The Department of Health and Human Services (HHS) on Dec. 31 granted distilleries a reprieve from a Food and Drug Administration (FDA) rule that would have cost them thousands of dollars.
A $14,060 drug production charge was sent to about 800 alcoholic beverage producers who pivoted from making spirits to producing hand sanitizer, Reason magazine reported.
HHS officials decided in an emergency meeting that the FDA would not collect the fees, according to The Hill.
Many liquor producers pivoted to making disinfectant in an effort to help their communities at the beginning of the COVID-19 pandemic. As a result, the FDA treated them as drug manufacturers. They would have had to pay a fee to the federal government due to that classification, which would have been due on Feb. 11.
HHS Chief of Staff Brian Harrison announced the move on Twitter.
“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!” (2/2)
— HHS Office of Public Affairs (@SpoxHHS) December 31, 2020
The HHS decision was a welcome development for alcohol producers who have already suffered greatly under the pandemic and associated lockdowns.
“The $14,000 fee being assessed could certainly put many of these small family owned businesses out of business,” distiller and chair of the DISCUS Craft Advisory Council Phil McDaniel told Forbes. (RELATED: Pennsylvania Democratic Gov. Tom Wolf Plans To Waive Liquor License Fees)
The FDA rule stemmed from a provision of the CARES Act, signed by President Donald Trump in March, which created a fee structure for the production of certain over-the-counter drugs. The fees are used to fund FDA regulatory activities.
FDA officials had previously told USA Today that “the statute does not provide any waiver provisions for any specific category of manufacturer,” so they could only waive the fee pursuant to an act of Congress.