Raising infant formula prices during statewide shortages could become a crime in Ohio if a new bill becomes law.
Price gouging would be measured as price increases of more than 5% above standard cost immediately before formula shortages.
House Bill 718introduced at the Ohio House in August, would allow the state to hit providers with criminal penalties that vary depending on the number of violations, but can be as high as a first-degree misdemeanor and a $1,000 fine for repeat offenders.
Legislation faces an uphill battle: the two-year legislative session ends in December and all bills that have not been approved by both the House and Senate die.
“Supply is always a concern, and there just aren’t enough protections in Ohio for people facing price gouging,” said state Rep. Jeff Crossman, D-Parma, co-sponsor of the bill. “It’s about people subverting the market to try to make an extraordinary amount of money.”
Spurred by the national infant formula shortage in May, the bill was introduced after the infant formula giant Abbott Nutrition resumed production of powdered infant formula at its plant in Sturgis, Michigan. Abbott temporarily closed the plant earlier this year due to reports of bacterial contamination believed to be linked to four infants who fell ill with bacterial infections after consuming formula made at the factory, two of whom died from their infections.
In February, Abbott voluntary recall of batches of three different formulations manufactured in the factory following a US Food and Drug Administration investigation. The shutdown and recall sparked a national formula shortage – the factory is estimated to control about a fifth of the U.S. formula supply, according to Bloomberg. Labor shortages and supply chain issues related to COVID-19 have exacerbated the problem.
The cost of price gouging
Although the shortage of infant formula has improved since mid-July, 23% of powdered infant formula remained out of stock at the end of August, The New York Times reported. Prior to Abbott’s recall and discontinuation, that number of stockouts was 10%.
High demand for infant formula and dwindling supplies have forced many families to pay high prices to online retailers to get the specific brands they need due to medical or dietary restrictions.
For example, a parent looking for a 12.5 oz. A box of Enfamil infant formula powder could normally be expected to pay around $17.26, or $1.38 per ounce (retail price at Wal-Mart). If that parent can’t find Enfamil anywhere else, they might end up paying about $26.99 — about $2.16 an ounce — the price a charged eBay listing from Tuesday for this same size can.
A year of formula can cost between $1,200 and $1,500 depending on the brand and type of formula, depending whattoexpect parent website. Babies can’t start eating solid foods up to six months of age, and cannot drink cow’s milk for at least a yearaccording to the Centers for Disease Control and Prevention.
About 23.7% of Ohio babies born in 2019 were exclusively breastfed until six months, according to CDC Breastfeeding Newsletter 2022. On the other hand, 23.9% of infants in Ohio received formula during their first two days of age.
The Federal Trade Commission issued an alert in May warn consumers about online scammers using official-looking websites and social media accounts to charge high prices for formulas they will never send.
The Better Business Bureau has issued a similar alert in May. The BBB has received at least 17 reports of scammers using fake sales to take advantage of consumers buying infant formula since February 1. The latest scam report was released on July 29, according to the BBB Scam Tracker.
“I attended a community meeting where parents talked about not finding formula on the shelves and saw the price of formula go up at three different stores,” said Shayla Davis, I-Garfield Heights, co. -sponsor of the bill. “I have one of the poorest neighborhoods in Ohio and if my people say so, there are poorer people (saying so too).”
Parents take matters into their own hands
Many families, tired of navigating empty store shelves and the volatile resale market, have formed local communities online to help find a formula.
Facebook groups such as Columbus formula seekers have become one-stop shops for families to exchange information about which stores have what in stock. Members can donate unused formulas to others and buy, sell, and trade formulas on the page – as long as no one is doing it for profit.
“It’s disgusting to me that people are taking advantage of such a vulnerable time trying to make a quick buck,” said Kelly Keyser, the mother who started the group. “Parents worry about feeding their child, and some have chosen to take it out on them. It’s disgusting.”
Keyser, a nurse at James Cancer Hospital, started the Facebook group in May while on maternity leave after she and a friend discussed the stress of parenting during the baby formula shortage.
The group has grown to over 2,500 members.
“I was really encouraged by how quickly he grew, he was clearly very needed and helped feed so many babies,” Keyser said. “I’ve been really encouraged by the members of this group who are so eager to help find a formula for people they don’t even know.”
She said her group encourages parents to seek help from their pediatricians if they can’t find or afford the formula they need.
Does Ohio already have consumer protection laws?
Although Ohio prohibits unfair sales practicesno state law specifically prohibits price gouging, said Bethany McCorkle, a spokeswoman for the Ohio attorney general’s office.
In Ohio, vendors are prohibited from engaging in sales practices deemed “unconscionable,” including engaging in consumer transactions that are “materially above the price at which similar goods or services were readily available in like consumer transactions by like consumers”, according to State Law.
“The attorney general’s office is supposed to be the primary advocate for consumer protection in Ohio,” Crossman said. “There are laws that allow the Attorney General to do that now, but that’s a specific line in the sand for a specific product.”
The attorney general’s office has used the law in the past to indict retailers, most recently to go after ‘pandemic profiteers’ who were hoarding essentials like toilet paper during the confinement linked to COVID-19McCorkle said.
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