.
WIC shoppers can typically only buy formula produced by the company that has a contract with their state, territory, or tribe. Infants on WIC consume about 56% of the nation's formula. [L2N2XF204]
Abbott Laboratories (NYSE:ABT), the biggest participant in the WIC program whose Michigan plant closure due to complaints of bacterial contamination greatly exacerbated the national shortage, has said it will honor its rebates even if shoppers buy competing formulas.
USDA said it would step in to cover the cost of competing formulas in states with Reckitt or Nestle contracts, if the contracted formula is not available, using authority granted to the agency under the Access to Baby Formula law signed by President Biden on May 21.
The agency sent letters to states with Reckitt and Nestle contracts on May 24 encouraging them to work with the companies to negotiate temporary flexibility in their formula contracts by covering a wider range of their own or competitors' products.
Reckitt and Nestle did not immediately respond to requests for comment.
"WIC families are depending on us for the vital nourishment their babies and children need to thrive," said agriculture secretary Tom Vilsack in a statement. "We cannot let them down."