Tag: IQOS

  • Altria Reaches Deal With PMI for IQOS Transition

    Altria Reaches Deal With PMI for IQOS Transition

    Credit: Naka

    Philip Morris International will 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 2013, Altria entered into a series of agreements with PMI related to innovative tobacco products, which included exclusive U.S. commercialization rights of Altria subsidiary Philip Morris USA to the IQOS system. PM USA’s commercialization rights were subject to an initial five-year term, which began when the system received authorization from the U.S. Food and Drug Administration in April 2019 and continued through April 2024.

    As part of the 2013 agreement, PM USA had the right to maintain exclusive U.S. commercialization rights upon achieving an initial milestone by April 2022. Upon achieving additional milestones, PM USA had the option to renew for an additional five-year term through April 2029.

    While Altria believed it has achieved the required milestones, PMI disagreed. The parties were unable to reach a long-term agreement and decided to enter into the agreement to transition and ultimately conclude their relationship.

    Altria received a $1 billion from PMI upon entry into the agreement. Under the terms of the deal, PMI is obligated to make an additional payment of $1.7 billion (plus interest) by July 2023 for a total cash payment of approximately $2.7 billion (pre-tax). Altria expects to use the cash proceeds for several items, which may include investments in pursuit of its vision, debt repayment, share repurchases and general corporate purposes. Share repurchases, Altria said, depend on marketplace conditions and other factors and remain subject to the discretion of its board of directors.

    Altria expects to record the $2.7 billion pre-tax transaction amount as a deferred gain on its consolidated balance sheet in the fourth quarter of 2022. This gain will be recognized in earnings when the company assigns its rights to the IQOS system.

    IQOS and Marlboro HeatSticks are currently unavailable for sale in the U.S. due to orders imposed by the U.S. International Trade Commission that prohibit importation of IQOS and Marlboro HeatSticks into the U.S. relating to a patent dispute. PMI remains responsible for manufacturing the IQOS system and Marlboro HeatSticks and targets resumption of product supply in the first half of 2023.

    If supply of FDA-authorized product is available to Altria before May 2024, PM USA has the option to reintroduce the IQOS system and Marlboro HeatSticks for sale in the U.S. On April 30, 2024, U.S. commercialization rights to the IQOS system will transition to PMI. PMI will not have access to the Marlboro brand name or other brand assets, as PM USA owns the Marlboro trademark in the U.S.

    In a press note announcing the IQOS transition, Altria said it remains committed to its vision to responsibly lead the transition of adult smokers to a smoke-free future. “We believe in a portfolio approach to tobacco harm reduction and expect to compete in the major smoke-free categories. We have reinvested into our internal product development system and we expect to finalize designs for two smoke-free products, including a heated tobacco product, by the end of 2022,” the company wrote.

  • PMI Argues IQOS Ban Hurts Smokers Trying to Quit

    PMI Argues IQOS Ban Hurts Smokers Trying to Quit

    Photo: librakv

    The U.S. International Trade Commission (ITC) should have consulted more with the Food and Drug Administration before banning IQOS imports, lawyers for Philip Morris International argued before an appeals court panel on Oct. 3, according to Reuters.

    In September 2021, the ITC upheld an initial determination from May 2021 that PMI’s IQOS device infringes on two patents owned by BAT subsidiary Reynolds American Inc. (RAI). The agency then instituted an import ban and a cease-and-desist order preventing IQOS consumables and devices from being sold in the U.S.

    PMI has challenged the import ban in court, arguing among other things that the ban deprives American smokers of nicotine products that are less unhealthy than cigarettes.

    The case is part of a global patent dispute between RAI’s parent company British American Tobacco and tobacco giant Altria Group, which separated from PMI in 2008 and is the exclusive distributor of IQOS in the United States.

    A North Carolina jury awarded Altria won $95 million last month on claims that RAI’s Vuse e-cigarettes infringed its patents. In a separate case over RAI’s Vuse line, PMI won more than $10 million from a Virginia jury.

    RAI sued Philip Morris at the ITC in 2020. Its related patent case against PMI in Virginia is on hold.

    In July 2020, the FDA granted IQOS modified-risk orders, allowing Altria and PMI to tell consumers that the product generates lower levels of harmful chemicals than traditional cigarettes, among other claims.

  • Judge Boosts Philip Morris’ IQOS Infringement Award

    Judge Boosts Philip Morris’ IQOS Infringement Award

    Photo: New Africa

    R.J. Reynolds Vapor Co. owes Philip Morris Products more than $14 million after a federal judge on Aug. 17 increased a jury’s June patent-infringement award over vapor products to include prejudgment interest and supplemental damages, reports Bloomberg Law.

    Judge Leonie M. Brinkema amended the judgment entered June 15 in the U.S. District Court for the Eastern District of Virginia to reflect a total judgment amount of $10.9 million for infringement of one patent and $3.16 million for infringement of another.

    In its June 15 judgement, the jury found that RJR’s Vuse Solo and Alto devices infringe two Philip Morris patents covering parts of a vaping device for heating substances and preventing leaks. At the same time, the jury cleared Vuse Alto of infringing one of the patents.

    The verdict concerned counterclaims in RJR’s ongoing patent lawsuit over PMI’s IQOS heated-tobacco device. RJR won an order blocking IQOS imports at the U.S. International Trade Commission last November.

    Philip Morris succeeded earlier this year in invalidating parts of some patents RJR accused it of infringing at a U.S. Patent Office tribunal.

    RJR parent company BAT has also sued Philip Morris over IQOS in the United Kingdom, Germany and elsewhere. A PMI filing with the U.S. Securities and Exchange Commission earlier this year said IQOS patent lawsuits and challenges outside of the U.S. have “repeatedly and universally failed.”

    Altria has separately sued Reynolds for patent infringement in North Carolina over the Vuse line.

  • Aquavape to Distribute IQOS Devices in U.K. Vape Shops

    Aquavape to Distribute IQOS Devices in U.K. Vape Shops

    The U.K.-based next-generation nicotine distributor Aquavape has partnered with Philip Morris Limited (PML), the supplier behind IQOS, to offer heated tobacco products for the first time. Philip Morris Ltd. (PML), the U.K. affiliate of Philip Morris International

    This year, vape retailers have been challenged by the needs of their consumers, which are changing rapidly, according to Better Retailing. While over a quarter of adult smokers will explore smoke-free products in 2022, 58 percent haven’t yet found a satisfying alternative to cigarettes.

    The challenge for vape retailers, said PML, is twofold: meeting the growing consumer demand for smoke-free products, while matching individual preferences based on taste, satisfaction, ritual and other potentially complex needs.

    “It’s fair to say that no one single product can achieve this which is why retail outlets of all sizes have evolved as vape specialists, to become multicategory operators. Aquavape is one supplier which has made the move to multicategory, both for the benefit of its retailers’ customers and to the revenues generated by its business,” a spokesperson for PML told betterRetailing.com.

    Ebrahim Kathrada, managing director at Aquavape, said historically, the company did not list multiple smoke-free categories: “We now supply a range of smoking alternatives that meet market demands and trends.”

    Ebrahim believes a complete smoke-free product offering is essential to diversifying sales and increasing chances of satisfying more customers. “If you don’t have a category in the store, you can’t sell it and explore its potential. If you do, you become the one-stop shop conveniently catering to all the customer’s needs which increases overall takings, basket spend and retention,” he explained.

  • FDA Grants Reduced-Exposure Claim to PMI’s IQOS 3

    FDA Grants Reduced-Exposure Claim to PMI’s IQOS 3

    Photo: PMI

    The U.S. Food and Drug Administration has issued a modified risk granted order authorizing Philip Morris Products to market the IQOS 3 system holder and charger with the following reduced exposure information:

    • The IQOS system heats tobacco but does not burn it.
    • This significantly reduces the production of harmful and potentially harmful chemicals.
    • Scientific studies have shown that switching completely from conventional cigarettes to the IQOS system significantly reduces your body’s exposure to harmful or potentially harmful chemicals.”
    • This reduced exposure information is the same as the information previously authorized by FDA in July 2020 for an earlier version of the device.

    Today’s action follows the FDA’s review of a new modified risk tobacco product (MRTP) application submitted by the company for the IQOS 3 system holder and charger. This MRTP application primarily cross-referenced the supplemental premarket tobacco product application for this device, which was authorized for legal sale and distribution in the United States in December 2020, as well as the MRTP application for the previous version of the device.

    The IQOS 3 device is similar in design to the previous version (with mainly aesthetic changes), uses the same tobacco source, and the company requested to use the same exposure reduction claim as authorized for the previous version of the device. Given these similarities, FDA largely relied on its past evaluations of the IQOS 3 device and previous version of the device in determining that the IQOS 3 device meets the authorization criteria to be marketed as an MRTP.

    Headquartered in Switzerland, Philip Morris is currently banned from importing the product into the United States following an adverse ruling in a patent dispute with BAT’s Reynolds American subsidiary.

    In an interview with Bloomberg, PMI CEO Jack Olczak said the company plans to manufacture IQOS in the U.S. to get around the import ban.

  • PMI to Bypass Import Ban by Manufacturing IQOS in U.S.

    PMI to Bypass Import Ban by Manufacturing IQOS in U.S.

    Philip Morris International plans to manufacture IQOS in the United States to get its tobacco-heating device back on that country’s store shelves, reports Bloomberg.

    The move follows an adverse ruling against the company and its U.S. partner, Altria Group, in a patent dispute with British American Tobacco.

    In September 2021, the International Trade Commission (ITC) upheld an initial determination from May 2021 that IQOS infringes on two patents owned by BAT subsidiary Reynolds American Inc. (RAI).

    The ITC instituted an import ban and issued a cease-and-desist order, barring Altria Group from importing PMI’s IQOS 2.4, IQOS 3, IQOS 3 Duo products into the U.S. By declining to intervene, the U.S. Trade Representative upheld the ITC finding in November, leaving PMI with the options to produce IQOS domestically or tweak the design.

    A design change, however, would require authorization from the U.S. Food and Drug Administration again.

    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.

  • IQOS Iluma Prime Debuts in Switzerland Duty Free

    IQOS Iluma Prime Debuts in Switzerland Duty Free

    Photo: Taco Tuinstra

    Philip Morris International has launched the new IQOS Iluma Prime in Switzerland duty free, according to DFNI Frontier.

    The announcement follows the market launch of IQOS Iluma in Japan in 2021.

    The IQOS Iluma Prime is PMI’s first tobacco-heating system to introduce induction-heating technology, which utilizes no blade and requires no cleaning.

    “Our objective is a world without cigarettes, a world where cigarettes are replaced by smoke-free alternatives that are a better choice than continued smoking,” said PMI CEO Jacek Olczak. “We have launched several generations of our IQOS heated-tobacco system, expanding our portfolio to offer constantly improved, science-backed solutions that take advantage of advancements in technology and address pain points heard from consumers.

    “This commitment to continuous innovation plays a significant role in our ambition to deliver a smoke-free future. The launch of IQOS Iluma, our most innovative device yet, gives adult smokers another better choice and represents an important leap forward in our efforts to accelerate the end of smoking.”

     “IQOS Iluma is our most innovative offering to date and the new flagship in our portfolio of science-backed, smoke-free products. Its breakthrough induction-heating technology heats tobacco from within, without burning, so there’s no smoke, no ash and, like previous IQOS devices, it emits, on average, 95 percent lower levels of harmful chemicals compared with cigarettes,” said Michele Cattoni, vice president of heated-tobacco platforms at PMI.

    “However, unlike our previous tobacco-heating systems, IQOS Iluma has no blade. That means no tobacco residue or cleaning—ever. With this, and other product features, we aim to address consumer pain points that may have hindered some adult smokers from beginning or maintaining their journey away from cigarettes in the past.”

  • Altria Banned From Importing IQOS Into U.S.

    Altria Banned From Importing IQOS Into U.S.

    Photo: Kuznietsov Dmitriy

    The U.S. Trade Representative has upheld the International Trade Commission’s (ITC) finding that Philip Morris International’s IQOS tobacco heating device infringes on patents held by British American Tobacco, reports The Winston-Salem Journal.

    As a result of the ITC ruling, Philip Morris USA is barred from importing PMI’s IQOS 2.4, IQOS 3, IQOS 3 Duo heat-not-burn traditional cigarette products. It also was ordered to halt future sales of those products—marketed as Marlboro HeatSticks—already in the U.S.

    Some retailers of the Marlboro HeatSticks, including convenience stores, already had displayed notifications to customers that those products could no longer be sold as of Monday.

    “Today’s announcement provides a measure of success for our enforcement of intellectual property rights to ensure we can continue to innovate, as is common practice among innovation-based industries,” Gareth Cooper, BAT’s assistant general counsel, said in a statement. “As we have strenuously noted, there was no reason to overturn the policy.”

    Altria said expressed disappointment with the decision. “We continue to believe that the plaintiff’s patents are invalid and that IQOS does not infringe on those patents,” the company said in a statement.

    “The ITC’s importation ban makes the product unavailable for all consumers who have switched to IQOS, reduces the options for the over 20 million smokers looking for alternatives to cigarettes, and ultimately is detrimental to the public health.”

    This sentiment was echoed by Gregory Conley, president of American Vaping Association, at the time of the ITC’s Sept. 30 decision.

    “By potentially denying them the opportunity to switch to a harm reduction production IQOS, the real losers of this protracted court battle could end up being American adult smokers,” Conley said.

    “While some may use vaping, snus, or pouches in the absence of IQOS, far too many American adults will choose to just smoke cigarettes instead.”

    The U.S. Food and Drug Administration authorized IQOS for sale in April 2019. The products debuted in test markets in Atlanta in October 2019 and Richmond, Virginia, in November 2019. During the second quarter, PM USA expanded retail distribution of Marlboro HeatSticks into the Triad and other metro areas of North Carolina, as well as northern Virginia and Georgia.

    Altria will likely appeal to the U.S. Court of Appeals for the Federal Circuit, which handles patent lawsuits. That process could take up to a year to reach a decision, with the likelihood of a successful appeal not favorable, according to industry analysts.

    In the worst-case scenario for Altria and Philip Morris, the two companies would have to go back to the drawing board, moving production to the U.S. or changing up the design enough to avoid patent infringement claims.

    PMI has successfully defended similar cases in the U.K. and elsewhere. BAT has already pursued litigation over IQOS in Poland, the Czech Republic, Bulgaria, Romania and Greece and through the European Patent Office.

  • PMI Makes Case for U.S. Sales of IQOS at FDA

    PMI Makes Case for U.S. Sales of IQOS at FDA

    Credit: Aidman

    Philip Morris International met with the U.S. Food and Drug Administration on Nov. 5 to present its argument for why the multinational and Altria Group should be allowed to import and sell the IQOS tobacco-heating device in the U.S., reports CNBC.

    According to a CNBC source, PMI told the FDA that IQOS is unique in its ability to transition smokers away from combustible cigarettes, which the company says are more harmful to health than tobacco-heating devices.

    In late September, the International Trade Commission ruled that IQOS infringed on two of Reynolds’ patents. The Biden administration is conducting an administrative review until Nov. 29 to decide if the sale and import of the cigarette alternative will be banned.

    During the FDA meeting, PMI reportedly argued that the ITC overstepped its bounds, given that the FDA is in charge of regulating which tobacco products can be sold.

    The U.S. Trade Representative will make a recommendation to President Joe Biden after listening to input from a number of agencies, including the FDA, which regulates tobacco products.

    If the administration sides with R.J. Reynolds in the dispute, IQOS could be off of U.S. shelves for months as it waits for a decision on a separate claim from Reynolds with the U.S. Patent and Trademark Office.

    PMI has successfully defended similar cases in the U.K. and elsewhere. BAT has already pursued litigation over IQOS in Poland, the Czech Republic, Bulgaria, Romania and Greece and through the European Patent Office.

    In the worst-case scenario for Altria and Philip Morris, the two companies would have to go back to the drawing board, moving production to the U.S. or changing up the design enough to avoid patent infringement claims.

  • ITC: IQOS Infringes on BAT Patents, U.S. Sales to End

    ITC: IQOS Infringes on BAT Patents, U.S. Sales to End

    Photo: theaphotography

    The International Trade Commission (ITC) has upheld an initial determination from May 2021 that Philip Morris International’s IQOS device infringes on two patents owned by BAT subsidiary Reynolds American Inc. (RAI).

    The agency has instituted an import ban and a cease-and-desist order preventing IQOS consumables and devices from being sold in the U.S. in 60 days. PMI’s U.S. partner, Altria Group, plans to continue to sell IQOS through the 60-day period in its existing markets.

    BAT welcomed the ruling. “Infringement of our intellectual property undermines our ability to invest and innovate and thereby reduce the health impact of our business,” the company wrote in a statement. “We will therefore defend our IP robustly across the globe.”

    The patents relate to an electronically powered device with a heater to generate an aerosol and expire in October 2026 and November 2031. BAT has filed similar cases globally, including in Germany, the U.K., Japan and Italy.

    Morgan Stanley said the ruling would have limited financial impact on PMI and Altria, as IQOS in the U.S. is not a meaningful contributor to the companies’ earnings. The outcome of similar cases brought by BAT against PMI internationally, however, could have a greater impact. But so far, PMI has been successful defending cases in the U.K. and Greece.

    The investment bank also noted that the IQOS ban applies to imported product, suggesting it may be overcome by shifting production to the U.S.

    The ITC decision will now be reviewed by the U.S. Trade Representative. If the decision is not vetoed within 60 days (only a handful have ever been vetoed), it can be appealed to the U.S. Court of Appeals, but the import ban would still be in effect throughout an appeals process.