The U.S. Department of Health and Human Services has instructed the FDA not to charge distilleries a $14,000 fee for producing hand sanitizer during the COVID-19 pandemic.
That’s according to a statement sent out Thursday night by the HHS Office of Public Affairs.
ROCHESTER, N.Y. (WROC) — For distilleries across the US and in Rochester, turning to producing hand sanitizer was not only a way to stay in business, many thought it was the right thing to do.
“We are doing this to help our community, to hopefully save lives and to get our employees back to work. We want to do our part in these unprecedented times,” said owner of Black Button Distilling, Jason Barrett, when the company made the announcement on March 19th. “I couldn’t stand by and watch this pandemic ravage my hometown of Rochester. We will work around the clock to help as many as we can.”
But now, they are faced with a steep cost for making hand sanitizer. According to Distilled Sprits Council, the FDA will be charging distilleries a $14,000 fee if they produced hand sanitizers.
Iron Smoke Distillery was also involved in making hand sanitizer at a time when it was needed most. They made over a hundred thousand gallons of hand sanitizer, and they gave it all away. 10,000 bottles of it.
Tommy Brunett, one of the co-owners of the distillery and music venue (or “Head Honcho”), says that he only found out about these fines today, while Distilled Sprits Council also said the announcement was made on December 29th with no preamble or warning, and they are urging the FDA to waive those fees.
“At first I thought it was a hoax,” Brunett said. “I thought it was someone just thought it’d be fun at the end of the year to throw this out there and see who would bite, but it’s not evidently.”
Brunett’s frustration not only extends to the irony that distilleries are seeming to be punished for helping the community at a time of need, but that $14,000 is a lot for any distillery to swallow, especially for ones who only made dozens of bottles for their local church or community center.
“They’re treating you like a pharmaceutical company, one of the big boys,” Brunett said.
While Iron Smoke has had good financial and business advice (according to Brunett) by switching their business back to bourbon after that run of sanitizer, the sting of that much money would hurt anyone.
“That’s pretty excessive when you look at your bottom line and what you’re trying to do to make it through this,” Brunett said. “It’s a crazy season finale to the year to have this type of thing going down. We had to work twice as hard to get half as much this year.
“It’s baffling that this happened and, and we don’t know where it came from,” he said.
“We stand proud that when our local community had a need this spring we leapt into action and delivered over 405,000 bottles of FDA ethanol-based hand sanitizer, said Barrett of Black Button. “That’s over 300 million hand washes spread across NY state. We delivered to the Javits Field hospital when no one else could, we sent trailer loads to Hunts Point Produce Market so they could continue to feed NYC. We donated $100,000 worth to our local United Way so that regardless of someone’s ability to pay, they could be safe.”
Brunett says he, as well as local and national adovcates — including Bob Duffy’s Rochester Chamber of Commerce office — are working to fight against these fees.
Duffy said this in a statement today:
“When our community experienced critical shortages of hand sanitizer, local distilleries stepped up and shifted their production lines to help fill the need. In a matter of months, they donated or provided at a financial loss tens of thousands of bottles to hospitals, medical offices, schools, restaurants, retail shops, and others. The fees being assessed by the FDA should be canceled immediately. Greater Rochester Chamber stands by distilleries throughout the Finger Lakes and beyond, and we are grateful for their incredibly generous support of and great public service to the Finger Lakes region.”
The association detailed the fees in a press release:
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.
“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.