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Abstract
Over half of all infant formula consumed in the United States is purchased through USDA's Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). WIC receives significant price rebates from manufacturers in return for exclusive rights to provide infant formula to WIC participants. Congress, concerned about the rise in the price of infant formula since the WIC rebate program began, directed USDA's Economic Research Service to report on the availability of infant formula and to compare the cost of formula that is included in the WIC rebate program with the cost of formula not in the program. The findings show that infant formula from the three major manufacturers, which accounts for 99 percent of all sales, was available in supermarkets in each of the market areas examined. Products in powder form from a fourth manufacturer were also available in supermarkets in 83 percent of the market areas. The price of the WIC contract brand for milk-based brands of infant formula (the most common type) exceeded the price of the noncontract brands in 23 of the 55 market areas for powdered formula and in 31 of the 55 market areas for liquid concentrate. The price of the WIC contract brand for soy-based formula exceeded the price of noncontract brands in 33 market areas for liquid concentrate and in 34 market areas for powdered formula. The study involves the first comprehensive national analysis of retail pricing for infant formula, enabling direct examination of prices faced by non-WIC consumers; most previous studies looked only at wholesale prices. This final report bolsters an interim report to Congress, published in April 2001, in two ways: It includes average retail prices for soy-based infant formula, and the price analysis is based on a more refined specification.