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The U.S. Food and Drug Administration has set up a potential showdown with tobacco manufacturers and Republicans in U.S. House on the potential fate of tobacco and nicotine product innovations, particularly electronic cigarettes and vaporizers.

The FDA on Thursday released its long-awaited second and final phase of heightened regulations. The first phase was disclosed in April 2014. The new regulations would go into effect in 90 days.

The typical e-cig is a battery-powered device that heats a liquid nicotine solution in a disposable cartridge and creates a vapor that is inhaled. A vaporizer can be supplied and reused through the insertion of a liquid capsule.

The FDA’s decision to stick with a Feb. 15, 2007, predicate date for product introductions is likely to spur lawsuits from manufacturers, vape shops and advocate groups.

That’s because products introduced into the marketplace after that date — including almost every electronic cigarette — would have to retroactively go through stiffer regulatory requirements to prove they don’t cause public harm. That includes providing more detail on liquid nicotine ingredients and manufacturing details.

Analysts have said it could cost millions of dollars for each product to go through the heightened regulatory requirements.

The FDA estimates it would cost about $500,000.

Bonnie Herzog, an analyst with Wells Fargo Securities, said she expects “litigation from several manufacturers, which could unfortunately prolong the uncertainty plaguing the entire industry.”

“Our main concern is that these final deeming regulations could dramatically slow industry growth by dis-incentivizing consumer conversion from combustible cigarettes.” Herzog said.

“This would ultimately have a net negative impact on public health, which is clearly in direct opposition to the FDA’s goal,” she said.

The FDA said manufacturers will be able to continue selling their products for up to two years while they submit a new tobacco product application. They would get an additional year during the review process.

Other tobacco products subject to potentially tighter regulations are cigars, pipe tobacco, nicotine gels, water-pipe or hookah tobacco, and dissolvable products.

Many of the heightened regulations were unveiled in October: banning the sale of e-cigs and vaporizers to those under age 18; requiring age identification to buy the products; no free samples; and no sales in vending machines unless in adult-only venues.

E-cig and vaporizer marketing, particularly on TV, remains allowed, but public health claims can’t be made without FDA approval.

Mitch Zeller, the director of the FDA’s Center for Tobacco Products, called the regulations as a “foundational step.”

In a statement, U.S. Health and Human Services Secretary Sylvia Burwell said the regulations “will help us catch up with changes in the marketplace, put into place rules that protect our kids, and give adults information they need to make informed decisions.”

Several recent studies, including from the Royal College of Physicians, have determined e-cigs and vaporizers could be as much as 95 percent less harmful than traditional cigarettes.

David Howard, a spokesman for Reynolds American Services Co., said the company believes “that a pivotal element of achieving the public health goal is regulation that provides adult smokers with innovative nicotine products that do not burn tobacco. We also believe that smokers should have accurate information and education about products that are potentially less risky than cigarettes.”

“We look forward to discussing with FDA how best to establish a reasonable structure for review and approval of new products so that public health benefits can be expeditiously achieved,” Howard said.

Daunting regulatory path

The FDA defines substantially equivalent as “being the same in terms of ingredients, design, composition, heating source and other characteristics to an existing, single predicate product or have different characteristics, but not raise different questions of public health.”
As part of the federal Tobacco Control Act, FDA officials want new and enhanced products to be “substantially equivalent” to products already in the marketplace as of Feb. 15, 2007.

Some industry observers say they believe that predicate date would drastically curtail product innovations, particularly by companies that don’t have the research and development budgets of Reynolds American Inc., Philip Morris USA and their affiliates.

The FDA predicate date puts the agency at odds with U.S. House Republicans, which could directly affect its funding to implement the new regulations.

The U.S. House agriculture appropriations bill for 2016-17 contains language that would only permit funding for FDA substantial equivalent restrictions with a start date 21 months after the effective date of the final FDA regulatory rule.

Supporters of the alternative predicate date — including co-sponsors Reps. Tom Cole, R-Okla., and Sanford Bishop Jr., D-Ga. — have said having a later predicate date makes “common sense.”

“To treat these products worse than a traditional cigarette would be a gift to Big Tobacco,” Bishop said in April. “We don’t want to limit these products’ ability to compete.”

Cole said that “while we can all agree that tobacco products should not be marketed to children, I still believe that my bipartisan amendment provides the same framework for new tobacco products without needlessly subjecting small businesses to unnecessary regulations and without treating law-abiding adults like naïve children.”

U.S. Rep. Virginia Foxx, R-N.C., said Thursday that “by ignoring the recommendations of House leadership regarding the grandfathering date, it’s clear these rules are designed to stifle the innovation that the electronic cigarette industry has seen over the last several years.”

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