That means that about one-third of the formula industry's total $ 1 billion sales comes from the WIC program, which is administered by the Agriculture Department.
About $ 350 million of that is expected to go toward purchase of infant formula. The WIC program, which each month provides free infant formula to about 1 million low-income children who are under 1 year old and need a diet supplement, plus other foods to children ages 1 to 5 and nursing mothers, has an overall appropriation of $ 1.663 billion for fiscal 1987.
Howard Scholick, spokesman for Ross, said that by giving a single company a WIC monopoly within a state, the change will disrupt the competitive market distribution system intended under the program law, taking away from low-income mothers the right to choose any brand of formula from among those on the grocery shelf. The industry, led by Ross Laboratories, whose Similac has 55 percent of the total national infant formula market, and Meade Johnson, whose Enfamil holds 35 percent, is opposing the rebate plan. To date, two states have instituted the change.
The program would still operate through a system of coupons redeemable at grocery stores, but parents could use the coupons only for the brand offered by the producer designated by the state. In return, the company offering the biggest rebates to a state government would become the sole supplier of infant formula offered through the WIC program in that state. So, in an effort to stretch the federal appropriation and serve more children, some states are moving to force the companies to grant them rebates of 30, 40 or 50 cents on each can of infant formula provided to low-income children through the WIC program. The states, which administer the women-infants-children (WIC) food program, fear they may have to cut back services to children if infant formula prices keep rising faster than WIC appropriations. A dispute over a key element of one of the federal government's most highly praised programs is pitting the $ 1 billion-a-year infant formula industry against child-feeding agencies in a number of states.
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