April 21, 2020
Due to current strains on the supply chain for hand sanitiser and other disinfecting products, legislative bodies have been implementing changes to allow for new and current producers to increase the volumes available on the market.
As the demand for raw ingredients to manufacture biocidal hand sanitisers is increasing, industry is facing significant challenges within the supply chain to formulate these products in a timely manner. Two major legislative factors are impacting the production of the required raw materials, and final products. The first is the regulations governing the placing of these types of product on the market, and the second is the licensing and tax considerations surrounding the alcohols that are used to make the majority of the sanitising agents.
In the EU whilst predominantly all disinfectant products fall under scope of the BPR, hand sanitisers can be regulated under one of three regulations depending on the claims and primary purpose of the product.
Cosmetics Regulations
If the product is used to clean or moisturise the hands with a secondary anti-bacterial property (a claim can still be made to this property) then it falls under the Cosmetics Regulations.
Medicinal Product Regulations
Where specific claims against either a disease or a known pathogen are made then the product may fall under the Medicinal Product Regulations. These are typically seen on products such as surgical scrubs.
Biocidal Products Regulation (BPR)
If the primary action and claim of the product is to kill pathogens without stating specific species or diseases it is acting against, then the product is considered a biocidal product falling under Product Type 1 (human hygiene).
It is also worth noting that if the product falls under the Biocidal Products Regulation it will also have to comply with CLP and REACH requirements too.
Temporary regulatory changes to ease pressure on the supply chain
Although there has been no real movement on the Cosmetic or Medicinal Product front, a series of Biocidal Product derogations have been implemented to try to boost the supply of hand sanitisers and disinfectants on the EU market.
Member states have the ability to implement Article 55 of the BPR which allows for a temporary relaxation of the BPR regulations for up to 180 days initially, followed by up to a further 550 days if needed for a specific substance.
Article 55 cannot be implemented at an EU level and it is therefore up to the individual member states to determine which, if any, substances should be temporarily exempted and for how long. The exemption in the BPR also only references the removal of the requirement to authorise the products. Whether the products are also exempt from Article 95 requirements is less straightforward. Countries such as Germany have made it clear in their Article 55 release that the requirement to purchase from Article 95 suppliers is also exempt, but this is not so clear in other member states.
Most of the member states have just implemented the Article 55 statute for the main hand sanitiser active substances as stated in the WHO formulations Ethanol (CAS 64-17-5), Propan-1-ol (CAS 71-23-8) and Propan-2-ol (CAS 67-63-0), although countries such as Sweden and Spain have expanded this to include other disinfectants such as Sodium hypochlorite (CAS 7681-52-9) and Hydrogen peroxide (CAS 7722-84-1) for additional product types.
To keep track of the Article 55 exemptions throughout the member states, the European Commission collates a list of these that can be found here: https://circabc.europa.eu/w/browse/47c6e2b3-27a1-4137-83e4-9605a64e2de7
However, it is still recommended to check the local legislation for the most recent updates regarding this situation.
Member states are also putting into place other measures to help smooth the increased production and import of these types of products. Ireland for example has implemented a prioritisation process to allow for the authorisations of certain disinfectant products. Whilst Sweden has implemented a translation derogation for disinfectant products, for which SDS and labels can now be supplied in English, Danish and Norwegian instead of Swedish which was previously required.
Taxation Relief
To make sure companies that need the disinfectant and sanitisation products can afford them, the European Commission has released an EU VAT exemption for products imported for free circulation by or on behalf of State and Public bodies that meet the following requirements:
- The product is being made available free of charge to the persons affected by or at risk from COVID-19 or involved in combating the COVID-19 outbreak while remaining the property of the state or public bodies.
- The product is distributed free of charge to the persons affected by or at risk from COVID-19 or involved in combating the COVID-19 outbreak.
Tax exemptions on raw materials used to make hand sanitisers
- are done on a country by country basis and fully depend on what barriers were put into place with regards to the production and selling of alcohol.
In the UK, the HMRC has introduced new measures to try to increase the production of Ethanol for use in hand sanitising products.
If licensed distillers or gin manufacturers hold duty suspended Ethanol in an excise warehouse, they can denature the Ethanol by either: producing a hand sanitiser that meets World Health Organisation (WHO) formulations for handrub, or by meeting the formulations of industrial denatured alcohol or trade specific denatured alcohol 1, 6 or 7. They do not need to tell HMRC or get approval, but must keep a record of the amounts of Ethanol denatured and the method used. This alcohol used will then not be subject to the drinkable alcohol tax which is £28.74 per litre of the 96% proof that is currently used in beverages in the UK
To find out information on Ethanol taxation in other European countries, you will need to check with the local tax office.
References:
Guidance as to whether the product should be considered a cosmetic or a biocidal product: https://ec.europa.eu/docsroom/documents/40523
UK HSE guidance for potential hand sanitiser manufacturers: https://www.hse.gov.uk/news/hand-sanitiser-manufacture-supply-coronavirus.htm
UK HMRC guidance for potential hand sanitiser manufacturers: https://www.gov.uk/guidance/producing-hand-sanitiser-and-gel-for-coronavirus-covid-19
Biocidal Product Regulations: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32012R0528&qid=1585911557679&from=EN
Cosmetic Product Regulations: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:342:0059:0209:en:PDF
Medicinal Product Regulations: https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1585914844857&uri=CELEX:02001L0083-20190726
EU VAT exemption: https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1586169794737&uri=CELEX:32020D0491
Guide to Local Production – WHO Recommended Handrub Formulations: https://www.who.int/gpsc/5may/Guide_to_Local_Production.pdf