COVID-19: Guidance Issued on Producing Alcohol-Based Hand Sanitizer

Amid a growing number of cases of COVID-19 around the United States, consumers may face empty shelves when looking for high-demand items such as masks and hand sanitizer. While washing your hands frequently with soap and water for at least 20 seconds is the most important action one can take to combat COVID-19, the Centers for Disease Control and Prevention (CDC) has deemed using hand sanitizer an effective and viable alternative. To be effective, the CDC recommends consumers use an alcohol-based hand sanitizer that contains at least 60 percent alcohol to reduce bacteria that can potentially cause the disease.

Along with directives from the CDC, other agencies such as the Food and Drug Administration (FDA) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) have issued guidance regarding the production of hand sanitizer by alcoholic beverage manufacturers. 

Food and Drug Administration

Due to the importance of hand hygiene in combatting the further spread of COVID-19, the FDA issued a temporary policy and corresponding guidance for entities not currently licensed or regulated by the FDA regarding preparing and distributing alcohol-based hand sanitizer products.

In its guidance, the FDA advised that it will not take action against any entity for preparing alcohol-based hand sanitizers for consumer use for the duration of the public health emergency as long as:

1. The hand sanitizer is manufactured using only United States Pharmacopeia (USP)-grade ingredients in preparing the product consistent with the World Health Organization (WHO) recommendations:
   • Alcohol (ethanol) (USP or Food Chemical Codex (FCC) grade) (80 percent, volume/volume (v/v)) in an aqueous solution denatured according to TTB regulations in 27 CFR part 20 or Isopropyl Alcohol (75 percent, v/v) in an aqueous solution
   • Glycerol (1.45 percent v/v).10
   • Hydrogen peroxide (0.125 percent v/v)
   • Sterile distilled water or boiled cold water 
2. The alcohol (ethanol) must be denatured either by the alcohol producer or at the point of production of the finished hand sanitizer product.
3. The entity ensures the ethanol or isopropyl alcohol active ingredient is correct and the correct amount of the active ingredient is used. Records should be kept documenting the key steps and controls used to ensure each batch matches the developed formula. 
4. The hand sanitizer is prepared under sanitary conditions and the equipment utilized are well maintained.
5. The entity uses the most accurate method of analysis available at the site for verification of alcohol content in samples of the finished drug product before each batch is released for distribution.
6. The hand sanitizer is properly labeled in accordance with FDA guidelines.
7. Prior to production, the entity must register their facility and list the products they make in the FDA Registration and Listing System.

Despite the FDA’s temporary policy and guidance, it is important to ensure that, if your business chooses to produce alcohol-based hand sanitizer, it does not run afoul of laws, rules, and regulations of other state and federal agencies.

TTB Guidance

Due to the COVID-19, the TTB has temporarily waived provisions of internal revenue law with regard to distilled spirits through June 30, with the possibility for extending as necessary.

This means the TTB is providing certain exemptions and authorizations to distilled spirits permittees (DSPs) and alcohol fuel plants (AFPs) that wish to produce ethanol-based hand sanitizers to address demand. Any existing DSP can immediately commence producing hand sanitizer or distilled spirits (ethanol) for use in hand sanitizer without having to obtain authorization first. 

• Permit guidance for AFPs and beverage distilled spirits plants: The TTB is exempting AFPs and beverage DSPs from the requirement to obtain additional permits or bonds to manufacture hand sanitizer or to supply ethanol for use in manufacturing hand sanitizer to other TTB permittees that are authorized to receive distilled spirits. AFPs and beverage DSPs must continue to keep records of their operations, including any undertaken as authorized under this exemption.
• Tax guidance for manufacturing hand sanitizer: Hand sanitizer products are not subject to federal excise taxes if made with denatured ethanol. However, if made with undenatured ethanol, federal excise taxes apply. 
• Formula guidance for manufacturing hand sanitizer: The TTB is authorizing the manufacture of hand sanitizer products consistent with WHO guidance without first obtaining formula approval from the TTB.
• Guidance for industrial alcohol users: Industrial alcohol user permittees may also use denatured ethanol to manufacture hand sanitizer consistent with WHO guidance without first obtaining formula approval. During the period of this guidance, the TTB is also exempting industrial alcohol user permittees from the requirement to request approval from the TTB to increase the quantities of denatured ethanol they may procure. 
• Guidance regarding transfers in bond: DSPs are temporarily exempt from the requirements to request approval to receive denatured or un-denatured distilled spirits from another DSP and to obtain additional bond coverage. Instead, DSPs must continue to keep records of their receipts, including any undertaken as authorized under this exemption.
• Guidance for state and local governments: Both denatured and un-denatured alcohol may be removed free of tax for non-beverage purposes for the use of a state, including making hand sanitizer. Alcohol must be obtained from a DSP and may only be obtained by those holding an alcohol user permit from the TTB. Local and state government permittees may make hand sanitizer for use anywhere as needed to address COVID-19.
• Guidance for hospitals, blood banks, sanitariums, certain pathological laboratories, not-for-profit clinics, and qualifying educational institutions: These entities may 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.

---------------------------------------------------------------------------------------------------------------------------

  ^[1]No other active or inactive ingredient should be used, as additional or different ingredients may impact the quality and potency of hand sanitizer products.

If you have any questions regarding the content of this alert, please contact Katie Markert, counsel, at kmarkert@barclaydamon.com; Brenda Baddam, associate, at bbaddam@barclaydamon.com; or another member of the firm’s Hotels, Hospitality & Food Service Team.

We have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates related to COVID-19 and who are prepared to assist clients. Please contact Yvonne Hennessey, COVID-19 Response Team leader, at yhennessey@barclaydamon.com or any member of the COVID-19 Response Team at COVID-19ResponseTeam@barclaydamon.com.