Member Article

The U.S. Food and Drug Administration (FDA) recently issued a burst of COVID-19-related guidance documents to facilitate expanded availability of medical products during the current public health emergency created by COVID-19. FDA-regulated products under these temporary policies include: PPE, diagnostic tests, hand sanitizers, disinfectant devices, remote monitoring devices, ventilators, and electronic thermometers for clinical use.

FDA Says Alcohol-Based Hand Sanitizers May Be Manufactured by Distillers

Hand sanitizer is an over-the-counter (OTC) drug that is regulated under the Food, Drug and Cosmetics Act (FD&C Act). On March 23, 2020 (updated March 27, 2020), FDA provided temporary production guidelines for manufacturing alcohol for incorporation into hand sanitizer products to respond to the shortage of alcohol-based hand sanitizer. If alcohol production companies follow the FDA guidance, which includes the requirement to register and list their product with the agency, they will not have to comply with other provisions of the FD&C Act. Currently, more than 200 distillers across the U.S. are registered as a drug manufacturer with the FDA.

Tax Exempt

The Alcohol and Tobacco Tax and Trade Bureau (TTB) aligned its own policy with FDA and offered a streamlined application process for distilleries to produce non-beverage products made with ethanol, including hand sanitizers. These products are not subject to federal excise tax through June 30, 2020, provided the authorized formula is consistent with the updated FDA guidance for industry. TTB also announced certain exemptions from requirements for qualifying state and local governments, hospitals, blood banks, sanitariums, pathological laboratories, non-profit clinics, and educational institutions to obtain alcohol free of tax for their own non-beverage-purpose use and not for resale or use in the manufacture of any product for sale, as described in 26 U.S.C. 5214(a)(3).

Alcohol Production Firms Are Stepping Up to Help Local Communities

Distillers across the U.S. are supporting their local communities in the fight to contain the spread of COVID-19. Rebecca Creek Distillery in Texas is one of many examples. The distillery temporarily shifted its production of whiskey to hand sanitizer. According to company officials, the first 16,000 liters of sanitizer made by Rebecca Creek Distillery were donated to first responders.[1] In Eastern Kentucky, Dueling Barrels Brewery & Distillery distributed free hand sanitizer to first responders and local organizations. Dueling Barrels’ sister distillery, Lexington Brewing & Distilling Co., also distributed hand sanitizer and will be supporting the effort to increase production to benefit first responders in Pikeville, Kentucky.[2] Eight Oaks, a veteran-owned craft distillery located in Pennsylvania, is taking $1 donations on its website to offset the cost of producing hand sanitizer for first responders, hospitals, clinics, government agencies, and nonprofits in their local community. The website states it has already donated over 27,000 bottles.[3] Another company in the industry, Brain Brew Custom Whiskey at the Eureka Ranch in Ohio, is donating hand sanitizer to local hospitals, food banks and the Cincinnati Zoo. The company says it has produced 88 liters so far and plans to switch to a higher volume system and is on track to make a donation of 40,000-plus eight-ounce equivalents.[4] John Little, CEO of the West Virginia Distillery Smooth Ambler told Forbes his company is honored to donate the hand sanitizer they produce free of charge because “[i]t’s just the right thing to do.”[5] This is not an exhaustive list of corporate social responsibility actions taken by these companies and many other distillers to address the public health emergency threatening their communities. Producing alcohol-based hand sanitizers is one of many ways distillers can get involved and support at-risk first responders and essential employees.

Alcohol production firms that are considering manufacturing alcohol (i.e., ethanol or ethyl alcohol) for use as the Active Pharmaceutical Ingredient (API) in alcohol-based hand sanitizers for consumer use and for use as health care personnel hand rubs for the duration of the public health emergency must rigorously adhere to the guidance issued for the industry by FDA, entitled Temporary Policy for Manufacture of Alcohol for Incorporation Into Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19) and the TTB’s Updated Hand Sanitizer Guidance to Address the COVID-19 Pandemic (TTB G 2020-1A).

Unlike products that fall under Emergency Use Authorization (EUA) authority per §564 of the FD&C Act, FDA is only applying a policy of enforcement discretion to hand sanitizer producers. These products are not “approved” by FDA. The agency has taken action against companies that have made false claims related to FDA approval. Distillers should also be aware that Public Readiness and Emergency Preparedness Act (PREP Act) immunity does not apply to unapproved products that FDA permits to be used through an enforcement discretion policy. This means that distillers that manufacture and distribute hand sanitizer may be legally responsible for any harm caused by their product. Failure to follow all of the requirements, including limiting the hand sanitizer to the ingredients listed in the FDA guidance, increases the legal risk of consumer claims and regulatory enforcement actions.

Please contact Aaliyah Eaves ([email protected]) or one of the attorneys in Dinsmore’s Health Care practice group, for more information on the specific conditions alcohol production firms must meet to qualify for FDA enforcement discretion.

[1] https://www.rebeccacreekdistillery.com/lovedistilled

[2] https://kybourbon.com/dueling-barrels-brewery-distillery-to-distribute-free-hand-sanitizer/

[3] https://eightoaksdistillery.com/donate-to-the-hand-sanitizer-project

[4] https://brainbrewwhiskey.com/

[5] https://www.forbes.com/sites/fredminnick/2020/03/18/white-house-works-with-distillers-to-increase-hand-sanitizer-production/