Food Assistance
Potential to Serve More WIC Infants by Reducing Formula Cost Gao ID: GAO-03-331 February 12, 2003The Department of Agriculture's Food and Nutrition Service (FNS) provided about $3 billion to state agencies in fiscal year 2001 for food assistance, including infant formula, through its Special Supplemental Nutrition Program for Women, Infants and Children (WIC). Most infants receiving formula are given a milk- or soy-based standard formula. To stretch program dollars, each state WIC agency contracts with a single company for purchases of that company's standard formula for which they receive rebates. These rebates totaled $1.4 billion in fiscal year 2001. Rebates do not apply to other companies' brands of standard formula (noncontract standard formula) or to nonstandard formulas designed to meet special medical or dietary conditions. GAO was directed to examine the extent that WIC agencies have restricted the use of noncontract standard formula to lower cost of the WIC program.
As of February 2002, all 51 of the state WIC agencies included in our survey had policies to restrict the use of noncontract standard formula. Three of the 51 agencies prohibited the use of this formula entirely. The other 48 agencies restricted its use to specific situations, such as if medically prescribed or if needed for religious reasons. Seven of these 48 agencies also set percentage limits, such as 4 percent of all standard formula issued, on the use of noncontract standard formula. In fiscal year 2002, 3.3 percent of the infants using formula in the WIC program received a noncontract standard formula, while 90.3 percent received the contract brand. The remaining 6.4 percent received a medically prescribed nonstandard formula for special medical or dietary needs. There were wide variations between WIC agencies in the percentage of infants who received noncontract standard formula, ranging from a low of zero, for the 3 agencies that prohibited its use, to 10.5 percent. Likewise, the percentage of infants receiving medically prescribed nonstandard formula ranged from 0.2 percent to 27.7 percent. FNS has not routinely collected from WIC agencies the data that would allow it to monitor the effectiveness of these agencies in restricting the use of either noncontract standard or nonstandard infant formula. Buying noncontract standard formula brands cost the WIC program an estimated $50.9 million in foregone rebates in fiscal year 2002. Although it may be neither feasible nor desirable to prohibit all purchases of noncontract standard formula, rebates would have increased by $13.8 million if every state had a noncontract standard formula usage rate no higher than the average of 3.3 percent reported across all agencies.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-03-331, Food Assistance: Potential to Serve More WIC Infants by Reducing Formula Cost
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Report to Congressional Committees:
United States General Accounting Office:
GAO:
February 2003:
Food Assistance:
Potential to Serve More WIC Infants by Reducing Formula Cost:
GAO-03-331:
GAO Highlights:
Highlights of GAO-03-331, a report to the House and Senate
Committees on Appropriations, Subcomittees on Agriculture:
Why GAO Did This Study:
The Department of Agriculture‘s Food and Nutrition Service (FNS)
provided about $3 billion to state agencies in fiscal year 2001 for
food assistance, including infant formula, through its Special
Supplemental Nutrition Program for Women, Infants and Children
(WIC). Most infants receiving formula are given a milk- or soybased
standard formula. To stretch program dollars, each state WIC
agency contracts with a single company for purchases of that
company‘s standard formula for which they receive rebates. These
rebates totaled $1.4 billion in fiscal year 2001. Rebates do not
apply to other companies‘ brands of standard formula (noncontract
standard formula) or to nonstandard formulas designed to
meet special medical or dietary conditions. GAO was directed to
examine the extent that WIC agencies have restricted the use of
noncontract standard formula to lower cost of the WIC program.
What GAO Found:
As of February 2002, all 51 of the state WIC agencies included in our
survey had policies to restrict the use of noncontract standard
formula.
Three of the 51 agencies prohibited the use of this formula entirely.
The other 48 agencies restricted its use to specific situations, such
as if medically prescribed or if needed for religious reasons. Seven
of these 48 agencies also set percentage limits, such as 4 percent of
all standard formula issued, on the use of noncontract standard
formula.
In fiscal year 2002, 3.3 percent of the infants using formula in the
WIC
program received a noncontract standard formula, while 90.3 percent
received the contract brand. The remaining 6.4 percent received a
medically prescribed nonstandard formula for special medical or dietary
needs. There were wide variations between WIC agencies in the
percentage
of infants who received noncontract standard formula, ranging from a
low
of zero, for the 3 agencies that prohibited its use, to 10.5 percent.
Likewise, the percentage of infants receiving medically prescribed
nonstandard formula ranged from 0.2 percent to 27.7 percent. FNS has
not
routinely collected from WIC agencies the data that would allow it to
monitor the effectiveness of these agencies in restricting the use of
either noncontract standard or nonstandard infant formula.
Buying noncontract standard formula brands cost the WIC program an
estimated $50.9 million in foregone rebates in fiscal year 2002.
Although it may be neither feasible nor desirable to prohibit all
purchases of noncontract standard formula, rebates would have increased
by $13.8 million if every state had a noncontract standard formula
usage
rate no higher than the average of 3.3 percent reported across all
agencies.
Highlights Figure:
[See PDF for image]
[End of figure]
What GAO Recommends:
GAO recommends several actions that FNS take to assist some WIC
agencies to reduce their use of noncontract brands of standard
formula and nonstandard formulas. In comments on a draft of GAO‘s
report, FNS agreed with the recommendations and stated that it
had recently started collecting data that will facilitate the
implementation of the recommendations.
Contents:
Letter:
Results in Brief:
Background:
WIC Agencies Use Different Approaches to Restrict the Use of
Noncontract Standard Formula:
About 3 Percent of WIC Infants Receive Noncontract Standard Formula,
but Extent Varies Greatly Among WIC Agencies:
No Research Found on Effects of Switching Brands of Standard Infant
Formula:
Use of Noncontract Standard Formula Cost WIC about $51 Million in Lost
Rebates:
Conclusions:
Recommendations:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: Number of Infants That Received Contract Standard,
Noncontract Standard, and Nonstandard Formula:
Appendix III: Estimate of Rebates Foregone by WIC Agency:
Appendix IV: Estimate of Rebates Foregone Due to Above Average Use of
Noncontract Standard Formula by
WIC Agencies:
Appendix V: Comments from the Department of Agriculture:
Appendix VI: GAO Contacts and Staff Acknowledgments:
Contacts:
Acknowledgments:
Tables:
Table 1: Washington WIC Agency Example of the Per Can, Net Cost of
Contract Standard and Noncontract Standard 13 ounce Concentrate Cans of
Milk-and Soy-Based Formula, April 2002:
Table 2: Methods Used by 51 WIC Agencies to Restrict the Use of
Noncontract Standard Infant Formula as of February 2002:
Table 3: Policies Setting Quantitative Limits on the Use of Noncontract
Standard Formula at Seven WIC Agencies as of February 2002:
Table 4: Number of Infants Issued Vouchers for Contract Standard,
Noncontract Standard, and Nonstandard Formula as a Percentage of All
Infants Receiving Formula in February 2002 for 45 WIC Agencies:
Table 5: Percent of Noncontract Standard Formula Used for WIC Agencies
with Quantitative Limits on Noncontract Standard Formula, February
2002:
Table 6: Number of Infants That Received Contract Standard, Noncontract
Standard, and Nonstandard Formula in February 2002 for 45 WIC Agencies:
Table 7: Estimate of Rebates Foregone in February 2002 by 47 WIC
Agencies:
Table 8: Estimates of Rebates Foregone in February 2002 by 19 WIC
Agencies Due to the Use of Noncontract Standard Infant Formula
Exceeding the 3.3 Percent Average of All Infants Receiving Formula:
Figures:
Figure 1: Overview of Infant Formula Categories and Subcategories:
Figure 2: Infants Issued Contract Standard, Noncontract Standard, and
Nonstandard Formula as a Percentage of All Infants Receiving Formula in
February 2002 for 45 WIC Agencies:
Abbreviations:
FNS: Department of Agriculture‘s Food and Nutrition Service:
WIC: Special Supplemental Nutrition Program for Women, Infants, and
Children:
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February 12, 2003:
The Honorable Thad Cochran, Chairman
The Honorable Herb Kohl, Ranking Minority Member
Subcommittee on Agriculture, Rural Development, and Related Agencies
Committee on Appropriations
United States Senate:
The Honorable Henry Bonilla, Chairman
The Honorable Marcy Kaptur, Ranking Minority Member
Subcommittee on Agriculture, Rural Development, Food
and Drug Administration, and Related Agencies
Committee on Appropriations
House of Representatives:
About half of all infant formula sold in the United States is purchased
through the federally funded Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC). The U.S. Department of
Agriculture‘s Food and Nutrition Service (FNS) administers WIC in
partnership with state-level WIC agencies. Federal WIC grants provided
to WIC agencies for infant formula and other supplemental food were
about $3 billion for fiscal year 2001, during which WIC served a
monthly average of 7.3 million participants, including women, children
(up to age 5), and 1.9 million infants. Participants generally receive
this aid in the form of vouchers, which they can use to buy infant
formula and other approved types of foods.
Since 1989, federal law has required WIC agencies to take steps to
contain the cost of infant formula purchased through the WIC program.
All the competing brands of standard infant formula on the market are
nutritionally identical because the federal government regulates their
content and quality. To contain costs, WIC agencies have taken
advantage of their substantial buying power by using a competitive-bid
process. The agencies have entered into contracts giving one
manufacturer the exclusive right to sell formula to all WIC
participants whose infants (those less than 1 year old) can use
standard formula (any cow‘s milk-based or soy-based formula intended
for feeding full-term, healthy infants). For each can of the contract
manufacturer‘s standard formula (called contract standard formula) that
WIC participants purchase with their vouchers at retail stores, the WIC
agency receives a rebate. The net effect for the WIC agency is a
substantial reduction in the net retail cost--sometimes as much as 80
percent. For the country as a whole, rebates totaled about $1.4 billion
in fiscal year 2001. By reducing the cost of infant formula in this
way, such contracts leveraged the buying power of federal grants and
enabled the program to serve over 2 million additional participants
during the fiscal year.
To effectively leverage its purchasing power, a WIC agency must ensure
that WIC participants are issued vouchers for contract standard formula
with a rebate rather than vouchers for a standard formula produced by
another manufacturer that is not under contract and does not provide a
rebate--called noncontract standard formula. Generally, contract
standard formulas must be used unless medical documentation is obtained
or a religious reason cited to justify the use of another
manufacturer‘s brand of formula.[Footnote 1] However, WIC participants
may have other reasons why they prefer not to purchase the contract
standard formula. For example, parents of newborns who receive
noncontract standard formula at the hospital and find that their infant
is content with it may be reluctant to switch to the contract brand.
Similar concerns may surface if, in negotiating a new contract, the WIC
agency signs an agreement with a different manufacturer. In this
situation, some parents whose infants are used to one brand may prefer
not to switch brands and may request their medical providers to
document a need for another formula. In these instances, WIC
participants and prescribing medical providers may be unaware of the
large cost differences between the contract standard and noncontract
standard brands. This is because the differences come in the form of
rebates paid to WIC agencies, not to participants or medical providers.
Concerned over selected aspects of infant formula cost containment
measures, the House Conference Report on Appropriations for the
Department of Agriculture for fiscal year 2002 directed us to examine
the following:
* To what extent have WIC state agencies restricted the use of
noncontract standard formula to help lower the overall cost of the WIC
program?
* To what extent do infants in the WIC program receive noncontract
standard formula?:
* To what extent, according to available research, are normal, healthy
infants adversely affected by switching to a different brand of
formula?:
* What is the estimated dollar effect of using noncontract standard
formula?:
In conducting our work, we also obtained data on the use of nonstandard
infant formula and have included that data in this report.
To respond to this request, we developed a survey and sent it in June
2002 to 51 WIC agencies (48 states, the District of Columbia, the
Navajo Nation tribal organization, and Puerto Rico).[Footnote 2] We
used a survey because the FNS did not have data on the use of
noncontract formula by WIC agencies. The 51 agencies in our survey
collectively served over 97 percent of all WIC infant participants in
fiscal year 2001. All 51 agencies responded to our survey, however,
some agencies did not have the data needed to answer all survey
questions. We did not independently verify the accuracy of the
information these agencies reported to us. However, to verify the
correctness of the data they had provided we did contact several
agencies that reported very low or very high usage of either
noncontract standard or nonstandard formula (any formula that is not
contract standard or noncontract standard and that is designed to meet
various medical and dietary needs of infants that standard formulas
will not satisfy). Several of the agencies contacted provided us with
revised formula usage data in response to our inquiries.
In addition to conducting the survey, we discussed WIC infant formula
use with officials at WIC agencies and at FNS headquarters and regional
offices, and we reviewed relevant regulations and research. We also
performed an extended literature search on the issue of normal, healthy
infants being adversely affected by switching between brands of infant
formula or showing a strong preference for the first standard formula
used, and we included a question on this issue in our survey sent to
the WIC agencies. We performed our work between May 2002 and December
2002 in accordance with generally accepted government auditing
standards. Appendix I further describes our scope and methodology.
Results in Brief:
As of February 2002, all 51 WIC agencies we surveyed had restrictions
to limit the amount of noncontract standard infant formula provided
under the WIC program. The approach of 48 of the 51 WIC agencies was to
adopt the limitations in federal regulations, which restrict the use of
noncontract standard formula to specific situations, such as if
medically prescribed or if needed for religious reasons. Seven of the
48 WIC agencies also had established quantitative limits on the overall
percentage of noncontract standard formula allowed. These limits
typically ranged from 2 percent to 4 percent of all standard formula
provided to infants by the agency. Three additional WIC agencies--New
Mexico, Tennessee, and Virginia--were even more restrictive,
prohibiting the purchase of noncontract standard infant formula
entirely.
Nationally, 3.3 percent of WIC infants using formula received
noncontract standard formula in February 2002, but 19 of the 45
agencies that had these data reported percentages higher than this
average. By comparison, 90.3 percent of all infants received contract
standard formula, while 6.4 percent received nonstandard formulas,
which are special formulas for infants who cannot use standard formula.
There was substantial variation in these percentages from agency to
agency. The 3 agencies with the most restrictive policies that
prohibited the use of noncontract standard formula reported they did
not use any of this formula. Seven agencies that established
quantitative limits on noncontract standard formula use had mixed
success in staying within their limits. Four of the 7 agencies that set
the highest limits stayed within their limits while the 3 agencies with
the lowest established limits exceeded their limits. Also, the 7
agencies, on average, issued a somewhat greater portion of noncontract
standard formula than did the remaining 35 agencies that only
restricted its use to specific situations. Officials at selected WIC
agencies reported that the use of noncontract standard formula for
religious reasons was very limited.
We found no research that directly addressed the question of whether
normal, healthy infants are adversely affected by switching to a
different standard formula brand, and no research that directly
addressed whether infants exhibit a strong preference for the first
standard formula they use. We identified two industry-sponsored studies
that noted differences in such things as stool characteristics from
switching to a different standard formula, but neither study noted any
adverse effect from making the switch. FNS has stated that almost all
infants can be issued contract standard infant formula without
compromising an infant‘s nutritional needs and that noncontract
standard formula should only be issued when medically necessary.
Additionally, in 1995, FNS studied the issue of switching between
formulas and found no scientific evidence to support that switching
standard infant formulas should be accomplished gradually rather than
immediately.
On the basis of February 2002 data, we calculated that the purchase of
noncontract standard infant formula cost the WIC program an estimated
$50.9 million annually, an amount equal to about 3.7 percent of the
rebates actually received. Because WIC regulations permit noncontract
standard formula to be issued for medical or religious reasons, it may
not be practical or desirable for all WIC agencies to prohibit the use
of noncontract standard formula. However, an opportunity may exist for
agencies with higher-than-average usage rates to curtail their use of
noncontract standard formula, thereby increasing rebates. For example,
we calculated that rebates could have been increased by an estimated
$13.8 million in fiscal year 2002 if the 19 agencies with higher-than-
average usage rates for noncontract standard formula had been able to
lower their use of noncontract standard formula to the average of 3.3
percent reported by the 45 WIC agencies. This estimated $13.8 million
could have been used to provide additional WIC benefits to women,
infants, and children.
The ability of some WIC agencies to operate a program with relatively
low use of noncontract standard or nonstandard infant formula indicates
that it is feasible to make the current program more efficient.
Therefore, we are recommending several actions that FNS take to assist
some WIC agencies to reduce their use of noncontract brands of standard
formula and nonstandard formulas.
Background:
The WIC program provides eligible women, infants, and children with
nutritious foods to supplement their diets, nutrition education, and
referrals to health care. FNS administers the program through a
federal/state partnership in which FNS makes funds available in the
form of grants to WIC agencies. FNS establishes regulations for the
program, including the cost containment aspects, and provides guidance
to the agencies. To measure overall compliance with program
requirements, FNS regional offices conduct management evaluations at
state-level WIC and local agencies. Each WIC agency is responsible for
developing guidelines to ensure that WIC benefits are effectively
delivered to eligible participants. WIC grants cover the costs of food
grants, nutrition services, and administration. Food grants are
allocated to the WIC agencies through a formula that is based on the
number of individuals in each state who are potentially eligible for
WIC benefits. Nutrition services and administration grants are
allocated to the agencies through a formula that considers factors such
as an agency‘s number of projected program participants and a salary
differential for local government employees.
In fiscal year 2001, FNS provided $4.1 billion in grants to WIC
agencies to fund all benefits and services, of which about $3.0 billion
was for supplemental food, including formula. On average, the program
had about 7.3 million participants each month, including 1.9 million
infants. WIC is a discretionary grant program for which the Congress
authorizes a specific amount of funds each year, not an entitlement
program. Therefore, eligible individuals can enroll in the program only
to the extent that funds are available. FNS estimated that about 47
percent of all babies born in the United States were served by WIC in
fiscal year 2001. FNS also estimated that about 19 percent of all
potentially eligible women, infants, and children were not
participating in the program. At the state level, the program is
administered through 88 state-level WIC agencies[Footnote 3] and a
network of over 2,000 local agencies.
Eligible participants include pregnant or postpartum and breastfeeding
women, infants, and children up to age five who meet income guidelines,
a state residency requirement, and are individually determined to be at
’nutritional risk“ by a health professional. The two major types of
nutritional risk are (1) medical-based risks such as anemic or
underweight infants, maternal age, history of pregnancy complications,
or poor pregnancy outcomes and (2) diet-based risks such as an
inadequate diet pattern. Infants are among those given highest priority
for receiving WIC benefits of those who have medical-based nutritional
risk conditions. Infants with dietary risk are lower priority than
medically at risk infants. For the first 6 months of life, breast milk
or infant formula is the primary food in a baby‘s diet. WIC promotes
breastfeeding as the best choice for meeting an infant‘s nutritional
needs, but it also provides infant formula to those who prefer to use
it exclusively or as a supplement to their breastfeeding. About half of
all infant formula sold in the country is purchased through the WIC
program.
As defined in the Federal Food, Drug, and Cosmetic Act, infant formula
means a food that ’purports to be or is represented for special dietary
use solely as a food for infants by reason of its simulation of human
milk or its suitability as a complete or partial substitute for human
milk.“ Commercially available infant formulas can be described in two
broad categories: standard and nonstandard. (See fig. 1.) Standard
infant formula includes milk-based and soy-based infant formulas that
meet the nutritional needs of most full-term healthy infants less than
one year old. The Food and Drug Administration strictly regulates the
content and quality of standard infant formula for all brands.
Therefore, all brands of standard formula are nutritionally identical.
In this report, we use two categories of standard infant formula--
contract and noncontract. Contract standard formula is any standard
infant formula that is provided to WIC participants for which a WIC
agency receives a rebate based on its contractual arrangement with an
infant formula manufacturer. Noncontract standard formula is any
standard infant formula that is not eligible for a rebate from an
infant formula manufacturer. Nonstandard formula, as we use the term,
is any formula that is not contract standard or noncontract standard
and that is designed to meet various medical and dietary needs of
infants that standard formulas will not satisfy. This includes ’exempt“
formulas, which are defined in the Federal Food, Drug, and Cosmetic Act
as any infant formula which is represented and labeled for use by an
infant who has an inborn error of metabolism or a low birth weight, or
who otherwise has an unusual medical or dietary problem, and other
specialized but nonexempt infant formulas classified as WIC eligible
medical foods, which are specifically formulated to provide nutritional
support for infants with a diagnosed medical condition when the use of
conventional foods is precluded, restricted, or inadequate.
Figure 1: Overview of Infant Formula Categories and Subcategories:
[See PDF for image]
[End of figure]
Since 1989, WIC agencies have been required by law to implement
measures to contain the cost of infant formula. In most instances, this
means a state-level agency agrees, through a competitive contract
awarded to one manufacturer, to provide and deliver one brand of
standard infant formula to its participants through the existing retail
outlet system and in return receives money back, called a rebate, from
the manufacturer for each can of standard infant formula that is
purchased by WIC participants at retail stores. Rebates are not
received for noncontract standard formula and nonstandard infant
formula, which is not covered by rebate contracts as reported by the
WIC agencies responding to our survey.[Footnote 4]
Most WIC infant formula participants receive vouchers that they use to
purchase the contract standard infant formula at authorized retailers.
The WIC agency then reimburses the retailer for the full retail price
of the infant formula. The WIC agency or its financial institution then
obtains a reimbursement from the manufacturer for the rebate agreed to
in the contract. As a result, the actual cost of infant formula to the
WIC program equals the retail cost minus the amount of the
manufacturer‘s rebate. FNS policy requires that during the grant year,
any savings from cost containment are to be used to provide food
benefits to additional WIC participants.
Even though a state-level WIC agency contracts to provide only one
brand of standard infant formula, federal WIC regulations permit the
issuance of noncontract standard formula provided medical documentation
is obtained or a religious reason is offered to justify its use for
individual participants. Medical documentation must be provided by a
licensed health care professional authorized to write medical
prescriptions under state law. According to regulations, there is just
one exception to the medical documentation requirement: noncontract
standard brand infant formulas may be issued without medical
documentation to accommodate religious eating patterns, such as the
Judaic requirement for kosher infant formulas. However, between
February 2000 and February 2002, the three infant formula manufacturers
that WIC agencies used for their formula rebate contracting (Mead
Johnson, Ross, and Carnation) each provided a soy-based, kosher infant
formula, which minimizes the need for agencies to provide noncontract
standard formulas to accommodate Jewish infants‘ religious eating
patterns.
Because WIC agencies pay the retail price but do not receive rebates
for noncontract standard formula, an increase in the use of this
formula will increase a WIC agency‘s total net payments for infant
formula. Table 1 shows an example of the effect rebates had on the net
cost of contract and noncontract standard formula in the state of
Washington in April 2002.
Table 1: Washington WIC Agency Example of the Per Can, Net Cost of
Contract Standard and Noncontract Standard 13 ounce Concentrate Cans of
Milk-and Soy-Based Formula, April 2002:
Formula brand and type: Contract standard formula:; Average retail
cost: [Empty]; Rebate: [Empty]; Net cost: [Empty].
Formula brand and type: Mead Johnson Enfamil with Iron [milk-based];
Average retail cost: $3.69; Rebate: $2.97; Net cost: $0.72.
Formula brand and type: Mead Johnson Enfamil ProSobee [soy-based];
Average retail cost: 3.66; Rebate: 3.10; Net cost: 0.56.
Formula brand and type: Noncontract standard formula:; Average retail
cost: [Empty]; Rebate: [Empty]; Net cost: [Empty].
Formula brand and type: Ross Similac with Iron [milk-based]; Average
retail cost: 3.46; Rebate: 0.00; Net cost: 3.46.
Formula brand and type: Ross Isomil with Iron [soy-based]; Average
retail cost: 3.75; Rebate: 0.00; Net cost: 3.75.
Formula brand and type: Carnation Good Start [milk-based]; Average
retail cost: 2.86; Rebate: 0.00; Net cost: 2.86.
Formula brand and type: Carnation Alsoy [soy-based]; Average retail
cost: 2.68; Rebate: 0.00; Net cost: 2.68.
[End of table]
Source: Washington WIC state agency.
As table 1 indicates, even though the retail cost of contact standard
formula and noncontract standard formula may be similar, rebates equal
to 80 percent or more of the average retail cost of contract formula
can lower its net cost for the WIC agency to 20 percent of the cost of
noncontract standard formula.
WIC Agencies Use Different Approaches to Restrict the Use of
Noncontract Standard Formula:
The 51 WIC agencies we surveyed all set some sort of restrictions
designed to limit the amount of noncontract standard infant formula
provided under WIC. (See table 2.) The approach used by 48 WIC agencies
in February 2002 was to adopt the restrictions contained in federal
regulation, which limit the use of noncontract standard formula to
certain specific situations, such as if medically prescribed or if
needed for religious reasons. Seven of the 48 agencies also set
quantitative limits on the amount of noncontract standard formula
allowed. Three other agencies were even more restrictive and prohibited
noncontract standard formula use entirely.
Table 2: Methods Used by 51 WIC Agencies to Restrict the Use of
Noncontract Standard Infant Formula as of February 2002:
WIC agency: Alabama; Prohibits use, but with exceptions[A]: X[B];
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Alaska; Prohibits use, but with exceptions[A]: X; Prohibits
use, but with exceptions and with quantitative limits: [Empty];
Prohibits use with no exceptions: [Empty].
WIC agency: Arizona; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Arkansas; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: California; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits: X;
Prohibits use with no exceptions: [Empty].
WIC agency: Colorado; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Connecticut; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Delaware; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: District of Columbia; Prohibits use, but with
exceptions[A]: X; Prohibits use, but with exceptions and with
quantitative limits: [Empty]; Prohibits use with no exceptions:
[Empty].
WIC agency: Florida; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Georgia; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Hawaii; Prohibits use, but with exceptions[A]: X; Prohibits
use, but with exceptions and with quantitative limits: [Empty];
Prohibits use with no exceptions: [Empty].
WIC agency: Idaho; Prohibits use, but with exceptions[A]: X; Prohibits
use, but with exceptions and with quantitative limits: [Empty];
Prohibits use with no exceptions: [Empty].
WIC agency: Illinois; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits: X;
Prohibits use with no exceptions: [Empty].
WIC agency: Indiana; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits: X;
Prohibits use with no exceptions: [Empty].
WIC agency: Iowa; Prohibits use, but with exceptions[A]: X; Prohibits
use, but with exceptions and with quantitative limits: [Empty];
Prohibits use with no exceptions: [Empty].
WIC agency: Kansas; Prohibits use, but with exceptions[A]: X; Prohibits
use, but with exceptions and with quantitative limits: [Empty];
Prohibits use with no exceptions: [Empty].
WIC agency: Kentucky; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Louisiana; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits: X;
Prohibits use with no exceptions: [Empty].
WIC agency: Maine; Prohibits use, but with exceptions[A]: X; Prohibits
use, but with exceptions and with quantitative limits: [Empty];
Prohibits use with no exceptions: [Empty].
WIC agency: Maryland; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Massachusetts; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Michigan; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Minnesota; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits: X;
Prohibits use with no exceptions: [Empty].
WIC agency: Missouri; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Montana; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Navajo Nation; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Nebraska; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Nevada; Prohibits use, but with exceptions[A]: X; Prohibits
use, but with exceptions and with quantitative limits: [Empty];
Prohibits use with no exceptions: [Empty].
WIC agency: New Hampshire; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: New Jersey; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: New Mexico; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: X.
WIC agency: New York; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: North Carolina; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: North Dakota; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Ohio; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits: X;
Prohibits use with no exceptions: [Empty].
WIC agency: Oklahoma; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Oregon; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits: X;
Prohibits use with no exceptions: [Empty].
WIC agency: Pennsylvania; Prohibits use, but with exceptions[A]: X[B];
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Puerto Rico; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Rhode Island; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: South Carolina; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: South Dakota; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Tennessee; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: X.
WIC agency: Texas; Prohibits use, but with exceptions[A]: X; Prohibits
use, but with exceptions and with quantitative limits: [Empty];
Prohibits use with no exceptions: [Empty].
WIC agency: Utah; Prohibits use, but with exceptions[A]: X; Prohibits
use, but with exceptions and with quantitative limits: [Empty];
Prohibits use with no exceptions: [Empty].
WIC agency: Virginia; Prohibits use, but with exceptions[A]: [Empty];
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: X.
WIC agency: Washington; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: West Virginia; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Wisconsin; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Wyoming; Prohibits use, but with exceptions[A]: X;
Prohibits use, but with exceptions and with quantitative limits:
[Empty]; Prohibits use with no exceptions: [Empty].
WIC agency: Total; Prohibits use, but with exceptions[A]: 41; Prohibits
use, but with exceptions and with quantitative limits: 7; Prohibits use
with no exceptions: 3.
[End of table]
Source: GAO‘s analysis of survey data provided by WIC agencies.
[A] Exceptions to prohibiting the use of noncontract standard formula
may be based on either medical documentation or religious reasons, as
allowed by federal regulations.
[B] As of March 2002, Alabama‘s and Pennsylvania‘s policies changed to
prohibit the use of noncontract standard formula without exception.
The 7 agencies that set quantitative limits on the use of noncontract
standard formula all differed to some degree in their approach, with
the maximum limit for noncontract formula usually set at 2 to 4 percent
of all infant formula or all standard infant formula issued. (See table
3.) For example, the Oregon agency has two maximum usage rates for
local agencies: 4 percent for noncontract standard cow‘s milk-based
formula and 8 percent for noncontract standard soy-based formula; and
the Louisiana agency requires that 96 percent of all standard formula
be contract formula which, in effect, sets the limit for noncontract
standard formula at 4 percent.
Table 3: Policies Setting Quantitative Limits on the Use of Noncontract
Standard Formula at Seven WIC Agencies as of February 2002:
WIC agency: California; Quantitative limit policy: ’A local agency‘s
noncontract [standard] formula issuance rate shall be only 2 percent of
total formula issuance.“.
WIC agency: Illinois; Quantitative limit policy: ’Issuance of
noncontract [standard] brands of iron-fortified milk-based, lactose
free and soy-based formula (on average) should not exceed 3 percent of
the local agency‘s infant formula enrollment.“.
WIC agency: Indiana; Quantitative limit policy: On January 30, 2002 the
Indiana WIC agency changed its policy to ’limit standard infant
formulas that are not covered under our Infant Formula Rebate contract
to an exception rate of 2%.“ The agency‘s previous policy stated ’No
local agency may exceed a 4% noncontract [standard] formula allowance
without documented permission from the State WIC Office.“.
WIC agency: Louisiana; Quantitative limit policy: ’At least 96 percent
of standard formulas issued to infants must be standard contract
formula.“.
WIC agency: Minnesota; Quantitative limit policy: ’The maximum number
of infants on noncontract [standard], iron-fortified formula is 4
percent of the local agency infant caseload or five infants whichever
is greater.“.
WIC agency: Ohio; Quantitative limit policy: ’Statewide, issuance of
nonprimary [noncontract standard] formulas is limited to 4 percent of
the total participants receiving iron-fortified milk-base or soy-based
formula, not including special formulas. Each local WIC project is
assigned a maximum number of nonprimary formula slots.“.
WIC agency: Oregon; Quantitative limit policy: ’Local programs are
expected to have a usage rate of no greater than 4 percent for non-bid
[noncontract standard] cow‘s milk-based formula and 8 percent for non-
bid [noncontract standard] soy-based formula.“.
[End of table]
Source: WIC agencies‘ policies on noncontract standard infant formula
use.
The Mississippi, New Mexico, Tennessee, and Virginia WIC agencies all
had policies prohibiting the use of noncontract standard formula and
did not issue any such formula in February of 2002.[Footnote 5] New
Mexico and Tennessee had such a policy in place since before February
2000, while Virginia‘s policy took effect in July 2001. In addition to
these 3 WIC agencies, Alabama and Pennsylvania both implemented
policies prohibiting the issuance of noncontract standard formula in
March 2002, although Alabama allowed WIC infants already receiving a
noncontract standard formula to continue doing so and Pennsylvania
allowed existing vouchers for noncontract standard formula to be used.
The directors of the Alabama and Pennsylvania WIC agencies told us that
the overall implementation of the prohibition on noncontract standard
formula had gone smoothly and there were few complaints from WIC
participants.
To obtain perspective from other states about a policy that would
prohibit the use of noncontract standard formula altogether, we asked
officials of the 4 WIC agencies providing formula to the largest number
of infants (California, Florida, New York, and Texas) whether they had
considered instituting a policy of prohibiting the issuance of
noncontract standard formula without exception, and what the overall
effect of such a policy would be on WIC participants in their states.
Three (California, Florida, and Texas) responded that their agencies
had considered prohibiting the issuance of noncontract standard formula
but had decided not to do so. Generally, the Texas and Florida agencies
stated that if they prohibited the use of noncontract standard formula
the likely effect on infants receiving noncontract standard formula
would be (1) the larger portion of parents of these infants would ask
their doctors to prescribe nonstandard formulas, which could cost the
agency more than the noncontract standard formula, (2) some parents
would remove their infants from the WIC program; and (3) few or no
infants would be switched to the contract standard formula. California
WIC agency officials said that projecting the impact on WIC families of
prohibiting noncontract standard formula is speculative, but that some
families would probably switch to a contract standard formula, others
might drop out of the program, and some participants might ask their
doctor to put the infant on a more expensive nonstandard formula.
The New York WIC agency had not considered a policy of prohibiting the
use of noncontract standard formula. However, an agency official
believed such a prohibition would cause a majority of users of
noncontract standard formula to either switch to contract standard
formula or seek another party to pay for noncontract standard formula,
such as U.S. Department of Agriculture‘s Commodity Supplemental Food
Program, Medicaid or food banks. The official does not believe that
prohibiting noncontract standard formula would lead to an increase in
requests for nonstandard formula.
About 3 Percent of WIC Infants Receive Noncontract Standard Formula,
but Extent Varies Greatly Among WIC Agencies:
Nationally, 3.3 percent of WIC infants using formula received
noncontract standard formula in February 2002, according to usage data
reported by 45 WIC agencies that had these data. By comparison, 90.3
percent of all infants received contract standard formula, while 6.4
percent received nonstandard formulas, which are special formulas for
infants who cannot use standard formula. (See fig.2.) There was
substantial variation in these percentages from agency to agency. The 3
agencies with the most restrictive policies that prohibited the use of
noncontract standard formula reported they did not use any of this
formula. Seven agencies that established quantitative limits on
noncontract standard formula use had mixed success in staying within
their limits. Four of the 7 agencies that set the highest limits stayed
within their limits while the 3 agencies with the lowest established
limits exceeded their limits. Also, the 7 agencies, on average, issued
a somewhat greater portion of noncontract standard formula than did the
remaining 35 agencies that only restricted its use to specific
situations. Officials at selected WIC agencies reported that the use of
noncontract standard formula for religious reasons was very limited.
Figure 2: Infants Issued Contract Standard, Noncontract Standard, and
Nonstandard Formula as a Percentage of All Infants Receiving Formula in
February 2002 for 45 WIC Agencies:
[See PDF for image]
[End of figure]
Agencies Showed Variation in Both Noncontract Standard and Nonstandard
Formula Use:
The percentage of WIC infants receiving noncontract standard formula in
February 2002 ranged from a low of zero to a high of 10.5 percent, as
reported by the 45 agencies that provided this information. (See table
4.) Four agencies (New Mexico, Tennessee, Virginia, and the Navajo
Nation) reported issuing no noncontract standard formula in February
2002. Three other agencies reported rates of less than 1 percent:
Arkansas, Maryland, and Georgia reported rates of 0.04, 0.6, and 0.7
percent, respectively. At the other end of the spectrum, Utah issued
vouchers for noncontract standard formula to 8.5 percent of all WIC
infants, Puerto Rico to 8.9 percent, and Wyoming to 10.5 percent.
However, Wyoming and Utah are 2 of the smaller agencies in terms of
number of WIC infants served, so despite the high percentage figure,
the number of infants issued vouchers for noncontract standard formula
by these agencies is relatively small compared to other larger WIC
agencies.
Table 4: Number of Infants Issued Vouchers for Contract Standard,
Noncontract Standard, and Nonstandard Formula as a Percentage of All
Infants Receiving Formula in February 2002 for 45 WIC Agencies:
WIC agency: Alabama; Contract standard: 89.0; Noncontract standard:
2.3; Nonstandard: 8.7.
WIC agency: Alaska; Contract standard: 94.5; Noncontract standard: 3.2;
Nonstandard: 2.3.
WIC agency: Arizona; Contract standard: 80.2; Noncontract standard:
3.9; Nonstandard: 15.9.
WIC agency: Arkansas; Contract standard: 91.1; Noncontract standard:
0.04; Nonstandard: 8.9.
WIC agency: California; Contract standard: 94.4; Noncontract standard:
4.6; Nonstandard: 1.0.
WIC agency: Colorado; Contract standard: 89.0; Noncontract standard:
6.8; Nonstandard: 4.2.
WIC agency: Connecticut; Contract standard: 88.3; Noncontract standard:
3.3; Nonstandard: 8.4.
WIC agency: Delaware; Contract standard: 86.0; Noncontract standard:
6.8; Nonstandard: 7.2.
WIC agency: District of Columbia; Contract standard: 94.4; Noncontract
standard: 4.7; Nonstandard: 0.9.
WIC agency: Florida; Contract standard: 87.8; Noncontract standard:
5.9; Nonstandard: 6.2.
WIC agency: Georgia; Contract standard: 90.9; Noncontract standard:
0.7; Nonstandard: 8.5.
WIC agency: Hawaii; Contract standard: 95.1; Noncontract standard: 2.6;
Nonstandard: 2.3.
WIC agency: Illinois; Contract standard: 91.8; Noncontract standard:
3.7; Nonstandard: 4.5.
WIC agency: Indiana; Contract standard: 86.0; Noncontract standard:
6.8; Nonstandard: 7.2.
WIC agency: Iowa; Contract standard: 93.1; Noncontract standard: 2.5;
Nonstandard: 4.4.
WIC agency: Kansas; Contract standard: 93.0; Noncontract standard: 3.0;
Nonstandard: 4.0.
WIC agency: Kentucky; Contract standard: 82.1; Noncontract standard:
7.9; Nonstandard: 10.0.
WIC agency: Louisiana; Contract standard: 89.9; Noncontract standard:
2.4; Nonstandard: 7.7.
WIC agency: Maine; Contract standard: 89.6; Noncontract standard: 2.9;
Nonstandard: 7.5.
WIC agency: Maryland; Contract standard: 93.7; Noncontract standard:
0.6; Nonstandard: 5.7.
WIC agency: Massachusetts; Contract standard: 93.2; Noncontract
standard: 1.4; Nonstandard: 5.4.
WIC agency: Michigan; Contract standard: 93.4; Noncontract standard:
4.1; Nonstandard: 2.5.
WIC agency: Minnesota; Contract standard: 90.9; Noncontract standard:
2.9; Nonstandard: 6.2.
WIC agency: Navajo Nation; Contract standard: 95.6; Noncontract
standard: 0.0; Nonstandard: 4.4.
WIC agency: Nebraska; Contract standard: 86.7; Noncontract standard:
2.7; Nonstandard: 10.7.
WIC agency: Nevada; Contract standard: 97.6; Noncontract standard: 2.1;
Nonstandard: 0.2.
WIC agency: New Jersey; Contract standard: 95.7; Noncontract standard:
1.4; Nonstandard: 2.9.
WIC agency: New Mexico; Contract standard: 94.8; Noncontract standard:
0.0; Nonstandard: 5.2.
WIC agency: New York; Contract standard: 91.1; Noncontract standard:
2.3; Nonstandard: 6.5.
WIC agency: Ohio; Contract standard: 78.3; Noncontract standard: 1.8;
Nonstandard: 19.9.
WIC agency: Oklahoma; Contract standard: 92.5; Noncontract standard:
2.7; Nonstandard: 4.8.
WIC agency: Oregon; Contract standard: 93.9; Noncontract standard: 3.8;
Nonstandard: 2.3.
WIC agency: Pennsylvania; Contract standard: 90.6; Noncontract
standard: 5.9; Nonstandard: 3.5.
WIC agency: Puerto Rico; Contract standard: 63.5; Noncontract standard:
8.9; Nonstandard: 27.7.
WIC agency: Rhode Island; Contract standard: 90.3; Noncontract
standard: 3.1; Nonstandard: 6.5.
WIC agency: South Carolina; Contract standard: 90.0; Noncontract
standard: 3.0; Nonstandard: 7.0.
WIC agency: South Dakota; Contract standard: 82.9; Noncontract
standard: 7.2; Nonstandard: 9.9.
WIC agency: Tennessee; Contract standard: 92.7; Noncontract standard:
0.0; Nonstandard: 7.3.
WIC agency: Texas; Contract standard: 95.3; Noncontract standard: 1.4;
Nonstandard: 3.3.
WIC agency: Utah; Contract standard: 85.8; Noncontract standard: 8.5;
Nonstandard: 5.7.
WIC agency: Virginia; Contract standard: 91.0; Noncontract standard:
0.0; Nonstandard: 9.0.
WIC agency: Washington; Contract standard: 92.2; Noncontract standard:
4.5; Nonstandard: 3.2.
WIC agency: West Virginia; Contract standard: 87.7; Noncontract
standard: 6.4; Nonstandard: 5.9.
WIC agency: Wisconsin; Contract standard: 92.0; Noncontract standard:
3.8; Nonstandard: 4.2.
WIC agency: Wyoming; Contract standard: 81.1; Noncontract standard:
10.5; Nonstandard: 8.4.
WIC agency: Weighted average.
[End of table]
Source: GAO‘s analysis of survey data provided by WIC agencies.
Note: Idaho, Missouri, Montana, New Hampshire, North Carolina, and
North Dakota are excluded from this table because they either did not
provide or did not completely provide these data for our survey.
The variation in the percentage of infants who received nonstandard
formula was even greater than the percentage that received noncontract
standard formula. The use of nonstandard formula ranged from 0.2
percent of all infants receiving WIC formula in Nevada and 0.9 percent
in the District of Columbia to 27.7 percent in Puerto Rico and 19.9
percent in Ohio. Appendix II shows the number of infants using each
type of formula, by agency.
Reasons for Variations Not Fully Known, but Restrictiveness of Policies
Plays a Role:
Our survey was designed to gather basic information about noncontract
standard formula usage in the absence of any available information on
this issue. FNS is not routinely collecting from WIC agencies the data
that would allow it to monitor the effectiveness of these agencies in
restricting the use of noncontract standard formula. To provide some
perspective on why there was so much variation in noncontract standard
formula usage rates, we contacted certain agencies, especially those
with the lowest percentage usage and those with the largest programs.
For agencies with the lowest percentage of infants receiving
noncontract standard formula, the restrictiveness of the agency policy
with regard to noncontract formula is clearly a factor. Three of the 4
agencies reporting zero usage (New Mexico, Tennessee, and Virginia) had
policies in place prohibiting the use of noncontract standard formula
with no exceptions.
The 4 largest of the 48 agencies that allowed the use of noncontract
standard formula in specific situations (California, Florida, New York,
and Texas) varied considerably in the percentage of infants who
received this formula. Two of them, Texas and New York, issued vouchers
for noncontract standard formula to a smaller percentage of infants
than the average of 3.3 percent for all 45 agencies. Texas‘s percentage
was 1.4 percent, while New York‘s was 2.3 percent. Texas and New York
pointed to policies and practices they regarded as restrictive as the
reason for their relatively low percentages. Officials at the Texas
agency said their practice for issuing vouchers for noncontract
standard formula was restrictive enough that they were a little
concerned it may have shifted some infants into nonstandard formula,
which is more expensive than noncontract standard formula. However,
Texas‘s rate of 3.3 percent for nonstandard formula was also lower than
the average reported by all agencies (6.4 percent). A New York agency
official said the agency restricts the approval of certain noncontract
standard formulas and that is tantamount to prohibiting the issuance of
those particular formulas.
California and Florida, by contrast, reported noncontract standard
rates that were above the national average of 3.3 percent: California‘s
rate was 4.6 percent, while Florida‘s was 5.9 percent. Our discussions
with agency officials about the possible reasons for their relatively
high rates showed that the factors contributing to such rates might
vary considerably from agency to agency. In California, for example,
agency officials said they grapple on a continuing basis with
responding to parental requests for noncontract standard formula
because the infant received noncontract standard formula in the
hospital at birth. California officials have drafted a new policy,
which they designed to limit the use of noncontract standard
formula.[Footnote 6] Florida officials said the use of noncontract
standard formula in their state, which had historically been less than
3 percent, increased when a different manufacturer became the contract
supplier. Florida‘s experience is discussed in more detail later in
this report.
Agencies with Low Quantitative Limits on Noncontract Standard Formula
Use Exceeded Them:
The 3 agencies that set a low quantitative limit (2 or 3 percent of all
formula used) on the use of noncontract standard formula exceeded that
limit in February 2002. However, the 4 agencies that set a higher limit
(4 percent) stayed below that limit. On average, the 7 agencies with
policies setting quantitative limits actually issued a somewhat greater
portion of noncontract standard formula (4.0 percent of all formula
issued) than did 35 WIC agencies that also granted exceptions but did
not set quantitative limits (3.3 percent).[Footnote 7] (See table 5.):
Table 5: Percent of Noncontract Standard Formula Used for WIC Agencies
with Quantitative Limits on Noncontract Standard Formula, February
2002:
WIC agency: California; Established quantitative limit, February 2002:
2; Noncontract standard infant formula used, February 2002: 4.6.
WIC agency: Illinois; Established quantitative limit, February 2002: 3;
Noncontract standard infant formula used, February 2002: 3.7.
WIC agency: Indiana; Established quantitative limit, February 2002: 2;
Noncontract standard infant formula used, February 2002: 6.8.
WIC agency: Louisiana; Established quantitative limit, February 2002:
4; Noncontract standard infant formula used, February 2002: 2.4.
WIC agency: Minnesota; Established quantitative limit, February 2002:
4; Noncontract standard infant formula used, February 2002: 2.9.
WIC agency: Ohio; Established quantitative limit, February 2002: 4;
Noncontract standard infant formula used, February 2002: 1.8.
WIC agency: Oregon; Established quantitative limit, February 2002: 4;
Noncontract standard infant formula used, February 2002: 3.8.
WIC agency: Weighted average; Established quantitative limit, February
2002: [Empty]; Noncontract standard infant formula used, February 2002:
4.0.
[End of table]
Source: GAO‘s analysis of data provided by WIC agencies.
Only Limited Issuance of Noncontract Standard Formula for Religious
Reasons Identified:
It does not appear that a substantial amount of the noncontract
standard formula is issued for religious reasons. Religious concerns
about contract standard formula mainly involved the brands manufactured
by a company, whose formula contained ingredients or involved
manufacturing processes that did not meet some groups‘ requirements. We
contacted all five agencies that had contracts with the company as of
February 2002, and officials from four of the five said they issued
small amounts of noncontract standard formula for religious reasons.
For example, in New Jersey, where the rate of noncontract formula is
1.4 percent, an agency official said all of the noncontract standard
formula was issued for Orthodox Jewish infants whose parents do not
find the soy-based, kosher contract standard formula provided by the
New Jersey agency to be manufactured to strict enough standards to be
acceptable. The agency permits the issuance of noncontract standard
soy-based, kosher formula, which is made by other manufacturers and is
acceptable to Orthodox Jewish parents. The Kentucky WIC agency also
issued a small amount on noncontract standard formula to meet the
kosher requirements of some Jewish parents. Similarly, officials from
the Florida and North Dakota agencies said a very few Muslim
participants received noncontract standard formula because they find a
pork enzyme used in the manufacture of the milk-based contract standard
formula to be unacceptable and are unable or not required to use the
soy-based standard contract formula which does not contain the pork
enzyme. We contacted 5 other agencies (Alabama, New Mexico, New York,
Pennsylvania, and Tennessee) that had contracts with other
manufacturers, and none of them reported issuing any noncontract
standard formula for religious reasons.
No Research Found on Effects of Switching Brands of Standard Infant
Formula:
We found no research that directly addressed the question of whether
normal, healthy infants are adversely affected by switching to a
different standard formula brand, and no research that directly
addressed whether infants exhibit a strong preference for the first
standard formula they use. The studies we identified addressed such
things as whether stool characteristics changed as a result of changing
formula, but they did not note any adverse effects from making the
switch. In the past, FNS has also studied the issue of switching
between standard formulas and found no scientific evidence to support
the need for a gradual rather than immediate switch. However, some WIC
agencies report that when a switch in contract standard formula occurs,
use of noncontract standard formula rises. Thirty-two of the WIC
agencies we surveyed had entered into new contracts resulting in a
change of infant formula manufacturer and of contract standard formula
brand, and of these, 7 (22 percent) reported that an increase in
noncontract standard formula use occurred after changing contract
standard formula brands.
Research Identified Addresses Narrower Topics:
We identified two industry-sponsored studies that addressed how infants
are affected by switching between brands of standard formula. These
studies were ’Formula Tolerance in Postbreastfed and Exclusively
Formula-fed Infants“ and ’Effect of Infant Formula on Stool
Characteristics of Young Infants.“[Footnote 8] Two of the 51 agencies
also informed us of these studies. The two studies did not disclose any
adverse affect for normal, healthy infants from switching to a
different brand of standard formula but did note differences in such
things as stool characteristics from switching to a different formula
brand.
* The first article, supported by Ross Products Division, attempted to
measure infant tolerance in two standard milk-based formulas, Ross‘s
Similac with iron powder and Mead Johnson‘s Enfamil with iron powder.
Included were healthy, full-term infants, who were either initially
breastfed in one group or initially formula-fed Similac in another
group. In both groups, the results of intolerance measures, such as the
volume of formula intake, weight gain, and incidence of spit-up or
vomit did not differ between formulas. However, differences were
observed in stool characteristics, such as color, firmness, and
frequency. The study concluded that one brand of formula produced stool
characteristics closer to that of infants who feed on breast milk, and
it made no mention of stool differences being adverse to an infant‘s
health.
* The second article, supported by Mead Johnson Nutritionals,
investigated the relationship among four types of Mead Johnson formulas
(Enfamil, Enfamil with Iron, ProSobee, and Nutramigen) consumed and the
stooling characteristics and gastrointestinal symptoms of young
infants. Among formula groups tested, there were variations in stool
frequency, consistency, and color. However, no significant differences
were noted in the severity of spitting, gas, and crying between the
four formula groups. The study concluded that although true
hypersensitivity to cow‘s milk or soy protein may occur, it is uncommon
and many infants are often mislabeled as being ’allergic“ to a
particular formula when their symptoms such as loose stools, gas,
spitting, and crying probably fall within the normal range of
variability observed with all infant formulas. The study stressed the
importance of parental education in the interpretation of stooling
patterns and gastrointestinal symptoms during the administration of
various infant formulas, and it made no mention of differences in stool
characteristics being adverse to an infant‘s health.
Prior FNS Review Found No Evidence That Gradual Shift in Standard
Formula Was Necessary:
FNS headquarters officials also were not aware of any research
concluding that infants show a strong preference for the first standard
formula used. However, FNS pointed out that because WIC state agencies
typically renegotiate rebate contracts every few years, many of the
infants they serve are required to switch from receiving one brand of
standard infant formula to another. And on occasion, parents and
caretakers complained that their infants experienced problems
tolerating the new brand of formula and requested a noncontract
standard substitute. Because this situation has raised concern within
the WIC community, in 1995 FNS explored whether scientific evidence
exists to support the suggestion that a change of standard formula
should be gradually introduced into an infant‘s diet. FNS wanted to
ascertain whether a specific amount of time was needed to wean an
infant from one formula to another and if a particular proportion of
old-to-new formula was recommended.
In its research of this issue, FNS contacted the American Academy of
Pediatrics and the Infant Formula Council to solicit their advice and
recommendations on the proper methods to use when introducing an infant
to a change in formula. FNS reported that the American Academy of
Pediatrics stated ’scientific literature does not reveal any compelling
evidence for adopting a guideline suggesting the delayed introduction
of infant formula products for well babies.“ Although the Infant
Formula Council did not directly reply to FNS‘s inquiry, FNS reported
that one of the council‘s members, Ross Products Division of Abbott
Laboratories, sent a letter stating that its staff physicians and
researchers also concluded ’no scientific evidence or formal guidelines
exist concerning the introduction of a formula change.“ As a result of
its inquiry, FNS sent a letter in June 1995, to FNS Regional Directors
which stated that FNS was ’unaware of a medical basis for recommending
any particular procedures or methods which should be routinely followed
when a well WIC infant is switched from one standard infant formula to
another.“ Also, in August 2001, in responding to Senator Leahy
regarding WIC‘s issuance of noncontract standard formula, FNS stated
that almost all infants, except those that are exclusively breastfed,
can be issued contract standard infant formula without compromising an
infant‘s nutritional needs and that noncontract standard formula should
only be issued in exceptional situations.
Observations from Some WIC Agencies on Switching Contract Standard
Formulas:
Considering the possibility that changing infant formula manufacturers
might lead to an increase in the use of noncontract standard formula,
we asked the WIC agencies we surveyed to consider how their most recent
change to a different infant formula manufacturer affected their use of
noncontract standard infant formula. Most agencies that had switched
between brands of standard formula for their rebate contract indicated
that the change had not been accompanied by an increase in noncontract
standard formula. In all, 32 of the WIC agencies we surveyed had made
such a change, and 25 of them (78 percent) said the use of noncontract
standard formula had not increased after their most recent contract
change to a different infant formula manufacturer.[Footnote 9]
We did not follow up with all of the 7 other agencies that reported an
increase, but 1 of the 7 (Florida) was among the largest agencies where
we focused part of our follow-up work.[Footnote 10] A state agency
official said that use of noncontract formula had traditionally been
less than 3 percent of all formula issued until February 1999, when the
Florida WIC agency switched its contract to a new infant formula
manufacturer. The official cited several reasons for the increase in
noncontract standard formula use after changing contractors. For
example, some hospitals were not using the new contractor‘s products,
so infants not exclusively breastfed were started out on a noncontract
formula rather than a contract formula. In addition, the new contractor
did not initially market its products to health care professionals in
Florida. However, Florida‘s use of noncontract standard formula has
declined from 10.1 percent of all infants issued WIC formula in
February 2000 to 8.6 percent in February 2001 and 5.9 percent in
February 2002. In October 2002, the Florida agency official informed us
that there had been a steady decline in requests for noncontract
standard formulas since the new contractor deployed a medical marketing
team in Florida. He said the team had good success in some areas in
gaining physician acceptance and in persuading hospitals to provide
their products in nurseries to newborns and in pediatric units to
infants who may participate in the WIC program, although there were
still some large hospitals that did not offer the new contractor‘s
formulas.
Use of Noncontract Standard Formula Cost WIC about $51 Million in Lost
Rebates:
Using February 2002 data, we estimated that the use of noncontract
standard infant formula cost the WIC program $50.9 million annually in
lost rebates, an amount equal to about 3.7 percent of the rebates
actually received. This calculation assumes all infants using
noncontract standard formula would instead use contract standard
formula. Each WIC infant using noncontract standard formula instead of
contract standard formula results in the agency foregoing the rebate
from the infant formula manufacturer. For February 2002, the sum of
infant formula rebates foregone by the 47 WIC agencies that provided
data was an estimated $4.25 million. Assuming that February‘s total is
representative of months throughout the year, the annual total is an
estimated $50.9 million. Assuming the retail price of contract standard
and noncontract standard infant formula is the same, the foregone
rebate is also the net cost to the WIC agency. Amounts foregone for
February 2002 ranged from zero at the 4 WIC agencies that reported
issuing no noncontract standard formula to $781,370 for California, the
largest WIC agency. (See appendix III for an estimate of rebates
foregone in February 2002 by each of 47 WIC agencies; see appendix I
for a description of the method we used to estimate the amount of
rebate dollars lost.):
Six WIC agencies--California, Florida, New York, Pennsylvania, Puerto
Rico, and Texas--accounted for over half of the estimated infant
formula rebates lost in 2002. All were among the 9 largest agencies in
terms of the number of infants provided infant formula. These agencies,
however, did not necessarily have above average percentages of infants
receiving noncontract standard formula. For example, as a percentage of
all WIC infants issued formula, Texas issued noncontract standard
formula to only 1.4 percent of infants and New York to 2.3 percent of
infants in February 2002. Nevertheless, the sheer size of their
programs meant that even a below average percentage of infants issued
noncontract standard formula could result in a substantial amount of
rebates being foregone.
Six WIC state agencies--Alabama, Mississippi, New Mexico, Pennsylvania,
Tennessee, and Virginia--have implemented policies prohibiting the use
of noncontract standard formula entirely. Some state agencies may have
medical or dietary religious reasons for not entirely prohibiting the
use of noncontract standard formula. However, an opportunity exists for
agencies with higher-than-average usage rates to lower their use of
noncontract standard formula, thereby increasing rebates. If the 19
agencies with higher-than-average noncontract standard use were able to
lower their usage rates to 3.3 percent (the average for 45 WIC agencies
in 2002) rebates could have been increased by an estimated $13.8
million in 2002 (about 1 percent of annual rebate savings). These
rebates could have been used to provide additional program benefits to
women, infants, and children. (See appendix IV for an estimate of
rebates foregone by each of 19 WIC agencies due to noncontract standard
formula use in excess of 3.3 percent of all formula issued in February
2002; see appendix I for a description of the method we used to
estimate the amount of these rebate dollars foregone.):
Knowing the reasons for the widely varying usage rates among the WIC
agencies for nonstandard infant formula could also provide an
opportunity to lower the usage rate of the higher costing formula and
result in cost savings. FNS is not routinely collecting from WIC
agencies the data that would allow it to monitor the effectiveness of
WIC agencies in restricting the use of nonstandard infant formula. As
shown in table 4, the usage rate reported by the 45 WIC agencies for
nonstandard infant formula varied significantly. We did not examine the
cause of this variation because our study focused on the use and cost
of noncontract standard formula. However, the usage rate reported for
nonstandard formula (6.4 percent) is nearly double that of noncontract
standard formula, and nonstandard formula can be, on average, twice as
expensive as noncontract standard formula. For example, nonstandard
formula issued in Montgomery County, Ohio in December 2001 cost, on
average, $19.00 per can compared to $9.48 per can for noncontract
standard formula. If this cost differential exists nationally, agencies
may be spending nearly four times as much on nonstandard formula as
they are on noncontract standard formula. Potential topics on which to
focus future studies of cost savings opportunities in the WIC program
may thus include examining why nonstandard formula use varied so widely
between WIC agencies, and what policies and practices were used by
agencies that kept their use of nonstandard formula at below-average
levels.
Conclusions:
Federal law requires WIC state agencies to contain the cost of
purchasing infant formula. In fiscal year 2001, FNS received $1.4
billion in rebates from the use of contract standard formula by infants
participating in the WIC program. The $1.4 billion permitted FNS and
the WIC agencies to provide WIC benefits to about 2.0 million
additional participants. In February 2002, we found that 3.3 percent of
infants received noncontract standard formula and 6.4 percent received
nonstandard infant formulas for which there were no rebates. FNS has
stated that almost all healthy infants, except those that are
exclusively breastfed, can be issued contract standard infant formula
without compromising an infant‘s nutritional needs and that noncontract
standard formula should only be issued in exceptional situations. Six
state-level WIC agencies that we contacted have found it feasible to
prohibit noncontract standard formula entirely.
FNS is not routinely collecting from WIC agencies the data that would
allow it to monitor the effectiveness of WIC agencies in restricting
the use of noncontract standard or nonstandard infant formula. The wide
variation among WIC agencies in the percentage of noncontract standard
formula used suggests that there is potential for the WIC agencies with
above-average usage to reduce their use of noncontract standard formula
and thereby increase rebates received from infant formula
manufacturers. For example, if the 19 WIC state agencies with above-
average usage had been able to reduce their noncontract standard usage
to the average of 3.3 percent reported in February 2002, infant formula
rebates would have been an estimated $13.8 million greater in 2002,
which would have allowed the program to serve additional participants.
Beyond the issue of noncontract standard formula use, we observed wide
variations in the use of nonstandard formulas--those special formulas
for infants whose health or dietary needs cannot be met through
standard formulas. The usage rates reported by WIC agencies are nearly
twice as great and vary even more for nonstandard formulas than for
noncontract standard formula, and nonstandard formulas can be much more
expensive.
Recommendations:
To effectively monitor the economical purchase of infant formula, we
recommend the Secretary of Agriculture direct the Administrator of the
Food and Nutrition Service to (1) require that WIC agencies develop and
regularly submit data on their use of noncontract standard infant
formula, and (2) work with WIC agencies with above-average usage rates
of noncontract standard formula to implement the best policies and
practices for reducing the level of use. Additionally, the
Administrator should (1) require that WIC agencies develop and
regularly submit data on their use of nonstandard formula, and (2) work
with WIC agencies with above-average use of nonstandard formula to
implement the best policies and practices for reducing nonstandard
formula use.
Agency Comments:
We provided a draft of this report to the Department of Agriculture.
FNS provided a written response, which is included as appendix V of
this report. In addition, FNS provided technical comments, which we
incorporated where appropriate. In its letter, FNS agreed with the
recommendations in the report and stated that it had recently started
collecting data that will facilitate the implementation of the
recommendations. However, FNS expressed concern that GAO‘s survey
instrument may have been misinterpreted by WIC state agencies because
we used terms to describe types of infant formula that are different
from FNS‘s terms. FNS believes this difference in terminology, and in
particular our use of the term nonstandard formula, may have resulted
in WIC state agencies‘ overreporting the volume of nonrebated,
nonstandard infant formula purchased by WIC participants.
We used the term ’nonstandard formula“ in our report because we wanted
to capture the different types of special formulas for which states did
not receive rebates, and this term encompassed all the types of special
formula not under contract that the WIC agencies used and reported to
us in our infant formula survey. Our definition of nonstandard formula
includes both the Food and Drug Administration exempt and the special
nonexempt formulas that the WIC agencies provided, neither of which
were covered by a rebate contract as reported by the states. We do not
believe that the WIC agencies had difficulty interpreting our survey
terms. We pretested our survey with officials in three states, which
included a discussion of their understanding of the definitions we
employed. In addition, after our preliminary analysis of survey
responses, we contacted officials in four WIC agencies with
particularly high usage of nonstandard formula to verify the
correctness of the data they had provided. In three of the four
instances, state officials chose not to make any changes to the data.
Although one of the agencies adjusted their nonstandard formula usage
downward, the adjustment was not required due to difficulty in
interpreting our infant formula descriptions, but rather was because
agency officials neglected to subtract exclusively breastfed infants in
their reported data.
Despite these efforts, it is possible that the amount of nonstandard
formula use reported by some WIC agencies included the use of nonexempt
infant formulas that should have been covered by the agencies‘ infant
formula rebate contracts. Whether such instances occurred cannot be
determined from our survey data. However, if such instances did occur,
as FNS believes, this only reinforces the importance of our
recommendation that FNS effectively monitor the use of both noncontract
standard and nonstandard formulas, including those that are categorized
as nonexempt and exempt. Such monitoring would help to identify any
nonstandard, nonexempt formulas manufactured by a WIC agency‘s rebate
contractor that should be covered by the agency‘s rebate contract but
are not.
We are sending copies of this report to the Honorable Ann M. Veneman,
Secretary of Agriculture; Roberto Salazar, FNS Administrator;
appropriate congressional committees; and other interested parties.
Please call me at (202) 512-7215 if you or your staffs have any
questions about this report. Key contacts and staff acknowledgements
for this report are listed in appendix VI.
Signed by Marnie S. Shaul:
Marnie S. Shaul
Director, Education, Workforce
and Income Security Issues:
[End of section]
Appendix I: Scope and Methodology:
At the state level, the WIC program is administered through 88 state-
level WIC agencies and a network of over 2,000 local agencies. The 88
state-level WIC agencies, which received program funding in fiscal year
2001, include agencies in all 50 states, the District of Columbia,
American Samoa, the Commonwealth of Puerto Rico, Guam, the U.S. Virgin
Islands, and 33 Indian Tribal Organizations. We obtained most of the
data used to address our report objectives from the responses to a
survey on the use of infant formula we sent out in June 2002 to 51 WIC
agencies (48 states, the District of Columbia, the Navajo Nation tribal
organization, and Puerto Rico). These agencies collectively represented
over 97 percent of the WIC infant participants in fiscal year 2001 and
they primarily relied on the competitively bid rebate contracts with
infant formula manufacturers to comply with federal cost containment
requirements for infant formula. All 51 WIC agencies receiving our
survey responded. However, some agencies were unable to answer every
survey question due to the unavailability of some data.
Of the 88 WIC agencies that received program funding in fiscal year
2001, we excluded 37 agencies from our survey. Seventeen were excluded
because they were exempted from continuously operating a cost
containment system for infant formula that is implemented in accordance
with 7 CFR 246.16a, Infant Formula Cost Containment. Two WIC agencies,
Mississippi and Vermont, were exempted because they did not use retail
stores for distributing infant formula to their WIC participants.
Mississippi uses a direct distribution delivery system under which
participants pick up formula from storage facilities operated by the
state or local agency. Vermont uses a home delivery system under which
formula is delivered to the participant‘s home. Fifteen Indian tribal
organizations were exempted because they served 1,000 or fewer WIC
participants. Another 20 WIC agencies (Guam, Virgin Islands, American
Samoa, and 17 other Indian tribal organizations) we judgmentally
excluded from our survey because they served fewer infant participants
in fiscal year 2001 than Wyoming, the smallest WIC state agency.
Our survey was necessary because data on the use of contract standard,
noncontract standard and nonstandard infant formula by WIC agency was
not available from FNS. In addition, some of the WIC agencies did not
account for the number of infants receiving each type of formula. As a
result, 3 of the 51 agencies we surveyed were unable to provide any
data on the number of infants using each type of infant formula in
February of 2000, 2001, or 2002. Another 9 agencies could provide only
partial data. Of the agencies that provided data on the number of
infants using each type of formula in each of the three years, some had
to estimate the number of infants receiving each type of formula based
on the number of cans of formula issued and still other agencies had to
make special analyses of computerized data that took up to two months
to complete. We did not independently verify the accuracy of the
information these agencies reported to us and we did not examine the
effectiveness of their policies or practices. However, when we
completed our analysis of agency data we did contact several agencies
that had very low or very high usage of either noncontract standard or
nonstandard formula to verify the correctness of the data they had
provided. Several of these agencies provided us with revised formula
usage data in response to our inquiries.
Our survey was designed to determine, for each responding WIC agency,
the amount of infant formula use for infant participants based on the
number of infants that were issued three categories of formula--
contract standard, noncontract standard or nonstandard formula during
the month of February for the years 2000, 2001, and 2002. The number of
infants receiving the three categories of formula was determined to be
a reasonable proxy for the extent that infant formula was being used
and it was a common measure that could be obtained from most WIC
agencies. Also, we limited the infant use data collected and the amount
of rebate dollars received to just one month for each year to minimize
the work required by WIC agencies responding to our survey. We used the
month of February because that was the most current month in 2002 we
could use and still expect to receive information on the amount of
rebate dollars received or billed for, considering the lag time
typically required for WIC agencies to determine the amount of rebate
dollars they will receive for a given month for contract standard
formula purchased.
In determining what research says about the extent that infants are
adversely affected by switching to a different brand of standard infant
formula intended for normal healthy babies, we performed an extensive
literature search and we used a question in our survey of 51 WIC
agencies to ask if they were aware of any studies or research that have
addressed how switching standard formulas affects infants. Also,
considering the possibility that changing infant formula manufacturers
might lead to an increase in the use of noncontract standard formula,
we used another survey question to ask each responding WIC agency to
describe how changing its contract to the current infant formula
manufacturer may have affected their infant participants‘ use of
noncontract standard infant formula. In addition to conducting the
survey, we discussed WIC infant formula use with officials at WIC
agencies and at FNS headquarters and regional offices, and we reviewed
relevant regulations and research.
To determine whether WIC agencies restricted the use of noncontract
standard formula, we primarily relied on the answers to a survey
question which asked what the WIC agency‘s current policy was on the
use of noncontract standard formula, and we also obtained copies of the
WIC agencies‘ policies pertaining to the use of noncontract standard
formula. To determine the extent that infants in the WIC program
receive noncontract standard formula we relied on a survey question
which asked, during the month of February in each of the years 2000,
2001, and 2002, how many infants each WIC state agency provided with
each of the three categories of formula. First, the WIC agencies
reported all infant formula used for which rebates were received. In
addition, they reported all infant formula used for which no rebates
were received, and this no-rebate-received category was provided in two
parts: noncontract standard formula and nonstandard formula. Therefore,
we assumed all nonstandard formula reported to be noncontract formula,
that is, not included in contracts for rebates from infant formula
manufacturers.
In estimating the dollar effect of using noncontract standard formula,
we assumed that all infants that used noncontract standard formula
could and would have used contract standard formula if noncontract
standard formula had been prohibited from use. Also, assuming that the
retail price of contract and noncontract standard infant formula was
the same, the rebate dollars foregone would equal the net cost to the
WIC agencies. To estimate the dollar effect of using noncontract
standard formula, we multiplied the number of infants provided
noncontract standard formula in February 2002 for each of the 47 WIC
agencies that provided data times the average rebate received per
infant by that agency to obtain the amount of rebate dollars forgone.
Computations made to estimate the rebate dollars foregone by each of 19
WIC agencies with noncontract standard use in excess of the 3.3 percent
average for all agencies that reported data in February 2002, are as
follows: (1) we multiplied the total infants receiving formula by 0.033
to obtain the number of infants required to attain a 3.3 percent
noncontract standard formula usage rate, (2) we subtracted the number
of infants required to attain a 3.3 percent noncontract standard
formula usage rate from the total infants that received such formula to
obtain the number of infants receiving noncontract standard formula in
excess of the 3.3 percent rate, and (3) we multiplied the number of
infants receiving noncontract standard formula in excess of 3.3 percent
by the average monthly rebate received per infant using contract
standard formula to obtain the number of rebate dollars foregone. The
total of all rebate dollars foregone by each agency in February was
multiplied by 12 to obtain an estimated annual effect of using
noncontract standard formula. This a conservative estimate because
February is the shortest month of the year. Data for these calculations
were derived from responses to survey questions.
[End of section]
Appendix II: Number of Infants That Received Contract Standard,
Noncontract Standard, and Nonstandard Formula:
Table 6: Number of Infants That Received Contract Standard, Noncontract
Standard, and Nonstandard Formula in February 2002 for 45 WIC Agencies:
WIC agency: Alabama; Contract standard: 27,262; Noncontract standard:
704; Nonstandard: 2,665; Total: 30,631.
WIC agency: Alaska; Contract standard: 3,923; Noncontract standard:
134; Nonstandard: 95; Total: 4,152.
WIC agency: Arizona; Contract standard: 28,949; Noncontract standard:
1,408; Nonstandard: 5,739; Total: 36,096.
WIC agency: Arkansas; Contract standard: 20,093; Noncontract standard:
8; Nonstandard: 1,957; Total: 22,058.
WIC agency: California; Contract standard: 229,914; Noncontract
standard: 11,149; Nonstandard: 2,532; Total: 243,595.
WIC agency: Colorado; Contract standard: 12,785; Noncontract standard:
970; Nonstandard: 608; Total: 14,363.
WIC agency: Connecticut; Contract standard: 11,248; Noncontract
standard: 421; Nonstandard: 1,067; Total: 12,736.
WIC agency: Delaware; Contract standard: 2,776; Noncontract standard:
220; Nonstandard: 233; Total: 3,229.
WIC agency: District of Columbia; Contract standard: 4,188; Noncontract
standard: 210; Nonstandard: 40; Total: 4,438.
WIC agency: Florida; Contract standard: 65,086; Noncontract standard:
4,394; Nonstandard: 4,613; Total: 74,093.
WIC agency: Georgia; Contract standard: 60,557; Noncontract standard:
443; Nonstandard: 5,653; Total: 66,653.
WIC agency: Hawaii; Contract standard: 6,606; Noncontract standard:
184; Nonstandard: 160; Total: 6,950.
WIC agency: Illinois; Contract standard: 61,516; Noncontract standard:
2,477; Nonstandard: 3,022; Total: 67,015.
WIC agency: Indiana; Contract standard: 31,452; Noncontract standard:
2,470; Nonstandard: 2,637; Total: 36,559.
WIC agency: Iowa; Contract standard: 12,527; Noncontract standard: 338;
Nonstandard: 588; Total: 13,453.
WIC agency: Kansas; Contract standard: 9,885; Noncontract standard:
322; Nonstandard: 422; Total: 10,629.
WIC agency: Kentucky; Contract standard: 21,922; Noncontract standard:
2,109; Nonstandard: 2,666; Total: 26,697.
WIC agency: Louisiana; Contract standard: 35,658; Noncontract standard:
938; Nonstandard: 3,059; Total: 39,655.
WIC agency: Maine; Contract standard: 4,219; Noncontract standard: 137;
Nonstandard: 354; Total: 4,710.
WIC agency: Maryland; Contract standard: 24,613; Noncontract standard:
165; Nonstandard: 1,486; Total: 26,264.
WIC agency: Massachusetts; Contract standard: 23,110; Noncontract
standard: 344; Nonstandard: 1,337; Total: 24,791.
WIC agency: Michigan; Contract standard: 45,745; Noncontract standard:
2,029; Nonstandard: 1,227; Total: 49,001.
WIC agency: Minnesota; Contract standard: 20,095; Noncontract standard:
640; Nonstandard: 1,366; Total: 22,101.
WIC agency: Navajo Nation; Contract standard: 2,793; Noncontract
standard: 0; Nonstandard: 128; Total: 2,921.
WIC agency: Nebraska; Contract standard: 7,690; Noncontract standard:
236; Nonstandard: 948; Total: 8,874.
WIC agency: Nevada; Contract standard: 10,273; Noncontract standard:
225; Nonstandard: 25; Total: 10,523.
WIC agency: New Jersey; Contract standard: 32,218; Noncontract
standard: 462; Nonstandard: 992; Total: 33,672.
WIC agency: New Mexico; Contract standard: 10,191; Noncontract
standard: 0; Nonstandard: 555; Total: 10,746.
WIC agency: New York; Contract standard: 117,385; Noncontract standard:
3,012; Nonstandard: 8,413; Total: 128,810.
WIC agency: Ohio; Contract standard: 54,761; Noncontract standard:
1,268; Nonstandard: 13,918; Total: 69,947.
WIC agency: Oklahoma; Contract standard: 22,326; Noncontract standard:
655; Nonstandard: 1,152; Total: 24,133.
WIC agency: Oregon; Contract standard: 15,188; Noncontract standard:
617; Nonstandard: 375; Total: 16,180.
WIC agency: Pennsylvania; Contract standard: 45,226; Noncontract
standard: 2,951; Nonstandard: 1,754; Total: 49,931.
WIC agency: Puerto Rico; Contract standard: 31,240; Noncontract
standard: 4,378; Nonstandard: 13,613; Total: 49,231.
WIC agency: Rhode Island; Contract standard: 3,615; Noncontract
standard: 126; Nonstandard: 262; Total: 4,003.
WIC agency: South Carolina; Contract standard: 26,177; Noncontract
standard: 873; Nonstandard: 2,036; Total: 29,086.
WIC agency: South Dakota; Contract standard: 3,158; Noncontract
standard: 274; Nonstandard: 376; Total: 3,808.
WIC agency: Tennessee; Contract standard: 38,607; Noncontract standard:
0; Nonstandard: 3,059; Total: 41,666.
WIC agency: Texas; Contract standard: 176,227; Noncontract standard:
2,582; Nonstandard: 6,113; Total: 184,922.
WIC agency: Utah; Contract standard: 8,375; Noncontract standard: 832;
Nonstandard: 554; Total: 9,761.
WIC agency: Virginia; Contract standard: 29,281; Noncontract standard:
0; Nonstandard: 2,896; Total: 32,177.
WIC agency: Washington; Contract standard: 28,266; Noncontract
standard: 1,390; Nonstandard: 990; Total: 30,646.
WIC agency: West Virginia; Contract standard: 10,008; Noncontract
standard: 730; Nonstandard: 671; Total: 11,409.
WIC agency: Wisconsin; Contract standard: 22,107; Noncontract standard:
913; Nonstandard: 1,009; Total: 24,029.
WIC agency: Wyoming; Contract standard: 1,509; Noncontract standard:
196; Nonstandard: 156; Total: 1,861.
WIC agency: Totals; Contract standard: 1,460,750; Noncontract standard:
53,934; Nonstandard: 103,521; Total: 1,618,205.
[End of table]
Source: GAO survey of WIC agencies.
Note: Idaho, Missouri, Montana, New Hampshire, North Carolina, and
North Dakota are excluded from this table because they either did not
provide or did not completely provide these data for our survey.
[End of section]
Appendix III: Estimate of Rebates Foregone by WIC Agency:
Table 7: Estimate of Rebates Foregone in February 2002 by 47 WIC
Agencies:
WIC agency: Alabama; Number of infants receiving noncontract standard
formula: 704; Average monthly rebate received per WIC contract standard
formula infant: $90.10; Amount of rebate foregone due to use of
noncontract
standard formula[A]: $63,431.
WIC agency: Alaska; Number of infants receiving noncontract standard
formula: 134; Average monthly rebate received per WIC contract standard
formula infant: 60.68; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 8,131.
WIC agency: Arizona; Number of infants receiving noncontract standard
formula: 1,408; Average monthly rebate received per WIC contract
standard
formula infant: 76.43; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 107,614.
WIC agency: Arkansas; Number of infants receiving noncontract standard
formula: 8; Average monthly rebate received per WIC contract standard
formula infant: 83.47; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 668.
WIC agency: California; Number of infants receiving noncontract
standard formula: 11,149; Average monthly rebate received per WIC
contract standard
formula infant: 70.08; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 781,370.
WIC agency: Colorado; Number of infants receiving noncontract standard
formula: 970; Average monthly rebate received per WIC contract standard
formula infant: 93.13; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 90,337.
WIC agency: Connecticut; Number of infants receiving noncontract
standard formula: 421; Average monthly rebate received per WIC contract
standard
formula infant: 80.09; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 33,716.
WIC agency: Delaware; Number of infants receiving noncontract standard
formula: 220; Average monthly rebate received per WIC contract standard
formula infant: 101.77; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 22,390.
WIC agency: District of Columbia; Number of infants receiving
noncontract standard formula: 210; Average monthly rebate received per
WIC contract standard
formula infant: 66.62; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 13,991.
WIC agency: Florida; Number of infants receiving noncontract standard
formula: 4,394; Average monthly rebate received per WIC contract
standard
formula infant: 72.13; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 316,932.
WIC agency: Georgia; Number of infants receiving noncontract standard
formula: 443; Average monthly rebate received per WIC contract standard
formula infant: 70.33; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 31,154.
WIC agency: Hawaii; Number of infants receiving noncontract standard
formula: 184; Average monthly rebate received per WIC contract standard
formula infant: 76.58; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 14,090.
WIC agency: Illinois; Number of infants receiving noncontract standard
formula: 2,477; Average monthly rebate received per WIC contract
standard
formula infant: 80.49; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 199,369.
WIC agency: Indiana; Number of infants receiving noncontract standard
formula: 2,470; Average monthly rebate received per WIC contract
standard
formula infant: 74.51; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 184,045.
WIC agency: Iowa; Number of infants receiving noncontract standard
formula: 338; Average monthly rebate received per WIC contract standard
formula infant: 72.80; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 24,606.
WIC agency: Kansas; Number of infants receiving noncontract standard
formula: 322; Average monthly rebate received per WIC contract standard
formula infant: 85.87; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 27,652.
WIC agency: Kentucky; Number of infants receiving noncontract standard
formula: 2,109; Average monthly rebate received per WIC contract
standard
formula infant: 51.75; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 109,146.
WIC agency: Louisiana; Number of infants receiving noncontract standard
formula: 938; Average monthly rebate received per WIC contract standard
formula infant: 82.06; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 76,970.
WIC agency: Maine; Number of infants receiving noncontract standard
formula: 137; Average monthly rebate received per WIC contract standard
formula infant: 62.71; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 8,591.
WIC agency: Maryland; Number of infants receiving noncontract standard
formula: 165; Average monthly rebate received per WIC contract standard
formula infant: 80.29; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 13,249.
WIC agency: Massachusetts; Number of infants receiving noncontract
standard formula: 344; Average monthly rebate received per WIC contract
standard
formula infant: 77.06; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 26,508.
WIC agency: Michigan; Number of infants receiving noncontract standard
formula: 2,029; Average monthly rebate received per WIC contract
standard
formula infant: 84.16; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 170,770.
WIC agency: Minnesota; Number of infants receiving noncontract standard
formula: 640; Average monthly rebate received per WIC contract standard
formula infant: 82.43; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 52,757.
WIC agency: Navajo Nation; Number of infants receiving noncontract
standard formula: 0; Average monthly rebate received per WIC contract
standard
formula infant: 57.06; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 0.
WIC agency: Nebraska; Number of infants receiving noncontract standard
formula: 236; Average monthly rebate received per WIC contract standard
formula infant: 72.05; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 17,004.
WIC agency: Nevada; Number of infants receiving noncontract standard
formula: 225; Average monthly rebate received per WIC contract standard
formula infant: 74.84; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 16,839.
WIC agency: New Jersey; Number of infants receiving noncontract
standard formula: 462; Average monthly rebate received per WIC contract
standard
formula infant: 51.64; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 23,857.
WIC agency: New Mexico; Number of infants receiving noncontract
standard formula: 0; Average monthly rebate received per WIC contract
standard
formula infant: 68.74; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 0.
WIC agency: New York; Number of infants receiving noncontract standard
formula: 3,012; Average monthly rebate received per WIC contract
standard
formula infant: 72.13; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 217,241.
WIC agency: North Carolina; Number of infants receiving noncontract
standard formula: 1,565; Average monthly rebate received per WIC
contract standard
formula infant: 79.71; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 124,742.
WIC agency: North Dakota; Number of infants receiving noncontract
standard formula: 203; Average monthly rebate received per WIC contract
standard
formula infant: 52.56; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 10,670.
WIC agency: Ohio; Number of infants receiving noncontract standard
formula: 1,268; Average monthly rebate received per WIC contract
standard
formula infant: 77.63; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 98,433.
WIC agency: Oklahoma; Number of infants receiving noncontract standard
formula: 655; Average monthly rebate received per WIC contract standard
formula infant: 62.75; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 41,100.
WIC agency: Oregon; Number of infants receiving noncontract standard
formula: 617; Average monthly rebate received per WIC contract standard
formula infant: 73.05; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 45,070.
WIC agency: Pennsylvania; Number of infants receiving noncontract
standard formula: 2,951; Average monthly rebate received per WIC
contract standard
formula infant: 78.80; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 232,551.
WIC agency: Puerto Rico; Number of infants receiving noncontract
standard formula: 4,378; Average monthly rebate received per WIC
contract standard
formula infant: 92.94; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 406,903.
WIC agency: Rhode Island; Number of infants receiving noncontract
standard formula: 126; Average monthly rebate received per WIC contract
standard
formula infant: 93.06; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 11,726.
WIC agency: South Carolina; Number of infants receiving noncontract
standard formula: 873; Average monthly rebate received per WIC contract
standard
formula infant: 79.09; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 69,046.
WIC agency: South Dakota; Number of infants receiving noncontract
standard formula: 274; Average monthly rebate received per WIC contract
standard
formula infant: 78.72; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 21,570.
WIC agency: Tennessee; Number of infants receiving noncontract standard
formula: 0; Average monthly rebate received per WIC contract standard
formula infant: 71.18; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 0.
WIC agency: Texas; Number of infants receiving noncontract standard
formula: 2,582; Average monthly rebate received per WIC contract
standard
formula infant: 84.67; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 218,626.
WIC agency: Utah; Number of infants receiving noncontract standard
formula: 832; Average monthly rebate received per WIC contract standard
formula infant: 88.79; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 73,869.
WIC agency: Virginia; Number of infants receiving noncontract standard
formula: 0; Average monthly rebate received per WIC contract standard
formula infant: 41.81; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 0.
WIC agency: Washington; Number of infants receiving noncontract
standard formula: 1,390; Average monthly rebate received per WIC
contract standard
formula infant: 67.26; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 93,485.
WIC agency: West Virginia; Number of infants receiving noncontract
standard formula: 730; Average monthly rebate received per WIC contract
standard
formula infant: 76.82; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 56,081.
WIC agency: Wisconsin; Number of infants receiving noncontract standard
formula: 913; Average monthly rebate received per WIC contract standard
formula infant: 78.41; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 71,590.
WIC agency: Wyoming; Number of infants receiving noncontract standard
formula: 196; Average monthly rebate received per WIC contract standard
formula infant: 87.65; Amount of rebate foregone due to use of
noncontract
standard formula[A]: 17,179.
WIC agency: Total; Number of infants receiving noncontract standard
formula: 55,702; Average monthly rebate received per WIC contract
standard
formula infant: [Empty]; Amount of rebate foregone due to use of
noncontract
standard formula[A]: $4,245,072.
[End of table]
Source: GAO‘s analysis of survey data provided by WIC state agencies.
Note: Idaho, Missouri, Montana, and New Hampshire are excluded from
this table because they either did not provide or did not completely
provide these data for our survey.
[A] Individual agency totals may differ from the multiplication of the
figures in the preceding two columns due to rounding of those figures.
[End of section]
Appendix IV: Estimate of Rebates Foregone Due to Above Average Use of
Noncontract Standard Formula by WIC Agencies:
Table 8: Estimates of Rebates Foregone in February 2002 by 19 WIC
Agencies Due to the Use of Noncontract Standard Infant Formula
Exceeding the 3.3 Percent Average of All Infants Receiving Formula:
WIC agency: Arizona; Noncontract standard formula usage (percent): 3.9;
Number of infants receiving noncontract standard formula exceeding the
3.3 percent average: 217; Average monthly rebate received per WIC
contract standard formula infant: $76.43; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: $16,573.
WIC agency: California; Noncontract standard formula usage (percent):
4.6; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 3,110; Average monthly rebate received per WIC
contract standard formula infant: 70.08; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 217,988.
WIC agency: Colorado; Noncontract standard formula usage (percent):
6.8; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 496; Average monthly rebate received per WIC
contract standard formula infant: 93.13; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 46,195.
WIC agency: Delaware; Noncontract standard formula usage (percent):
6.8; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 113; Average monthly rebate received per WIC
contract standard formula infant: 101.77; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 11,546.
WIC agency: District of Columbia; Noncontract standard formula usage
(percent): 4.7; Number of infants receiving noncontract standard
formula exceeding the 3.3 percent average: 64; Average monthly rebate
received per WIC contract standard formula infant: 66.62; Amount of
rebate foregone due to noncontract standard formula use in excess of
the 3.3 percent average[A]: 4,234.
WIC agency: Florida; Noncontract standard formula usage (percent): 5.9;
Number of infants receiving noncontract standard formula exceeding the
3.3 percent average: 1,949; Average monthly rebate received per WIC
contract standard formula infant: 72.13; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 140,573.
WIC agency: Illinois; Noncontract standard formula usage (percent):
3.7; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 266; Average monthly rebate received per WIC
contract standard formula infant: 80.49; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 21,370.
WIC agency: Indiana; Noncontract standard formula usage (percent): 6.8;
Number of infants receiving noncontract standard formula exceeding the
3.3 percent average: 1,264; Average monthly rebate received per WIC
contract standard formula infant: 74.51; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 94,150.
WIC agency: Kentucky; Noncontract standard formula usage (percent):
7.9; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 1,228; Average monthly rebate received per WIC
contract standard formula infant: 51.75; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 63,552.
WIC agency: Michigan; Noncontract standard formula usage (percent):
4.1; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 412; Average monthly rebate received per WIC
contract standard formula infant: 84.16; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 34,673.
WIC agency: Oregon; Noncontract standard formula usage (percent): 3.8;
Number of infants receiving noncontract standard formula exceeding the
3.3 percent average: 83; Average monthly rebate received per WIC
contract standard formula infant: 73.05; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 6,067.
WIC agency: Pennsylvania; Noncontract standard formula usage (percent):
5.9; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 1,303; Average monthly rebate received per WIC
contract standard formula infant: 78.80; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 102,704.
WIC agency: Puerto Rico; Noncontract standard formula usage (percent):
8.9; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 2,753; Average monthly rebate received per WIC
contract standard formula infant: 92.94; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 255,906.
WIC agency: South Dakota; Noncontract standard formula usage (percent):
7.2; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 148; Average monthly rebate received per WIC
contract standard formula infant: 78.72; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 11,677.
WIC agency: Utah; Noncontract standard formula usage (percent): 8.5;
Number of infants receiving noncontract standard formula exceeding the
3.3 percent average: 510; Average monthly rebate received per WIC
contract standard formula infant: 88.79; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 45,271.
WIC agency: Washington; Noncontract standard formula usage (percent):
4.5; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 379; Average monthly rebate received per WIC
contract standard formula infant: 67.26; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 25,468.
WIC agency: West Virginia; Noncontract standard formula usage
(percent): 6.4; Number of infants receiving noncontract standard
formula exceeding the 3.3 percent average: 354; Average monthly rebate
received per WIC contract standard formula infant: 76.82; Amount of
rebate foregone due to noncontract standard formula use in excess of
the 3.3 percent average[A]: 27,157.
WIC agency: Wisconsin; Noncontract standard formula usage (percent):
3.8; Number of infants receiving noncontract standard formula exceeding
the 3.3 percent average: 120; Average monthly rebate received per WIC
contract standard formula infant: 78.41; Amount of rebate foregone due
to noncontract standard formula use in excess of the 3.3 percent
average[A]: 9,413.
WIC agency: Wyoming; Noncontract standard formula usage (percent):
10.5; Number of infants receiving noncontract standard formula
exceeding the 3.3 percent average: 135; Average monthly rebate received
per WIC contract standard formula infant: 87.65; Amount of rebate
foregone due to noncontract standard formula use in excess of the 3.3
percent average[A]: 11,796.
WIC agency: Total; Noncontract standard formula usage (percent):
[Empty]; Number of infants receiving noncontract standard formula
exceeding the 3.3 percent average: 14,903[B]; Average monthly rebate
received per WIC contract standard formula infant: [Empty]; Amount of
rebate foregone due to noncontract standard formula use in excess of
the 3.3 percent average[A]: $1,146,313.
[End of table]
Source: GAO‘s analysis of survey data provided by WIC state agencies.
[A] Individual agency totals may differ from the multiplication of the
figures in the preceding two columns due to rounding of those figures.
[B] Total differs from the sum of the numbers in the column due to the
rounding of those numbers.
[End of section]
Appendix V: Comments from the Department of Agriculture:
USDA:
Ms. Mamie S. Shaul.
Director, Education, Workforce.
and Income Security Issues.
General Accounting Office.
441 G Street, N. W.
Washington, D.C. 20548.
Dear Ms. Shaul:.
We appreciate the opportunity to respond to
the General Accounting Office‘s.
(GAO) draft report, entitled ’Food Assistance: Potential to
Lower the Cost of Purchasing WIC Infant Formula.“ We agree with the
recommendations outlined in the report and have recently started
collecting data based on Special Supplemental Nutrition Program for
Women, Infants and Children (WIC) State agency food codes that will
facilitate the implementation of these recommendations. However, the
Food and Nutrition Service (FNS) is concerned that the methodology used
to determine the estimates for non-rebated ’nonstandard“ infant
formulas in the report may have resulted in the reporting of data in
excess of actual usage.
In its survey instrument, GAO used terms that were different
from those used by FNS to describe types of infant formula.
Consequently, the information reported by the State agencies may have
been misrepresented as a result. For example, FNS believes that some
states may have misinterpreted the survey term ’special“ formula (which
is reported by GAO in this report as ’nonstandard“ formula) in a manner
inconsistent with the regulatory definition of exempt infant formulas.
FNS regulations denote two definitions for infant formula according to
the Food and. Drug Administration (FDA) standard of identity, exempt
and
nonexempt. Nonexempt WIC formulas generally correspond to GAO‘s
’standard“
category and exempt WIC formulas to GAO‘s ’nonstandard“ formula
category.
However, there is a group of formulas that are nonstandard by the GAO
definition or as the States‘ classify and report them, that are not
exempt
formulas by FNS and FDA definition Formulas such as milk-based, lactose
free, added rice, follow-up formulas and high calorie formulas may be
considered by some State agencies as ’special“ because a State agency
may
require medical documentation for issuance. However, these formulas are
actually nonexempt by FDA definition and, therefore, eligible for
rebates
if under contract.
In conclusion, FNS believes GAO‘s survey instrument may have been
misinterpreted by State agencies because GAO employed different infant
formula terms than those used by FNS. This may have resulted in an
excess
of non-rebated ’nonstandard“ infant formulas reported.
FNS appreciates GAO‘s efforts to bring further attention to the
importance
of rebates in helping to reduce WIC food package costs and agrees to
more
closely monitor noncontract infant formula issuance data. More detailed
overall comments and technical comments were previously provided to GAO
in
a comment session January 10, 2003.
Signed by Roberto Salazar:
Roberto Salazar:
Administrator:
[End of section]
Appendix VI: GAO Contacts and Staff Acknowledgments:
Contacts:
Kay E. Brown, (202) 512-3674
Daniel C. Jacobsen, (206) 287-4797:
Acknowledgments:
In addition to those named above, Chuck Novak, Stan Stenersen, and Ron
Wood made key contributions to this report. Luann Moy provided
important consultation on methodological issues for the WIC agency
survey.
FOOTNOTES
[1] According to regulations, noncontract standard brand infant
formulas may be issued without medical documentation only to
accommodate religious eating patterns, such as the Judaic requirement
for kosher infant formulas.
[2] Our survey did not include the WIC agencies for two states--
Mississippi and Vermont--because they do not distribute infant formula
through retail outlets but rather use direct distribution and home
delivery food distribution systems, respectively. Under direct
distribution, participants pick up standard formula from storage
facilities operated by the state or local agency; under home delivery,
formula is delivered to the participant‘s home. Also, not included in
our survey were 35 WIC agencies that were either exempt from operating
a cost containment system or judgmentally excluded from our survey due
to their small size.
[3] The 88 state-level WIC agencies, referred to as ’WIC agencies“
throughout this report, include agencies in all 50 states, the District
of Columbia, American Samoa, the Commonwealth of Puerto Rico, Guam, the
U.S. Virgin Islands, and 33 Indian Tribal Organizations.
[4] In our survey, the WIC agencies reported all infants using formula
that was under contract for rebate. In addition, they reported all
infants using formula for which no rebates were received, and this no-
rebate-received category was provided in two parts: noncontract
standard formula and nonstandard (or ’special“) formula.
[5] Mississippi, one of two agencies not included in our survey because
it does not purchase formula through retail outlets, also prohibits the
use of noncontract standard formula without exception. According to a
Mississippi WIC agency official, the agency receives a discounted price
for contract standard infant formula resulting from a competitively bid
contract with a single manufacturer. The formula is directly delivered
by the manufacturer to 94 food centers operated by state employees,
where the agency‘s WIC participants pick it up.
[6] California‘s proposed policy, which has been submitted to FNS for
approval, would revise its policy in three significant ways. First, the
agency will only allow local staff to provide noncontract standard
formula to infants up to 6 months of age (compared to 12 months now)
with medical documentation from a physician. Noncontract standard
formula will not be issued after the infant is six months of age.
Second, local staff will be required to educate the parents of newborns
about the adjustments the infant‘s gastrointestinal tract makes during
the first three months so that--after about three months of age in most
cases--the infant will be able to tolerate the contract standard
formula even if she or he was not able to at an earlier age. At this
point, the parents should begin to introduce the contract standard
product so that the transition is complete by 6 months of age. Third,
if after 6 months of age the infant still cannot tolerate the contract
standard product, she or he should receive a medical evaluation for
possible transition to a medical (nonstandard) formula for a more
severe condition.
[7] We were able to determine the portion of noncontract standard
formula use for just 35 agencies because 6 of the 41 WIC agencies that
only prohibited noncontract standard formula use with some exceptions
did not provide sufficient usage data in our survey.
[8] B. Lloyd et al., Ross Product Div., Abbot Laboratories, ’Formula
Tolerance in Postbreastfed and Exclusively Formula-fed Infants“,
Pediatrics Vol. 103 No. 1, January (1999). J. S. Hyams et al., ’Effect
of Infant Formula on Stool Characteristics of Young Infants“,
Pediatrics 95: 50-54, (1995).
[9] Four state WIC agencies said that, although they had changed
manufacturers, they did not have the data to determine whether
noncontract standard formula use had been affected. An additional 15
agencies said that they had always contracted with the same
manufacturer and therefore, their noncontract standard use had not been
affected by a change of formula manufacturer.
[10] Another of the large agencies we contacted, California, reported
that while its contract has remained with the same manufacturer for a
number of years, it continues to grapple on a continuing basis with
parental requests to use noncontract standard formula because their
infant has started on a different formula before leaving the hospital.
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