Excise taxes on vapor and OTPs can present considerable administrative burdens on businesses.
By Bryan Haynes, Christina Sava and Robert Claiborne
Excise taxes on vapor products and tobacco products other than cigarettes, also referred to as “other tobacco products” (OTPs), present considerable administrative burdens on businesses dealing in these products. All 50 states impose excise taxes on most traditional OTPs, and have for a long time, but operators in the vapor category have been subject to rapidly shifting regulatory conditions as states update their OTP laws and other laws to account for vapor products.
Many of these laws are framed on traditional distribution models, and businesses’ innovations in routing taxable products to market can raise unique compliance questions. Recent legal changes have also raised new issues over the permissibility of state taxation of products coming in from another state. Where excise taxes are imposed on a product, the sale of such products requires licensure at various points in the supply chain, accurate bookkeeping, regular reporting, and tax remittance practices.
Typically, distributors and wholesalers of these highly regulated products may be the subject of audits by state revenue departments, and manufacturers and retailers may similarly be subject to audit depending on the auditing state. In our experience, it is a rare audit that does not result in an alleged deficiency. Some deficiency determinations are minor and easily paid while others can add up to hundreds of thousands—and even millions—of dollars due, plus interest and penalties. In such cases, it is imperative to engage the assistance of experienced counsel who can assist you in addressing the assessment.
A final deficiency determination can be crippling to a business. The audit process itself can be time-consuming and disruptive to normal operations, and any ensuing disputes will be even more so. It’s never a bad time to either establish an audit-readiness plan or clean up existing operating procedures to make sure a future audit and possible dispute go as smoothly as possible. We have drawn on our experience representing clients in such disputes to compile this list of best practices for avoiding or contesting OTP and vapor tax assessments.
Best Practices for Avoiding a Dispute
Understand your state’s licensure requirements. This tip should go without saying, but it is worth repeating given the rapid evolution of vapor products laws and innovations in businesses’ routing of taxable vapor or OTP products to market. If you do any business in traditional forms of tobacco, and begin selling vapor products, it would be prudent to confirm whether your state requires additional licenses, taxes or reporting for these products.
Know your regulator. For any highly regulated business, it’s important to be familiar with your primary regulatory agency and its agents and maintain a good relationship with them. Any time you are communicating with your regulator is a chance to make a good impression, so remain courteous and professional in your dealings with them, whether via email, by phone or in person. If there are occasions where you disagree with the regulator, you can do so respectfully and without being disagreeable.
Keep and organize accurate books and records. This tip is important for all business owners but especially for businesses that deal in excise-taxed products. Being able to produce accurate documentation of your activities can make all the difference in a dispute as well as prevent disputes. State laws typically establish the minimum record-keeping requirements. A good record-keeping system will include:
copies of invoices and receipts;
copies of bills of lading and other shipping documentation;
copies of all communications with state regulators; and
copies of documentation for any tax payments, tax reports and tax returns.
Make your records readily accessible as you will be asked to produce them during an audit. You will also want to promptly transmit records to your attorneys if you involve them in any phase of the matter. Verify whether your state requires you to maintain physical copies on-site or whether you can organize your records digitally.
Understand the applicable laws. This one is, again, obvious for all businesses but crucial for those dealing in highly regulated products. Keep track of the tax rate applicable to all of your product classes. If there is a question about whether your products qualify as taxable tobacco or vapor products, you should seek clarification and probably involve your attorney. Some laws, for instance, tax liquid nicotine but not certain other forms of nicotine while other laws tax products, such as vape products, that do not contain nicotine at all. Make sure you are signed up for alerts from your regulatory agency. If you don’t understand a change in law or policy, follow up with the regulator or experienced counsel for clarification. If you are going to seek a formal advisory opinion or even informal guidance from a state department of revenue, you will likely want to involve your attorney to ensure that you inform the department of all material facts and legal grounds that may distinguish your product or activities from coverage under the state’s excise tax laws.
File timely returns. Set up a system for making tax reporting easy and automatic. There are third-party providers that can assist if necessary. Filing thorough, well-prepared returns on time each month generates goodwill and can help prevent audits.
Periodically audit yourself. Set up periodic self-audits to ensure your reporting is accurate. Self-audits can help businesses mitigate issues that, if not discovered sooner, may result in large assessments. If you discover an issue, many state excise tax laws require that returns be corrected proactively. If you discover a major issue, it may be prudent to have a discussion with relevant taxing authorities but involve counsel early if you think you’ve discovered deficiencies. Some states have voluntary disclosure programs that may mitigate potential consequences from noncompliance.
If you are audited, make timely and thorough responses. If you are audited, it is critical to be responsive to auditors’ legitimate requests. Initial interactions with auditors can set the tone for the rest of the audit. Review requests for production thoroughly, note the deadlines and begin working on the responses early. Auditors appreciate well-organized productions, which are easier to provide if they are already organized and you’ve given yourself time to put together a thorough response.
Best Practices for Dealing with a Potential or Actual Dispute
Engage experienced counsel early. Consider contacting counsel the moment a request for records arrives. Counsel does not always have to respond on your behalf, but they can help you evaluate the legitimacy of requests and help you respond. You should contact counsel immediately upon receipt of a deficiency determination.
Be aware of deadlines. This one bears repeating because, in tax matters, missing a deadline can mean you have conceded to the assessment. Review the assessment carefully and note all deadlines. Review statutes, regulations and agency guidance to familiarize yourself with the appeal process, including any additional deadlines that might not have been identified in your notice.
Provide relevant information to your counsel as soon as possible and throughout the dispute. Is the disputed issue one that your business has previously discussed with the tax department? Has the tax department’s position changed at any point? Does the disputed issue concern products that had taxes paid on them in another state? Have there been any changes in the manner in which you conduct your business? What individuals or documents can address the facts in issue? These are just some of the questions your counsel may have, and there will be others depending on the nature of your dispute. It is important to make sure that you fully inform counsel of the relevant facts and documents early on and throughout the matter.
Keep perspective. Running a business is hard work, and a tax dispute will not make it easier. While you will naturally be eager for the dispute’s resolution, it is important to bear in mind that the dispute process can be lengthy. Most states route tax disputes through a maze of administrative processes before the taxpayer can have its day in court. Either party can have multiple stages for appeal. Also bear in mind that most disputes eventually settle. Keep a cool head, maintain professionalism and know that you’ll eventually be on the other side of this.
Proactive measures can help you streamline audits and mitigate the risk of tax assessments. If a dispute arises, early engagement with counsel is critical to developing and executing an effective strategy. Troutman Pepper’s tobacco team has substantial experience advising clients in vape and OTP tax matters and, when necessary, assisting them in disputing assessments. In 2022, we assisted clients in successfully disputing more than $45 million in claimed tobacco tax deficiencies.
When the taxman asserts a deficiency, you don’t have to resign yourself to “be[ing] thankful [he] don’t take it all.”[1] There is more that you can do before and after that point. Please let us know if we can help.
Bryan Haynes, Christina Sava and Robert Claiborne are attorneys for the law firm Troutman Pepper Tobacco Practice.
If you improve the way that you implement bad policies, you are still left with bad policies.
By George Gay
Yet another report has demonstrated that the quest to encourage cigarette smokers to switch to the consumption of less risky tobacco and nicotine products is being subsumed under what now seems to be seen as the loftier aim of counting how many anti-tobacco policies and strategies can dance on the head of a pin. Constantinople is under attack.
The report, Operational Evaluation of Certain Components of FDA’s Tobacco Program, was drawn up by an Independent Expert Panel convened by the Reagan-Udall Foundation at the request, in July, of U.S. Food and Drug Administration Commissioner Robert Califf.
I should point out, however, that the direction the report took was not due to some gratuitous decision on the part of those serving on the panel but was rather determined by the terms of reference they were given. According to the report, issued in December, the panel members were charged with conducting “an evaluation of the FDA Center for Tobacco Products (CTP) with the aim of addressing immediate issues and providing recommendations to position the center for greater success in the future.”
But the key to the direction the panel took was provided in the following sentence. “This report focuses on operational issues; it does not address tobacco policy.”
In other words (my words), the panel members were given the task of addressing the symptoms afflicting the CTP, not the causes of its malaise. Their task resembled that undertaken by engineers charged with halting or slowing the collapse of the Leaning Tower of Pisa. Theirs was not to ask whether the tottering tower was fit for purpose. Theirs was to underpin the edifice.
Of course, there was a major difference between the engineers working beneath the tower and the academics working to prop up the CTP. The former had the joy of working on a beautiful, if foundationally flawed, Romanesque campanile that each year attracts countless tourists. All panel members had to work on, however, was the CTP edifice, whose superadditions rival those of a Gaudi building while lacking the charm or joie de vivre.
But I have digressed and, in doing so, skipped over something mentioned above that might have puzzled—even angered—some readers. I can assure you, however, that I detected no implied irony in the statement that the aim of the report should be, in part, to provide “recommendations to position the center for greater success [my emphasis] in the future.”
Indeed, the report says that, since its creation in 2009, the CTP has accomplished a great deal. “Between 2009 and 2022,” it says, “CTP published 16 proposed rules, 16 final rules, 35 draft guidances and 50 final Level 1 guidances.” And the report continues in that vein, listing such things as the number of applications the CTP has dealt with, the manufacturing and retail inspections it has carried out, the number of warning letters it has sent out and the amount of money it has collected from retailers in civil monetary penalties.
There are two things that strike me about this. The first is that it seems as though the tasks listed as having been carried out are merely part of the job description and therefore hardly worthy of remark.
The other point is more important, I think. There was no mention within the paragraph on CTP achievements as to how many smokers the center estimates it has encouraged to quit their habit or how many it has encouraged to move, either partially or wholly, to less risky tobacco and nicotine products.
Credit: Postmodern Studio
This is significant because the CTP’s stated mission is to protect people in the U.S. from tobacco-related disease and death, and you’re a million miles from the coalface of such an undertaking if you’re sitting in your office sending out warning letters to retailers. In fact, we seem to be talking mission impossible. “The lack of clarity about CTP’s direction, its priorities and its near-term and longer-term goals and objectives hinders CTP’s ability to effectively carry out its mission,” the report says.
Indeed, far from mission-judged achievements, the report is clear that things are not going well. “Tobacco is the leading preventable cause of death in the U.S., with cigarette smoking accounting for more than 480,000 deaths annually, according to the Centers for Disease Control and Prevention (CDC),” the report says. “Despite efforts to curb tobacco use, the smoking epidemic continues to contribute to an enormous, avoidable public health catastrophe.”
And the report then goes on to provide some statistics on smoking and vaping and their outcomes in respect of U.S. adults and young people. With the exception of the references to vaping, that same summation, including the huge death toll, could have been made before the formation of the CTP. It would seem that no progress has been made.
On the other hand, the report seems very good given the limits of the panel’s mandate, which saw it address four CTP program areas: regulations and guidance, application review, compliance and enforcement, and communication with the public and other stakeholders. As far as I am able to judge and given the time restraints involved, the panel members seem to have consulted widely, summed up the situation well and presented a host of necessary recommendations to improve the performance of the CTP.
I would worry, however, that in trying to implement the recommendations, the CTP would simply take on more work at a time when it is said to be overworked and almost overwhelmed to the point of being regularly reactive rather than proactive. Whereas the recommendations, if implemented, would no doubt be timesaving in the long run, it is difficult to see how the CTP can put those recommendations into place in the short term without additional resources, which we are told are in short supply.
Surely, the only way out of this vicious circle is to go back to basics and trim the policies to the resources available. This would be no bad thing in any case. The level of complexity of the CTP’s proffered solution to the problem of tobacco consumption is out of all proportion to the problem, or how do we put it now? The “challenge,” or, more recently, the “solution opportunity.” Concentrating on operational aspects means that the CTP, having lost sight of its objectives, is going to redouble its efforts.
While the panel was robust but diplomatic in its presentation, the report will not have made easy reading for those at the top of the CTP. Reading between the lines, I came away with the impression that the performance of the center has been unnecessarily bureaucratic, confused on the question of the interaction between science and policy, verging on the chaotic and, in large part, ineffective. But, in fairness, I must say that this was broadly my opinion before I read the report, so I cannot claim that my reading was impartial.
In what I thought was the most important aspect of the report, the panel addressed the tricky issue of science and how it informs the CTP’s work. The report notes that some issues before the CTP were fundamental policy questions that had to be informed by science but were not, themselves, scientific issues. “Rather, they are policy issues with profound societal impacts,” the report said.
And then it went on to make what is a vital point about an issue that, to my way of thinking, has tripped the CTP up on its mission path. One such question that scientific analysis alone would not resolve, the report said, was how to weigh the public health benefits achieved through smokers using electronic nicotine-delivery systems (ENDS) to completely quit smoking combustible tobacco products against the public health harms that might occur if young people used ENDS and thereby acquired a lifelong addiction to nicotine or proceeded to use combustible tobacco products,
Again, in fairness, I don’t believe that all the problems that have beset the CTP since it was set up as part of the FDA following the passing in 2009 of the Tobacco Control Act can be laid solely at the door of the center. The decision to hand to the FDA responsibility for the oversight of products whose consumption was known to be risky was fraught, especially given the tendency of politicians to use tobacco as a way of burnishing their often tarnished credentials in the eyes of populations made up overwhelmingly of people who do not use tobacco products. Putting the boot into smokers is generally a vote winner.
The CTP has been confronted, too, with legal challenges, but here it must be prepared to take a large part of the blame because important aspects of what it has done have been characterized by a lack of consistency. The report is awash with stakeholder comments about a lack of clarity, transparency and communication regarding its priorities and its decision-making processes.
Application processes were said by stakeholders to be extremely cumbersome and time-consuming, with submission requirements vague, frequently changing and favoring established companies. Application reviews were said to be inefficient and unpredictable, which is unsurprising given that FDA employees described the past several years of application review programs as full of ad hoc troubleshooting and abrupt shifts in direction.
What will have particularly exercised the minds of most of the readers of this magazine are those sections that deal with tobacco harm reduction issues, though much of what was said will have been widely known. At one point, the report notes that the agency announced its intention to apply a harm reduction strategy designed to move tobacco product consumers down the continuum of risk: switching from using combustible tobacco products to noncombustible products.
“However, stakeholders observed the agency’s more recent marketing authorization decisions appear to reflect a policy shift—specifically a reluctance to authorize any … ENDS other than those that are tobacco flavored,” the report notes. “If such a policy shift occurred, the agency did not specifically announce it in a regulation or guidance, leaving stakeholders to glean it from documents posted on FDA’s website such as a Technical Project Lead (TPL) review of PMTAs [premarket tobacco product applications], MDOs [marketing denial orders] posted in abbreviated form, or from heavily redacted documents provided in response to Freedom of Information Act (FOIA) requests.”
There are two main points in the report with which I would take issue. My main gripe concerns the following sentence. “Although CTP has a critical mission to protect the public health from tobacco-related disease and death and is regulating products that have no inherent benefit and huge societal costs, it is a government regulatory program with a duty to run efficiently, fairly and transparently.”
“No inherent benefit”? Unless I am misunderstanding what is being said here, and I hope that is the case, I have to ask how such a distinguished panel can have arrived at this idea. How can the panel say that a product consumed by, we are told, more than 30 million people in the U.S., often at great financial sacrifice, has no inherent value? Is the panel saying that these people have no agency—are zombie consumers?
The other issue has to do with enforcement of the various rules laid down by the CTP, which were seen by some CTP staff and stakeholders as being cumbersome. There seemed to be a suggestion that a task force should be formed of half a dozen or so agencies, including the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Department of Homeland Security.
Wouldn’t this be somewhat heavy handed? Whenever such issues arise, surely it is incumbent upon us to take a step back and ask, is enforcement really the problem? Is it time to increase penalties as some apparently suggest, or is it time to say that perhaps the rules are the problem? And, in this case, it seems to me that the rules are the problem, or rather that the problems arise because the rules are changed without warning and are therefore difficult to follow.
Overall, given such circumstances, I cannot see how this report will help smokers, even indirectly. The problem lies in the CTP’s policies. If you improve the way that you implement bad policies, you are still left with bad policies.
Where does innovation in the tobacco and nicotine field come from? Is it the far-sighted senior executive assessing the needs of the evolving market and committing R&D budgets to realize the corporate vision? Or is it the genius scientists and engineers toiling 24/7 in the labs to invent the wonder product that will become The Next Big Thing?
Both are caricatures, of course, but neither explains how innovation really works.
In his brilliant book, How Innovation Works, author Matt Ridley points out that “Innovation is not an individual phenomenon but a collective, incremental and messy network phenomenon.” For those involved, I would say it is more like surfing while juggling than a straightforward path from idea to implementation. To see why, let’s look at five types of innovation in the tobacco and nicotine market.
First, disruptive innovation. The most prominent recent case of disruptive innovation in the tobacco and nicotine field is the rise of electrical heating as an alternative to tobacco combustion to create an inhalable nicotine-bearing aerosol. Though the Chinese inventor Hon Lik is usually credited with inventing the e-cigarette, the truly disruptive innovation came before and from outside the tobacco and nicotine industry. It is what makes the e-cigarette and modern heated-tobacco products possible. The critical disruptive innovation was the lithium-ion battery. By the 2000s, battery technology had steadily progressed to achieve a sufficiently high power and energy density, allowing rapid heating and an adequately long life between recharges within a compact form factor. Developments in battery technology were driven by the demands of the giant and ultra-competitive markets for mobile devices like smartphones and tablets.
For decades, the intense heat, complex reactions and chemical cocktail generated by the combustion of tobacco leaf at 900 degrees Celsius in the burning coal of a cigarette were unmatched and unmatchable as a means of delivering nicotine to the lungs. The combination of electrically heated coil and e-liquid to generate an aerosol is now competitive. The disruption of the dominance of the cigarette, currently underway and likely to last two decades to three decades, is driven by a fundamental energy transition that degrades the advantage of combustion.
I refer to the second type as system innovation. This is the consequential economic, regulatory and public health reaction to the initial disruption and may involve hundreds of innovative responses. For example, the emergence of e-cigarettes triggered a creative response in the Stop Smoking Service in the city of Leicester, U.K. Under the leadership of its manager, Louise Ross, the service changed its practice to embrace vaping as a low-risk alternative to smoking that could appeal to many smokers who had previously been beyond the service’s reach. Through the power of example, that experience led to further innovation at the National Centre for Smoking Cessation and Training and with the government’s support to guidance on e-cigarettes issued by the National Health Service.
But this innovation did not happen linearly, driven only by personal inspiration. It is best seen as “emergent,” arising from a wide range of concurrent changes and influences triggered within the public health ecosystem. The disruptive innovation also led to system innovations in regulation, such as the 2014 European Union Tobacco Products Directive. In 2016, the U.S. Food and Drug Administration’s deeming rule brought vaping products into the definition of tobacco products and under the jurisdiction of the Tobacco Control Act. The initial disruptive innovation also led to innovation in the business models of tobacco companies, but also in the tactics of their traditional adversaries. Tobacco companies started moving their business toward a future in noncombustible nicotine products, and the anti-tobacco groups shifted their focus from preventing disease to fighting nicotine addiction.
For tobacco and nicotine companies, the disruptive innovation and the system responses it triggers are like a “big wave,” both prized and feared by top surfers. Like a wave, the companies didn’t create it and can’t control it, but their challenge is to catch it, ride it well and not wipe out. The case of Kodak and its destruction under the breaking wave of digital photography is probably the most cited case of an innovation wipeout. But it doesn’t have to be a technology shift. In the 1970s, deregulation in the aviation sector enabled the emergence of the innovative low-cost airline business model. It wasn’t long before major airline incumbents were going under as that big wave gathered pace.
The disruptive and systems innovations generate a changing paradigm: a big wave of opportunity or destruction that businesses must learn to surf. But why does innovation feel like juggling while surfing? The juggling reflects the frenetic activity of keeping a company moving, in financial balance and ahead of its rivals while it navigates a radically changing context. This brings us to three further types of innovation: the innovation occurring within the changing paradigm.
So, the third type of innovation is evolutionary. It resembles the Darwinist process of evolution in nature. Here, the consumer provides what evolutionary biologists call selection pressure, and innovation emerges from incremental improvement through trial and error, mirroring what biologists recognize as mutation and natural selection. It will usually be incremental, but its impact will not always be gradual. Evolutionary innovation can make radical inroads into a market by solving a particular problem or exploiting an opportunity.
A good example is pod-based vaping products using nicotine salts. Salts change how nicotine is absorbed in the airways and allow users to consume smaller volumes of higher strength liquids. The effect of the salts is to allow high-strength nicotine liquids to be used without undue harshness with a smaller battery and tank, enabling a compact and convenient device. This addressed the challenge of providing a convenient and discreet product with effective nicotine delivery. It was wildly successful—at least where regulators allowed it.
I have seen much handwringing about the recent rise of disposable vaping products. But this is another case of evolutionary innovation. The disposables solve the problem of finding a quick and convenient way into vaping for smokers in the early or tentative stages of switching away from smoking. They are simple to use, low cost and convenient. They don’t require an upfront investment in a device, so they lower the cost of consumer trial and experimentation. Like many innovations, these products have downsides, such as the waste generated. But this is manageable and must be set against the potential benefits and in context with other waste material flows.
The fourth type of innovation is adaptive. This is a variation of evolutionary innovation, but it arises in response to regulation. Ultimately, it is driven by meeting consumer preferences, but it is triggered by regulatory interventions that would otherwise compromise the consumer experience—ether by design or as an unintended consequence. One example is the mentholation cards that emerged after the European Union ban on menthol-flavored cigarettes. These are inserted into cigarette packs to infuse nonmenthol cigarettes with menthol flavor. Another case is the “shortfill” e-liquid containers that became popular as a workaround to overcome the European Union ban on e-liquid containers of more than 10 mL volume. Much larger containers of nicotine-free vaping liquid are sold only partially filled, allowing the nicotine to be added later—often from nicotine liquids stronger than permitted in the EU.
As the FDA imposed ever more burdensome regulation on nicotine vapes, small companies introduced synthetic nicotine products because the law confined FDA jurisdiction to nicotine derived from tobacco. This example also illustrates the arms race fought between adaptive innovators and responsive regulators. By March 2022, the FDA had prompted Congress to amend the Tobacco Control Act to apply to nicotine derived from any source, not just tobacco. Adaptive innovations can come with novel risks. For example, regulated bans on flavored e-liquids may lead to consumers adding food or aromatherapy flavoring agents not necessarily intended for vaping.
The fifth type of innovation is user-driven. The early vaping enthusiasts were hybrid producer-consumers, interacting on user forums with a strong problem-solving ethos and a hands-on approach to product design and construction. Users created innovations like “squonkers” or “squonk mods” to facilitate dripping, a niche style of vaping, by incorporating a flexible liquid bottle into the design of the vaping device. But the most impressive innovations from the user side have been social and community in nature. The vaping forums and vape meets created an elaborate technical and moral support infrastructure. This online community blossomed into vape shops as centers of expertise, personalization and encouragement. The vape shops are now de facto cutting-edge stop-smoking services but with a very different offer to the more clinical settings of traditional services. Even the biggest corporate beasts benefit and learn from user innovation. They should take care not to crush it.
Innovation is a fluid and dynamic business phenomenon with many simultaneously moving parts embedded in an unpredictably evolving, threatening or promising context. Surfing while juggling is hard and risky, but it is no longer a choice in the tobacco and nicotine business.
It was more adversity for the vapor industry as many companies are still waiting on PMTA results.
By VV Staff
The year 2022 was tough on the vaping industry. While several countries banned or began heavily regulating vaping products, the United States banning most premarket tobacco product applications (PMTAs) probably had the greatest impact on the industry. Industry analysts estimate that 50 percent to 60 percent of vaping-related businesses in the U.S. had closed by late 2022 after the Food and Drug Administration began issuing mass marketing denial orders (MDOs) for nearly all the 6.5 million PMTAs submitted by 500 companies in 2021.
Companies had until May 14 to submit a PMTA to the FDA to keep their synthetic nicotine products on the market. Companies that failed to secure authorization were supposed to pull their products from the market by July 13. However, the regulatory agency has been using some discretion in its enforcement of synthetic nicotine products as it continues to review both tobacco and nontobacco PMTAs.
One of the biggest stories of the year is the rise of R.J. Reynolds Vapor Co.’s Vuse e-cigarettes, which took over as U.S. market leader from Juul in 2022. Juul’s fall came after the FDA issued an MDO for Juul Labs’ PMTAs on June 23. On July 5, the FDA stayed the MDO, announcing that it would review the decision after determining “there are scientific issues unique to this application that warrant additional review.” By October, Vuse had expanded its market share lead over Juul to 12 percent in the Nielsen analysis of convenience store data.
January
Credit: Selen Geren
Thirty U.S. states plus the District of Columbia kick off the new year on Jan. 1 with taxes on vaping products. Filipino vapers appeal to Duterte to sign a bill that would legalize vaping. The U.S. Congress begins review the Clarifying Authority Over Nicotine Act of 2021—a bipartisan bill designed to give the FDA the authority to regulate synthetic nicotine products just as it regulates nicotine products made or derived from tobacco. South Africa begins considering taxes on hardware and e-liquids, with high-nicotine products getting higher rates. Malaysia postpones implementing a tax that would have more than doubled the retail prices of e-liquid bottles for open systems. FEELM Air launches in the U.K.
February
Credit: Timon
Triton Distribution makes opening arguments in its battle with the FDA over how the regulatory agency conducted its PMTA reviews. A court of appeals stays Bidi Vapor’s MDO. Judges grant stays to Diamond Vapor, Johnny Copper and Vapor Unlimited in MDO lawsuits. The U.S. Senate confirms FDA Commissioner Robert Califf. Philip Morris International announces its plans to bypass an import ban by manufacturing IQOS in U.S. The FDA posts its first warning letter for vaping hardware products. The letter is issued to China-based Sigelei Vapor for two coil brands. The U.S. International Trade Commission (ITC) issues a general exclusion order that bans the importation of any unauthorized cartridges compatible with the Juul vaping system that infringe Juul Labs’ patents. The FDA submits its proposal to ban menthol to the Office of Management and Budget for review.
March
Credit: V. Chalup
The Swedish government proposes a ban on nontobacco-flavored vaping devices, including menthol. The National Youth Tobacco Survey (NYTS) 2021 finds youth cigarette smoking rates in the U.S. at historically low levels, with just 1.9 percent of high school students reporting current use of cigarettes. U.S. President Joe Biden signs a bill giving the FDA power over synthetic nicotine. Companies have 60 days to file PMTAs. China announces e-cigarette regulations, including flavor bans and compliance of all products produced for export with the regulations and laws in the destination country. If a country does not regulate e-cigarettes, China’s rules for vaping products would apply to those exports, including bans on flavors and synthetic nicotine. Myth of a gateway from vaping to smoking is debunked … again. FDA issues marketing orders to eight Logic brand vaping products.
April
Credit: Jarretera
Mitch Zeller retires as director of the FDA’s Center for Tobacco Products (CTP). Vuse surpassed Juul to become the No. 1 e-cigarette brand in the U.S., according to Nielsen. Smoore International, the largest vaping company in the world, reports 2021 annual revenue of $2.16 billion. Canada proposes the first federal nicotine-only vape tax. China releases its rules listing the requirements for design, chemical compounds and the mechanics for manufacturing e-cigarettes. New York Stock Exchange rules force RLX Technology co-founder Kate Wang to resign from RLX committees. Fontem Ventures, a subsidiary of Imperial Brands, receives an MDO for its MyBlu products. Judge orders the FDA to give PMTA updates every 90 days for products with at least a 2 percent market share. Juul begins settling marketing lawsuits with several states. Hong Kong’s ban on vaping products makes it illegal to use or carry an activated vaping device in no-smoking areas. The FDA publishes rules for the menthol ban. Several Njoy vaping products receive marketing orders.
May
For the first time, the FDA issues warning letters for marketing products containing delta-8 THC. Several R.J. Reynolds Vapor Co. Vuse branded e-cigarette products receive marketing orders, including six new tobacco products, through the PMTA pathway. The San Diego City Council passes an ordinance for the second time banning vape flavors, and it’s effective Jan. 1, 2023. In its first status report, the FDA states that it expects to have resolved 63 percent of PMTAs set out in its original priority by June 30. Altria Client Services pays $100.5 million for assets and properties used in Poda Holdings’ business of developing, manufacturing and marketing multi-substrate heated capsule technology. FEELM wins four Red Dot Awards, an international competition for product, communication and concept design. Longtime Centers for Disease Control and Prevention alumnus Brian King succeeds Mitch Zeller at the FDA’s Center for Tobacco Products (CTP).
June
Credit: Premium Collection
Mexico bans all vaping and heated-tobacco products. Mexican President Andres Manuel Lopez Obrador signs a decree that outlaws the sale of e-cigarettes in line with continuing the government’s ongoing anti-vaping policy. Heated-tobacco products are not exempt from the ban as previously reported that they would. Njoy Daily disposables get marketing orders; however, the FDA issued MDOs to Njoy for multiple other flavored Daily e-cigarette products. A study finds e-cigarette or vaping product use-associated lung injury (EVALI) and Covid-19 boosted misinformation on vaping. A federal court jury finds R.J. Reynolds’ Vuse Solo and Alto devices infringe two Philip Morris patents. Zinwi is among the first to get a green light to produce e-liquids under China’s new regulatory framework. Juul receives an MDO, which is subsequently stayed in court. The FDA places Juul’s application back under review. EU lawmakers propose a flavor ban for heated-tobacco products.
July
PMI opens its flagship IQOS store in South Africa. Confronted with rising prices for batteries, engineers in Ukraine begin using power cells from vapes to power drones. A U.S. administrative tribunal invalidates two claims in an R.J. Reynolds vaping patent. Panama bans the sale and import of vapes, joining more than a dozen Latin American and Caribbean countries with such restrictions. Brazil also maintains its ban on vaping products. The FDA issues first warning letters for synthetic products. Juul Labs begins exploring financing options to avoid bankruptcy. Juul quarterly revenues drop 23 percent. FDA Commissioner Robert Califf says the nonprofit Reagan-Udall Foundation—a nongovernmental research group created by Congress to support the FDA’s work—will convene experts to evaluate the CTP within 60 business days. Matt Holman, the director of the CTP’s Office of Science, announces he is stepping down. Altria reduces the value of its investment in Juul Labs to $1.3 billion, a nearly 70 percent loss of its original $12.8 billion evaluation. The Philippine president allows a bill that legalizes e-cigarettes to lapse into law.
August
Credit: Savvapanf Photo
CTP Director Brian King states that the agency is “making significant progress” in reviewing synthetic nicotine applications. Chinese car maker BYD gets a vape production permit and its stock price soars. Monroe County becomes the first in New York state to accept e-cigarettes and e-liquids for safe disposal. VPR Brands receives an FDA warning letter for its nicotine gummies. FEELM, one of the largest and most influential e-cigarette brands, earns its production license in China. The U.S. Court of Appeals for the Eleventh Circuit grants petitions for review filed by Bidi Vapor, Diamond Vapor and four other companies challenging the FDA’s rejection of their e-cigarette applications in a 2-1 decision. Great Britain reports record levels of vaping in a report that found 2.4 million vapers are ex-smokers. Vuse’s market grows from 37.4 percent to 39 percent, with Juul declining from 30.7 percent to 29.4 percent. A U.S. appeals court denies a petition to review the FDA’s marketing denial order to Illinois-based e-liquid manufacturer Gripum.
September
Credit: Kristina Blokhin
Juul Labs agrees to pay nearly $440 million to settle a two-year investigation by 33 U.S. states into the marketing of its vaping products, which critics have blamed for sparking a surge in underage vaping. A jury in the U.S. District Court for the Middle District of North Carolina awards Altria Client Services more than $95 million after finding that Reynolds Vapor Co.’s Vuse Alto e-vapor product infringes three Altria patents. The FDA states it sent more than 44 warning letters to manufacturers and over 300 warning letters to retailers for violations relating to nontobacco nicotine. Alaska’s governor vetoes an age-to-vape bill because it also included the implementation of a tax on e-cigarettes. Nicaragua bans the import of e-cigarette products. Altria Group exercises its option to be released from its noncompete deal with Juul Labs. Maine backs out of a Juul settlement claiming it would cancel out school district suits.
October
Credit: Charlottes Web
The Colorado Supreme Court rules that the Colorado attorney general’s office’s lawsuit against electronic cigarette manufacturer Juul Labs cannot include four of the company’s executives. The FDA announces that as of Oct. 7, it has issued refuse to accept (RTA) letters for more than 889,000 synthetic nicotine product applications that did not meet the criteria for acceptance. Magellan CEO Jon Glauser says the FDA acknowledged in writing that it had “erred in failing to inform the company” about its MDOs before announcing the move publicly. An analysis suggests that over 90 percent of FDA warning letters were sent to small online retailers. For the first time, the U.S. Department of Justice files requests for permanent injunctions in federal district courts against six e-cigarette manufacturers on behalf of the FDA. Charlotte’s Web signs the first CBD licensing deal with Major League Baseball. A health regulatory body for Mexico’s government says its scientists have developed a new methodology to analyze the aerosols in electronic nicotine-delivery systems because “no one else has come up with one.” PMI reaches a deal with Altria Group to pay nearly $2.7 billion for exclusive U.S. commercialization rights to IQOS. FDA staff comments for the Reagan-Udall assessment of the performance of the CTP suggest the regulatory agency is in a state of disarray and being influenced by outside forces not scientific research. The FDA issues its first menthol MDOs for the Logic Pro Menthol E-Liquid Package and the Logic Power Menthol E-Liquid Package.
November
Credit: Vege Fox
China’s Ministry of Finance imposes a consumption tax on e-cigarettes sold in China from Nov. 1. China bans celebrities from endorsing vaping products. Logic is granted a temporary stay of the FDA’s menthol MDO. The EU publishes a directive officially banning flavors in heated-tobacco products throughout the union. Magellan sues the FDA and the U.S. Department of Health and Human Services, claiming the agencies violated the Administrative Procedure Act in the PMTA reviews. Maryland and Missouri become the 20th and 21st states to legalize marijuana for adult recreational use, but cannabis reform efforts meet defeat in Arkansas, North Dakota and South Dakota. Vuse’s market share rises from 40 percent in the previous report to 40.4 percent compared with Juul declining from 28 percent to 27.6 percent in Nielson’s four-week period ending Nov. 5. The European Union proposes a bloc-wide vaping tax policy as part of a shake-up of levies on the tobacco industry.
December
Credit: Sharaf Maksumov
Macau’s blanket ban on vaping products goes into effect. The rules prevent people from carrying e-cigarettes across the border with fines up to mop20,000 ($2,505). The Netherlands bans all e-cigarette flavors except tobacco effective Oct. 1, 2023. U.S. President Joe Biden officially signs the first piece of standalone federal cannabis reform. The Marijuana and Cannabidiol Research Expansion Act is aimed at providing federal support to facilitate research of cannabis and its potential health benefits. Juul Labs settles more than 5,000 lawsuits covering more than 10,000 individual plaintiffs. Financial terms of the deal were not disclosed. Costa Rica for the first time gives a company authorization to grow and process hemp. Canada’s Minister of Mental Health and Addictions and Associate Minister of Health released a report finding that vaping products offer the 3.8 million Canadians who smoke a less harmful source of nicotine than tobacco products, and do help people to stop smoking. The Reagan-Udall Foundation submitted its recommendations to the commissioner of the FDA. The report concludes that vaping industry stakeholders observed a lack of “consistent implementation” of what the industry understood to be the policies of the Center for Tobacco Products (CTP), particularly with respect to tobacco harm reduction and the requirements needed to navigate the PMTA process. A separate investigation, conducted by the U.S. Office of Special Counsel (OSC) after a whistleblower complaint, found the CTP had relaxed its standards of review for certain tobacco products and stifled attempts by its scientists to raise concerns.
Looking ahead
It’s impossible to predict what the vaping industry will look like by the end of 2023. The U.S. will probably see a decline in product variety because the FDA is unlikely to approve many devices. However, globally, especially in the EU and the U.K., the industry should continue to thrive and expand, according to industry analysts. More importantly, innovation should continue to thrive outside the U.S.
Gregory Conley, director of legislative and external affairs for the American Vapor Manufacturers Association, said the global fight for fair and sensible regulation of vaping products will continue throughout 2023. “Regrettably, just like years prior, some battles will be lost, and the end result will be fewer adults who smoke fully switching to vaping,” he said. “However, the silver lining is that—as we see today in Australia and Thailand—even prohibitions with criminal sanctions are not enough to stop illicit markets from popping up. This industry will never be able to stop every attempt at prohibition, but it can continue to document and expose how black markets follow whenever these bans are implemented.”
On the U.S. state level, Conley said his major concern is PMTA registry bills being put forth by the tobacco industry. He explained that these bills would devastate law-abiding vape shops and smoke shops by banning any vaping product that does not have a PMTA granted or explicit enforcement discretion from the FDA. “This means that synthetic nicotine, nicotine-free [products] and CBD/delta products would all become illegal to sell,” said Conley.
Nationally in the U.S., Conley said the FDA’s policy on vaping products in 2023 is likely to still be characterized by regulatory paralysis and the eternal search for the least politically controversial regulatory option. “Despite declines in youth vaping and the admonishment of federal judges, leadership at FDA remains steadfastly committed to having more combustible cigarettes on the market than vaping products,” he said. “On the plus side, the pace of FDA review has been slow to say the least, so we won’t hear rulings on many applications until 2024 or later.”
Smoore is the manufacturer of several vaping products that have survived strict government scrutiny.
By Timothy S. Donahue
The U.S. premarket tobacco product application (PMTA) process is one of the world’s most rigorous regulatory pathways to market for nicotine products. Out of nearly 7 million applications, only 23 e-cigarette-style products have been approved for marketing by the Food and Drug Administration. Most of the approved products have been manufactured by a single company.
Smoore International Holdings, through its subsidiary, Shenzhen Smoore Technology, manufactures the Njoy Ace, Njoy Daily, Logic Power and Logic Pro devices. The Njoy Ace is the most technologically advanced vaping product to receive marketing approval in the U.S. It is the first e-cigarette authorized by the FDA that is equipped with ceramic coils that are manufactured by FEELM, the atomization brand owned by Smoore Technology. The Ace marketing orders mark the first approval by the FDA of a pod-style vaping product.
Garnering the marketing orders required plenty of forethought and investment from Smoore. Based on PMTA requirements, Smoore established a comprehensive analytical testing and safety assessment system, including the vaping industry’s first corporate toxicology laboratory, which explores the health impacts of exposure to e-cigarette vapor by means of cytotoxicity tests. These test the reaction of living cells to different components of e-cigarette vapor. The company has also developed the third generation of in-house safety standards, Smoore 3.0, which covers all of the necessary PMTA tests, including testing for harmful and potentially harmful constituents.
In a conversation with Tobacco Reporter, FEELM Marketing Director Sofia Luo attributed the success of Smoore products in the regulatory process to the company’s detailed and lengthy research and development process, which includes a rigorous testing and safety assessment system.
“FEELM ceramic coils have more than seven years of research and development. It is the first black ceramic atomization coil that presents high harm reduction performance in the electronic atomization industry. It provides more flavor than a cotton coil,” Luo said. “’FEELM Inside’s technology has also been upgraded and optimized continuously since its debut. We believe that only innovation from bottom to top can lead to industry breakthroughs and allow us to provide outstanding products for our clients.”
Because of their innovative atomization technology, FEELM coils significantly increase Smoore clients’ chances of garnering an FDA marketing order and meeting China’s e-cigarette standard. Currently, the top four Chinese e-cigarette brands with the highest production quotas (amounting to 80 percent of the total) are partnered with the FEELM brand.
A quality coil is a much-needed component for generating flavor in vaping products. Looking at the current regulatory landscape, tobacco will likely remain the dominating flavor in both the U.S and China. Tobacco taste-only policies could also impact other regions. According to Luo, Smoore has upgraded its ceramic coils, which can be specifically tailored toward tobacco flavors.
“To comply with the Chinese national standard for e-cigs released this year, domestic brands use materials directly extracted from tobacco for e-liquid production, making it harder for coil manufacturers to produce a suitable device,” explains Luo. “We developed a comprehensive technology solution [that helps Smoore’s] Chinese and overseas clients to study [and develop new innovations] and produce better e-cigarette products. This continuous innovation is the foundation for the advancement of Smoore and the rapid development of the e-cigarette industry.”
Innovation is important for the industry. Smoore has been a frontrunner in innovation and has applied for 4,300 global patents. The company must also be diligent in protecting its intellectual property. Last October, Smoore filed a complaint under the U.S. Tariff Act accusing 38 American and Canadian companies and individuals of infringing on three of its patents and one of its trademarks. As of April 20, 17 of the 38 defendant companies had signed consent letters or settlement agreements.
To stay ahead in innovation, Smoore has recruited over 1,500 R&D experts, accounting for more than 40 percent of its total staff. The company has applied for more than 500 vaping-related heating patents. Recently, Smoore launched the FEELM Max, the world’s first ceramic coil disposable pod solution. The ceramic coil allows for a higher level of safety and harm reduction compared to previous devices.
Smoore presented its FEELM Max disposable technology solution at the Indonesia Electronic Atomization Exhibition (IECIE 2022), which took place at the Jakarta International Convention and Exhibition Center in late October. Speaking at the exhibition, Smoore Vice President Clayton Shen highlighted the importance of technological innovation in driving progress in the vaping industry.
During his presentation, Shen explained that the closed system is the fastest-growing category in the next-generation tobacco market and will claim a significant market share over time. According to Smoore, ceramic coils solve longstanding coil challenges such as leaking liquid and a burnt taste. FEELM’s ceramic coils, said Shen, are used by many of the leading vapor product manufacturers, such as Relx and Njoy.
Founded in 2009, Smoore was one of the first companies to join the e-cigarette industry and later became China’s first billion-dollar vapor company. Smoore International Holdings, parent to Shenzhen Smoore Technology, is also the first vapor company to be listed on the Stock Exchange of Hong Kong. Globally, Smoore is considered one of the most valuable vapor industry manufacturers. According to Frost and Sullivan, Smoore is No. 1 in the global vaping device market with a 22.8 percent market share in 2021.
Smoore is parent to Vaporesso and FEELM, two vaping brands that have gained global recognition for their innovative products. Vaporesso is an open system product brand created in 2015 and is “dedicated to establishing a smoke-free world while raising the quality of life for its users,” according to Luo. “Based on its continuous innovation, strict quality control and substantial commitment, Vaporesso creates products that can fit all levels and styles of vapers.”
FEELM is a closed system technology brand that has been devoted to providing comprehensive atomization technology for global tobacco giants and independent e-cigarette brands, according to Luo, adding that FEELM manufactures FEELM Inside and FEELM Air, the latest in closed pod systems, and FEELM Max, a disposable system.
“This year, FEELM has started to bring the advanced technology of ceramic coils to the field of disposable vapes, hoping to bring our consumers of disposable products the same atomizing experiences as a closed pod system. Compared to other disposable products, FEELM presents a better performance on safety and harm reduction,” Luo said. “Developing and upgrading atomization technology to better optimize the user experience has been a goal, and we wanted to support our clients in launching disposable vapes with ceramic coils in the global market rapidly. This has provided end consumers with more choices.”
When Smoore International announced its financial results for 2021, it reported annual revenues of rmb13.75 billion ($2.16 billion), representing a year-on-year increase of approximately 37.4 percent. The company credited its FEELM brand and its innovative vaping solutions for its growing success. “The driving force of the atomization industry is technological innovations, which brings fundamental breakthroughs in product safety and flavor reproduction,” said Smoore board chairman Chen Zhiping at the time.
In its effort to provide consumers more choices in harm reduction products, Smoore has now launched Metex, its heat-not-burn division. The company’s goal is to create a new heating technology R&D platform “that connects the present and the future, balancing the beauty of technology and life,” according to the Metex website. Metex aims to provide its business partners with one-stop supply chain solutions, from core heating technology research to product development and final production.
While Smoore began as an e-cigarette company, the company increasingly views itself as a technology company. Recently, it changed its email address from @smoorecig to @smooretech to better reflect the company’s growing goals. Luo said that changing the email suffix was a way to “better convey our technology” concept to the public, and at least 10 percent of the company’s profits every year are reinvested into its science and technology components, including Smoore’s 14 research institutes that the company has established around the world.
Smoore is growing rapidly. The company expects the e-cigarette market to continue growing at a significant stride over the next five years. Industry experts say product innovation, too, is going to continue at a rapid pace. Luo said that smoking alternatives are becoming increasingly popular worldwide as more consumers and governments realize the significance of e-cigarettes in supporting harm reduction. Improvements in the manufacturing process, she says, will help increase the options for consumers, and manufacturers will inevitably move from semiautomated production lines toward fully automated production lines.
“Regarding the technical development in the overall e-cigarette market, we believe that improving safety, taste optimization and improving the efficiency of nicotine delivery are the major trends in the future. We also are conducting in-depth research on these important technologies internally,” Luo said. “As for the device development trend, we believe that consumers prefer to purchase environmentally friendly and carbon-reducing products as we move toward the future. Consumers need more diversified choices.”
Smoore’s new FEELM Max disposable pod line includes products featuring concepts that help minimize environmental concerns, according to the company. FEELM also published its Carbon Neutral Plan, and the company is committed to implementing increasingly high sustainability standards into its business strategy. “We are moving toward carbon neutrality,” Luo said. “It’s part of [our] strategic plan moving forward.”
With atomization technology being the foundation for Smoore, the company is looking toward more diversification over the next five years and growing outside the vaping industry. Luo said that the company is increasing its research and development investments for atomization improvements in the medical and beauty/cosmetics industries, for example.
“In addition to vaping products, Smoore is committed to integrating atomization technology into more industries, distributing these technologies to other industries,” Luo said. “Our medical atomization and beauty atomization products are now being tested. After their launch, they will broaden the business categories of Smoore and increase the scope of our clients. We are very excited about enhancing our future development through multiple driving incentives and wider roads. And we firmly believe that atomization makes life better.”
Chinese e-cigarette manufacturers are expanding into Indonesia to better serve markets.
By Yutong Song and Alan Zhao
China’s rules for the vaping industry are stringent. They do, however, allow leniency for most exports. There is one rule, though, that can make shipping product to some countries nearly impossible: China’s regulations state that all products produced for export must comply with the regulations and laws in the destination country, according to 2FIRSTS, a vaping industry vertical media firm. If a country does not regulate e-cigarettes, China’s rules for vaping products would apply to those exports, including bans on flavors and synthetic nicotine.
To better serve countries that have not yet created regulations for electronic nicotine-delivery system products, manufacturers are opening factories outside of China. Many of those companies are moving into Indonesia where there are more than 70 million combustible cigarette smokers. The preference of Chinese manufacturers for Indonesia is also evident from a set of recent news headlines:
“Jinjia Group’s manufacturing base in Indonesia to provide integrated e-cigarette services.”
“Smoore Technology Indonesia (STI), a subsidiary of one of the largest e-cigarette manufacturers, has invested $80 million to establish e-cigarette factories in Indonesia.”
“The Indonesian factory of Zhijing Precision, an e-cigarette assembly supplier, is to be operational by 2022.”
The cost factors, such as land and labor, make Indonesia the first choice for e-cigarette companies setting up abroad, but the country has more to offer. Garindra Kartasasmita, secretary general of the Indonesian Vapor Entrepreneurs Association, mentioned in his keynote speech at the IECIE Vape Show that the Indonesian vaping market has been growing since 2013, with an annual rate of 50 percent except for the year 2021, when it shrank by 7 percent due to the Covid-19 pandemic. It is expected to rebound to 50 percent growth in 2022.
Integration of Production and Sales
Indonesia is ripe for helping to grow vaping businesses and boost the harm reduction potential of vaping products. One major advantage of moving e-cigarette production into Indonesia is the ease of integration and sales offered by the country’s large population. With 280 million people, Indonesia is the world’s fourth most populous country, accounting for 40 percent of all people in Southeast Asia. Moreover, Indonesia has 70.2 million smokers, which translates into a smoking rate of 34 percent.
The presence of so many nicotine consumers means e-cigarettes produced in Indonesia could also be sold domestically. Indonesia’s regulatory environment is conducive to the marketing of nicotine products that present lower risks than combustible cigarettes. Indonesia is the only country in Southeast Asia that allows tobacco advertising on television and in the media. It also has a place for e-cigarette bloggers and cross-category blogging, such as beauty and skin care. Indonesia has the second-highest number of posts on Instagram sharing vaping and related devices among all countries.
E-cigarette brands can be imported and sold in Indonesia only if they are recommended by the country’s National Agency of Drug and Food Control (part of the Ministry of Health) and the Ministry of Industry. Additionally, the products must be certified by the Indonesian National Standard. The policies are a positive for Chinese e-cigarette manufacturers.
Commenting on Smoore’s plant in Indonesia, Bahlil Lahadalia, Indonesia’s investment minister and director of the Investment Coordinating Board, publicly stated, “We need cooperation, we need jobs, we need opportunities that will make our brothers owners of our country.” And Clayton Shen, president of Smoore Indonesia, expressed his gratitude for the support of the Indonesian government, including the tariff-free incentives granted by the Ministry of Investment for the company’s much-needed machinery that needed to be imported.
Challenges Ahead
There are some challenges in the Indonesian market, however. Although the Indonesian market represents a large pie for Chinese manufacturers, it is not easy to navigate the market. A well-known Chinese e-cigarette manufacturer intending to build a factory in Indonesia revealed to 2FIRSTS that logistics is a problem for manufacturers, and currently no good solution is available.
For example, if the end products are filled and assembled in China and then sent to Indonesia, the amount of time the products could be held at customs is unpredictable. “I had a batch of goods that arrived at customs the end of last month, but they are still in customs as of the 20th of this month,” the manufacturer said. “If it was assembled in Indonesia and sent from the Indonesian factory, the time difference in delivery is not much different from if it were delivered from China.”
There is also a lack of e-cigarette machinery. Another vaping product manufacturer told 2FIRSTS that “there’s a critical lack of tools and machinery to keep pace with the production lines. Should factories be built here, machinery must be transported from China, which is a critical problem to tackle. It’s a misconception that the only shortage we would face is raw materials.”
Credit: Donvictori0
There is also a “workers’ gap” that can often create staff training and production concerns. In addition to overcoming cultural and geographical challenges when training local workers, it’s difficult to have the workers adapt to the Chinese style of work, which is very dedicated and focused on teamwork. An insider told 2FIRSTS that some workers have a “casual attitude to being late.” He said that he had to create numerous incentives to discourage employees from being late for work and/or going home early. “This is very different from the Chinese work habits,” he said.
Migration or Spillover
Shenzhen is considered the vaping capital of the world. Located just north of Hong Kong, the city designs and manufactures an estimated 90 percent of the world’s vaping and e-cigarette devices. There are more than 1,000 factories and thousands of support companies that form the supply chain throughout Guangdong Province and the rest of China.
A joint report from the E-Cigarette Professional Committee of the China Electronics Chamber of Commerce and 2FIRSTS anticipates the global e-cigarette market to grow by 35 percent in 2022. The total market is expected to exceed $108 billion. In 2021, China’s total e-cigarette exports were $19.8 billion and were expected to reach $26.7 billion in 2022. The expansion of China’s e-cigarette industry from Shenzhen to Indonesia can more accurately be described as “spillover” rather than “migration.”
Just because Shenzhen’s e-cigarette manufacturing hub status is unshakable in the short term does not mean that the global manufacturing layout is cast in stone. In fact, over the past five years, the country’s e-cigarette industry has spilled from the city into China’s Greater Bay Area. We have seen spillover from Shajing of the Bao’an District of Shenzhen to the Dongguan area and in between.
This spillover has not affected the development of China’s electronic cigarette industry, however. During the same time, there was also a period of rapid industrial growth and improvements on the supply chain side of the industry.
In a recent interview, 2FIRSTS co-founder and Chief Operating Officer Echo Guo said that years of development not only granted the Bao’an District of Shenzhen a number of e-cigarette enterprises but also brought together supporting supply chains, including industrial design, molds, batteries and other essential needs for manufacturing vaping products. “Here to there is a ‘two-hour traffic circle’ within the whole e-cigarette industry, with all of its subbranches cooperating closely,” said Guo. “Even when the manufacturers and customers exchange new ideas, it would take less than two hours to get a prototype ready.”
The spillover of China’s e-cigarette industry to Indonesia can also be seen as the absorption and utilization of manufacturing resources by China’s e-cigarette industry, which has broken the boundary of China’s Greater Bay Area and extended to a broader region of the Asia-Pacific. The entire region will now have the opportunity to create greater economic success through the growth of the e-cigarette and vaping industry.
The IQOS heat-not-burn brand remains one of the most popular products in the category.
By Norm Bour
For those who have been in the nicotine industry for more than a few years, the IQOS saga is an amazing story of the ups and downs and volatility of the vapor market. If there is a real-life example of a “killer app,” IQOS changed the direction of vaping and introduced the concept of “heat-not-burn.”
First launched in Italy and Japan in 2016, IQOS was initially shot down by the U.S. Food and Drug Administration, which has been the regulatory agency’s tendency since it received the authority to regulate vaping products. Since the FDA started soliciting and accepting premarket tobacco product applications, a long and arduous approval process, it has approved just a handful of products and cost the industry hundreds of millions of dollars and countless hours of legal work and accounting.
IQOS didn’t find the process any easier.
Owned by Philip Morris International, which has billions of dollars to spend on new technologies and employs who knows how many well-connected lobbyists, none of that made a difference. Since the company has an international footprint, PMI could focus on greener pastures and jurisdictions with less challenging regulations, so the company put its efforts on “testing” IQOS outside the U.S., where it was generally well received.
PMI built its first factory in Italy, and after the initial tests in Italy and Japan proved successful, it introduced IQOS in the U.K. Over the years, PMI has partnered with several international companies and marketed IQOS under a variety of names. However, the U.S. market proved to be more challenging.
In 2020, however, the FDA agreed that IQOS “significantly reduces exposure to harmful or potentially harmful chemicals,” and PMI launched the product in the U.S. that year. After launching IQOS in a handful of states and gaining a single-digit share of the overall market, PMI suddenly found the door slammed shut on IQOS by a copyright infringement claim by BAT, the U.K.-based parent company of Reynolds American Inc (RAI).
In September 2021, the International Trade Commission (ITC) upheld an initial determination from May 2021 that IQOS infringed on two RAI patents. The ITC barred PMI’s then-partner, Altria Group, from importing PMI’s IQOS 2.4, IQOS 3 and IQOS 3 Duo products into the U.S.
Following the ITC ruling, PMI stated, “At the present time, we do not expect to have access to IQOS devices or Marlboro HeatSticks in 2022. However, we remain focused on returning IQOS to the market as soon as possible. Our teams are actively working on reentry plans, and we expect to be ready to bring IQOS back to U.S. consumers when available.”
In order to get its tobacco-heating device back on U.S. store shelves, in early 2022 PMI announced its plans to manufacture IQOS in the United States. In October 2022, PMI agreed to pay Altria Group approximately $2.7 billion for the exclusive U.S. commercialization rights to the IQOS tobacco-heating system effective April 20, 2024.
“We remain committed to creating long-term value through our vision,” said Altria CEO Billy Gifford in a statement. “We believe that this agreement provides us with fair compensation and greater flexibility to allocate resources toward ‘moving beyond smoking.’”
In an interview with Bloomberg, PMI CEO Jacek Olczak said the company had planned to manufacture IQOS in the U.S. all along. “From the very beginning of us going to the FDA, we had in mind that IQOS would one day not only be sold in the U.S. but manufactured there, if you take into consideration the size of the market and the opportunity for IQOS,” he said. “It’s just happening sooner because of the ITC decision.”
In July 2020, the FDA authorized PMI and Altria to market IQOS with certain modified-exposure claims, giving the company a leg up over its rivals. PMI has not specified where it will be manufacturing IQOS but said it plans to sell IQOS in the U.S. again in the first half of 2023.
Meanwhile, overseas, specifically in Europe, IQOS stores are some of the most beautifully designed tobacco shops in the world. The products are available in 68 international markets, and PMI claims that “13.5 million adult smokers have made the switch from tobacco.”
PMI’s heated-tobacco products (HTPs) have been launched in key cities in Albania, Andorra, Armenia, Aruba, Austria, Bahrain, Bosnia and Herzegovina, Bulgaria, Canada, Canary Islands, Colombia, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Dominican Republic, Egypt, Estonia, France, Georgia, Germany, Greece, Guatemala, Hungary, Iceland, Italy, Israel, Japan, Jordan, Kazakhstan, Korea, Kuwait, Kyrgyzstan, Lebanon, Latvia, Lithuania, Malaysia, the Maldives, Mexico, Moldova, Monaco, Montenegro, Morocco, the Netherlands, New Zealand, North Macedonia, Norway, Palestine, the Philippines, Poland, Portugal, Reunion, Romania, Saudi Arabia, Serbia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Tunisia, the United Arab Emirates, the United Kingdom, Uzbekistan, and in some duty-free shops.
PMI has marketed several HTPs under its IQOS brand, and the most popular versions today use “blade heating technology,” a proprietary system for its HEETS, or HeatSticks. That overall methodology encompasses several versions of IQOS.
The latest generation of IQOS, ILUMA, was released in 2021 and uses induction to heat the tobacco instead of the blade technology and requires no cleaning. These devices use specific heated-tobacco units called Terea Smartcore Sticks.
In 2022, PMI launched Bonds by IQOS, along with its compatible tobacco sticks, Blends, in a pilot market in the Philippines. The company intends to further commercialize the product into 2023. Equipped with “bladeless” resistive external heating technology, Bond emits 95 percent less harmful chemicals compared to cigarettes, according to PMI.
“Bonds by IQOS represents another step forward in our ambition to replace cigarettes with innovative, science-based, smoke-free alternatives,” said Olczak. “We know that no single smoke-free product will appeal to all adult smokers. Providing a range of alternatives to continued smoking—with a variety of taste, technology, usage and price options—is imperative and helps us to address a range of preferences as diverse as adult smokers themselves—ultimately encouraging them to leave cigarettes behind.”
PMI’s ambition is that by 2025 at least 40 million PMI cigarette smokers who would otherwise continue to smoke will have switched to smoke-free products. Furthermore, the company’s aim is that more than half of its net revenues will come from smoke-free products by 2025.
In 2018, IQOS opened its first “boutique store” in one of the most fashionable, popular areas of Sofia, Bulgaria.
“I’ve been here since we opened, and it was a madhouse back then,” said the store manager, who asked to remain unnamed. “Many smokers, and even nonsmokers, had heard about the innovative smoking products and were looking for ways to quit smoking. Here in Bulgaria, we have the worse percentage of smokers in all of Europe, and even though it’s dropped, the numbers are between 30 [percent and] 40 percent depending upon age segmentation.
“Even now, four years later, many tourists visiting this area are shocked to find a store like this. Most of them are current or past smokers and are used to seeing small, ugly tobacco shops, so seeing such a classy place as this excites them.”
In November 2002, PMI launched its IQOS Iluma Prime at Dubai Duty Free. The appearance of IQOS Iluma Prime in Dubai International Airport terminals 1 and 3 follows the initial market launch in Japan and Switzerland duty-free in 2021.
“The launch of the IQOS Iluma Prime, our most refined and advanced device yet, in Dubai Duty Free further demonstrates our constant commitment to delight our legal-age consumers in travel retail with our most premium and stylish product range,” PMI vice president of Duty Free Edvinas Katilius said during the Dubai opening.
The electronic nicotine-delivery systems road is a rocky one, and it is difficult to predict what innovation may be around the next corner. For IQOS, however, market growth is on the horizon.
Norm Bour is the founder of VapeMentors and works with vape businesses worldwide. He can be reached at norm@VapeMentors.com.
Kim Hesse shares her insights into the comparatively new field of testing ENDS products.
By Timothy S. Donahue
In late October, a health regulatory body in Mexico said its scientists had developed a new methodology to analyze the aerosols in electronic nicotine-delivery systems (ENDS) because “no one else has come up with one.” Cofepris chief Alejandro Svarch said that the final results of a new analysis of ENDS products using the new method will be published in scientific journals in the coming months. Svarch added that the “pioneering methodology” developed in Mexico will be of interest to health authorities in other countries.
The situation is puzzling at best since researchers have had the ability to evaluate aerosols in ENDS products for some time. Additionally, the sale of ENDS products was banned in Mexico in June. This led to many in the vaping industry to wonder how the nation could justify an ENDS ban when it now claims it had no ability to test the safety of the products.
Every country that regulates vaping products requires that the products be tested for various elements, such as harmful and potentially harmful constituents (HPHCs) and heavy metals. According to Kim Hesse, vice president of sales and marketing for McKinney Regulatory Science Advisors, researchers have used aerosol testing methodologies to evaluate air quality, combustible cigarette smoke and inhaled medical product aerosols for many years, and ENDS aerosol testing has existed for nearly 15 years.
“This knowledge was then adapted to the ENDS industry. The earliest known third-party tobacco testing laboratory of ENDS products occurred in 2008 by one of the largest tobacco laboratories. Most other third-party labs began testing no later than 2015,” explained Hesse. “Coresta [Cooperation Centre for Scientific Research Relative to Tobacco, an organization that promotes international cooperation in scientific research relating to tobacco] has been working on validating methods for ENDS products for many years. The organization has validated method[s] for smoke collection and instrumentation while continuing to work on many more method needs for the ENDS category.”
Hesse said that it is important to test ENDS products to ensure the general public is not inhaling unacceptable levels of potentially harmful compounds (e.g., heavy metals or diacetyl). By testing these products, the industry can ensure consistency and provide regulators, such as the U.S. Food and Drug Administration and other government agencies, the data needed to evaluate ENDS products. She sat down with Vapor Voice to answer several questions related to ENDS testing.
Vapor Voice: What type of experience do you have in testing tobacco and ENDS products?
Hesse: We published several scientific articles that demonstrate our knowledge, capabilities and experience testing tobacco and ENDS products. For example, we recently published an article that provides instructions on the importance of conventional toxicological metrics when generating and characterizing ENDS aerosols.
How is testing e-cigarette vapor different from testing combustible cigarettes?
It depends. Testing combustible cigarette smoke, which contains a particle and gas phase, is a bit more challenging than simply testing an ENDS aerosol.
However, when you consider product variability, ENDS products present many challenges that cigarettes don’t. ENDS products come in all different shapes and sizes. Some have round mouthpieces while others have square. This alone poses a challenge in connecting the device to the smoking instruments, whose adaptors are round. Some devices have actuators, all of which are in different locations. Some vaping machines have push actuators that do not work well with the various actuator shapes and locations. Cigarettes, on the other hand, are standard size, and 20 cigarettes can be lit at one time with a standardized lighter that is built into the smoking machine.
Combustible cigarettes are tested to completion, and e-cigs are only tested for a set number of puffs. After the aerosol or smoke collection is accomplished, the remainder of the testing for the various compounds proceeds in essentially the same fashion regardless of whether it is aerosol or smoke. The e-cigs and cigarettes are tested on essentially the same instruments, but the method regimes (number of puffs, interval between puffs and volume) are slightly different.
Are there different standards for testing, and how does a company know which ones to use?
Both combustible cigarettes and ENDS products have a standard Coresta regime for ambient (ISO) testing. The Health Canada (intense) method for e-cigarettes [is] determined by the manufacturer’s scientists and is established based on the limitations of the devices (some devices have puff duration limits).
The analytical methods can also vary slightly between combustible cigarettes and vaping products due to the significant reduction of constituents in the e-cigarettes. The calibration curve is usually much lower in e-cigarette analysis. Other variabilities are the angle in which the e-cigarette devices are tested. The testing angle of the device is based on the model (tank, cigalike, etc.).
Are there many challenges in e-cigarette testing, and how can those difficulties be overcome?
You are required to share data with FDA even if the data is not favorable. Several companies simply have their products tested and then send the report to FDA without knowing if the data supports their product as appropriate for the protection of public health.
There is always room for improvement. We find that most labs are always working on method improvement. As mentioned previously, the various sizes and shapes of the ENDS devices pose a challenge. The lack of standardized testing methods for all the HPHCs and lab variability pose opportunities for improvement.
How accurate are the testing methods and the results that the tests provide?
Currently, analytical methods can detect chemicals at extremely low levels. Chemicals are often detected at levels that do not pose a health risk to humans. Some in public health use detected levels of chemicals rather than the more important harmful level of chemicals to create a public panic and thereby negatively impact the goal of harm reduction.
Coresta has a good working group for ENDS testing and analytical methods. We should focus on having more companies and laboratories actively participate in studies aimed at simplifying and reducing variability of existing methods.
One area of a standardization focus should be on the creation of a reference ENDS device that may be used with any remaining e-liquids—similar to the reference cigarette (1R6F), which is used to compare combustible cigarette data generated by different labs.
From your test results, would you say that vaping is less risky than combustible smoking?
This isn’t about me. What I can say is that Brian King, the director of the FDA’s Center for Tobacco Products, said in the media that he understands that e-cigarettes have “markedly less risk” than a combustible cigarette product. He acknowledged the continuum of risk for tobacco products and where e-cigarettes fall on that continuum. During the recent GTNF 2022 I attended, he said that there are certain products that are lower risk than combustible cigarettes, and that is an important component of the dialogue for the FDA. The FDA acknowledging that e-cigarettes are less harmful than combustible cigarettes is significant.
Do you have any recommendations for companies looking to have their products tested?
First, simply sending samples to a lab without understanding the testing requirements or how to interpret the data is a waste of money. Make sure you are working with a credible group of scientists that guide you through the process of generating scientific data.
I suggest the following: Ensure the laboratory you choose is ISO 17025 certified. It is advisable to use a laboratory the FDA is familiar with. This will make the data review process a bit better and will likely not result in denial of data submission due to laboratory insufficiencies. When choosing a lab, make sure they have filed a tobacco product master file (TPMF) with the FDA and that their methods are validated and validation reports are included in their TPMF.
Issues to be aware of before marketing THCa hemp flower
By Rod Kight
As a cannabis lawyer, I represent lots of companies in the U.S. hemp industry, and I am routinely asked legal questions about new and novel products. I am currently receiving lots of calls about “THCa flower.” In this article, I will discuss THCa flower and several legal and practical issues regarding it.
What is THCa flower?
THCa flower refers to cannabis buds marketed as hemp. These buds are intended for smoking or vaping. They contain high concentrations of tetrahydrocannabinolic acid (THCa) and low concentrations of delta-9 THC (D9). Specifically, their D9 levels do not exceed 0.3 percent by dry weight, which is the legal limit for hemp under the 2018 Farm Bill. For example, I recently viewed a certificate of analysis of THCa flower that showed 25 percent THCa and 0.18 percent D9. This is remarkable. Despite the fact that this cannabis flower is federally lawful hemp, smoking it will get you very high. In fact, cannabis flowers with high THCa/low D9 ratios are exactly what is being sold as marijuana in states that have legalized it. Although some marijuana strains contain D9 in levels that exceed 0.3 percent, many strains do not. This means that they are technically “hemp” under federal law. In other words, THCa hemp flower is no different from much of the marijuana flower currently sold in medical and recreational marijuana dispensaries in states with regulated marijuana markets.
Rod Kight
Is THCa flower legal?
The short answer is “yes,” at least under federal law and the laws of some states.The idea that there are legal hemp buds that are no different from illegal marijuana buds seems counterintuitive, but proving that this is true involves a very straightforward analysis. The 2018 Farm Bill distinguishes legal hemp from illegal marijuana solely by reference to its D9 levels. Specifically, hemp is cannabis with no more than 0.3 percent D9 by dry weight. A hemp bud with THCa levels of 20 percent and D9 levels of 0.15 percent falls squarely within the 2018 Farm Bill’s definition of “hemp” and is legal under federal law.
In fact, the Drug Enforcement Administration (DEA) has specifically stated on multiple occasions that cannabis material meeting this definition is lawful. In a Jan. 6, 2022, letter, the DEA stated: “Material that is derived or extracted from the cannabis plant, such as tissue culture and any other genetic material that has a delta-9 tetrahydrocannabinol concentration of no more than 0.3 percent on a dry weight basis, meets the legal definition of ‘hemp’ and is thus not controlled under the CSA.” This was not the first time the DEA confirmed that the sole factor distinguishing lawful hemp from unlawful marijuana is its D9 concentration. In addition to confirming this standard in both a letter to the Alabama Board of Pharmacy and a public statement to the Florida Department of Agriculture and Consumer Services, the DEA’s Interim Final Rule regarding hemp states that marijuana is limited “to only include cannabis or cannabis-derived material that contain more than 0.3 percent delta-9-tetrahydrocannabinol (also known as D9-THC) on a dry weight basis.”
In summary, harvested cannabis flower with D9 concentrations not exceeding 0.3 percent meets the legal definition of “hemp” and is not controlled under federal law, regardless of its THCa levels. It is important to note that this only applies to harvested cannabis material. The U.S. Department of Agriculture (USDA) controls hemp production, and its regulations require a test that accounts for both THCa and D9 before the hemp can be harvested, commonly referred to as a “total THC” test.
What are the major legal issues with THCa flower?
Although THCa hemp flower is lawful under federal law, there are some important issues and considerations to be aware of. The rest of this article will discuss these issues.
Is it possible to grow compliant THCa flower?
One issue is whether THCa flower, at least with the high THCa concentrations discussed at the beginning of this article, can come from hemp grown in compliance with the USDA’s pre-harvest testing requirements. Through my research and discussions with clients, I have been made to understand that it is difficult, though possible, to obtain THCa hemp flower from hemp that passed the USDA’s pre-harvest tests. Additionally, it is important to note that the DEA considers all cannabis material with D9 levels not exceeding 0.3 percent by dry weight to be lawful “hemp” regardless of whether or not it was grown by a licensed hemp producer and/or if it passed a USDA total THC pre-harvest test. This conflict between the USDA and the DEA is an unsettled area of law, though it is clear that the USDA’s regulation of hemp terminates upon harvest.
What about state laws?
Another issue is whether THCa flower is lawful under state law. The answer depends on the state in question. It is clear that you can lawfully transport THCa flower through a state regardless of its hemp laws. This is because the 2018 Farm Bill states: “[N]o state or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the state or the territory of the Indian Tribe as applicable.” But individual states may restrict or even downright prohibit it. Although THCa flower is lawful in many states, it is prohibited in others. For instance, some states restrict all hemp that is intended for smoking, which includes THCa flower. Some states allow smokable hemp but prohibit THCa flower based on their requirement that hemp pass both a pre-harvest and post-harvest “total THC” test. Additionally, the legal status of THCa flower in some states can be tricky to determine due to the way that their hemp laws and regulations are written.
In summary, the laws and regulations of a given state determine the extent to which THCa flower is lawful. State laws vary, and the legal status of THCa flower can sometimes be difficult to determine. This leads to a final issue: confusion and misunderstanding of hemp laws.
What if THCa is lawful in my state but law enforcement disagrees?
A final issue to consider is confusion by law enforcement and state regulators about the legal status of THCa flower. Many people in the hemp industry contend that hemp flower is only lawful if it passes a “total THC” test, which accounts for both THCa and D9. Although this is correct for hemp that has not been harvested, it is wrong under federal law and the laws of many states for harvested cannabis material. Given that this issue is confusing even to experienced hemp industry participants, you can imagine its misunderstanding is compounded by law enforcement and even regulators, many of whom do not know or care much about (or for) hemp. In practice, this means that someone lawfully selling THCa flower may experience problems, including prosecution, from law enforcement.
Conclusion
THCa flower is poised to be the “next big thing” in the hemp industry. Based on the feedback I am receiving, I believe that it will be very popular in much of the country. As discussed above, THCa flower is lawful under federal law and the laws of some states. However, before deciding to participate in the emerging THCa flower market, it is very important to understand the issues and risks involved.
Important Note: This article is not intended to be legal advice and should not be used as such. The matters discussed are novel and involve complicated and unsettled legal issues. Before making any decisions regarding THCa, you should first consult with an experienced attorney.
The vaping industry is born of innovation. During GTNF 2022, held in Washington, D.C., Sept. 27–29, nicotine industry stakeholders brought to the forefront the challenges that the electronic nicotine-delivery system (ENDS) market is facing. Many said lives are being lost and the vaping industry is being crippled by regulations that many industry stakeholders say are designed to keep smokers hooked on combustible cigarettes. A well-respected nicotine industry conference, GTNF 2022 highlighted the need to allow nicotine consumers access to less risky delivery systems.
The GTNF is held each year in varying cities around the globe. It consists of representatives and stakeholders in the global nicotine industry. It offers insight to its attendees through expert panels and keynote speakers that provide diverse viewpoints on a variety of aspects concerning the worldwide nicotine industry. The GTNF is also the parent organization for Vapor Voice and its sister publication, Tobacco Reporter.
This year, seminar speakers nearly 300 in-person attendees and 500 online registrants that access to products is being denied mainly by regulations, especially by the U.S. Food and Drug Administration and its Center for Tobacco Products, which is charged with regulating all nonmedical nicotine and tobacco products, including ENDS in that country. In this special section dedicated to GTNF 2022, Vapor Voice shares some of the sessions that helped paint a precise picture of what’s wrong and what could be done to possibly help dispel the current cloud of misinformation that surrounds ENDS products and help adult smokers gain better access to less harmful ways to consume nicotine.
The ENDS industry also won several awards at the GTNF, which hosts the nicotine industry’s Golden Leaf Awards. FEELM, the flagship atomization technology platform belonging to Smoore, the world’s largest vape manufacturer, won “Most Promising Innovation” for its FEELM Max device, and ALD won the “Reducing Environmental Impact Innovation” award for its innovative biodegradable technology design and cutting-edge product concept. Additionally, Innokin won “Best Innovation Breakthrough” for its joint venture with Aquios Labs to develop water-based vaping technology.
Forgotten Smokers
Most smokers belong to vulnerable groups, suffering from issues such as mental illness or unemployment.
By VV staff
Rather than being “forgotten,” as the session’s title suggested, people who smoke are an unexplored, stigmatized and often misunderstood species, according to the participants in a GTNF discussion about consumers. While consumer centricity has become a buzzword in the reduced-risk product industry, companies still have a lot to learn about their target group.
Altria, whose vision is to responsibly lead the transition to a smoke-free future, examined the plight of consumers on their journey to less hazardous products. “We had done a comprehensive research program about the interest in vape products, but what was really missing was to bring the voice of the consumer directly to the organization,” said Brent Taylor, managing director of consumer and marketplace insights at Altria.
Last year, the company initiated “Project 21,” a study of 21 consumers of combustible tobacco who were interested in switching to less harmful nicotine products (see “Listening to Nicotine Users,” Tobacco Reporter, September 2022). Over 21 days, Altria’s researchers catalogued the study participants’ behavior via videos and weekly surveys. The participants were asked to “do their best” but didn’t get any guidance, as Altria wanted to learn how they tackled the challenge on their own. Their progress was checked after three weeks, three months and six months.
After six months, 15 participants were still smoke-free. The people who were most successful were those who really wanted to switch and held themselves accountable. The project also showed that many factors unrelated to the product category, such as a bad day at work, impacted the success of participants in transitioning. Each of the journeys was unique and entailed its own set of complications. For all participants, it was a highly emotional experience, according to Altria.
Kim “Skip” Murray, a person who vapes and a tobacco harm reduction (THR) advocate who until last year ran a vape shop in Minnesota, related experiences from her customers that illustrate how external factors, such as misinformation and economic strain, can impact attempts at switching. One of her customers, a Vietnam veteran with chronic obstructive pulmonary disease, returned to smoking for some months after press reports and health authorities mistakenly attributed the e-cigarette or vaping product use-associated lung injury (EVALI) outbreak to nicotine vapes.
Some clients reverted to more harmful but less expensive cigarettes when their budgets were tight. Discouragingly, the Food and Drug Administration’s marketing denial orders forced products off the market that had helped Murray’s customers quit cigarettes while leaving combustible products widely available. Murray said she was unable to dispel the myths about EVALI and many of the other false narratives about vaping. The number of people who came into her shop wanting to quit dropped substantially, eventually forcing her out of business.
Alex Clark, CEO of the Consumer Advocacy for Smoke-free Alternatives Association, stressed the importance of language in the smoking and health debate. “Smoker,” he said, has become a pejorative term. “We’re now focusing on people who have a history of being underprivileged, undeserved and oppressed—people who we don’t see in offices or at conferences; people who have been pushed to the margin of society.” Having smoked heavily in his youth, Clark recalled being told that his habit was a character flaw. The stigma of having no control over his decisions and essentially being a drug addict, Clark said, stuck with him even after he had switched to vaping.
Most of the 30 million Americans who smoke today belong to vulnerable groups, suffering, for instance, from mental illness or unemployment, according to health behavior consultant Cheryl K. Olson. Among people in custody, the percentage of people who smoke is four times higher across the world. Together with other researchers, Olson explored the potential of vape products for use in a prison environment and found that the acceptance was 95 percent. “For vulnerable groups, harm reduction is a realistic goal if nicotine abstinence is not,” she said. “Our findings about these groups have the potential to rebalance the conversation about appropriateness for the protection of public health.”
Will Godfrey, editor-in-chief of Filter and executive director of the Influence Foundation, bemoaned the lack of synergy between harm reduction for illegal drugs and harm reduction for tobacco.
Many illegal drug users smoke, and it would make sense to apply harm reduction strategies to both habits. In reality, those running drug-related programs are often unwilling to apply harm reduction to tobacco use. Bizarrely, some needle exchange programs for intravenous drug users are accompanied by anti-vaping policies, noted Godfrey.
He blamed the “deep suspicion” of the nicotine industry within the left-wing harm reduction movement as well as the growing influence of Bloomberg Philanthropies, a big funder of anti-smoking programs that is notoriously hostile to vapor products.
Godfrey urged the administrators of drug harm reduction programs to extend the harm reduction principle to smoking. “It is vital that THR, including the industry, builds momentum in this direction,” he said. “The hostility to the industry won’t go away but is surmountable, as the role of pharma in drug harm reduction has shown.”
Reservations Required
Brian King
The FDA’s CTP Director King says the Reagan-Udall review of the agency will be complete by mid-December.
By VV staff
There are plenty of reservations about the way in which the U.S. Food and Drug Administration’s Center for Tobacco Products (CTP) has handled its responsibilities. During a brief speech at the GTNF 2022, the new director of the CTP, Brian King, did little to quell those concerns. He did, however, acknowledge the continuum of risk. “We do have certain products that are lower risk than combustible cigarettes, and that’s an important component of the dialogue,” said King.
King told attendees that there is an opportunity for the CTP to assess the risk of youth vaping initiation and counterbalance that with the opportunity for adults who use e-cigarettes to quit combustible cigarettes.
“I think that [the] public health standard is pretty critical to the work we do, and it’s definitely a guiding light in terms of my determinations and decision-making,” he said. “Ultimately, it comes down to the science … it’s very critical, to me, to ensure that we use that as our guiding light. And of course, the onus is on the applicants to ensure that they are providing the most robust signs possible to inform decision-making.”
The FDA has long been criticized for its handling of the premarket tobacco product application (PMTA) process and is currently defending multiple lawsuits from vapor companies challenging its marketing denial orders (MDOs), including two from Juul Labs, which recently filed a lawsuit over the regulatory agency’s refusal to disclose documents supporting its MDO.
Juul claims the agency overlooked more than 6,000 pages of the data it submitted on the aerosols that users inhale, according to Joe Murillo, chief regulatory officer at Juul Labs, who also spoke at the conference (see “A Question of Integrity,” page ??).
King said that a sizeable portion of youth are still vaping flavored and disposable products. However, he also said that the potential benefits for adult smokers are “mutually exclusive” from youth uptake concerns. “I don’t think that they necessarily have to be separate; they can certainly be explored concurrently,” he said. “But again, we need to ensure that we’re considering the science from both ends when making our decisions.”
King said the agency is “continuing to make progress” on the estimated 1 million PMTAs for nontobacco nicotine products as well. He said over 90 percent of the applications have been completed. “We have 350 acceptances so far, and there’s about 800,000 that have received an RTA [a ‘refuse-to-accept’ letter], and I’m hopeful that within the next few weeks we should be able to get through all 100 percent of those 1 million.”
Being accepted for review is only the first step in the PMTA process. There are six stages, or rounds, to the PMTA process. After acceptance is filing, then a substantive review before an action is taken. King called the first step an important one. “[It’s] an important step, and I’m committed to ensuring that we keep things moving as expeditiously as possible,” King said.
King recently told the AP that he believes “there’s a lot of really important science and innovations” that have occurred in the vaping industry in recent years, adding that the most notable is nicotine salts in e-liquids. “We know that when you smoke a tobacco product, it’s a very efficient way to deliver nicotine across the blood-brain barrier. So it’s been very difficult to rival that efficiency in another product,” said King in the interview. “But in the case of nicotine salts, you have the potential to more efficiently deliver nicotine, which could hold some public health promise in terms of giving smokers enough nicotine that they would transition [off cigarettes] completely.”
King also discussed the FDA’s ability to force companies to comply with its MDOs. So far, very few companies that have been told to remove their products from the market have complied. King said the agency has multiple enforcement options to bring both manufacturers and retailers to heel.
“We have several tools available to us, including advisory actions,” he said. “We also have regulatory enforcement actions, including voluntary recalls as well as various other requested recalls. We can also take administrative action, civil money penalties (in terms of manufacturers, that penalty cannot exceed $15,000 for any single violation or $1 million for any number of violations related to a single action),” explained King. “When it comes to judicial action, we can do seizure, injunction and also criminal prosecution. I will say that when it comes to enforcement and compliance, nothing is off the table.”
King also updated attendees on the FDA’s external review of the CTP’s procedures, which is being conducted by the Reagan-Udall Foundation. Lauren Silvis, a former FDA chief of staff, was named as chair of the panel that has been asked to “evaluate regulatory processes and agency operations related to tobacco to help the center address new challenges as it works to reduce death and disease from tobacco and achieve its public health mission.”
“Within only a few weeks of assuming this role, we were told that there would be an external evaluation,” said King. “I actually wholly welcome it. I think it’s a good opportunity, particularly with new leadership, to identify areas where we’re doing things very well but also identify areas where we can enhance our efficiency and effectiveness. I have had meetings with [Silvis] and her team, and I’m confident that we’re going to get very useful information.
“It’s an ambitious timeline, 60 business days, so it’s going to work out to about 90 days total. It should finish probably by the end of the year, mid-December, and I’m looking forward to the opportunity to hear the recommendations. And I do have a very open mind on this. I’m always for improvement.”
King expects there will also be opportunities for external engagement, including listening sessions. He could not provide specifics during the speech but said he welcomes feedback from others in terms of informing the CTP’s processes.
“It’s not a one-size-fits-all, but I do think that we have some great opportunities here,” he said. “I’m fully committed to listening to the evaluator’s input and ensuring that we use it in a very useful way … then we’ll take it from there … I’m sure many of you have heard publicly, my calendar is rapidly filling up, and we are meeting with many—I know I’ve met with several of you in the room already, and I value those opportunities to meet with folks from across the spectrum, whether it be industry or public health … to hear people’s insights, what your priorities are.
“And those have been very productive and helpful to me. I do listen. I think it’s a very useful opportunity to me in terms of hearing specifically what the recommendations are from industry and what are areas where you feel it would be useful for FDA to engage in to make your life easier in terms of submissions and applications and [what] processes are overly complicated and could be improved,” said King. “I’m fully committed to ensuring that happens.”
A Question of Integrity
Joe Murillo
Juul Labs accuses the FDA of submitting to political pressure when the agency issued Juul an MDO.
By VV staff
Joe Murillo is right. It is hard to believe that the U.S. Food and Drug Administration reviewed Juul’s premarket tobacco product application (PMTA) thoroughly. Murillo, chief regulatory officer for Juul Labs, told attendees of the GTNF 2022 that the regulatory agency wrongly issued Juul a marketing denial order (MDO). That order was later stayed by both a court and the FDA itself.
The FDA says it follows the science; Murillo counters that the entire process is “substantively and procedurally flawed,” adding that the MDO was not based on a fair and complete review of the science in Juul’s PMTAs.
“Our PMTAs included over 125,000 pages of data. They included information and analyses from over 110 scientific studies, and these studies cut across nonclinical, clinical and behavioral research programs,” he said. “We assessed our products relative to combustible cigarettes … and relative to other marketed [electronic nicotine-delivery system] ENDS products. It seems as though, among other things, FDA overlooked at least 6,000 pages of these data.”
Murillo said that the FDA prides itself on having the “highest scientific integrity and public health focus, shielded from political interference.” That statement mirrored what was said by the director of the FDA’s Center for Tobacco Products, Brian King, who spoke at the same conference. “Ultimately, it comes down to the science … it’s very critical, to me, to ensure that we use that as our guiding light,” King said (see “Reservations Required,” page ?).
Despite that stated commitment, the PMTA review process appears to be susceptible to politics, according to Murillo. He noted that the FDA has been under immense pressure to deny Juul Labs’ applications and remove Juul products from the U.S. market. “This political pressure cannot continue,” said Murillo. “FDA cannot allow the hostile conversations around tobacco harm reduction to seep into what should be a science and evidence-based process. The very integrity of the FDA’s review process is now called into question. The FDA must guard against politics and improper attempts to influence their scientific decision-making. We need to find common ground, turn down the temperature of the rhetoric and put people who smoke [combustible cigarettes] at the center.”
Juul Labs is now in a fight for its future. After the e-cigarette maker appealed the MDO in court, the FDA on July 5 stayed its own order. The agency announced that it would review its decision after determining that “There are scientific issues unique to this application that warrant additional review.” Alongside the agency’s internal review, Juul Labs also submitted its own administrative appeal with the FDA.
“In this appeal, we demonstrate how the agency’s denial of our applications was substantively and procedurally flawed,” said Murillo. “We requested, among other relief, that FDA rescind its denial and put our applications back into substantive review. Throughout this process, Juul products will remain on the market, and we are confident we can address any further questions the agency may have. So, we will continue to fight for the millions of adults who use our products. They deserve a complete review of the science and evidence we presented as required by law and without political interference.”
Murillo said that while underage use is a concern, last year’s National Youth Tobacco Survey (NYTS) showed a significant decline in underage use compared with just two years ago, and youth use of cigarettes continues to decline to historic lows. Murillo said the decline in underage years can be attributed to many factors, including raising the minimum purchasing age to 21 and measures to further restrict access and limit appeal.
“But not all trends related to underage use are positive. Many of us are worried about the rise of disposable flavored products among youth,” he said. “In the United States, fly-by-night companies have flooded the market with illegally marketed products. These products flout laws and regulations and present a public health danger.”
According to Murillo, regulators must improve and prioritize enforcement. “True Age, NACS and other stakeholders are firmly committed to reducing and preventing underage access to tobacco products at retail,” he said. “Scientists and public policy experts have put forward thoughtful solutions to preserve the harm reduction opportunity for adults while also protecting youth.”
Meanwhile, regulatory uncertainty has created immense barriers to innovation in reduced-risk products. This uncertainty diminishes confidence in the products themselves and the category, according to Murillo, who said that uncertainty “has a chilling effect” on investment and further innovation.
“To be crystal clear, this uncertainty only prolongs cigarette use,” he said. “Despite challenges for alternatives like ours, with the PMTA process, new combustible cigarettes continue to receive authorization via substantial equivalents and even PMTA and MRTPA [modified-risk tobacco product application] pathways; 13 years after the passage of the Tobacco Control Act, cigarettes remain far and away the most used tobacco product in the United States, making up over 75 percent of the market.
“Less than 3 percent of the total tracked ENDS market is authorized under FDA’s PMTA process … the rest of the market, the vast majority of ENDS products fall into one of three precarious buckets,” explains Murillo. “One, those being sold illegally. This includes companies that have not even submitted to the PMTAs. Two, those awaiting a marketing decision from FDA after years of review; or three, those stuck in a highly opaque administrative process—one that’s subject to a shifting requirement and unpredictable timelines.”
Innovative products that are specifically designed to advance public health have a steep road ahead in the U.S. Murillo said this is alarming. While the technology is available to accelerate the displacement of combustible cigarettes, a slow and uncertain path to the market is a significant obstacle.
“The data suggests that ENDS sales are displacing cigarette sales. So, we can see an emerging path to end the combustible cigarette once and for all. Unfortunately, that path remains blocked by a political and regulatory environment that inhibits meaningful progress … I think most of us in this room appreciate that combustible cigarettes will one day be obsolete,” he said. “Undoubtedly, that is our company’s goal. It’s not a question of whether, but of when … As an industry, we can accelerate this public health goal through product innovation and evidence-based policy development. But the viability of the marketplace is at stake, especially for those companies that don’t sell cigarettes.”
Murillo said an example of innovation in a market that is more accepting of ENDS products as a tool toward harm reduction can be found in the U.K., where Juul Labs launched its Juul 2 product last year. The platform includes cutting-edge technology designed to deliver a more consistent vapor experience with improved nicotine delivery. Its temperature control minimizes the production of toxicants, and the platform can help address underage use through its pod technology.
“We’ve also developed a mobile app that can be used for age verification and locking the device when it’s out of the range of a user’s phone,” said Murillo. “The app has other features that enhance the experience for users as they switch away from cigarettes. We’re confident that Juul 2 delivers a better experience for adult smokers than products currently available, which should result in increased switching from combustible cigarettes.”
In the end, Murillo said he is disappointed with where the ENDS industry is currently, but he has a genuine belief that there is an endgame for combustible tobacco. “Society cannot allow the death and disease associated with smoking to be a part of the incremental progress we’ve made,” he said. “Absent a renewed and fundamental commitment to the very concept of harm reduction, we will lose this opportunity.”
Perceptions of Nicotine
Because of its association with combustible cigarettes as a delivery device, nicotine is surrounded by misconceptions.
By VV staff
Participants in “The Perceptions of Nicotine” panel during the GTNF 2022, began the conversation by drawing comparisons to similar consumer products, most notably caffeine. Nicotine is found in tobacco leaves, but it’s also found, at lower levels, in plants, such as tomatoes, potatoes, eggplants and sweet peppers. However, by far its predominant source is in tobacco leaves.
Caffeine can also be found in multiple food sources, including coffee beans, tea, cocoa beans, Kola nuts and guarana berries. The amount of caffeine in guarana berry seeds is about the same as the amount of nicotine in tobacco leaves, up to about 4 percent, according to a panelist. Unlike caffeine, however, nicotine is tied to tobacco. Nicotine is a public pariah while caffeine is socially acceptable. The panelist agreed that this is due to the differences in how the public has been educated on these products. Medical professionals, for example, get much of their information from medical societies, one panelist noted.
One challenge is that the public and even many medical specialists don’t distinguish between nicotine and smoking. “I think that’s part of the problem,” a speaker said. “How do we untangle that? Nicotine does not produce disease. It’s not carcinogenic. It does increase heart rate and blood pressure. And perhaps there are some positives … it’s a stimulant, it induces pleasure, and it improves concentration, reaction time [and] performance on some tasks, but it can also reduce stress and anxiety.”
For consumers, when asked why they smoke, the most common answer is for enjoyment and pleasure; however, nicotine ranks low on the list of motivations. But when you ask a smoker, “Why do you find smoking difficult to quit?” the answer is “because I’m addicted—addicted to nicotine.” One panelist said when consumers want medical information, more than 70 percent say the first place they go is the internet. The misinformation is rampant, even from seemingly trustworthy sources.
“The first place that they turn for health-related information is the internet. More than 70 percent of people say that’s the first place they go when they’re looking for information … because it’s easy to use, and they find information that way,” a panelist said. “Just doing the quick search yesterday, you put in electronic cigarettes into the Google search engine, and the first thing you see is the Center for Disease Control and Prevention website, which is great; it’s a government resource. The Office on Smoking and Health is the place within the federal government for information on health and smoking.
“But when you click on that link, the first thing you see is information on the EVALI [e-cigarette or vaping product use-associated lung injury] outbreak. The headline is [about an] outbreak of lung injuries from e-cigarettes and vaping products. That’s not the right way to help people understand the comparative risks between cigarettes and electronic cigarettes and nicotine-replacement therapy and other lower risk [nicotine] products.”
Many years ago, smoking and addiction were joined together, and that has now created the assumption in the public that nicotine use equals smoking, which equals addiction. It’s not helping people who smoke understand how they might be able to use the products that are available, including lower risk tobacco and nicotine-containing products as well as nicotine-replacement therapy, to quit smoking. Panelists agreed the misconception was doing more harm than good for public health.
The way vaping and tobacco products are regulated is also partly to blame, according to the panel. Tobacco companies are very limited in the amount of information they can provide on their products. Swedish Match, for example, was the first company to receive an authorization for a modified-risk tobacco product. The U.S. Food and Drug Administration, however, severely restricted the ways in which Swedish Match could communicate the lower risk of its product to consumers.
“We got super excited internally. I mean, here we have a product, it had no carcinogens, no tar, no nitrosamines, significant risk reductions, and when we started looking at how and what we can communicate, it was incredibly limited … as we were going through our process, we had [tried] to figure out how to tell consumers this was different without telling them it was different,” explained a panelist representing Swedish Match. “It was very challenging. We were trying to figure out how to use different colors and different cues. It was a brand-new category, so we’re trying to educate people on a brand-new category with a can, and you didn’t even know what was in it …. It was incredibly difficult to try to do that.”
Swedish Match also gathered customer testimonials, but regulations kept the company from doing anything with them. Another panelist explained that consumers do not separate nicotine from tobacco. Nearly 80 percent of the population agree that those are virtually the same. When asked to compare the risks of products, people list tobacco as the most harmful, followed closely by nicotine and then alcohol.
Caffeine, however, is on the other end of the scale. “Caffeine is on a totally different end of the spectrum. Interestingly, when we think about where the market is moving and things are moving relative to legality, you look at CBD, look at THC, [and caffeine] is more closely associated from a harm perspective to CBD and THC,” a speaker said. “In terms of addictiveness, 96 percent of U.S. consumers would say that nicotine is addictive. Only 76 percent say that caffeine is addictive. But then, you look at harmfulness to health. You can see this wide gap that exists in terms of … the core chemical, 89 percent versus 46 percent in terms of harmfulness to health [nicotine versus caffeine].”
The panelists argued that people who smoke combustible cigarettes are less likely to try less harmful products if they perceive those products to be no different than what they’re currently using in terms of harm. There’s very little motivation for them to try them. There is also very little the industry can do to reverse the misinformation surrounding nicotine.
“The industry’s hands are tied with regard to the voice that the industry can have. But I think the role that the industry can play in it is to continue to develop high-quality, lower risk products that are acceptable alternatives for cigarettes for people who smoked cigarettes, and then get those through the regulatory process,” a panelist said. “It’s up to the FDA to communicate to consumers that there are less risky products to consume nicotine.”
Constitutional Conundrum
Jonathan Adler
Law professor Jonathan Adler says some FDA rules may violate a company’s First Amendment rights.
By VV staff
There are numerous challenges to achieving the goal of tobacco harm reduction. Addressing these challenges might require thinking differently about how to approach the regulatory process and perhaps the extent to which the regulatory process needs to be changed, according to Jonathan Adler, the inaugural Johan Verheij Memorial Professor of Law and the founding director of the Coleman P. Burke Center for Environmental Law at the Case Western Reserve University School of Law, where he teaches courses in environmental, administrative and constitutional law.
Speaking at the GTNF 2022, Adler said that the U.S. Food and Drug Administration’s handling of premarket tobacco product applications (PMTAs) has been arbitrary. It’s been sloppy. It hasn’t followed its own guidances. “It’s pretty clear that the FDA was not prepared for this onslaught of applications, prepared for the volume, prepared for the type of analyses it would have to conduct,” he told attendees. “And [the agency] responded to that with a mixture of cutting corners and adopting shortcuts that would enable it to make decisions, typically negative decisions, so that it could process these applications.”
Companies aren’t happy with how the FDA has handled the PMTA process. Numerous companies have taken the agency to court, with mixed results. There are currently more than 30 court cases surrounding PMTA actions. Adler said that the FDA has responded inconsistently to these lawsuits. After denying Juul’s application, for example, the FDA decided to reconsider and review all the things it was supposed to review before issuing a marketing denial order. The agency took the same type of action with Turning Point Brands.
In other cases, however, the FDA has been willing to let the courts decide. The challenge in this approach is that the FDA is being strategic about which cases it fights in court and which cases it retreats on. “As someone that follows a lot of administrative litigation, it certainly looks as if FDA is retreating where the cases against its actions are the strongest and allowing cases to proceed where it thinks the challenges are weak,” said Adler. “[This is] either because issues haven’t been raised or because issues haven’t been printed in the strongest way possible or perhaps because the applications were weaker to begin with.
“As these precedents build, it will become easier and easier for FDA to defend against challenges to even the strongest arguments, so this is certainly part of the regulatory challenge …. We know—and this is all information that you’re all aware of—that the majority of people in the United States believe that ENDS [electronic nicotine-delivery systems] are as [dangerous] if not more dangerous than combustible cigarettes.”
There are other challenges too. Adler said the United States also has trust issues on both sides of the aisle. Many of the institutions and authorities that historically have been seen as trustworthy and would provide accurate information aren’t considered to be as reputable anymore.
“And certainly, the experience of Covid and the like has eroded that trust even more,” he said. “We need to think more broadly about how we might overcome this challenge. My own view is that we need to think more about the competitive process and how we discover how to communicate to consumers. And that word ‘discover’ is important. Because it’s not always clear what consumers want, why they want it and how you let them know that what you have might be what they want.”
In the case of nicotine products, due to FDA regulations, companies can’t compete in trying to convince smokers that their product will satisfy the desire for nicotine, or whatever else, in a less risky way. In Section 911 of the Tobacco Control Act, there are strict restrictions on what can be said about modified-risk tobacco products, including factually true statements. Adler said that’s a problem because if companies are able to compete on characteristics like health impact, it affects not only the behavior of those companies, but it also affects consumer understanding.
“This statute has also been interpreted, I would argue quite aggressively, by the FDA. The FDA’s position is that producers of electronic cigarettes can’t quote things that Brian King said here yesterday [the CTP director spoke at the GTNF on Sept. 28]. Can’t quote things the FDA has put in the Federal Register that are indisputably factually true. And if they say things like ‘This might help you quit smoking,’ well, then the FDA’s position is ‘forget [the modified-risk order] …. That makes you a drug device.’ And there’s a whole different approval process you have to go through for that.”
A constitutional law professor, Adler views Section 911 as a potential First Amendment issue. The U.S. Supreme Court, he said, has stated repeatedly that courts should be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good. That includes attempts to deprive consumers of accurate information about their chosen product.
“We’re not talking about sensational claims about unproven medications or unproven treatments. We are talking about claims that the FDA itself acknowledges are true. [In a case involving the FDA and a compounding pharmacy that the agency wanted to prevent from advertising,] we rejected the notion that the government has an interest in preventing the dissemination of truthful, commercial information in order to prevent members of the public from making bad decisions with the information.
“And the circuit, in the context of nutritional supplements, has also said that it is clear that when the government chooses a policy of suppression over disclosure, at least where there was no showing that disclosure would not suffice to cure misleadingness, government disregards are far less restrictive means. It violates the relevant standards under the First Amendment.
“The FDA’s position is that no disclaimer, no disclosure can somehow cure the problem of telling people what the FDA itself has said about noncombustible products. It’s not clear to me—I mean that’s not only not rational, [but] it’s not clear to me why that’s constitutional.”
Study Sessions
Showing the FDA that flavors are appropriate for the protection of public health may be a challenge.
By VV staff
Flavors other than tobacco will not be allowed on the U.S. market. In order for that to happen, a manufacturer would need to show the U.S. Food and Drug Administration that flavors other than tobacco are appropriate for the protection of public health (APPH), and that may be more complicated than once thought. This was the opinion of Christopher Russell, director at Russell Burnett Research and Consultancy.
Presenting at the GTNF 2022 in Washington, D.C., Russell described the regulatory rationale and features of several types of research studies that can be conducted to compare the efficacy of flavored electronic nicotine-delivery system (ENDS) products versus tobacco-flavored ENDS products for facilitating switching and reducing cigarette consumption among adult smokers.
For a premarket tobacco product application, the FDA requires a range of valid scientific data and other research information to determine whether permitting the marketing of the new tobacco product qualifies as APPH. However, Russell explains, the Food, Drugs and Cosmetics (FD&C) Act, which guides the FDA’s authority, doesn’t clearly define APPH.
“Instead, to determine whether a new tobacco product meets the APPH standard, Section 910 of the FD&C Act requires FDA to, among other things, weigh the risks and benefits of the new tobacco product to the population as a whole, including users and nonusers of tobacco products, and taking into account both the likelihood that existing tobacco users will stop using such products if the new product is marketed and the likelihood that individuals who do not currently use tobacco products will start to use tobacco products if the new product is marketed,” Russell said.
To consider the marketing of a new tobacco product to be APPH, the FDA states that a PMTA must contain sufficient valid scientific information that demonstrates that the new tobacco product significantly reduces harm or the risk of tobacco-related diseases to individual tobacco users. Additionally, allowing adults access to ENDS and other noncombustible tobacco products cannot come at the expense of addicting a new generation of children and teenagers to nicotine.
“Though the FDA has sought to strike a balance in recent years between reducing youth appeal and access to ENDS on one hand while maintaining opportunities for addicted adult smokers to access ENDS on the other hand, the FDA’s current position expressed most recently in the issuance of marketing denial orders (MDOs) for flavored ENDS products is that the evidence available to FDA is clear in showing that the appeal and the likelihood of use of flavored ENDS by youth harms the public health to a level that is not outweighed by the health benefits of adult smokers switching to ENDS products,” said Russell. “In fact, flavored ENDS do not confer any incremental benefits over and above tobacco-flavored ENDS.”
The FDA has indicated that it may require a randomized controlled trial (RCT) and or a longitudinal cohort study (LCS) that demonstrates the benefit of an applicant’s flavored products help adult smokers more than they entice youth to start vaping. The FDA said it would also consider data that showed the same results through other research routes.
An RCT uses control factors not under direct experimental control. Examples of RCTs are clinical trials that compare the effects of drugs, surgical techniques, medical devices, diagnostic procedures or other medical treatments, according to Russell. An LCS is a research study that follows large groups of people over a long time. The groups are alike in many ways but differ by a certain characteristic (for example, vapers who use flavors other than tobacco, those who vape tobacco and those who smoke combustible cigarettes).
“I think FDA is—without being explicit—they are strongly communicating that an RCT or a longitudinal cohort study would provide the strongest evidence of an added benefit of a flavored ENDS product and that any application for a flavored ENDS product that does not contain one of those two studies or both of those studies will leave FDA in a position where they cannot possibly be confident that the potential benefits of the flavored ENDS would outweigh or overcome the risks to youth or would exceed the benefits of a comparable tobacco-flavored product,” said Russell. “I cannot see any circumstance in which flavored ENDS products will receive marketing authorization without having provided FDA with reliable and robust evidence from at least one of these two study designs. RCT is the gold standard in interventional research, and longitudinal cohort studies [are] the gold standard in observational research.”
Innovating for Tomorrow
Innovating should be about improving the vaping industry, not just its next-generation products.
By VV staff
When creating a smoke-free world, innovation must take place not only in terms of products but also in terms of regulation, communication, and sustainability. That was one of the messages of the “Innovating for Tomorrow” panel discussion during the recent GTNF 2022.
Ming Deng, head of Next-Generation Products (NGPs) Industry Study at Yunnan University, spoke about his desire to make NGPs smart and mobile. At present, he said, the electronic functions that differentiate an NGP from a combustible cigarette just serve as a marketing tool. However, the Artificial Intelligence of Things (AIoT)—the combination of artificial intelligence with the Internet of Things—offers considerable opportunity to improve human-machine interactions and enhance data management and analytics, among other benefits. “With AIoT, producers could trace consumers’ needs and innovate products accordingly,” said Deng.
For Meisen Liu, R&D director at Shenzhen Zinwi Bio-Tech, lower temperature atomization is one of the most important objectives in current research as it is safer for human health. A higher atomization temperature causes atomizing agents to decompose into harmful aldehydes whereas atomizing agents with a low boiling point decrease the atomizing temperature and reduce the emission of harmful substances. Liu also described how nicotine salts derived from different acids had different properties regarding sensory stimulation or taste. His company, he said, had created a new type of nicotine salt that allows for enhanced stimulation in markets where the amount of nicotine in e-liquids is restricted.
Kevin Peng, advanced technology scientist at the ALD Group, spoke about technologies to reduce the carbon footprint of vape product manufacturing and consumption. Earlier this year, his company launched a “green cigarette,” a disposable vape product featuring 6 percent lower carbon emissions than combustible cigarettes. The company also developed a super-slim pod for reusable vaping devices made from a material that has only one-third of the carbon emission of ALD’s older materials. This way, he said, his company had achieved a 50 percent emission reduction compared to other pod products.
ALD also conducted an emission assessment for its organization and products. “ESG [environmental, social and governance] is a much more difficult thing than we thought,” Peng stated. “We found that most suppliers are not very responsive in terms of such requirements.” He called for a unified industry ESG standard for suppliers, which would make it easier to reduce emissions.
To help accelerate its transformation, BAT established Btomorrow Ventures two-and-a-half years ago. Lisa Smith, the subsidiary’s managing director, related how Btomorrow had set up a number of innovative ecosystems. “It’s a highly competitive market,” she said. “It’s difficult to find the best innovators out there.” Her company’s role is to be the “handshake” to the outside world to show that BAT is an appropriate partner for innovators. Among the many tasks in BAT’s transformation are to quickly promote the ESG agenda and move beyond nicotine. In order to achieve the latter, she said, the company had to build science and credibility.
ICCPP, a provider of solutions for e-cigarettes and heated-tobacco products, believes that the key to innovation in vaporization might be the ceramic coil. The company, which focuses on research and manufacture of electronic atomizing technologies and is the parent company of the Voopoo vaping brand, introduced the world’s first nano-microcrystalline ceramic core in 2021. According to William Yu, vice president of global ODM business at ICCPP, the core is based on environmentally friendly mineral materials that result in an increased nicotine delivery and stable flavors. In combination with a powder-free technology and a porous structure, the core enables a significant increase in atomization, according to Yu. The company also develops environmentally friendly products, such as a disposable cigarette made from special recyclable paper.
Continuing to innovate is essential as the industry is at a crossroads, said George Cassels-Smith, CEO of Tobacco Technology Inc. (TTI). After the Food and Drug Administration, through its onerous market authorization processes, had “frozen” the U.S. market for next-generation products, TTI opened a new manufacturing site in Italy, which according to Cassels-Smith is more open to innovation. “It’s vital to involve science, which is one of the pillars of what is a quick-moving new technology,” he said. “It needs expertise to focus on this direction because, ultimately, we must find superior products to combustible cigarettes.”
What will have particularly exercised the minds of most of the readers of this magazine are those sections that deal with tobacco harm reduction issues, though much of what was said will have been widely known. At one point, the report notes that the agency announced its intention to apply a harm reduction strategy designed to move tobacco product consumers down the continuum of risk: switching from using combustible tobacco products to noncombustible products.
For the first time, the FDA issues warning letters for marketing products containing delta-8 THC. Several R.J. Reynolds Vapor Co. Vuse branded e-cigarette products receive marketing orders, including six new tobacco products, through the PMTA pathway. The San Diego City Council passes an ordinance for the second time banning vape flavors, and it’s effective Jan. 1, 2023. In its first status report, the FDA states that it expects to have resolved 63 percent of PMTAs set out in its original priority by June 30. Altria Client Services pays $100.5 million for assets and properties used in Poda Holdings’ business of developing, manufacturing and marketing multi-substrate heated capsule technology. FEELM wins four Red Dot Awards, an international competition for product, communication and concept design. Longtime Centers for Disease Control and Prevention alumnus Brian King succeeds Mitch Zeller at the FDA’s Center for Tobacco Products (CTP).
PMI opens its flagship IQOS store in South Africa. Confronted with rising prices for batteries, engineers in Ukraine begin using power cells from vapes to power drones. A U.S. administrative tribunal invalidates two claims in an R.J. Reynolds vaping patent. Panama bans the sale and import of vapes, joining more than a dozen Latin American and Caribbean countries with such restrictions. Brazil also maintains its ban on vaping products. The FDA issues first warning letters for synthetic products. Juul Labs begins exploring financing options to avoid bankruptcy. Juul quarterly revenues drop 23 percent. FDA Commissioner Robert Califf says the nonprofit Reagan-Udall Foundation—a nongovernmental research group created by Congress to support the FDA’s work—will convene experts to evaluate the CTP within 60 business days. Matt Holman, the director of the CTP’s Office of Science, announces he is stepping down. Altria reduces the value of its investment in Juul Labs to $1.3 billion, a nearly 70 percent loss of its original $12.8 billion evaluation. The Philippine president allows a bill that legalizes e-cigarettes to lapse into law.
