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Recent Trends and Economic Issues in the WIC Infant Formula Rebate Program

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Author Info

  • Oliveira, Victor
  • Davis, David E.

Abstract

Over half of all infant formula sold in the United States is purchased through the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Typically, WIC State agencies obtain substantial discounts in the form of rebates from infant formula manufacturers for each can of formula purchased through the program. The cost to WIC for each can of formula provided through the program has two components: (1) net wholesale price, which is equal to the wholesale price of formula minus the amount of the rebate; and (2)retail markup, which is equal to the retail price minus the wholesale price. This analysis suggests that retail markup accounts for most of the cost to WIC of infant formula in most States. However, both cost components have increased over time. The recent increase in both net wholesale price and retail markup coincides with the introduction of higher priced supplemented infant formulas. Conditions may change after the market adjusts to these new formulas.

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Bibliographic Info

Paper provided by United States Department of Agriculture, Economic Research Service in its series Economic Research Report with number 7228.

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Date of creation: 2006
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Handle: RePEc:ags:uersrr:7228

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Related research

Keywords: WIC; Special Supplemental Nutrition Program for Women; Infants; and Children; infant formula; rebates; net wholesale price; retail markup; wholesale price; Food Assistance and Nutrition Research Program; FANRP; Food Consumption/Nutrition/Food Safety;

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References

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  1. Oliveira, Victor & Prell, Mark A. & Smallwood, David M. & Frazao, Elizabeth, 2004. "Wic And The Retail Price Of Infant Formula," Food Assistance and Nutrition Research Reports 33873, United States Department of Agriculture, Economic Research Service.
  2. Prell, Mark A., 2004. "An Economic Model Of Wic, The Infant Formula Rebate Program, And The Retail Price Of Infant Formula," Food Assistance and Nutrition Research Reports 33879, United States Department of Agriculture, Economic Research Service.
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Cited by:
  1. Stefania Albanesi & Claudia Olivetti, 2009. "Gender Roles and Medical Progress," NBER Working Papers 14873, National Bureau of Economic Research, Inc.
  2. Oliveira, Victor & Frazao, Elizabeth & Smallwood, David M., 2011. "The Infant Formula Market: Consequences of a Change in the WIC Contract Brand," Economic Research Report 118020, United States Department of Agriculture, Economic Research Service.
  3. Saitone, Tina L. & Sexton, Richard J. & Volpe, Richard J., III, 2012. "Markups and Promotional Patterns of California WIC-Authorized Foods," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124927, Agricultural and Applied Economics Association.
  4. Oliveira, Victor & Frazao, Elizabeth, 2009. "The WIC Program: Background, Trends, and Economic Issues, 2009 Edition," Economic Research Report 55839, United States Department of Agriculture, Economic Research Service.
  5. David E. Davis, 2009. "Bidding for WIC infant formula contracts: Do non-WIC customers subsidize WIC customers?," SDSU Working Papers in Progress 52009, South Dakota State University, Department of Economics, revised Jan 2011.

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