The Morning Call (Sunday)
Relief won for a good job done
Agency voids FDA fee slapped on distiller in the Lehigh Valley
When the coronavirus pandemic shut down Triple Sun Spirits in Emmaus in March, owner Kristofer Kwantdid something magnanimous: He turned the distillery into a hand-sanitizer facility that pumped out gallons of a much-needed product that then was in short supply.
“Weproduced what we could, and sold it at cost, or donated what we could to vulnerable communities and first responders,” he told The Morning Call on Friday.
And how did the government thank Kwant and the hundreds of other civic-minded business owners in the Lehigh Valley and nationwide who joined the cause? The U.S. Food & Drug Administration slapped them with a $14,060 fee that was hidden in the Coronavirus Aid, Relief and Economic Security Act.
File that under no good deed goes unpunished.
Fortunately for Kwant and other distillers who rose to the occasion and shifted their operations from spirits to hand sanitizer, the agency that oversees the FDA said Thursday it was voiding the fee.
The U.S. Department of Health and Human Service said the FDA’s actions were not cleared by HHS leadership, who only learned of it through media reports. In a media statement Thursday, HHS said it convened an emergency meeting Wednesday night to review the FDA’s
action. That review, HHS said, concluded that the FDA’s notice had the effect of a legislative rule, which only the HHS secretary can issue.
“And he would never have authorized such an action during a time in which the department is maximizing its regulatory flexibility to empower Americans to confront and defeat COVID-19,” the statement said.
HHS then had the fee withdrawn from the Federal Register Notice, meaning businesses will not be levied the user fees.
“Small businesses whostepped up to fight COVID-19 should be applauded by their government, not taxed for doing so,” Brian Harrison, HHSchief of staff, said in the statement. “I’m pleased to announce we have directed FDA to cease enforcement of these arbitrary, surprise user fees.”
Kwant said he thought he was playing by the rules, registering with the FDA as a pharmaceutical manufacturer after receiving emergency approval to produce hand sanitizer, which is classified as anover-the-counter drug. After hearing about the fee, he deregistered his business so he wouldn’t be hit with a fee again this year, which means he can’t make hand sanitizer to offset the significant losses his distillery has experienced.
Wednesdaynight, whenhefirst learned about the fee, Kwant said he couldn’t sleep.
“It was like waking up to a gun pointed at your face andhaving all this flashing through your head,” he said Saturday. “I was literally freaking out.”
Kwant said he is considering reregistering with the federal government; registration is free, he said.
That would enable him to dispense with the 1,500 bottles of sanitizer he has in inventory. He donated some to places such as the Allentown Rescue Mission and sold some at cost.
“But I still have so much available I don’t knowwhattodowith it,” Kwant said.
The FDA told The Morning Call on Saturday that it “under
stands the concerns raised by manufacturers, especially the small businesses that stepped up during the COVID-19 pandemic to help meet the increasing demand for alcohol-based hand sanitizers.”
Theagency said it is committed to working with manufacturers to ensure the public has an ample supply of hand sanitizer.
TheFDA’sstatement noted that the fees it posted Tuesday are for 2021 and that those fees are used to fund the agency’s regulatory work.
In Tuesday’s notice, the FDA said the fees were established on March 27, under the CARES Act. The fee structure calls for a small business such as Triple Sun Spirits to pay the government $14,060.
Robert Cassell, president of
the Pennsylvania Distillers Guild, which represents about 140 craft distillers, said owners were frantic at first.
He noted the government established the fee because hand sanitizer is considered an overthe-counter drug.
“That’s what started us down this regulatory pigeonhole,” said Cassell, president of NewLiberty Distillery in Philadelphia. He said the government did not state in March how the fee would be assessedorhowmuchitwouldbe.
“As muchasIwasinfuriated by seeing that news, FDA and HHS was quick to respond in resolving that situation.” Cassell said.
In its statement, HHS said the FDA’s Tuesday notice contradicted a guidance document that the FDAput out in March, which
said the agency “does not intend to take action against firms” producing hand sanitizer, as long as the firm followed FDA guidance.
HHSnotedtheFDAdocument “contains no discussion regarding user fees or any indication such fees would be due by these entities, many of which would be entering the drug manufacturing business for the first time.”
In its response Saturday, the FDA said it posted information about the fee schedule in May.
“The FDA intends to conduct the implementation of the drug user fee program enacted by Congress and signed into law in an appropriate and transparent manner with these concerns in mind,” the statement said. “We will provide additional updates on this work as soon as we are able.”
AnFDAspokespersontold The Washington Post in a story Thursday that it lacked the authority to waive the fees, adding that would require “somehelp from lawmakers.”
To the relief of many distillers, Harrison tweeted on New Year’s Eve that HHS had directed the FDA to stop enforcing the fees.
“Happy NewYear, distilleries,” he tweeted, “and cheers to you for helping keep us safe!”