The FDA Almost Charged Some Distilleries $14,000 For Making Hand Sanitizer. Here's Why

Distilleries across the United States almost saw their holiday profits evaporate when the FDA originally charged them amounts ranging from $9,373 to $14,060 for supplying hand sanitizer during the pandemic, according to Food & Wine. Pulling back to late February 2020, CNN reported that large scale pharmacies like CVS and Walgreens were warning customers of an impending hand sanitizer shortage. With the onset of COVID-19, demand for hand sanitizer spiked before suppliers could accommodate. To assist with the potential crisis, distilleries began producing their own hand sanitizers which they sold or donated to hospitals.

Now to return to the present. As Food & Wine writes, CalWise Spirits, a California-based distillery, faced a bill for $14,060 due to a provision in some fine print in the FDA's Over-The-Counter Monograph User Fee Program, or non-prescription drugs, which apparently includes hand sanitizer: "The facility fee will be assessed for qualifying persons who own an OTC monograph drug facility, including contract manufacturing organization facilities," reads the FDA website.

Essentially, although the CARES Act allowed distilleries to register with the FDA to produce hand sanitizers without an official application due to the emergency need, such enterprises still need to pay for the privilege of doing so. This is regardless of whether the company charged people for the hand sanitizer or donated it. Furthermore, if the distillery was still registered as making hand sanitizer on January 1st 2021, then they would have to pay a fee next year for 2021 as well. 

"No good deed goes unpunished," Aaron Bergh, craft distiller and the owner of Calwise Spirits, commented to The (San Joaquin Valley) Sun. "At the beginning of the pandemic the FDA and our communities called out for help and distillers enthusiastically stepped up to the plate and provided an essential product to medical workers and first responders," Bergh continued. "Even if you created only a few gallons or donated all of it, you're on the hook..."

Luckily on New Year's Eve, the Department of Health and Human services directed the FDA to not enforce the surprise fees. "Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so," Brian Harrison, head of the HHS, announced in a statement shared on the department's official Twitter account. "I'm pleased to announce we have directed FDA to cease enforcement of these arbitrary, surprise user fees. Happy New Year, distilleries, and cheers to you for helping keep us safe!" It remains unclear whether distilleries will have to pay in 2022 if they continue their hand sanitizer manufacturing. Still, the decision was good news to end a year in which distilleries deserve some commendation.