No good deed goes unpunished. This is especially true when an entire industry comes together at a time of great national need to produce life-saving products, such as hand sanitizers, to make up for a massive shortage. For its patriotic and heroic efforts, the FDA gave American distillers … a $ 14,000 note, reported Alex Tavlian, of the San Joaquin Valley Sun. But the real villain behind this may not be the bureaucrats:
While the main producers of hand sanitizers faced a shrinking workforce and extremely high demand in the spring, an unlikely group of companies – artisanal distilleries – stepped up supplies to panicked consumers.
Now, the federal government expects distillers who used the occasion to alleviate the shortage to pay the bagpiper.
On Tuesday, the US Food and Drug Administration released a new set of fees for organizations that operate as “drug monograph facilities” that produce over-the-counter drugs.
Hand sanitizer is one of those over-the-counter medications that qualify for fee assessments by its producers – including improvised disinfectant producers, such as distillers.
Now, annual fees charged by the federal government are serving as the latest, overwhelming financial misfortune to end an already bleak business year for distillers.
The annual fee amounts to $ 14,060 and will hammer hundreds of artisanal distillers who have done nothing more than try to help. The same rate applies regardless of how much disinfectant each distiller produced, or even if the distillers gave everything away for free, as some did. It doesn’t matter – the FDA will require each of them to pay the same fixed “setup fee” it imposed on Tuesday.
Jacob Grier of Reason reminded readers of the FDA’s usefulness for the same distillers when they first entered the crisis. Do you remember their insistence on denaturing alcohol first? I had forgotten about this:
The main ingredient in a disinfectant is ethanol, which they are making, although usually in more fun and tasty formats. More than 800 distilleries have gone from distillates to disinfectants, offering them for sale or, in many cases, donating them to their communities free of charge. His immediate action helped to ensure the supply of disinfectant when it could not otherwise be obtained.
(Even so, the FDA complicated things unnecessarily, imposing additional requirements on the guidelines published by the World Health Organization for emergency production. The FDA’s mandate that all alcohol used in disinfectants first be denatured – making it unpalatable – created a bottleneck that has increased costs for distillers and reduced production.)
Imagine trying to drink a hand sanitizer with aloe gel to get a buzz, and you can see the absurdity of that regulation. Furthermore, hand sanitizer does not have a price much different than, say, vodka or cheap rum. A one-liter bottle of Everclear 151 costs $ 17.99 at Total Wine, which has a slightly higher tasting rate than hand sanitizers that use 70% alcohol, and that price is fifty-three cents a Jaguar. Hand sanitizers sold now at Walgreens they cost between thirty cents to a dollar an ounce, depending on what you buy and how much you receive, and it was much more expensive than when supplies ran out in early spring. Who would be buying hand sanitizer for this type of consumption, when there was no shortage of hard drinks? Come on, man.
Where did the FDA get the authority to impose these fees in the first place? Ironically, Congress granted – in the CARES Act, the first comprehensive pandemic emergency relief bill:
At issue is a provision of the CARES Act that reformed the regulation of medicines without a prescription. According to the revised law, distilleries that produced disinfectants were classified as “prescription drug monograph facilities”. The CARES Act has also enacted user fees on these facilities to finance FDA regulatory activities. For small distillers, that means ending the year with a $ 14,060 surprise account due on February 11th.
So, because the distillers cared, they came into conflict with the CARES Act … and with Congress. In other words, this was not a bureaucratic mess, but a deliberate choice made by Congress to tax the very companies that were producing desperately needed disinfectants when normal producers ran out. The FDA did not create this miserable example of ingratitude – they are just its enforcers.
It is now too late for this session of Congress to do anything to correct this problem. Perhaps the next session of Congress will rethink its FU for small businesses that just wanted to help in an emergency. One thing is for sure – everyone else will rethink that momentum the next time such an emergency occurs.