FDA Foolishly Smacks Struggling Distillers With $14,000 Fee For Producing Hand Sanitizer

(UPDATE) The FDA has backed down from this fee collection program after being told to do so by the federal Department of Health & Human Services. Read more on this latest development here.

Editor’s Note: It is our strong opinion here at The Whiskey Wash that this is a startling poor call on the part of the FDA at a time when these distilleries stepped up to do a decidedly public service. We call upon the government agency to rescind this fee described below immediately.

Word surfaced in distiller circles online in the last day or so, highlighted in particular by this article, of what looks to be a very bad move by the FDA towards distilleries that helped battle the pandemic earlier this year by producing loads and loads of hand sanitizer. Slapped on to these struggling spirits makers was a roughly $14,000 fee, classifying them as a type of drug making facility.

More specifically, as spelled out by the Distilled Spirits Council of the United States in a statement released to members of the press today

Wilderness Trail hand sanitizer

Hand sanitizer being made at Wilderness Trail in Kentucky (image via Wilderness Trail)

In a shocking turn of events, the FDA announced Dec. 29 without any advance notice that it is imposing fees on distilleries and other facilities that produced hand sanitizer during the pandemic.

“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.  This unexpected fee serves to punish already struggling distilleries who jumped in at a time of need to do the right thing,” said Distilled Spirits Council President and CEO Chris Swonger. “While this fee may be a rounding error to a large pharmaceutical company, this will be disastrous to small distilleries who stepped up to help produce this critical product – it will quite literally bankrupt some struggling businesses. We are urging FDA to immediately waive the fees for distillers who are producing hand sanitizer on a temporary basis to help combat the pandemic, pursuant to the FDA’s temporary policy.”

The FDA made the surprise announcement in a Federal Register Notice (FRN) titled “Fee Rates under the Over-The-Counter Monograph Drug User Fee Program for Fiscal Year 2021.”  

These fees are being levied under a newly established “OTC monograph drug user fee program,” which has established fees on OTC monograph drug facilities, as well as OTC Monograph Order Requests (OMORs) for FY 2021.  The FDA has stated that these fees also apply to facilities, including distilleries, that produced hand sanitizer under the temporary policy during Covid-19.

The fees impacting distillers are a $14,060 Monograph Drug Facility Fee and  $9,373 Contract Manufacturing Organization Facility Fee. The fees for FY 2021 are due on February 11, 2021.  

In order for distillers to avoid the 2022 OTC Monograph Drug Facility Fee, they need to act today, December 31, 2020 to (1) cease producing and selling the product; and (2) de-register in the FDA eDRLS system.

Phil McDaniel, CEO of St. Augustine Distillery and Chair of the DISCUS Craft Advisory Council, added, “Everyone was totally blindsided by FDA’s announcement and as a result, craft distillers across the country are scrambling to understand and respond. Given all that’s happened in 2020, the timing of this news could not be worse.  The $14,000 fee being assessed could certainly put many of these small family owned businesses out of business.”

The American Craft Spirits Association (ACSA) weighed in as well, noting to its members that

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FDA has published and notified registrants of facility fees for the Over-the-Counter Monograph Drug User Program. Distilleries throughout the US have received these notices, as any distillery who produced hand sanitizer under the Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19) Guidance, was directed to register. Although ACSA recognizes FDA was authorized to execute funding measures, until this notice and publication in the Federal Register, FDA was silent on the issue.

ACSA is communicating directly with the FDA to determine under what circumstances the fees are applicable. Moreover, we are taking all steps to advocate for a waiver for those distilleries who produced hand sanitizer on a temporary basis and have no plans to continue to manufacture and sell into 2021.

ACSA is of the opinion this program was unintended for small businesses who temporarily stepped up to produce hand sanitizer to help communities in a time of need. We will continue to advocate on your behalf as we also know most distillers were startled by the hefty user fee due in such a short time. If you do not plan on continuing to produce hand sanitizer into 2021, we recommend that you do NOT pay the fee until further clarification and guidance.

ACSA’s COVID-19 Task Force will continue to provide information as we receive it. And, rest assured, we will continue to advocate for a fee waiver.

The Kentucky Distillers’ Association (KDA) on social media also called into question the wisdom of this move by the FDA, stating that

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The KDA is shocked by the unexpected & unnecessary fees for distillers who produced hand sanitizer during the pandemic, much of which was donated to hospitals, nursing homes and first responders. We are working with government leaders on a waiver to right this wrong.

Also, if you want to make your feelings known on this, the KDA asks that you “please take a moment to ask Congress to work with the FDA to eliminate fees on hand sanitizer production our members may have incurred during emergency relief efforts. Check this link: https://p2a.co/ToHSRAS for more details and how you can have your voice heard.