During a public health crisis, distilleries across the country pumped hand sanitizer to cover a national shortage.
Now those same distilleries are being told to pay more than $ 14,000 to the Food and Drug Administration (FDA) for making over-the-counter drugs without the proper license.
“I feel like the FDA welcomed me when they needed me, now they are closing the door on me,” said Aaron Bergh, owner of the Calwise Spirits & Co. distillery.
For distilleries such as Calwise Spirits & Co. in Paso Robles, making disinfectant was an opportunity to bring back employees on leave and avoid bankruptcy during the pandemic.
He says the FDA reached out to distillers in March for help with making more products and waived the registration and drug approval process to promptly remove the sanitizer.
Over a six-week period, Bergh and his team made more than 5,000 liters of the germicidal formula and shipped it through the state to government agencies and frontline workers.
Now he and nearly 800 other distillers in the US owe $ 14,080 in facility fees to the FDA.
“I feel that no good deed goes unpunished,” said Bergh. “What I could have done what others did and didn’t register with the FDA and start making it without registering, but because I followed the rules and registered, I’m now being monitored and taxed.”
Shocks and frustration ripple through the industry.
‘There must have been a mistake. We’re the good guys. We are the guys that [the FDA] wanted us to help and we jumped in and helped, ”said Eric Olson, owner of Central Coast Distillery. “That was our whole goal and there was no question of having to pay for help later.”
The CARES law passed in March changed the regulation of non-prescription drugs, allowing distilleries to make the product according to FDA guidelines.
However, under the revision, distilleries are classified as “over-the-counter drug monographs,” meaning business owners will have to pay the corresponding fees for the fiscal year before February 12.
On Thursday night, the US Department of Health and Human Services tweeted a recommendation that the FDA “stop enforcement of these arbitrary, startling user fees.” However, there is no response from the FDA yet.
BREAK: @RTLnews Acts quickly to protect small businesses from arbitrary fees
Statement by Brian Harrison, HHS Chief of Staff
“Small businesses that have been committed to fighting COVID-19 should be applauded by their governments and not taxed for it. (1/2)
– HHS Office of Public Affairs (@SpoxHHS) December 31, 2020
Olson says many distillers lost or even broke money selling sanitizer.
Many local entrepreneurs like him even donated bottles to homeless shelters and first responders.
‘It was such a hurry to get started. Nobody even tried to make money. These guys were just trying to get it into people’s hands. I mean, frankly, it was goodwill, ”said Olson.
In an email to KSBY, an FDA spokeswoman said the fee information was posted on the agency’s website in May. On Tuesday, December 27, it announced how much the fee would be.
In a statement, the FDA said it “appreciates the industry’s willingness to help deliver alcohol-based hand sanitizer to the market to meet the increasing demand for these products during COVID-19, and we are grateful for their efforts. We understand the concern that manufacturers have about the fees they have to pay, especially from small businesses at this difficult time. “
Distilleries have until the end of 2020 to decide whether to continue production of sanitizers into the new year, which would cost them an additional $ 14,000 in registration and facility costs.
It is not worth it for Bergh.
“This morning I had to cancel my FDA registration. I would have liked to keep it, so I have it all ready in case there is another massive shortage and we can start producing, but the FDA created too much risk, ”said Bergh.
The United States’ Distilled Spirits Council said in a press release that the FDA announcement came without warning, and they urge the agency to waive those fees.