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Amid continuing baby formula shortage in the U.S., Abbott Laboratories (NYSE:ABT) plans to continue paying the rebates through the federal WIC nutrition program for another month as one of its key production plants has yet to reach full production capacity.
Previously, the company agreed to provide rebates until Sep. 30 for WIC beneficiaries. With contracts for supplying formula in 34 states, Abbott (ABT) dominates WIC, known as the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
The extension of rebates will mean WIC beneficiaries could obtain Abbott’s (ABT) Similac baby formula or a rival product free of charge for another month. Abbott spokesperson John Koval confirmed the decision.
Koval said that the company’s Sturgis plant, which the FDA previously shut due to safety concerns sparking a nationwide shortage of baby formula, has yet to produce the Similac brand. He added that the company was “working to restart Similac production as soon as we can” and will disclose more information as they become available.
Meanwhile, the Biden administration is also considering a move to again extend federal flexibilities for low-income families to allow access to formula through the WIC program through year-end, Reuters reported Tuesday.
Given Abbott’s (ABT) dominance in WIC, extending the waivers will allow more flexibility for low-income families to buy other available formula brands.
Companies operating in the U.S. baby formula market include Reckitt Benckiser (OTCPK:RBGPF) (OTCPK:RBGLY) and the Gerber division of Nestle (OTCPK:NSRGF)(OTCPK:NSRGY).
Amid baby formula shortage, revenue from Abbot’s (ABT) nutrition segment fell ~16% YoY in 1H 2022 to $1.4B.