U.S. Department of Health & Human Services withdrew a Food & Drug Administration notice published in the Federal Register that imposed a $14,060 fee on bev/al firms that stepped up to produce hand sanitizer during the Covid-19 epidemic.
HHS’s Office of General Counsel determined that the fee is a “legislative rule and that no one at FDA has been delegated authority to issue such a rule.” As a result, said, Brian Harrison, HHS Chief of Staff, “the notice is void” and “HHS leadership . . . ordered the Federal Register Notice to be withdrawn, meaning the surprise user fees will not need to be paid.”
Chris Swonger, president, Distilled Spirits Council of the U.S., praised the action, saying, ““This is such a relief to hundreds of distillers. We want to thank HHS leadership for quickly intervening and protecting distillers from these unwarranted fees. Distillers were proud to help make hand sanitizer for their communities and first responders during their time of need.”
In his statement, Harrison said: “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!”
In the statement, Harrison noted that “in March, the Food & Drug Administration (FDA) issued a guidance document – the Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19) – which provides flexibility for those entities capable of producing hand sanitizer to rapidly enter the market.
“In the guidance, the FDA stated it “does not intend to take action against firms that” produce hand sanitizer products – which are classified as over-the-counter drugs – during the COVID-19 Public Health Emergency, provided the firm’s activities are consistent with the guidance,” Harrison said, adding:
“Importantly, the guidance 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. Nevertheless, on Dec. 29, the FDA posted an over-the-counter drugs user fee notice that imposes a significant financial burden on these small businesses.
“This action was not cleared by HHS leadership, who only learned of it through media reports late yesterday. HHS leadership convened an emergency meeting late last night to discuss the matter and requested an immediate legal review. . . . Only the HHS Secretary has the authority to issue legislative rules, 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,” Harrison said.
Comment: This was exactly the right action.