Project: WIC and the Economics of Infant Formula Contracts, Rebates, and Wholesale Prices
Award Year: 2003
Amount of award, fiscal 2003: $70,000.00
Institution: University of Notre Dame
Principal Investigator: David Betson
Status: Completed
Detailed Objective: Federal law requires that WIC State agencies have competitively bid infant formula rebate contracts with formula manufacturers. In exchange for the rebates, the manufacturers are given exclusive rights to provide infant formula to WIC participants. In 2001, rebates totaled almost $1.6 billion. The amount of the rebates is not uniform across States. Currently, the rebates range from 85 percent to 98 percent of the wholesale price of infant formula.

Given the magnitude of the rebates, it is important to understand the determinants of rebate bids by the manufacturers. This project will address three research questions: 1) What determines who wins a WIC rebate contract in a State? 2) What determines the variation in the size of the rebate? and 3) What is the effect of WIC rebate program on the wholesale price of infant formula? State contracts and IRI retail prices for local markets from 1994 to 2002 will be used in the analyses.

Topic: Program Operations, WIC
Betson, D. Impact of the WIC Program on the Infant Formula Market, Contractor and Cooperator Report No. 51,USDA, ERS, January 2009.