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Baby formula shortage leads House to introduce bill to address ongoing crisis

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Yahoo Finance's Anjalee Khemlani details the legislation Congress is putting forth to address and alleviate the pains families are feeling from the ongoing baby formula shortage, as well as how the FDA is pushing formula production.

Video Transcript

[MUSIC PLAYING]

- Welcome back. The nationwide baby and infant formula shortage is prompting Democratic lawmakers to act fast. For more, here's Yahoo! Finance's Health Reporter, Anjalee Khemlani. Now, Anjalee, I understand that Speaker Pelosi held a presser today.

ANJALEE KHEMLANI: A number of other congresspeople were there as well. Really, trying to address this shortage and looking at the root cause of it is really the goal as well as how to prevent such an issue from happening in the future. So what the House is looking at doing really is creating bills that help the FDA to be alert in the event of another crisis, a shortage, or a contamination issue, supply chain issue, et cetera, as well as to be able to activate some sort of recall.

Right now, it is based on the companies voluntarily recalling in the event of an issue, like we saw with Abbott. If you recall, this issue was really exacerbated by Abbott having to shut down a plant in February that really provided a lot of the specialty formula. We saw representative Jahana Hayes saying that this bill will help give the state and territory governments really the power that they need in order to also provide flexibility.

Because as you can see, 50% of formula purchased in the US is through the WIC program. That's the Women, Infants and Children program. And so those beneficiaries are really hurting right now. While the US does provide 90% of the baby formula that it uses, we do get some imports as well. And so there's also been a focus on really bringing it in from there. So as you can see, representative Jahana Hayes saying that much there.

We also heard from Congresswoman Rosa DeLauro saying that the Abbott contract for the WIC program accounts for 1.2 million babies across the country and other companies, like Gerber as well as Reckitt, are also part of those contracts. And they are going to be brought in next week in the Energy and Commerce Committee.

According to representative Frank Pallone, they're going to be discussing their issues as well and be questioned about how to avoid this next time. They account for 80% of the supply of baby formula. There's also been as well an investigation opened into this issue to see what exactly happened. Again, a lot of frustration, as you can imagine. But we're getting a pretty widespread government response here.

- So then talk about some of the other government action that's taken place this week.

ANJALEE KHEMLANI: Yeah. So in addition to what Congress is doing, we know that the White House has been in touch with retailers like Walmart, Target, and Amazon to limit sales. We also know that they've been in touch with the manufacturers to figure out how to increase production. And to that effect, we saw that Reckitt, for example, did increase about 30% production. And Nestle, which is the maker of Gerber, has brought in from overseas locations, which includes the Netherlands.

And we also have seen these companies really look-- or sorry, the FDA looking at other companies in other countries that are either similarly regulated or may already have FDA-approved sites that could pick up the slack. We've also seen the FDA look at domestic manufacturing as a way out of this. And really, just a lot of focus on what the FDA can do as well in the future, of course.

Because this affects so many individuals who are on government benefits, that is where a lot of this government response is coming from. I also want to point out that one of the points in the bill is going to also include $20 million in new funding for the FDA. So really, like I said, just a lot of effort going into this from the government's side. Back to you.

- Certainly welcome relief for a lot of desperate parents out there. Thank you so much. Anjalee Khemlani there.