Got More Hand Sanitizer? (Part 2) More Legal and Business Considerations for New Market Entrants

This second McGuireWoods alert discussing regulation of hand sanitizer manufacture and distribution addresses new considerations from the Food and Drug Administration (FDA) published in a June 2020 update to its March 2020 hand sanitizer guidance. In this update, FDA concedes to industry that not all alcohol can be easily sourced. Accordingly, FDA lays out additional rules for use of alcohol in hand sanitizer products.

(For background, see McGuireWoods’ previous hand sanitizer alert, published March 24, 2020.)

I. FDA Updates Guidance

First, FDA will allow the use of fuel or technical grade alcohol (ethanol) under certain circumstances. Ethanol is readily available as a fuel additive for use either as a straight fuel or blended into the commonly known car fuel E-85 ethanol. It is mostly derived from corn that is not meant for human consumption. As a result, FDA is urging industry, if possible, to use Food Chemical Codex (FCC) or United States Pharmacopeia (USP) as quality standards. Where this is not possible, FDA has stated that it “does not intend” to take action against hand sanitizer that uses fuel or technical grade alcohol provided that the impurity levels are in accordance with the new guidance. FDA cautioned it can modify these policies at any time.

For guidance, FDA stated that there cannot be any gasoline in any sanitizer product. FDA also set very precise PPM levels for impurities in the products, including methanol, benzene, acetaldehyde, acetone, n-propanol, ethyl acetate, sec-butanol, iso-butanol, n-butanol, n-butanol, iso-amyl alcohol, amyly alcohol, and acetal levels. When in doubt about whether an impurity level is permissible, industry participants are asked to submit data to FDA about the chemical in question. The standard rules of the road still apply with the requirements of at least 70 percent active ingredient if using isopropyl alcohol. For all ethyl alcohol, the quality must be high enough in the finished product to allow for an 80 percent v/v concentration within the hand sanitizer.

Two key takeaways are: (1) businesses can use fuel or technical grade alcohol (ethanol), but it must be “pure” by FDA, USP or FCC standards; and (2) if ethanol is used as the base for hand sanitizer, labeling must be updated, as outlined in the guidance.

II. FDA Recalls and Further Warns on Claims

Ingredients matter for FDA, especially when it comes to hand sanitizer made under the Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19) Guidance for Industry. For instance, the only permissible ingredients in hand sanitizer are as follows:

1. Alcohol (ethanol or isopropyl alcohol)
2. Glycerin (glycerol)
3. Hydrogen peroxide
4. Sterile water

In the guidance, FDA specifically noted that ingredients to “improve the smell or taste,” such as adding lavender to a product made under the hand sanitizer guidance, are not permissible. Further ingredients, such as carbomer or triethanolamine, would also be prohibited, as FDA has not listed those as permissible. By far the most impermissible ingredient is methanol, which resulted in two recent recalls of products. In samples of two products on the market, FDA found concentrations of 81 percent and 28 percent methanol in the hand sanitizers. In a recent online publication, FDA clearly stated, “Methanol is not an acceptable ingredient for hand sanitizers and should not be used due to its toxic effects.” FDA said it will take immediate action for quality violations and claims where products imply or state “prolonged protection” against COVID-19.

III. Litigation Update

As mentioned in McGuireWoods’ March 24, 2020, alert, FDA issued a warning letter to Gojo Industries Inc., the manufacturer and distributor of Purell Healthcare Advanced Hand Sanitizer, and several class action lawsuits were filed against Gojo Industries in New York, Ohio and California regarding claims it had made on its website about the efficacy of its hand sanitizer against specific pathogens like influenza and Ebola. The alert also mentioned another manufacturer of hand sanitizer, Vi-Jon Inc., which makes Germ-X and was the target of a class action filed 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). Since the March alert, Target now also faces a class action lawsuit in California for a store-brand hand sanitizer — Taslakian v. Target Corp., No. 2:20-cv-02667 (C.D. Cal.) — and Gojo Industries has settled one of its three pending class action lawsuits. There is a clear trend of class action lawsuits filed across the country against hand sanitizer manufacturers and distributors.

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’ products are well-designed and well-manufactured, and that the product labeling and marketing are accurate, truthful and carefully considered. 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 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.
  
  
• Halo Claims. 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 also take a step back and confirm their labeling and marketing do not leave consumers with a false or deceiving impression about the product or its capabilities on the whole.

McGuireWoods’ food and product labeling team has been on the ground since day one helping companies with hand sanitizer-related issues. With a full-service interdisciplinary team of regulatory and litigation attorneys, we are well-equipped to handle client needs in this evolving landscape.

Our 24-hour hotline can answer time-sensitive food safety/labeling and product labeling inquiries. Email labelinghotline@mcguirewoods.com or call +1 804 775 7878.

McGuireWoods has published additional thought leadership analyzing how companies across industries can address crucial business and legal issues related to COVID-19.