Distilleries across the U.S. received a surprise fee from the Food and Drug Administration after using their facilities to make hand sanitizer amid the COVID-19 pandemic.
As COVID-19 cases began surging in March, distilleries started making hand sanitizer by switching their alcohol production to antiseptic, undrinkable alcohol and giving away bottles to members of their communities.
The efforts rose after the country faced a shortage in hand sanitizer as shoppers panic bought hand soap, cleaning wipes and other sanitation products.
The CARES Act enacted in March included a non-prescription drug policy, making distilleries producing hand sanitizer “over-the-counter drug monograph facilities.” The CARES Act also established these facilities must pay user fees under the over the counter monograph drug user fee program.
The fees impacting distillers are a $14,060 Monograph Drug Facility Fee and $9,373 Contract Manufacturing Organization Facility Fee due on Feb. 12.
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“This incredibly frustrating news comes as a complete shock to the more than 800 distilleries across the country that came to the aid of their local communities and first responders,” said Distilled Spirits Council President and CEO Chris Swonger. “This unexpected fee serves to punish already struggling distilleries who jumped in at a time of need to do the right thing.”
The FDA confirmed to USA TODAY that “the statute does not provide any waiver provisions for any specific category of manufacturer” or for the deadline for assessing those fees for that matter. “We stand ready to work with Congress on ways this can be addressed,” said an FDA spokesperson.
Distilleries planning to avoid paying fees in 2022 should update their status as an over-the-counter monograph drug production facility with the FDA and cease producing and selling the product by Dec. 31, 2020.
“What’s unfortunate about this situation is that this was provided to us on such short notice,” said CEO of Saint Augustine Distillery, Philip McDaniel. “Everybody wishes we would have had more time to react and have more time to plan.”
Later Thursday, however, the Department of Health and Human Services appeared to have struck down the FDA fees. “Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so,” HHS chief of staff Brian Harrison said in a statement posted on Twitter.
“I’m pleased to announce we have directed FDA to cease enforcement of these arbitrary, surprise user fees,” he said. “Happy New Year, distilleries, and cheers to you for helping keep us safe!”
Follow Coral Murphy on Twitter @CoralMerfi