Distillers react to FDA fees for producing hand sanitizer
Brothers tried to help hospital, got hit with nearly $23,500 bill
When deciding to switch gears to start producing much-needed hand sanitizer products at the height of the pandemic, brothers David and Billy Vondrasek were simply doing what they could to help meet growing demands.
It wasn’t until they, along with countless other distilleries across the U.S., received a surprise fee from the U.S. Food and Drug Administration that they thought twice about that decision.
“We thought we were doing something good, and then got this,” said David, a distiller at Azeo Distillery in Paso Robles. “We were all worried about having to succumb to this fee, no matter how much we’d produced, especially since when we went through the process with the FDA, and did everything by the book, that was never mentioned, so it was pretty non-transparent.”
Billy, a winemaker with Wine Cowboys, agreed, adding, “They weren’t very forthcoming, so it was disappointing.”
While the fee has since been reversed, the brothers agreed it was one of those things that will make them think twice before helping out again.
When COVID-19 cases began surging in March, the Tax and Trade Bureau
and FDA, which both oversee any kind of alcoholic beverage production, started to allow permitted distilleries to switch from producing alcohol for beverages to producing alcohol for hand sanitizer.
As hand sanitizer and other cleaning products became hard to come by, the brothers set to work getting the approvals needed, and soon, the distillery began producing sanitizer, made primarily from wine grapes.
From the start, the brothers knew they’d be producing the products strictly to donate to smaller hospitals or first responders on the front lines. They ended up donating hundreds of boxes of hand sanitizer up and down the coast of California, including here in the Santa Clarita Valley at Henry Mayo Newhall Hospital, then at the SCV Sheriff’s Station.
“At that time, the people who needed it were the hospitals and the first responders, so that’s why we did what we did,” Billy said. “We stand by what we did. … We literally gave it all away.”
Then in December, months after the brothers had ceased production, as part of the CARES Act, the FDA established a “OTC monograph drug user fee program” that would require distilleries that had created hand sanitizer to pay a $14,060 Monograph Drug Facility Fee, as well as a $9,373 Contract Manufacturing Organization Facility Fee.
While nearly $23,500 alone could be considered a hefty fee for small businesses, especially during a pandemic, the fee was also set to be due almost immediately — in early February.
However, the Department of Health and Human Services stepped in, striking down the FDA fees, HHS Chief of Staff Brian Harrison announced in a statement posted on Twitter.
“Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so. I’m pleased to announce we have directed FDA to cease enforcement of these arbitrary, surprise user fees,” he wrote. “Happy New Year, distilleries, and cheers to you for helping keep us safe!”
For the brothers and countless other distillers who had made the hand sanitizer as a way to give back to their communities rather than make a profit, the announcement brought a sigh of relief.
“I’m glad they didn’t go through with it because that just would have caused harm and really made us feel like we shouldn’t help people anymore, so it was really a blessing that they took the fees away,” Billy added. “It was important during that time of crisis for people to step up, and I’m proud of what we did.”