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Background Press Call by Senior Administration Officials on New Actions to Address Infant Formula Shortage

May 19, 2022

Via Teleconference

12:09 P.M. EDT

MR. MUNOZ: Hi, everybody. Thank you for joining us this afternoon for a background press call to discuss yesterday's new actions that are going to address the infant formula shortage in the United States and expand access to safe infant formula.

This call will be on background, attributable to "senior administration officials." It'll be embargoed until the conclusion of the call.

On today's call, we have [senior administration officials].

We have a, you know, download at the top on yesterday's actions, and then we'll take a few questions.

With that, I'll kick it to [senior administration official].

SENIOR ADMINISTRATION OFFICIAL: Good afternoon, everyone. President Biden knows that parents across the country are worried about finding enough infant formula to feed their baby. That is why he directed his administration to do everything possible to ensure that there is enough safe infant formula in the country available for families that need it.

Yesterday, the President invoked the Defense Production Act to ensure that manufacturers have the necessary ingredients to make safe, healthy infant formula here at home.

The DPA empowers the government to require suppliers to direct needed resources to infant formula manufacturers before any other customer who may have ordered that good.

Yesterday, the President gave HHS the authority to order suppliers to direct needed resources to infant formula manufacturers before any other customer who may have ordered that good.

So with this authority, we can direct firms to prioritize and allocate the production of key infant formula inputs as needed. This can and will help increase production and speed up supply chains.

Just an example of how this works: There are a range of things needed to make formula -- oil, fat blend, labels, cans. The company that makes one of those items, like a label, have a lot of customers, one of which happens to be infant formula manufacturers. And they are likely a very small share -- those infant formula manufacturers are likely a very small share of the overall market for that good.

By having DPA authority available for infant formula, we make sure formula manufacturers are at the top of the list for that item and can maintain the higher levels of production that the companies put in place in February to address the shortage caused by the Abbott plant being shut down.

Additionally, as the Abbott plant in Sturgis, Michigan, ramps up production over the coming weeks and months, there could be a tightening of supplies across key infant formula inputs. DPA authorities, for example, can be used to prioritize production of key equipment that can help suppliers expand.

And last, with some important context, DPA authorities were invoked similarly at the outset of the COVID-19 pandemic to prioritize needed supplies to fight the pandemic.

Yesterday, President Biden also announced Operation Fly Formula to speed up the import of infant formula and start getting more formula to stores as soon as possible.

Under Operation Fly Formula, the Department of Health and Human Services and U.S. Department of Agriculture will use Department of Defense contracted commercial aircraft to pick up overseas infant formula that meets U.S. health and safety standards so it can get to store shelves faster.

Bypassing traditional cargo routes will speed up the importation and distribution of formula and serve as an immediate support as manufacturers continue to ramp up production.

These announcements build on previous administration actions, including an agreement by the FDA and Abbott Nutrition detailing next steps to reopen Abbott Sturgis plant, FDA guidance that will allow major formula manufacturers to safely import formula that is not currently being produced for the U.S. market, efforts to cut red tape and provide consumer flexibility on types of formula they can provide, and calling on the Federal Trade Commission and State Attorney General to crack down on price gouging or unfair market practices.

This is one of the President's top priorities, and the administration will continue working overtime to get more formula to stores as soon as possible.

Thank you.

MR. MUNOZ: All right. Thank you, [senior administration official]. Let's take a few questions. Ali Rogan, PBS.

Q: Hi. Thank you so much for doing this call. What have formula companies been telling you about what they need in terms of these raw materials and in terms of flight support?

SENIOR ADMINISTRATION OFFICIAL: So, what the companies have told us is that they have been able to ramp up production quite rapidly since February, and in some instances, 50 percent to 30 percent above their normal production levels. And that is why today we are making more formula in America than we were back in February.

And they -- and, in addition, they have said that they want to be able to maintain this kind of high-octane, high-tempo production level through -- for the months ahead to make sure that we are -- we have adequate supply coming out to the market.

MR. MUNOZ: Let's go to Alex Alper at Reuters.

Q: Thank you guys so much for doing this call. You gave examples of products that this could be used for, but could you say specifically which ones the DPA invocation will be used for?

And as a second sort of follow-up, you mentioned that there could be a tightening of supply for some of these items. Does that mean that currently there is no tightness of supply and that the real issue is just ramping up production capacity and not a lack of these key ingredients?

SENIOR ADMINISTRATION OFFICIAL: We are still having active and ongoing conversations with the companies, so I have nothing more specific to report at this time about the specific instances in which we're going to be using the authority. What the authority does is empower the Secretary of Health and Human Services to make these individual decisions on a case-by-case basis.

Q: And then, as to the second point, could you clarify whether there currently is any tightness of supply on these ingredients or if, really, it's a, you know, potential future issue?

SENIOR ADMINISTRATION OFFICIAL: We are still having active, ongoing conversations with the companies.

MR. MUNOZ: Let's go to Alyssa Rosenberg at Washington Post.

Q: Hi. Thanks so much, Kevin. I know earlier in the week one of the things that the administration was discussing was efforts to monitor supply throughout the country and to attempt to work with retailers to prioritize rural areas or other areas where customers didn't have as many options to shop around for formula at multiple stores.

Can you give us an update on what, if any, progress you've made there, or anything you've learned about areas that are in particular need, and what actions are underway to try and get formula to those areas?

SENIOR ADMINISTRATION OFFICIAL: We continue to work closely with governors, state WIC agencies, and with retailers to both understand -- for the -- with the retailers. They have been working very closely with us to help us understand where -- where supply is distributed currently in the country. And with the -- with the governors and with the WIC agencies at the state level, they have done tremendous work to provide regulatory flexibility so that customers can access any product that is available in their state.

The situation, based on the conversations we're having, is very different all around the country. It seems to be very state by state. There are some states in which the local authority, the retailers are saying they are not seeing challenges. And there are some states where, you know, people have identified, have -- have suggested that there could be.

But it has been interesting to hear the number of states who suggest that they are not actually seeing (inaudible) in their market (inaudible).

Q: Just to follow up on that --

MR. MUNOZ: All right --

Q: Sorry, Kevin. Can I follow up on that quickly?

In situations where formula is, in fact, short, is the government anticipating asking retailers to shift their stocking plans to try and serve those areas where customers may not have as many choices or options to shop around?

SENIOR ADMINISTRATION OFFICIAL: The data has not suggested to us that there is that kind of shortness in any of those geographies at this point, so I have nothing further to report on that.

MR. MUNOZ: All right, let's go to Maegan Vazquez at CNN.

Q: Hi, can you hear me?

SENIOR ADMINISTRATION OFFICIAL: Oh, can I -- can I just offer one more point on the shelves -- stocking? The data -- there is data out there that -- it is a little bit difficult to interpret the data on shelf availability that retailers and industry analysts typically rely on because the manufacturers have changed the types of products that they are offering out in the market. And so, that is why we are working closely with the retailers and the manufacturers to make -- to understand the distribution right now.

MR. MUNOZ: Thanks, [senior administration official]. Let's go back to Maegan, CNN.

Q: Hi, can you hear me?

MR. MUNOZ: Yep.

Q: Great. On Operation Fly Formula, can you all walk us through some of the logistics in terms of where is this formula being flown into, what communities will get the formula, how is that determined? And generally speaking, when will we see planes start to land with this formula?

MR. MUNOZ: [Senior administration official], do you want to take that?

Q: Sure. I'm happy to take that. So, once we have identified a manufacturer that has available formula, we work with them to secure the specifics. Because enabled -- if we're going to use DOD-contracted commercial aircraft, we need to have a pick-up place and a drop-off place, and the amount, and other specifics.

So, it requires some negotiations, again, with the manufacturer of the formula.

We work with DOD to identify contracted commercial air -- you know, get them up in the air. And often, they are -- I shouldn't say "often" -- but they will land at airfields that are close to the factory or a manufacturing facility. It gets loaded onto the aircraft. The manufacturer actually tells us where it needs to be delivered, and that is to one of their facilities here in the United States -- because a portion of it, actually, when it gets offloaded, has to go through FDA inspection. And then we will, from there, work through vendors and retailers to come to that manufacturing facility to pick it up and hopefully get it out to the communities that are most in need.

SENIOR ADMINISTRATION OFFICIAL: And we are actively in conversations and discussions with manufacturers about where there might be cargo around the world that would be suitable for their procedures that [senior administration official] just laid out.

MR. MUNOZ: All right. A couple more questions. Let's go to Michael Shear with New York Times.

Q: Hey, guys. Thank you. I'd like to push just a little bit more on the question of the -- of the DPA and the materials that you're hoping to facilitate to the manufacturers.

It's almost impossible to judge whether this has -- is going to do anything until you know whether there is actually a shortage of formula, materials, and ingredients to help prioritize.

So, I mean, I guess the question is: I don't see how you can expect us to write about this without telling us if you actually know whether there is a shortage of any materials -- cans, labels, or anything else. And if you don't know that there's such a shortage, how is this -- why are you even invoking this?

SENIOR ADMINISTRATION OFFICIAL: I want to clarify one piece of the DPA authority. This isn't just about a situation about shortages, it's also about speeding up the delivery through the supply chain.

A supplier has a lot of different customers, and they may not realize that the infant formula manufacturer is one of those suppliers, especially if they are a second-, third-tier supplier to that infant formula manufacturer. So that gives us the authority to work closer with the infant formula manufacturers and pull stuff through the supply chain faster.

It's not a situation where you have to identify a shortage; it can also be used to make things faster.

MR. MUNOZ: Thanks. Let's go to Zeke Miller with AP.

SENIOR ADMINISTRATION OFFICIAL: And I'll just -- I'm just going to add one more point, sorry, on the, like -- on the making things faster. As we have said, we will do things to cut days off of production schedules and timelines to make sure that we are urgently moving quickly to get supply to store shelves.

Q: Thanks. To follow up to Mike's question there: If the DPA is -- is as significant as you're saying, why wait until now to invoke that authority to speed up any -- some of those bottlenecks? And then, you know, why couldn't this have been done a couple of months ago?

And then secondly, can you name the states that haven't issued WIC waivers yet, please?

SENIOR ADMINISTRATION OFFICIAL: So, on DPA, we have been clear from the outset that we are going to pull every lever that we can find when we need to deploy a lever to make sure that there is safe infant formula available to the American people.

The invoking of the DPA builds upon a lot of actions and steps that we have already taken. And we continue to look and execute on a range of options that can meaningfully expedite production and speed up supply chains for producing baby formula.

SENIOR ADMINISTRATION OFFICIAL: And on your question about the WIC waiver, USDA has a -- has a detailed website that lists what states have taken which actions. Kevin can -- can get that to you, but it's on USDA's website.

MR. MUNOZ: I'm happy to.

Let's do one more question. Josh Lederman at NBC.

Q: Hey, thanks for doing this. Senators Patty Murray and Casey are calling on the administration to appoint basically a "Baby Formula Czar." They say they really want to see a point person who's focused exclusively on this issue.

Is the White House open to that idea? Do you have any thoughts on whether that would be useful to further ramping up these efforts at this time?

SENIOR ADMINISTRATION OFFICIAL: As you know, we have been taking really urgent action for the last several months and in recent weeks to do everything we can to get more formula onto U.S. shelves and into the country and coming off of manufacturing lines.

I don't have anything to preview on that today.

MR. MUNOZ: All right. Thank you, everybody. You know where to find me if you have follow-ups. And have a good day, guys.

12:26 P.M. EDT

Joseph R. Biden, Background Press Call by Senior Administration Officials on New Actions to Address Infant Formula Shortage Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/355995

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