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Distillery owners grateful, relieved after HHS withdraws FDA fee for producing hand sanitizer

On Thursday, the FDA notified many of the distilleries that produced hand sanitizer they would be subject to a $14,060 fee.

HOPKINSVILLE, Ky. — Peg Hays said she was shocked to learn earlier this week she would have to pay a fee from the Food and Drug Administration. The reason? Making hand sanitizer.

"No good deed goes unpunished is the way to describe that," she said.

Hays, the owner of Casey Jones Distillery in Hopkinsville, Kentucky, was among the many distilleries around the country that began producing hand sanitizer during the coronavirus pandemic as many communities dealt with shortages.

"March 15, we had actually planning to close the distillery to get through COVID," she said. "And then in less than two weeks, we're out producing sanitizer."

The FDA notified many of the distilleries that produced hand sanitizer they would be subject to a $14,060 fee under the OTC monograph drug user fee program. Distilleries that did not immediately shut down production of hand sanitizer would be subject to another fee next year.

Hays said Casey Jones Distillery is a small operation expected to produce 12,000 gallons of alcohol this year and only employs a handful of employees.

"We are not just a small craft distillery. We are a nano-small craft distillery," she said. "We'd probably have sat down and had a big talk and said, 'Look, how are we going to cut hours here?'"

The Department of Health and Human Services reversed course Thursday and withdrew the fee for producing hand sanitizer in 2020.

In a statement, HHS chief of staff Brian Harrison wrote, "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. Happy New Year, distilleries, and cheers to you for helping keep us safe!"

Hays said she is grateful and relieved she will not have to pay the fee, but she is also seeking clarity about whether she can continue selling the hand sanitizer that is in her inventory without incurring another fee next year.

"We'll lose the money we have invested in our inventory, plus if we ship a bottle, we've got that 14,060 bucks ahead of us."

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