The city council for Foster City, California has tabled an ordinance prohibiting sales of flavored e-cigarettes and other tobacco products over potential litigation concerns and a desire to see what actions the state takes in November.
The council voted 2-2 on the proposed ordinance ban. Councilmember Sam Hindi recused himself because his business sells tobacco products, according to The Daily Journal.
Councilmember Patrick Sullivan wanted to table the item over litigation concerns because some tobacco retailers have sued cities like Palo Alto for ordinances. However, Forest City staff said no litigation has successfully overturned the ordinances.
“I’m not comfortable with moving forward,” Sullivan said.
San Mateo County and cities like Half Moon Bay, South San Francisco, Burlingame, San Carlos, San Mateo and Redwood City have prohibited selling flavored tobacco, with several others considering bans.
The state has also weighed in with Senate Bill 793, signed into law in 2020, which calls for tobacco retailers not to sell flavored tobacco products.
However, implementation has been halted due to a referendum calling for its repeal, stalling a decision.
While offering various benefits, heated-tobacco products (HTPs) require lots of dedication from tobacco retailers to be successful, according to an article in the U.K. publication Better Retailing.
Although vaping has rapidly taken off since its introduction in the U.K. two decades ago, HTP is a younger technology that has taken some time to build momentum. Philip Morris Limited (PML) entered the market in 2016 with IQOS, and Japan Tobacco International debuted its Ploom device in the U.K. in 2020.
In 2021, HTPs represented 18.6 percent of the total reduced-risk product market in the U.K., up 86 percent compared to 2020, suggesting considerable gains for retailers who can invest the time, energy and research that this category demands.
The retailers interviewed by Better Retailing reported hit-or-miss success with heat-not-burn products, with one shop owner keeping IQOS Heets in store for a single customer and another bringing in more than £1,000 ($1,183) per week with the product.
JTI advises retailers to maintain good stock levels and to have devices available for in-store demonstrations and for using platforms, such as JTI’s trade website jtiadvance.co.uk, to generate repeat sales.
Kate O’Dowd, head of commercial planning for U.K. and Ireland at PML, urges retailers to not limit themselves by a “stock-and-sell” mentality. “Build connections with customers to understand their preferences so you can offer a smoke-free alternative that meets their needs,” she says.
Recently, U.S. Food and Drug Administration Commissioner Robert Califf announced an external evaluation of both the Human Foods Program and the Center for Tobacco Products (CTP). The FDA press release observed that “… even greater challenges lie ahead as we determine how the agency will navigate complex policy issues and determine enforcement activities for an increasing number of novel products that could potentially have significant consequences for public health. To that end, the review will push toward ‘organizational excellence.’”
Califf is right—the CTP clearly requires assistance. The purpose of this article is to review how the CTP arrived in this untenable situation and to suggest areas of focus for the review of the CTP processes.
How Did We Get Here?
There is little doubt that the CTP is in an unenviable position. No matter which way the agency turns, it is impossible to please everyone. The anti-tobacco/vaping groups will never be satisfied until all tobacco products are gone—so realistic harm reduction propositions from the center will always be met with opposition. And when the CTP tries to develop policies with a focus on efficiency, many in the industry claim that they are “prohibitionist” and that they have no regard for harm reduction and/or the human and economic consequences of their decision-making.
Recently, several court opinions and CTP actions have significantly contributed to the challenging environment for the CTP:
West Virginia v. EPA. While not directly related to the CTP, the West Virginia v. EPA Supreme Court decision has reopened the question as to whether discretion of regulatory agencies may become more limited in the future. The court seems poised to chip away at longstanding doctrines (or apply them more forcefully) to limit agency power and place policymaking back with the legislature.
Cigar Association of American v. FDA. More recently, in the Cigar Association of America v. FDA case, Judge Amit Mehta of the U.S. District Court for the District of Columbia examined whether the FDA’s decision not to exempt premium cigars from the Deeming Rule was arbitrary and capricious. The court ultimately found that the FDA ignored evidence in the rulemaking record—and ruled against the agency.
Juul v. FDA. Days later, the CTP found toxicological issues with Juul’s popular vapor products and issued marketing denial orders (MDOs) for those products. Not surprisingly, Juul immediately requested and received an emergency stay of the MDOs from the D.C. Circuit. Without missing a beat, the CTP promptly “… administratively stayed the marketing denial order. The agency [determined] that there are scientific issues unique to the Juul application that warrant additional review.” Several commentators questioned the CTP’s rationale for its decision to re-review Juul’s applications, and some have gone so far as to suggest that this quick reversal indicates a less than appropriate review of Juul’s data or worse—a lack of confidence in the CTP’s decision-making. Either way, the entire chain of events draws into question the CTP’s review process.
Finally, the CTP is still under pressure to complete decisions on premarket tobacco product applications (PMTAs) for those companies addressed in the Maryland court decision which, according to the CTP, will not be completed until next summer. Further compounding the CTP’s problems, the center continues “processing” approximately 1,000,000 synthetic nicotine PMTAs past the congressional deadline for marketing decisions on July 13, 2022. How the center will respond to this pressure is anyone’s guess. So far, it seems like the CTP continues to move at its own pace, following the Maryland court’s order to the best of its abilities.
These external and internal factors point to one conclusion that cannot be ignored—the CTP appears to be struggling and needs something to change. With the above in mind, the following are a few areas ripe for external (and internal) review at the CTP.
Credit: Fizkes
Operational Changes
Operationally, the CTP seems to have the resources (personnel and budget) to successfully regulate tobacco products. That said, certain policy choices and administrative actions (both self-inflicted and externally inflicted) appear to hamper the center’s ability to effectively manage the space. Importantly, effective regulation is hamstrung by the complexity of the U.S. tobacco regulatory scheme, a lack of clear standards for product testing and approval and a too opaque product application process.
The most challenging operational issues come from the existing regulatory scheme, which is too complex for tobacco products. The Tobacco Control Act dictates the parameters/guardrails, but the CTP has latitude in how the process is implemented. The comprehensive PMTA guidance and robust final rule demand a scientific depth that goes too far. The question is: Is all of the delineated scientific data really necessary to determine that a product is appropriate for the protection of public health (APPH)?
If comparing to combustible cigarettes, it would seem that most electronic nicotine-delivery product APPH determinations could be made based on chemistry alone. Piling on bench toxicology, human factors, pharmacokinetic and behavioral studies, it’s no wonder the review process takes so long.
Standards are not clear. Without clear standards, the CTP and industry both are left constantly employing guesswork and conjecture to facilitate decision-making. While understandably there is no simple formula for APPH, clear expectations would be beneficial and efficient. By way of example, which device characteristics really need testing? What is the depth of stability testing necessary? What constitutes a sufficient PK [pharmacokinetic] study? While the initial meeting with the Office of Science is often useful to help answer questions like these, better defining product-specific standards and setting minimums would go a long way to streamlining the approval process.
Transparency is lacking. While one can review the Technical Project Lead Reviews and some of the review standards memos that the CTP places on its website, few PMTA applicants have any idea what’s going on with their applications at any given time. Other than the initial pre-PMTA meeting and the sole deficiency letter, there is little that applicants know about the status (both administratively and substantively) of their applications. While more transparency about the status of applications would be welcome, more back and forth on issues in applications would benefit everyone—particularly the CTP. In the case of Juul, reports indicate that Juul provided thousands of pages of data related to the toxicological issue that the CTP raised in the MDOs. If the now outdated additional information requests were utilized by the CTP, Juul would have pointed out this data, and at least one issue could have been resolved well short of a trip to the courthouse.
Credit: Oleg
Policy Changes
It goes without saying that U.S. government policy can be fickle to say the least. Setting and maintaining long-term policy is difficult—especially in light of changing administrations every few years. Despite this, overriding policy tenants as they relate to harm reduction can, and should, form the cornerstone of tobacco regulatory policy. If harm reduction is the priority, then regulators need to prioritize pathways for reduced-harm products to enter the market, incentivize innovation and focus on providing offramps to combustible cigarette smokers seeking to quit smoking.
Harm reduction policy. During the tenure of former Commissioner Gottlieb at the FDA, many in the industry thought harm reduction would prevail and that all would recognize vapor products’ place at the opposite end of the continuum of risk from combustible cigarettes. Unfortunately, the significant uptick in youth experimentation with a few types of vapor products prodded the CTP into a tough position. Public health groups, dissatisfied with the CTP’s pace, forced the center into a corner via litigation.
Assuming the goal of the Tobacco Control Act remains to reduce smoking-related morbidity and mortality, harm reduction strategies are central to achieving that goal. Importantly, harm reduction strategies should be palatable to all stakeholders. While the CTP has several initiatives moving forward, is there a plan for initiatives dedicated to moving smokers to safer alternatives? Efforts to move smokers to less risky alternatives do nothing when those less risky alternatives cannot succeed via the PMTA pathway. Current tobacco policy is remarkably dissimilar from the variety of strategies employed for other unsafe behaviors where harm reduction is embraced as the primary alternative. In areas such as drug use and sexually transmitted diseases, our society generally accepts reduced-harm efforts, but for tobacco, collectively we are still searching for that sweet spot.
Given all the challenges that the CTP faces, working on harm reduction policies hand-in-glove with nongovernmental groups and industry probably does not seem like the best use of time. When the center was first formed, frequent scientific meetings were held on various issues (such as harmful and potentially harmful constituents). These have fallen off in recent years, likely in part due to Covid and also due to the onerous demands on the center. Prioritizing genuine and open conversations between the CTP, industry and tobacco control groups is critical to developing strong harm reduction policies. Holding scientific meetings (either through the CTP or the Tobacco Products Scientific Advisory Committee) on harm reduction plans and policies would add transparency and bring all ideas to the table.
The FDA should not let the perfect be the enemy of the good when considering reduced-harm products. At present, PMTA reviews appear to be searching for the perfect. Reviews seem to focus on the smallest details that might pose a risk while ignoring a more generalized comparison to combustible products with 70 known carcinogens (and a track record of 480,000 deaths per year). APPH does not mean no risk—it means less risk than the deadliest consumer product ever invented, the combustible cigarette. Reconsidering how APPH is adjudged would be an excellent first step in combatting morbidity and mortality attributable to smoking.
Investing in harm reduction must be incentivized. If one wants to develop a new product, the timeline is a hard stop. A year of product development, up to three years of PMTA testing (including two years of stability and time to plan, conduct and write up the studies) plus one year to three years of the CTP review before the possibility of a marketing order sounds like a pretty poor investment. The PMTA process must change to bring less risky products more rapidly to market.
Society must not forget about smokers. Youth tobacco issues are important, but the 1,300 smokers dying each day are important too. A balanced harm reduction policy—controlling youth access and exposure while moving combustible cigarette smokers to quitting tobacco altogether or moving to a less risky product is necessary.
Moving Forward
Hopefully the external review will be a fruitful exercise—one that provides robust alternatives for the CTP to consider. The review, if rightly focused, will address foundational issues that will, in the end, lead tobacco regulation to a reasonable, reduced-harm world where smokers are given hope for a future.
Chris Howard is vice president, general counsel and chief compliance officer at E-Alternative Solutions, an independent, family-owned innovator of consumer-centric brands.
Rich Hill is the compliance director and associate general counsel of E-Alternative Solutions.
The UK’s largest vaping retailer VPZ has announced its intent to open 10 additional stores by the end of the year.
It comes as the business called for the UK Government to introduce tighter controls and licensing for selling vaping products.
The business will increase its portfolio to 160 locations across England and Scotland, including stores in London and Glasgow, according to a press release.
VPZ made the announcement as it takes its mobile vape clinic on the road throughout the country.
It comes as Government ministers continue to promote vaping, with Public Health England claiming e-cigarettes carry a “fraction of the risk of smoking”.
However, last month research indicated a steep rise in underage vaping over the last five years, according to Action on Smoking and Health.
Doug Mutter, director of VPZ, said that VPZ is spearheading the fight against the nation’s No. 1 killer – smoking.
“Our plans to open 10 new stores and the launch of our mobile vape clinic responds 100 percent to our ambition to engage with more smokers throughout the country and help them take the first steps on their quit journey.”
Mutter added that the e-cigarette sector could be improved, calling for greater scrutiny of those selling products,
“At the moment we have a challenge in the industry where imported, many unregulated, disposable vaping products are readily available from local convenience stores, supermarkets and several other general retailers with no age verification control or regulation in many of these,” said Mutter.
“We are urging the UK Government to act now and follow best practice from countries like New Zealand, where flavoured products can only be sold from specialist licensed vaping stores, where a challenge 25 policy is in place and consultation is aimed towards adult smokers and vapers.
“VPZ is also in favor of substantial fines for those who breach the rules.”
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.
As a statewide ballot question in November’s election about whether flavored e-cigarettes and other tobacco products should be banned approaches, San Benito County has decided to take the first step towards banning the products.
At its Aug. 9 meeting, the county’s Board of Supervisors approved the first reading of an ordinance that will ban the sale of flavored tobacco products in all areas in the county, including the cities of Hollister and San Juan Bautista, reports Halfwheel. The approval was unanimous among the five supervisors.
The ordinance, which also includes a ban on the sale of single-use or disposable e-cigarettes, will get a second reading at the board’s August 23 meeting. If it passes as written, the ban would go into place 30 days after is adopted.
San Benito County has approximately 64,000 residents, and is located southeast of San Jose.
The U.S. Food and Drug Administration on Aug. 18 issued a warning letter to VPR Brands (doing business as Krave Nic) for marketing illegal flavored nicotine gummies—the first warning letter for this type of product.
According to the FDA, these types of gummies are of particular public concern because of their resemblance to kid-friendly food or candy products and the potential to cause severe nicotine toxicity or even death among young children.
VPR Brands markets gummies that have 1 mg of nicotine each and are available in three flavors – Blueraz, Cherry Bomb and Pineapple. The packaging claims that the products contain tobacco-free nicotine. This firm has not submitted a premarket tobacco product application to the FDA, and does not have a marketing authorization order to manufacture, sell or distribute these products in the U.S.
“Nicotine gummies are a public health crisis just waiting to happen among our nation’s youth, particularly as we head into a new school year,” said FDA Commissioner Robert M. Califf in a statement. “We want parents to be aware of these products and the potential for health consequences for children of all ages—including toxicity to young children and appeal of these addictive products to our youth. The FDA will not stand by as illegal products infiltrate the marketplace.”
A new study carried out by the Center of Excellence for the Acceleration of Harm Reduction in Sicily confirms that vaping presents a lower risk to heart health than does smoking.
The researchers replicated a 2017 BAT study, which demonstrated that the endothelial cell migration inhibition caused by cigarette smoke is not caused by e-cigarette aerosol exposure. (The endothelium is a membrane lining the heart and blood vessels).
Using the Vype ePen3 and the heated-tobacco products Glo Pro and IQOS 3 Duo, the Replica study corroborated the findings of the BAT study.
Riccardo Polosa
“The interesting fact is that switching to combustion-free products reduces vascular damages and prevents the possibility of the onset of smoking-related diseases, such as arteriosclerosis and hypertension,” said Massimo Caruso, an author of the study. “Once again, our research has challenged the notion that e-cigarettes or heated tobacco cause similar damage to that of combustible cigarettes.”
The study is part of the Replica Project, whose mission is to replicate studies conducted by tobacco companies—whose research is routinely dismissed as conflicted—in order to independently assess their scientific validity.
“By replicating the findings generated by tobacco industry studies on e-cigarettes and heated tobacco products, we are proving that these results are robust and trustworthy,” CoEHAR founder Riccardo Polosa told Filter.
Charlie’s Holdings, parent to Charlie’s Chalk Dust e-liquids, says its best-selling e-liquids are in the substantive review phase of the U.S. Food and Drug Administration’s premarket tobacco product application (PMTA) process.
The company remains in the select minority of 2020 PMTA submissions that are still viable; the company also submitted PMTAs for more than 700 additional products prior to the May 14, 2022 FDA deadline, according to a press release. Prior to the FDA’s May 14 deadline, Charlie’s successfully filed new PMTAs for its synthetic nicotine Pacha Syn products.
“Charlie’s positive momentum continued in the second quarter and first half of 2022, highlighted by our 36 percent and 58 percent year-over-year revenue growth,” stated Matt Montesano, CFO for Charlie’s Holdings. “We continued to diversify and expand Charlie’s robust product line, as represented by our new 12ml Pacha Syn Disposable line and our refreshed Pacha Syn e-liquid line, both of which launched in the second quarter of 2022.
“At the same time, we continued to operate the business with tight fiscal controls, as demonstrated by our further reduction of operating expenses, as a percentage of revenue, to 46 percent during the second quarter.”
Financial Results for the Six Months Ended June 30, 2022:
Revenue: For the six months ended June 30, 2022, revenue was $15.5 million, an increase of $5.7 million, or 58%, compared with $9.8 million for the same period last year. The increase in revenue was primarily due to a $4.8 million increase in sales of our nicotine-based vapor products and a $0.9 million increase in sales of our hemp derived products. The increase in our nicotine-based vapor product sales was driven by sales of our new 8ml Pacha Syn Disposable line, which launched in December 2021, as well as our 12ml Pacha Syn Disposable and refreshed Pacha Syn e-liquid lines, both of which launched in the second quarter of 2022.
Gross Profit: For the six months ended June 30, 2022, gross profit was $6.5 million, an increase of $1.4 million, or 28%, compared with $5.1 million for the same period last year. The resulting gross margin was 41.9%, compared with 51.6% for the same period in 2021. The decrease in gross margin is primarily due to an increased percentage of our sales coming from Charlie’s Pacha Syn Disposable product line, which carries a lower unit margin relative to the Company’s other products, as well as comparatively higher freight and delivery expenses and a larger reserve for inventory obsolescence related to certain of our retired hemp-derived wellness products.
Total Operating Expenses: For the six months ended June 30, 2022, total operating expense, including general and administrative, sales and marketing expense and research and development costs, were $6.7 million, an increase of $1.2 million, or 22%, compared with $5.5 million for the six months ended June 30, 2021. The increase in operating expenses was primarily attributable to sales and marketing costs related to enhanced trade-show activity during the quarter in furtherance of our plan to grow market share across the nicotine and hemp-derived product categories and $0.8 million in research and development costs associated with our 2022 PMTA submissions. Operating expenses as a percentage of revenue decreased to 43%, from 56%, for the periods compared.
Operating Loss: For the six months ended June 30, 2022, operating loss was $0.2 million, a decrease of $0.2 million, or 51%, compared with an operating loss of $0.4 million for the six months ended June 30, 2021.
Net Income/Loss: For the six months ended June 30, 2022, net income was $0.1 million, compared with a net loss of $0.4 million for the six months ended June 30, 2021.
As a statewide ballot question in November’s election about whether flavored e-cigarettes and other tobacco products should be banned approaches, San Benito County has decided to take the first step towards banning the products.
