Federal government reverses course on charging distilleries $14,000 for making emergency hand sanitizers

Coronavirus causes craft distillers to suffer $700M loss

FOX Business’ Kristina Partsinevelos reports on how the alcohol industry and small craft distilleries are being hit by the coronavirus outbreak and potential increased prices next year.

Distilleries that made hand sanitizer amid a shortage earlier this year were shocked to learn this week that the Food and Drug Administration (FDA) was slapping them with a $14,060 fee, but in a reversal Thursday night, the Department of Health and Human Services directed the FDA to cease enforcement of the fees.

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"Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so," HHS Chief of Staff Brian Harrison said in a statement.

"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!”

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Workers bottle hand sanitizer produced by J. Rieger and Co., a Kansas City, Mo. distillery, March 20. People waited as long as two hours to buy the sanitizer, made from overproof gin, in response to the coronavirus pandemic. (AP Photo/Charlie Riedel)

The coronavirus pandemic caused a shortage of hand sanitizer earlier this year, so hundreds of distilleries across the country stepped up and transitioned their production lines to hand sanitizer to fill the gaps.

But on Tuesday, the FDA announced those companies must pay a $14,060 fee for making the hand sanitizer under a newly rolled out “OTC monograph drug user fee program," which was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March.

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"This unexpected fee serves to punish already struggling distilleries who jumped in at a time of need to do the right thing,” Distilled Spirits Council President and CEO Chris Swonger said before the reversal.

A spokesperson for the FDA told Fox News earlier Thursday that these "user fees will provide additional resources to help the agency conduct our important regulatory activities in a timelier manner and ultimately help provide the public with access to innovative OTC monograph drugs."

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But distillery owners couldn't believe the surprise fee after an already tough year that has crushed the bottom line.

“After all of that, you’re coming to us and telling us we owe you money? And it’s the same for the folks that made hundreds of thousands of bottles as the folks that made 100? There’s small distilleries that didn’t even make $15,000 in revenue this year," Jason Barrett, owner of Black Button Distilling in New York, told WXXI.

Fox News' Constance McDonough contributed to this report. 

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