Distilleries making pandemic hand sanitizer won’t have to pay a fee after all

U.S. distilleries and other businesses that began making hand sanitizer as the COVID-19 pandemic gripped the country are being reprieved from thousands of dollars in user fees normally imposed on companies that produce medical products.

The craft beverage industry, made up primarily of small businesses, initially received unwelcome news this week, after a posting in the Federal Register indicated that the U.S. Food and Drug Administration planned to charge fees of as much as $14,000 to companies that make hand sanitizer. The product normally is considered an over-the-counter drug regulated by the FDA.

A legal review by the Department of Health and Human Services has now found that the way the fees were announced and issued was inappropriate, constituting a legislative rule that only the HHS secretary is allowed to make, the department said in a statement Thursday evening.

HHS, according to the statement, has determined that the notice is void, ordered that the Federal Register posting be withdrawn and said the surprise user fees need not be paid.

“Small businesses who stepped up to fight Covid-19 should be applauded by their government, not taxed for doing so,” Brian Harrison, chief of staff at HHS, said in the statement. “I’m pleased to announce we have directed FDA to cease enforcement of these arbitrary, surprise user fees.”

Asked for comment Thursday after regular business hours, the FDA said it was closed until Monday and could not respond until then.

With hand sanitizer vanishing from store shelves as the coronavirus took hold across the U.S. early this year, distilleries and breweries, facing a steep drop in business, started making the product.