Update (July 14):
second alert covering regulation of the manufacture and distribution of hand sanitizer
addresses the additional legal and business considerations outlined in the
Food and Drug Administration’s June 1 update to its hand sanitizer
With the COVID-19 pandemic, the demand for hand sanitizer is extremely
high, and the supply chain has not kept pace with that demand. In an effort
to meet public need, several federal agencies, including the Food and Drug
Administration and the Alcohol and Tobacco Tax and Trade Bureau (TTB), have
relaxed some of their regulations regarding manufacturing and distributing
hand sanitizer, which is considered an over-the-counter (OTC) drug.
However, even with the relaxing of these regulations,
manufacturers/distributors and potential manufacturers/distributors need to
ensure that they are following the correct regulations and that product
labeling and marketing do not lead to future issues or litigation.
OTC Drug Monograph:
An OTC drug monograph is a formula by which any manufacturer can make a
drug and launch it into the marketplace. OTC drugs are unique in that,
provided they meet the monograph, they may be launched into the market
without prior approval by FDA. Fortuitously, FDA finalized the
OTC monograph for hand sanitizers
on April 12, 2019, with an effective date of April 13, 2020. That effective
date at this point is irrelevant and companies may treat the monograph as
final. Eligible OTC drugs for hand sanitizing may be made with 60 to 95
percent alcohol, among other approved active ingredients. OTC drugs must
comply with labeling requirements under 21 CFR 201.66. Manufacturers must
register with FDA and follow all applicable current good manufacturing
practices. No clinical trials or approvals are required, making OTC drugs
easy entry categories for manufacturers.
FDA has, for the first time in recent memory, suspended the rules of the
game for the manufacture of OTC drugs. According to March 2020 guidance, FDA will no longer take enforcement action against anyone making OTC hand
sanitizer. Entities not registered with FDA or who are part of the
regulated drug industry may begin manufacture provided they ensure the
- Alcohol (ethanol) USP or Food Grade is used; isopropyl alcohol made in
accordance with TTB regulation 27 CFR Part 20 is also permissible.
- The manufacturing firm ensures the ratios are correct for all products.
- All products are made in sanitary conditions.
- The firm uses accurate measuring methods for verifying alcohol content
- The hand sanitizer is labeled properly.
- The firm quickly registers with FDA, at which time they will receive
automatic confirmation from FDA to begin operations.
On March 18, 2020, the TTB waived certain provisions of internal revenue law for the
taxation of spirits in order to manufacture alcohol for hand sanitizers
without tax liability. Specifically, the alcohol used must be denatured
ethanol in order to avoid taxation, if the manufacturer is not an alcohol
fuel plant or a distilled beverage plant. AFPs and DSPs are allowed to make
denatured or undenatured ethanol without obtaining formula approval from
TTB and will not be taxed. AFPs and DSPs must continue to record the
ethanol made for these purposes in order to show TTB why tax is exempt for
these products, if audited.
As with any consumer product, a manufacturer, designer or distributor may
risk individual and class action lawsuits regarding the product (design or
manufacturing defect), product labeling (deceptive/false or failure to
warn) and marketing (deceptive/false or failure to warn). To help prevent
potential lawsuits, it is vital that companies have well-designed and
well-manufactured products and that the product labeling and marketing are
accurate, truthful and well-thought-out.
Gojo Industries, Inc., the manufacturer and distributor of Purell Healthcare Advanced Hand
Sanitizer, recently received an FDA warning letter. The letter knocked
claims made without proper FDA approval on Gojo’s website and social media
that the company’s Healthcare Advanced Hand Sanitizer was effective against
diseases such as Ebola, norovirus and the flu. This led, in turn, to
plaintiffs filing class action lawsuits against Gojo in New York, Ohio and
California shortly thereafter. The New York case, for instance, includes
claims such as negligent misrepresentation, violations of consumer
protection from deceptive acts under New York General Business Law §§ 349
and 350, breaches of implied and express warranties, a violation of the
Magnuson-Moss Act, fraud and unjust enrichment. See Gonzalez v. Gojo Industries, Inc., Case No. 1:20-cv-00888,
S.D.N.Y., ECF Doc. No. 1 (2/1/2020).
Another manufacturer of hand sanitizer, Vi-Jon Inc., who makes Germ-X, was
the target of another class action filed recently in California federal
court. See Geraldine David et al. v. Vi-Jon Inc., Case No.
3:20-cv-00424 (S.D. Cal.) (3/5/2020). To the extent a company would like to
make any health-related claims on its hand sanitizer products, it should
ensure the product strictly complies with all regulatory requirements,
given that FDA and class-action lawyers will be closely scrutinizing such
claims, and ensure that its product labeling and marketing are accurate and
truthful. Types of claims made against manufacturers and distributors for
product labeling have included the following:
Made in the USA Claims.
Manufacturers assembling their products within the United States may be
tempted to declare their products as “Made in the USA.” However,
regulators have strict interpretations of when products may declare
this. For instance, the Federal Trade Commission requires that a
product making an unqualified “Made in the USA” claim be derived “all
or substantially all” from parts and processing of U.S. origin and
“should contain no — or negligible — foreign content.” Similarly,
California law requires that no more than 5 percent of a product’s
final wholesale “articles, units, or parts” be obtained outside the
United States. Improper “Made in the USA” claims can be costly to
manufacturers. For instance, in 2018, Tabasco’s manufacturer settled a
“Made in the USA” class complaint for $650,000. To the extent a company
would like to make such a claim on its hand sanitizer products, it
should ensure the product and its constituent ingredients comply with
the regulatory requirements.
Social Media Content.
While manufacturers’ regulatory teams are used to ensuring their
on-pack claims comply with regulations, a company’s social media
managers likely have much less experience with what claims are
appropriate. Plaintiffs and their attorneys may not rely exclusively on
the label, but may highlight claims made by a manufacturer’s social
media accounts as the basis for a lawsuit. For instance, in Galvan v. Smashburger IP Holder LLC, plaintiffs relied in part
on marketing posted to the restaurant’s Twitter account in alleging
that Smashburger falsely marketed its burgers as containing “Double the
Beef.” Manufacturers should make it clear to their marketing and public
relations teams that they cannot make any unsupported claims or
otherwise implicitly suggest the product can do something unsupported,
including in promoting, liking or responding to customer comments.
A manufacturer may check all the regulatory boxes for its labeling and
marketing, yet find itself responding to one of an increasing number of
“halo” lawsuits. These suits get their name from the implicit feeling
(or “halo”) labeling and marketing create around the product, even when
no explicit labeling or marketing claim is targeted as violating
regulations. In Milan v. Clif Bar & Co., the plaintiffs
alleged that while label claims on Clif Bar’s products like “Made with
Organic Rolled Oats” may be technically true, the claims nonetheless
deceived consumers by creating a healthy halo around the bars despite
allegedly high levels of sugar. Images on the bars’ labels, such as a
rock climber, allegedly gave the bars an appearance of being part of a
healthy and active lifestyle. When conducting a label review,
manufacturers should not only check that each claim complies with the
applicable regulations, but should also take a step back and confirm
their labeling and marketing doesn’t leave consumers with a false or
deceiving impression about the product or its capabilities on the
McGuireWoods has a 24-hour hotline to answer time-sensitive food
safety/labeling and product labeling inquiries. This service provides
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manufacturing practices and regulatory compliance, among others. Email
or call +1 804 775 7878. Learn more about
McGuireWoods’ food and beverage industry team.
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