FDA’s distillery fiasco illustrates why arbitrary regulation is a problem
“No good deed goes unpunished,” as the old saying goes. Distillery owners, who acted quickly last year to relieve the national shortage of hand sanitizer in response to the COVID-19 pandemic, learned that lesson the hard way.
As COVID-19 lockdowns accelerated and supplies of paper towels, sanitizer and other key products dwindled, some American entrepreneurs stepped up. Distilleries, themselves suffering because of the closures of bars and restaurants, repurposed their equipment to manufacture hand sanitizers. Many Americans cheered the distilleries for their resourcefulness, and grateful consumers welcomed the new supply of hand sanitizer in the middle of a public health crisis.
But one federal agency was notably ungrateful for the distilleries’ quick pivot: The federal Food and Drug Administration (FDA), which rewarded these small businesses by charging many of them almost $24,000 in punitive “fees” for stepping outside their designated regulatory box.
Luckily for the distilleries, the Department of Health and Human Services (HHS), which oversees the FDA, reversed the fees. But this episode highlights the arbitrariness of modern government regulation, which threatens the entrepreneurial risk-taking required for innovation and production.