Distillers, lawmakers pressure FDA to revise hand sanitizer guidelines to permit excise tax relief

As the novel coronavirus spread across the globe and health officials implored the public to use more hand sanitizer to mitigate the potentially deadly pathogen, grocery stores and online retailers saw the product evaporate from their shelves.

Desperate first responders and others on the frontlines of the battle against the pandemic grew alarmed, but in walked an unlikely savior: the booze industry, which shifted gears to churn out sanitizer using alcohol it had on hand and following a recipe approved by the World Health Organization.

But U.S. federal regulators -- trying to balance safety concerns with a rising demand for the virus-mitigating product -- are insisting that the recipe is not enough, and this stance is now complicating efforts to waive federal excise taxes on the sanitizing product.

The result has led to an increasing pressure campaign, including senior members of Congress.

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Critics say the unbending stance by the Food and Drug Administration is inhibiting the production and distribution of thousands of gallons of the germ killer, though some distillers are providing their product regardless of FDA guidelines.

More than 600 distillers are involved in sanitizer production, according to industry experts, many following WHO rules, which allows for the use of "undenatured" alcohol, a food-grade ethanol that the industry has readily available.

The new $2 trillion stimulus bill signed into law last week threw something of a wrench into the works of this massive mobilization effort. The legislation provides a much-needed waiver of costly federal excise taxes on distillers who make sanitizer.

But, it links that waiver to an adherence to the stricter FDA guidelines, which require the use of much more bitter, often toxic, chemicals, called "denatured" alcohol, to deter consumption, particularly by children. And critics have cried fowl.

"This would penalize distillers who jumped in to produce hand sanitizer based on the WHO guidelines when regulatory guidance was unclear," said Chris Swonger, president and CEO of the Distilled Spirits Council of the United States (DISCUS), which represents scores of large and small distillers.

Swonger said these toxic agents could make it much harder for stills to turn back to the production of whiskey and such beverages when the nation returns to normal.

And DISCUS has been pressing the FDA to alter its guidelines, recently participating in a conference call with the agency pressing it to research possible ways to reach an accommodation with the industry, potentially issuing safety warnings, according to Swonger and his chief counsel, Courtney Armour -- who noted that the industry is equally concerned about children. DISCUS has also been working behind the scenes with the President Donald Trump's coronavirus task force.

"Those distillers were responding to pleas from their local officials and communities and should not now be faced with a huge tax bill. Distillers are already under significant financial pressure due to the COVID 19 crisis. This will inflict further injury on them," said Swonger, who estimated that 40% of the profit for spirit makers, which normally comes from tourist visits to craft distillers, has dried up in the face of this spreading health crisis.

Still, the FDA has not backed down. And while the agency did revise its guidelines just days ago to permit the use of food-grade alcohol, its safety concerns remain, according to a spokesman. The addition of foul-tasting chemicals is still required in the final product, they said.

"The FDA’s guidances explain that the FDA does not intend to object to the manufacture of denatured or undenatured alcohol for use in hand sanitizers, so long as a denaturant (bitterant) is added prior to the final production of the hand sanitizer," FDA's Jeremy Kahn, said in a statement to ABC News. "Adding these denaturants to the alcohol renders the product less appealing to ingest."

Kahn said incidents of children consuming lethal sanitizer have been increasing during the COVID-19 pandemic, noting that "in an 18-month old child, it takes only a small amount to be potentially lethal."

"Consumer safety is a top priority for the FDA," Khan said, adding "To protect children, it is important to make hand sanitizers unpalatable."

And while any potential accommodations would just be temporary while the current pandemic is strangling sanitizer supplies, Kahn said, "It is unclear what, if any, measure could be instituted to ensure that the product does not make its way into consumer hands, where children could have access.

He continued, "Given these unknowns, our current position is that a denaturant should be added to all hand sanitizer products, regardless of the ultimate intended setting."

But, members of Congress are now putting their weight behind the effort to pressure the FDA for temporary changes.

"Through the current guidance, the FDA is standing in the way of hundreds of thousands of gallons of hand sanitizer from being produced and given to those on the front lines battling this pandemic," said Kentucky Reps. John Yarmuth and Andy Barr, the co-chairs of the Congressional Bourbon Caucus, in a letter this week to FDA Commissioner Stephen Hahn.

"We have a responsibility to provide more resources to help flatten the curve and alleviating this burden would allow distilleries the opportunity to step up and help their communities," the pair of lawmakers said, along with a bipartisan group of 85 of their House colleagues.

Also squarely behind the effort, according to a spokesman, is Senate Majority Leader Mitch McConnell, a native of Kentucky.

Meanwhile, in western Kentucky, along the bourbon belt, which would normally be teeming with tourists flocking to sample the state's coveted alcohol, one whiskey and moonshine maker has found a way to make the stricter regulations work.

Arlon "AJ" Casey Jones and his wife, Peg Hays, formed a partnership with two other distillers, one which Jones said had its alcohol seized by the military to fight the virus, in order to churn out FDA-approved sanitizer.

The distilling trio, which Jones said met a couple of years ago during the lunar eclipse celebrations, have joined forces with an ethanol plant and a chemical company to make hand sanitizer that is being shipped out across the U.S. -- from first responders to a state penitentiary. Some of the product has also been donated to local hospitals, police and fire department, as well as, the Salvation Army and Boys and Girls Clubs.

And this extraordinary effort has helped Casey Jones Distillery bring back all of its employees, most of whom were laid off as the virus first struck. Hays said they’ve even hired a few part-time workers to help out.

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"It’s just incredible. We’ve even corralled the grandkids -- who are all old enough -- to help us get the product out the door," said Hays, whose efforts were recently lauded on the Senate floor by McConnell, who has known Peg Hays since she was a child, and worked with her mother and father in his early days in politics.

But Hays minced no words when asked if the stimulus bill’s excise tax waiver was key to enabling them to do their crucial work.

"Absolutely. That passage was key," said Hays, who calculated that the tax relief will save her own business tens of thousands of dollars. "This is the only thing that makes it affordable."

And while Jones and Hays say they would like nothing better than to return to making their famous moonshine, which they said was enjoyed by none other than mafia don Al Capone, they are humbled by their involvement in helping to mitigate against a pandemic threatening to ravage whole communities.

"I told everyone on the first night we made the sanitizer, ‘Remember, the product we’re making will no doubt be saving someone’s life'," Jones recounted.

It’s a sentiment echoed by DISCUS’s Swonger, "We all want to be making whiskey, not hand sanitizer, but we want to be as helpful as we can. So, it’s critical that we keep working at it and that we find a resolution."

"We are calling on the FDA to dig deep and do their research on the WHO guidelines," he added.

Swonger said his group also has its eye on " a variety of options in Phase 4," the next stimulus legislation that is already being discussed in the halls of Congress.