When the Covid-19 pandemic first hit the United States, many alcohol distilleries developed and began producing hand sanitizer, a product that was sorely needed in homes and hospitals to help protect against coronavirus. Understandably, these companies – many of which were already suffering financially due to reduced sales – were shocked when the Food and Drug Administration (FDA) sent notices that they were now classified as regulated over-the-counter drug manufacturers and owed a $ fee 14,060 due on February 11.
Fortunately for distillers, the Department of Health and Human Services (HHS) issued a statement this week instructing the FDA not to apply the fee.
Reason covered the story in a widely shared article, calling the regulatory fee threat a crushing blow to these small businesses that had already gone through “one of their worst years ever.” More than 800 American distillers produced hand sanitizers in the past year, and many sold them at narrow profit margins to nonexistent or even donated large quantities to hospitals, first aid and essential workers.
Aaron Bergh, president of Calwise Spirits in Paso Robles, California, said Reason that his company produced 5,000 gallons of hand sanitizer, prioritizing medical personnel and other frontline workers.
“Part of my hand sanitizer was donated,” said Bergh. “The rest was sold at a fraction of the market price. My goal was to get as much as I could, for the lowest possible price, while also getting my dismissed employees back to work. The hand sanitizer business saved me from bankruptcy, but I didn’t make a huge profit. “
HHS Chief of Staff Brian Harrison announced the rate reversal in a declaration posted on Twitter.
“Small businesses that came forward to fight COVID-19 should be applauded by their government, not taxed for that,” said Harrison. “I am pleased to announce that we have instructed the FDA to end the application of these arbitrary and unexpected fees to the user. Happy New Year, distilleries and a toast to you for helping to keep us safe! “
A longer statement from HHS condemned the FDA’s action as a legislative rule that “was not authorized by the HHS leadership” and based on its legal review, null and void because “no one at the FDA had delegated authority to issue such a rule. “
The distillers were obviously relieved by the news.
“The FDA’s announcement earlier this week was set to wipe out our profit from the holiday season,” said Bergh, calling it “a New Year miracle.” However, Bergh noted that they are still concerned that the government may try to impose the fee again next year for any disinfectant they have made in 2021.
Watch the video clip above, via MSNBC.
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