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In the early days of the pandemic, more than 800 distilleries stopped making whiskey, gin, vodka and other alcoholic beverages. Instead, they started making hand sanitizers, which were in short supply at the time. This often required retrofitting their equipment and stopping production of their core products, but they said they were happy to help their communities.
Now they are getting an uncomfortable reward for their troubles: the FDA charges a fee of $ 14,060 or more.
"This came as a nasty surprise to our small distillery community," said Becky Harris, co-owner of Catoctin Creek Distilling in Virginia and president of the American Craft Spirits Association.
The fee results from the temporary classification of these distillers as manufacturers of non-prescription drugs. During normal times, the FDA collects this fee to offset the cost of inspecting and regulating over-the-counter drug manufacturers to help ensure public health and safety. But many of the small, often family-owned distilleries that are already struggling to cope with the economic impact of 2020 have gone blind.
When the distilleries started making hand sanitizer in the spring, their efforts were highly organized. As the head of her industry association, Harris held meetings almost every day for weeks to ensure that the distillery's disinfectants met strict guidelines for safety and effectiveness.
This also meant working with the federal government, as many laws regulating the beverage alcohol industry had to be temporarily suspended. Before the pandemic, it would have been illegal for these facilities to manufacture disinfectants. "We worked with the FDA to register companies and make the rules clear to them," says Harris. "At no point has the specter of an impending fee been highlighted in their guidelines, particularly any of the announced scales."
Now the industry is urging the FDA to waive the fees.
"The purpose of this unexpected fee is to penalize already struggling distilleries that invaded at a time when it was necessary to do the right thing," said Chris Swonger, president and CEO of the United States' Distilled Spirits Council, who spoke on Dec. December published a statement. 2020. "While this fee can be a rounding error for a large pharmaceutical company, it will be catastrophic for small distilleries that are committed to making this critical product."
In the meantime, the recipients of this hand sanitiser are showing their appreciation. As early as March and April, when many distilleries relocated their production, the medical facilities were dangerously low on the life-saving gel.
"When our hospital ran out of hand sanitizer, we were grateful to the distilleries," said a southern Indiana nurse who spoke to Entrepreneur but asked to remain anonymous because her hospital had not authorized her to speak to the press . “Starlight [Distillery] also donated individual bottles to us and even set up a station where we can bring our own container from home and fill it up. We were so grateful. "
But it wasn't just hospitals that benefited from the distilleries' efforts. Companies also needed to have hand sanitizer and other cleaning solutions on hand in order to reopen their businesses.
"When we were told that we could finally reopen in the first phase, we were given new guidelines for cleaning and disinfection and had to develop PPE and accessories to ensure the safety of both staff and our patients," says Dr. Andrew Harvey, owner of Harvey Ophthalmic Optometry in Kentucky. “We actually stayed closed for an extra week because masks, thermometers and cleaning supplies were sold out everywhere at that time. The only thing we could easily and plentifully find was a disinfectant made by the local distilleries. I feel very fortunate to live in an area with so many wonderful distilleries like Jeptha Creed that have really responded to the new demand from the pandemic. "
Now that the distilleries know the fees, they need to act quickly. Distilleries had to register with the FDA in order to manufacture the hand sanitizer. If they do not revoke their registration with the FDA by the end of 2020, they will be notified that they will have to pay that fee again in 2021.
"I'm sure the FDA is inundated with myriad questions right now with requests from small businesses," says Harris. "We'd love to help them by working with them to find a solution to this problem and then working to get that information out into the community."