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Manufacturers' Bids for Infant Formula Rebate Contracts, 2013–23

Author

Listed:
  • Hodges, Leslie
  • Davis, David E.
  • Todd, Jessica E.

Abstract

The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides participating formula fed infants with free infant formula. This study estimates that, in 2020, about half of all infant formula in the United States was consumed by WIC infants. Federal law requires that WIC State agencies use a cost containment system to reduce infant formula costs. Most State agencies use a single supplier, competitively bid rebate program. The State agency awards a contract to the infant formula manufacturer offering the lowest net wholesale price per unit of infant formula, defined as the difference between the manufacturer’s wholesale price and the manufacturer’s rebate to the State agency. This study summarizes recent trends in State agencies’ infant formula rebate contracts and examines how factors, such as declining shares of infants born in the United States participating in WIC, contribute to these trends. Compared with previous contracts, contracts in effect in March 2023 resulted in greater savings to WIC for infant formula purchases. After adjusting for inflation, net wholesale prices decreased by $1.49 per 90 fluid ounces of reconstituted formula from previous contracts on average.

Suggested Citation

  • Hodges, Leslie & Davis, David E. & Todd, Jessica E., 2025. "Manufacturers' Bids for Infant Formula Rebate Contracts, 2013–23," Economic Research Report 355798, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersrr:355798
    DOI: 10.22004/ag.econ.355798
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    References listed on IDEAS

    as
    1. Oliveira, Victor & Davis, David E., 2006. "Recent Trends and Economic Issues in the WIC Infant Formula Rebate Program," MPRA Paper 6657, University Library of Munich, Germany.
    2. Oliveira, Victor & Davis, David, 2015. "Manufacturers’ Bids for WIC Infant Formula Rebate Contracts, 2003-2013," Economic Information Bulletin 206808, United States Department of Agriculture, Economic Research Service.
    3. David Davis, 2014. "Buyer Alliances as Countervailing Power in WIC Infant-Formula Auctions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(2), pages 121-138, September.
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    7. David E. Davis, 2012. "Bidding for WIC Infant Formula Contracts: Do Non-WIC Customers Subsidize WIC Customers?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 80-96.
    8. David E. Davis, 2012. "Bidding for WIC Infant Formula Contracts: Do Non-WIC Customers Subsidize WIC Customers?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 80-96.
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    12. Oliveira, Victor & Frazao, Elizabeth & Smallwood, David M., 2010. "Rising Infant Formula Costs to the WIC Program: Recent Trends in Rebates and Wholesale Prices," Economic Research Report 59384, United States Department of Agriculture, Economic Research Service.
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