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

Leslie Hodges, David E. Davis and Jessica E. Todd

No 355798, Economic Research Report from United States Department of Agriculture, Economic Research Service

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.

Keywords: Agricultural and Food Policy; Demand and Price Analysis; Research Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 47
Date: 2025-04
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uersrr:355798

DOI: 10.22004/ag.econ.355798

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