The year that was 2020 just didn’t want to let go without a fight. With just three days left in the calendar and many businesses shut down for the holidays the FDA came knocking on distillery doors like a tornado.
On December 29 the FDA issued a notice to all distilleries that stepped up in 2020 to make hand sanitizer to inform them they owe a fee under a newly established “OTC Monograph Drug User Fee”. The FDA stated that these fees 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.
These are the same distilleries that in many cases shifted their entire business to make hand sanitizer for first responders in a time when the country was desperate for protection from Covid-19. At DistilleryTrail we can verify that we were getting several emails a week from hospitals, nursing homes and police departments that were desperate in their search for hand sanitizer to protect their front-line workers and their customers.
FDA Blindsides Distillers at Year End with Outrageous Fee Request
“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,” exclaimed Chair of the Distilled Spirits Council of the United States – DISCUS Craft Advisory Council and CEO of St. Augustine Distillery Phil McDaniel. “The $14,000 fee being assessed could certainly put many of these small family owned businesses out of business.”
Distillers do what they’ve been doing all year and they jumped into action. They quickly organized via their respective association including Distilled Spirits Council of the United States – DISCUS and American Craft Spirits Association – ACSA and started a grass roots campaign to right this FDA announcement that arrived like a tornado in the middle of the night.
Old Dominick Distillery filling up plastic bottles. 
Dueling Grounds Distillery Founder Marc Dottore practicing social distancing. 
Barrel House Distilling crew delivering hand sanitizer. 
We’re All in this Together, Hand Sanitizer. 
Delivery to the Danville Fire Department. 
AJ and Peg Co-Owners of Casey Jones Distillery.
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HHS Jumps in to Halt Fees for Distillers Making Hand Sanitizer
ACSA leadership reports that on the heels of discussions with U.S. Department of Health & Human Services – HHS leadership, together with an intensive outreach campaign to congressional legislators and members of the media, HHS has withdrawn the FDA’s scheduled $14,060 fees to craft distillers who produced hand sanitizer in 2020.
And nearly as quickly as the FDA created this year end tornado HHS puts and end to this outrageous fee.
“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!”
~ U.S. Department of Health & Human Services Chief of Staff Brian Harrison
“We are pleased to report that Brian Harrison, HHS Chief of Staff, has just issued a statement that they have withdrawn the Notice published in the Federal Register re OTC Monograph Drug Facility Fees and directed FDA to cease enforcement of these fees,” said Distilled Spirits Council President Chris Swonger.
“This is such a relief to hundreds of distillers. We want to thank HHS leadership for quickly intervening and protecting distillers from these unwarranted fees. Distillers were proud to help make hand sanitizer for their communities and first responders during their time of need.”
Harrison stated, “Because HHS OGC has determined the notice is really a legislative rule and that no one at FDA has been delegated authority to issue such a rule, the notice is void. HHS leadership, based on this legal opinion, has ordered the Federal Register Notice to be withdrawn from the Federal Register, meaning these surprise user fees will not need to be paid.”
Harrison closes his statement saying, “Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so. 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!” His full statement is included below.
BREAKING: @HHSGov Acts Swiftly to Protect Small Businesses from Arbitrary Fees
— HHS Office of Public Affairs (@SpoxHHS) December 31, 2020
Statement from Brian Harrison, HHS Chief of Staff
“Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so. (1/2)
“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!” (2/2)
— HHS Office of Public Affairs (@SpoxHHS) December 31, 2020
U.S. Department of Health & Human Services Full Statement
“Good Afternoon – early in the COVID-19 pandemic many small businesses across the country joined the fight to combat the virus and keep Americans safe – that included distilleries that augmented their operations to produce hand sanitizer, an important asset in the battle to deter the spread of COVID. In March, the Food and Drug Administration (FDA) issued a guidance document – the Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19) – which provides flexibility for those entities capable of producing hand sanitizer to rapidly enter the market. In the guidance, the FDA stated it “does not intend to take action against firms that” produce hand sanitizer products – which are classified as over-the-counter drugs – during the COVID-19 Public Health Emergency, provided the firm’s activities are consistent with the guidance. Importantly, the guidance contains no discussion regarding user fees or any indication such fees would be due by these entities, many of which would be entering the drug manufacturing business for the first time. Nevertheless, on December 29, the FDA posted an over-the-counter drugs user fee notice that imposes a significant financial burden on these small businesses.
“This action was not cleared by HHS leadership, who only learned of it through media reports late yesterday. HHS leadership convened an emergency meeting late last night to discuss the matter and requested an immediate legal review. The HHS Office of the General Counsel (OGC) has reviewed the matter and determined that the manner in which the fees were announced and issued has the force and effect of a legislative rule. Only the HHS Secretary has the authority to issue legislative rules, and he would never have authorized such an action during a time in which the Department is maximizing its regulatory flexibility to empower Americans to confront and defeat COVID-19. Because HHS OGC has determined the notice is really a legislative rule and that no one at FDA has been delegated authority to issue such a rule, the notice is void. HHS leadership, based on this legal opinion, has ordered the Federal Register Notice to be withdrawn from the Federal Register, meaning these surprise user fees will not need to be paid.
“Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so. 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!” – Brian Harrison, HHS Chief of Staff.
We will continue to provide any further updates on this issue as information becomes available.
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