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On May 23, 2018, Bill S-5 (“An Act to amend the Tobacco Act and the Non-smokers’ Health Act and to make consequential amendments to other Acts”) became law in Canada, representing a major shift in Canada’s regulatory framework, as the Bill establishes a nationalized approach to the regulation of vaping products and tobacco products through the implementation of the Tobacco and Vaping Products Act (TVPA).

This legislation represents a milestone for vaping products. Prior to the TVPA, vaping products were not expressly acknowledged as legal at the federal level in Canada. Further, vaping products containing nicotine were regulated under the Food and Drugs Act and required premarket approval. Canada’s modernized approach seeks to strike a balance between the goals of restricting access to tobacco and vaping products for minors, while allowing adult smokers to access vaping products and less harmful alternatives to traditional tobacco products.

 General Overview of the TVPA and Related Legislation

Under the new TVPA framework, vaping products that are not marketed with therapeutic claims are now legal and may be manufactured, distributed, and sold in Canada.[1] A “vaping product” is defined in Section 2 (Interpretation) of the TVPA as: (a) a device that produces emissions in the form of an aerosol and is intended to be brought to the mouth for inhalation of the aerosol; (b) a device that is designated to be a vaping product by the regulations; (c) a part that may be used with those devices; and (d) a substance or mixture of substances, whether or not it contains nicotine, that is intended for use with those devices to produce emissions.  Therefore, e-liquids, including zero-nicotine e-liquid, fall within this definition.

While vaping products will be permitted under the TVPA, they will be subjected to substantial regulation. The Act addresses the manufacture, sale, labeling, and promotion of tobacco products and vaping products, and major provisions will:

  • Largely apply existing tobacco regulations to vaping products[2];
  • Prohibit the sale of vaping products to minors[3];
  • Place heavy restrictions on advertising and promotion of vaping products by restricting lifestyle advertising, use of testimonials, and related claims[4];
  • Restrict the promotion of certain flavors—especially those that may allegedly appeal to minors, e.g., dessert flavors[5]; and
  • Empower Health Canada to implement regulations, including plain and standardized tobacco packaging.[6]

Certain provisions of the TVPA became effective upon Bill S-5 receiving Royal Assent on May 23, 2018 (e.g., prohibition on sale to youth), while other provisions give manufacturers and importers 180 days to comply, following Royal Assent (e.g., provisions that prohibit the manufacture and sale of vaping products containing an ingredient set out in Schedule 2, such as “colouring agents”).

Promotional Claims

Stakeholders and Health Canada are working together to ensure that the various restrictions set out in the TVPA, including those impacting promotional claims and advertising, are not overly burdensome.[7] Health Canada has acknowledged competing interests that push back on its obligation to ensure that the public is not misled by promotional practices, including a strong interest in allowing adults to access the information needed to make informed decisions about the vaping products available on the market (especially adults who are working to quit the use of tobacco products). One example is the current dialogue between Health Canada and stakeholders related to TVPA Section 30.43. Specifically, while TVPA Section 30.43 seeks to prohibit the use of certain promotional statements, e.g., statements that could lead a consumer to believe that certain health benefits will result from vaping, Health Canada has distributed a draft list of relative risk statements about vaping products that would be permitted under the TVPA, if finalized.[8] The September 4, 2018 draft of the “List of Statements for Use in the Promotion of Vaping Products” was circulated, and Health Canada accepted comments until September 17, 2018.[9] The list is now under review with the Scientific Advisory Board on Vaping Products (SAB). The seven proposed statements are:

  1. If you are a smoker, switching completely to vaping is a much less harmful option;
  2. While vaping products emit toxic substances, the amount is significantly lower than in tobacco smoke;
  3. By switching completely to vaping products, smokers are exposed to a small fraction of the 7,000 chemicals found in tobacco smoke;
  4. Switching completely from combustible tobacco cigarettes to e-cigarettes significantly reduces users’ exposure to numerous toxic and cancer-causing substances;
  5. Completely replacing your cigarette with a vaping product will significantly reduce your exposure to numerous toxic and cancer-causing substances;
  6. Switching completely from smoking to e-cigarettes will reduce harms to your health; and
  7. Completely replacing your cigarette with an e-cigarette will reduce harms to your health.

While the list has not yet been finalized, the collaborative effort between Health Canada and stakeholders in bringing clarity to the TVPA through exemptions and other regulatory measures evidences an effort to balance the goals of the legislation. This is in stark contrast to the Tobacco Control Act in the United States, which bans all “modified risk” claims made with FDA authorization. As we have previously blogged about here, this provision of the Tobacco Control Act is being challenged by the vapor industry.

Related Legislation

Additional legislation, such as Canada’s Food and Drugs Act and the Non-smokers’ Health Act, will play a role in the approval of vaping products that contain therapeutic claims and will address other issues, such as exposure to second-hand smoke in public spaces and workplaces. The Canada Consumer Product Safety Act (CCPSA) will also play a role in the regulation of vaping products as a whole.

The CCPSA sets forth mandatory reporting and document retention requirements, as well as a prohibition on the manufacture, import, advertisement, or sale of any consumer product that is a “danger to human health or safety,” as defined by Paragraphs 7(a) and 8(a) of the CCPSA. Further, the CCPSA empowers Health Canada to order recalls (including less severe actions, depending on degree of risk), as well as to order that testing be conducted on the consumer product of interest.[10]

Health Canada intends to introduce regulations under the CCPSA to address health and safety risks posed by vaping products. While there are currently no product-specific regulations for vaping products under the CCPSA, the CCPSA and applicable regulations, including the Consumer Chemicals and Containers Regulations, 2001 (CCCR), will apply until regulations specific to vaping products are implemented.  After specific regulations take effect, general provisions of the CCPSA will continue to apply.

Canada’s Guidance Document, Vaping Products not Marketed for a Therapeutic Use (July 12, 2018), provides an overview of the health and safety requirements that exist under the CCPSA and related CCCR regulations that relate to vaping products marketed without therapeutic claims (i.e., vaping products that are not regulated as drugs under Canada’s Food and Drugs Act). The CCCR sets forth a classification-based approach to rules for consumer chemicals, including a prohibition on the sale of very toxic substances and requirements for labeling.  Child-resistant containers are also required for toxic substances.

Importantly, Section 3 of Health Canada’s Guidance Document summarizes the classifications related to nicotine that are applicable to vaping products “manufactured, imported, advertised, or sold as consumer products.” The summary from the Guidance Document states the following:

  1. Vaping liquids containing equal to or more than 66 mg/g nicotine meet the classification of “very toxic” under the CCCR, 2001 and are prohibited from being manufactured, imported, advertised, or sold under Section 38 of the CCCR, 2001.
  2. Vaping liquids containing between 10 mg/g and less than 66 mg/g nicotine meet the classification of “toxic” under the CCCR, 2001.  Stand-alone containers of these liquids must meet the CCCR, 2001 requirements for “toxic” chemicals, including child-resistant containers and hazard labelling.
  3. While the CCCR, 2001 excludes ingredients present between 0.1 mg/g and 10 mg/g when calculating a chemical product’s toxicity, Health Canada has determined that nicotine is potentially toxic via oral exposure in this concentration range. Therefore, vaping liquids containing nicotine between 0.1 mg/g and 10 mg/g or under 1% (m/m) (representations of nicotine concentration in mg/mL and mg/g are not necessarily interchangeable as mass varies with the density of the vaping liquid) that do not meet the requirements for the “toxic” classification under the CCCR, 2001 are a violation of the general prohibition set out in Paragraphs 7(a) or 8(a) of the CCPSA and are subject to enforcement action.

Section 4.3 of the Guidance Document (“Vaping Liquid Considerations”) describes additional considerations regarding whether a consumer product that is a “danger to human health or safety,” as defined by Paragraphs 7(a) and 8(a) of the CCPSA. As noted above, products that are considered to be a “danger to human health or safety” may not be manufactured, imported, advertised, or sold as a consumer product. Specific considerations for e-liquids include those related to nicotine, as described above, diluents, additives and flavors, impurities and thermal degradations products, and microbial contamination. Considerations for vaping devices focus on electrical and mechanical aspects of the product, batteries, and chargers.

Importing E-liquids into Canada from the United States

Under the TVPA, vaping products such as e-liquids may now be imported into Canada, according to Customs Notice 18-05.[11] A step-by-step guide to importing commercial goods into Canada is available here, which serves as a valuable tool.

While many manufacturers and distributors have looked to Canada as a potential market, navigating the process of importing vaping products does not come without its challenges. In addition to licensing and permits, tariff classification numbers are needed for each item, and duties and taxes must be determined prior to shipping the goods and having them released from customs. Further, provincial or territorial legislation may impose additional requirements that retailers must follow. We expect that additional guidance will be forthcoming in this regard.

Joint Efforts to Regulate Vaping Products in North America

The North American Vapor Alliance (NAVA) recently emerged as an outlet to ensure practical regulation of vaping products, and to create a unified approach to standards and regulatory regimes across the U.S. and Canada. On September 5, the American E-Liquid Manufacturing Standards Association (AEMSA), the Smoke-Free Alternatives Trade Association (SFATA), and the Canadian Vaping Association (CVA) announced that they would be engaging in this joint effort. For a copy of the press releases, see here and here.

We will continue to provide updates regarding the evolving regulatory landscape that will impact vaping products in Canada.

For more information, contact Azim Chowdhury (+1 202.434.4230, chowdhury@khlaw.com). For more information on our tobacco and e-vapor regulatory practice in general, visit khlaw.com/evapor.  Follow Keller and Heckman Tobacco and E-Vapor Partner Azim Chowdhury on Twitter.

 

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[1]              We note that vaping products that make therapeutic claims continue to fall within the scope of Canada’s Food and Drugs Act and require premarket approval.

[2]              See TVPA, Part I.1 (Vaping Products); see also Part III (Labelling).

[3]              TVPA, Part II (Access).

[4]              TVPA, Part IV (Promotion), Division 2 (Vaping Products).

[5]              See TVPA, Sections 30.48 and 30.49 and the “Flavours” table set out in Schedule 3.

[6]              See Canada Gazette, Part I, Volume 152, Number 25: Tobacco Products Regulations (Plain and Standardized Appearance.

[7]              See, e.g., TVPA, Sections 30.1 through 30.8.

[8]              In preparing the list of statements, Health Canada considered public opinion from the 2018 Public Health Consequences of E-Cigarettes report, prepared by the U.S. National Academies of Sciences, Engineering and Medicine (report highlights are available here), and consulted with the external Scientific Advisory Board on Vaping Products (SAB).

[9]              The draft list of statements was circulated in a September 4, 2018 email from Mathew Cook, Manager of the Regulations Division of the Tobacco Products Regulatory Office, which is part of Health Canada’s Tobacco Control Directorate.

[10]             See Sections 12(a), 31, and 32 of the CCPSA.

[11]             “Commercial shipments of vaping products with no health claims and no health product ingredients (can contain nicotine as a sole ingredient) may now be imported into Canada under the TPVA [sic].”  (See Customs Notice 18-05 (May 24, 2018), Paragraph 5).

Registration is open for Keller and Heckman’s 3rd Annual E-Vapor and Tobacco Law Symposium being held January 29-30, 2019 in Miami, Florida. Click here to register.

This comprehensive 2-day course will address regulatory and business issues relevant to e-vapor, e-liquid and tobacco product manufacturers, distributors and retailers including, among other things:

  • FDA enforcement and inspections – how to prepare and protect your business;
  • Product compliance – including advertising and labeling compliance, and preparing for Premarket Tobacco Product Applications (PMTAs);
  • Testing for Harmful and Potentially Harmful Constituents (HPHCs) – how to comply before the November 2019 deadline;
  • Going global – Presentations by experts on EU TPD, Canada, Asia and more;
  • State law update – Overview of new state and local laws, permitting/licensing and tax requirements, local flavor bans;
  • Environmental, hazardous waste and OSHA compliance;
  • Update on Deeming Rule appeal – Modified Risk Claims, PMTA and free samples;
  • Potential product standards including flavors and online sales;
  • Getting into CBD – how to stay legal; and
  • Business and intellectual property issues to protect your growing business.

A detailed agenda will be provided soon.  Register now for the early bird rate!

Seminar Details
Dates:
January 29 – January 30, 2019

Location:
Miami Marriott Biscayne Bay

Price:
$899 early rate
$1,099 regular rate

More information on speakers and a final agenda will be available soon. We look forward to seeing you at the program!

Take a look at highlights from this year’s conference:

 

For additional information, please contact:

Sara Woldai
Manager, Meetings and Events
Keller and Heckman LLP
woldai@khlaw.com

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On Tuesday October 2, at 2PM EST, Azim Chowdhury and Ben Wolf will present a webinar, “Ingredients Listing: Walk Through” sponsored by the Smoke-Free Alternatives Trade Association (SFATA). Ingredient listing reports for small-scale tobacco product manufacturers are due by November 8, 2018. This program is recommended for manufacturers of deemed tobacco products, including e-liquids, their management, and staff who are responsible for regulatory compliance. Participants will learn how to prepare and submit ingredient listing reports to FDA. The floor will also open for questions regarding FDA compliance. For more information and to register, click here.

 

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On September 12, 2018, in a self-described “blitz”, FDA announced a deluge of enforcement actions, including more than 1,300 warning letters and fines to retailers aimed at addressing youth use of e-cigarettes, which FDA asserts has reached “epidemic” proportions, based on new, not-yet-released survey data.[1]  FDA also requested manufacturers of five “national brands,” whose cartridge (pod) based e-cigarettes the Agency claimed make up 97% of the “current e-cigarette market” (but apparently excluding the open-system vapor products market), and allegedly represent the majority of e-cigarettes sold to minors, to provide detailed plans to curtail youth use of their products.  FDA also threatened drastic action that could impact the entire vapor industry, and millions of former smokers that rely on a variety of vapor products, if adequate responses are not received.

Addressing Increase in Underage E-Cigarette Use; Stopping Access at the Retail Level

In its press release, FDA clarified that these enforcement actions were part of a “large-scale, undercover nationwide” crack down on the sale of e-cigarettes to minors at both brick-and-mortar and online retailers.  FDA Commissioner Dr. Scott Gottlieb further stated that FDA had failed “to predict what [he] now believe[s] is an epidemic of e-cigarette use among teenagers.”  While he reiterated that FDA is “fully committed to the concept that products that deliver nicotine exist on a continuum of risk, with combustible products representing the highest risk, and [e-cigarettes] perhaps presenting an alternative for adult smokers who still seek access to satisfying levels of nicotine, but without all of the harmful effects that come from combustion,” he was unequivocal with respect to underage use, emphasizing FDA’s Youth Tobacco Prevention Plan launched earlier this year, and stating that he “won’t tolerate a whole generation of young people becoming addicted to nicotine as a tradeoff for enabling adults to have unfettered access to these same products.”  On September 18, 2018, FDA issued another press release announcing that it would be advancing “The Real Cost” Youth E-Cigarette Prevention Campaign to educate teens about the dangers of using e-cigarettes.

Notably, all of the cartridge-based e-cigarettes now being targeted by FDA (and the Big Tobacco brands in particular) are sold primarily in convenience stores, gas stations and similar outlets (along with cigarettes and other tobacco products), and appear to be the main source of youth access, as well as the focus of FDA’s retailer enforcement efforts.  Indeed, the vast majority of the 1,300 warning letters and civil monetary penalties were sent to these types of retailers, rather than to vape shops dedicated to open-system vapor products.  While dozens of vape shops and online vape retailers have also been cited by FDA for selling products to minors, those instances appear to represent just a fraction of the millions of transactions that occur annually in the 10,000+ dedicated vape shops across the country.[2]

FDA Focuses on JUUL and JUUL-Like E-Cigarettes; Distinguishes Youth Concerns Between Closed and Open System Vapor Products

Although FDA’s recent announcement refers simply to the “e-cigarette market”, the vapor industry is actually very diverse and complex. Closed-system and cartridge-based e-cigarettes (like JUUL), the adolescent use of which FDA has made clear is its primary public health concern, is only a portion of the overall U.S. vapor products market, along with open-system vapor products (e.g., tanks, mods, e-liquids, etc.).

Indeed, FDA has been focusing on youth-use of cartridge-based e-cigarettes, and JUUL in particular, for several months, as stories about rampant teenage use have been heavily reported in the media, and the focus of Congressional inquiries.

Back on April 24, 2018, FDA announced its first set of 40 warning letters to retailers for underage sales of JUUL e-cigarettes and that it was examining the youth appeal of these products in an effort to end their sale to minors.  FDA used its authority under Section 904(b) of the Family Smoking Prevention and Tobacco Control Act (TCA) to request JUUL Labs submit information regarding its marketing and research studies, and any other information it had on how certain product features might appeal to different age groups.  Subsequently, in May 2018 FDA sent a second set of requests to several manufacturers seeking information on their JUUL-like products, including information on product marketing and design (as it may relate to the appeal or addictive potential for youth and youth-related adverse experiences), and consumer complaints, among other things.[3]

FDA has now announced that it is targeting five national brands that dominate the closed-system e-cigarette market –  JUUL and four other cartridge-based e-cigarettes, all of which are marketed by large tobacco companies: Vuse (Reynolds American), MarkTen XL (Altria), blu e-cigs (Fontem Ventures), and Logic (Japan Tobacco International, USA).  Importantly, Gottlieb indicated that these specific e-cigarettes make up “the majority of products sold to minors,” while noting that “the biggest youth use seems to be among cartridge-based e-cigarettes, and not open-tank vaping products.” (Emphasis added.)

The Agency has requested these five manufacturers submit within 60 days detailed plans describing how they will address and mitigate widespread youth use of their products.  For example, the FDA stated that such a plan may include:

  • Discontinuing sales to retail establishments that have been subject to an FDA civil monetary penalty for sale of tobacco products to minors within the prior 12 months;
  • Developing or strengthening any internal program in place to check on retailers, and reporting to FDA the name and address of retailers that have sold products to minors;
  • Eliminating online sales, whether through Internet storefronts controlled by the company or other retailers, or providing evidence to demonstrate that the company’s online sales practices do not contribute to youth use of e-cigarette products;
  • Revising current marketing practices to help prevent use by minors; and
  • Removing flavored products from the market until those products can be reviewed by FDA as part of a PMTA.

The requests that the companies eliminate all online sales and remove flavored products from the market are extremely onerous and effectively require the companies to cease sales of legal products.  FDA further noted that these actions are only examples of things the manufacturers might do to demonstrate FDA should continue to defer enforcement of the premarket review requirement with respect to their products, as discussed below, and encouraged the companies to “provide additional youth use prevention tools” for the Agency’s consideration.

Warning Letters to E-Liquid Manufacturers

Beyond illegal underage sales at the retail level, open-system vapor products have not been free from FDA scrutiny.  In May 2018, FDA and the Federal Trade Commission (FTC) issued 17 warning letters to e-liquid manufacturers for marketing products the agencies claimed were both misbranded under Sections 903(a)(1) and 903(a)(7) of the FDCA and false and misleading under Section 5 of the FTC Act, for being packaged and/or labeled in a manner that imitated “kid-friendly” foods such as apple juice, candy, whipped cream and cereal.  On August 23, 2018, FDA announced that all 17 companies that were warned have cooperated and have ceased all sales of the offending products.  FDA has now issued 12 additional warning letters to retailers for continuing to sell those e-liquids, making clear that any existing inventory of the misbranded products must be removed from commerce.

Drastic Action by FDA Could Destroy the Vapor Industry

a. Premarket Compliance Policy

Commissioner Gottlieb has made clear that the recent increase in youth use may force FDA to revisit its premarket review compliance policy, pursuant to which manufacturers of deemed noncombustible tobacco products (such as vapor products) that were on the market as of August 8, 2016, when the Deeming Rule went into effect, have until August 8, 2022 to submit PMTAs, and can remain on the market through that date.[4]  Moreover, under this compliance policy, if an application is timely submitted and accepted for scientific review, the subject product is permitted to remain on the market pending FDA review.  This compliance policy was first announced in July 2017 as part of the Agency’s comprehensive plan for tobacco and nicotine regulation, and extended the original compliance policy in the Deeming Rule, which only gave e-cigarette manufacturers until August 8, 2018 to submit PMTAs for their existing products.[5]

As noted, FDA’s letter to JUUL and the other large manufacturers indicates that it is seriously reconsidering its compliance policy, at least for cartridge-based e-cigarettes, due to widespread youth use (emphasis added):

To fulfill our public health mandate to address youth addiction to nicotine, FDA is reconsidering its compliance policy for submission of PMTAs for [the JUUL e-cigarette] and other similar products that were illegally sold by retailers during this blitz, including whether earlier enforcement of the premarket review provision might be warranted.

FDA further noted it is “seriously considering a policy change that would lead to the immediate removal of these flavored products from the market.”

Critically, Commissioner Gottlieb stated that if the five companies referenced above do not submit plans to combat youth use of their products, or if those plans are insufficient to address the problem, the companies “face a potential decision by FDA to reconsider extending the compliance dates for submission of premarket applications.”

If FDA does decide to modify the compliance policy for cartridge-based e-cigarettes because of their apparent unique impact on youth compared to other types of vapor products, such action does have precedent.  In its comprehensive plan, for example, FDA required deemed combustible products, such as cigars and hookah, on the market as of August 8, 2016 to submit premarket review applications by August 8, 2021, because of the known-health risks of combustible tobacco.

However, open-system vapor product manufacturers should be aware that Gottlieb did note in his statement that FDA’s “policy reconsiderations apply to the entire category” and that FDA is “also re-examining the enforcement discretion we currently exercise for other e-cig products currently on the market without authorization.”

While it remains unclear what, if anything, FDA might do with respect to its current compliance policy, any move to shorten the PMTA grace period for the vapor industry at-large will have devastating consequences not only for thousands of small businesses that would effectively be banned, but also for the public health.  These impacts were recently summarized in an amicus brief submitted by the Right to be Smoke-Free Coalition in the federal lawsuit filed by the public health groups challenging FDA’s compliance policy.  You can read about that lawsuit and the amicus brief, which makes clear that the vapor industry needs at least until August 2022 to prepare applications given the need for long-term clinical data, on our previous blog post here.

b. Flavored Products

Also of concern for the vapor industry is the potential targeting of flavored products, which the industry has argued are, in fact, appropriate for the protection of the public health (see here). It is important to first recognize that there is no such thing as an unflavored e-cigarette or vapor product. Unlike combustible cigarettes or other tobacco-containing products, there is simply no “natural” tobacco or other flavors inherent to e-liquids.  Rather, all flavors for these products are chemically synthesized and added to the base propylene glycol/vegetable glycerin solution.  Thus, unlike cigarettes, a ban on characterizing flavors would effectively result in a ban of all vapor products.

Moreover, numerous published studies demonstrate, and FDA has acknowledged, that flavored vapor products and e-liquids can help adult smokers reduce their cigarette use and/or switch completely to vapor products.  For example, a recently-released survey of almost 70,000 U.S. vapers found that 87.3% of respondents who quit smoking with e-cigarettes said that flavors were “extremely” or “very” important to their quit attempts.[6]

Remaining Compliant in a Rapidly Changing Regulatory Landscape

The new FDA enforcement actions and broader threats against the industry raise the possibility of dramatically altering the regulatory landscape for e-cigarettes and other vapor products.  FDA’s September 12 letters to the large manufacturers of cartridge-based e-cigarettes threaten to potentially end the premarket review compliance policy for those types of products, but it is not clear if FDA would extend this to all vapor product manufacturers.  Indeed, the stock market appears to have recognized this possibility, as legacy tobacco stocks rallied after FDA’s announcement.  Apparently, the markets have concluded that if adults are not going to be permitted to vape, they could return to traditional combustible tobacco cigarettes – the most harmful nicotine delivery system.  From our vantage point, and to the detriment of public health, it is hard to argue with this conclusion.

Accordingly, in view of FDA’s enforcement blitz and the Agency’s current focus on manufacturer advertising, marketing, and manufacturing practices, we recommend vapor product companies:

  • Start preparing premarket applications (including PMTAs) sooner rather than later (and attend FDA’s public hearing on October 22-23, 2018).
  • Work with retailers (both brick-and-mortar and online) that have age and photo-ID verification procedures that comply with requirements applicable to tobacco retailers, including requirements that:
    • the retailer checks the photo ID of everyone under age 27 who attempts to purchase any tobacco product;
    • the retailer only sells tobacco products to customers age 18 or older (consider whether age-gating may be appropriate for online retailers); and
    • the retailer does not sell tobacco products in vending machines unless in an adult-only facility.
  • Work with legal counsel to ensure that your product labeling and marketing would not cause the product to be misbranded or misleading (i.e., by imitating potentially “kid-appealing” foods).
  • Make sure your advertising and product labeling fully comply with the nicotine addiction warning (and other labeling requirements).
  • Comply with TCA requirements, including registration and listing for U.S. establishments, ingredient listing, and health document disclosures.
  • Do not introduce new products after August 8, 2016 without receiving FDA premarket authorization.
  • Comply with all sales and marketing restrictions, including use of any modified risk claims and the ban on free samples.
  • Prepare to be inspected by FDA and other authorities (sign up for our audit and inspection program here).
  • Consider developing an internal audit program to evaluate the procedures used by retail partners to avoid youth-access to your products.

If you have any questions about FDA’s announcements contact Azim Chowdhury (202.434.4230, chowdhury@khlaw.com). For more information on our Tobacco and E-vapor Practice in general, visit www.khlaw.com/evapor. Follow Keller and Heckman Tobacco and E-Vapor Partner Azim Chowdhury on Twitter.

[1]              See U.S. Food & Drug Admin., FDA News Release, FDA Takes New Steps to Address Epidemic of Youth E-Cigarette Use, Including a Historic Action Against More Than 1,300 Retailers and 5 Major Manufacturers for Their Roles Perpetuating Youth Access (Sept. 12, 2018).

[2]              Christopher Groskopf, What Yelp Data Reveal About the Sudden Rise of Vape Shops in America, Quartz, (Feb. 10, 2016), https://qz.com/608469/what-yelp-data-tells-us-about-vaping/.

[3]              The first set of letters were sent on May 17, 2018 to J Well, of Paris, France, for Bo Starter Kit; YGT Investment LLC and 7 Daze LLC, of Baldwin Park, California, for Zoor Kit; Liquid Filling Solutions LLC, of King of Prussia, Pennsylvania, for Myle Products; and SVR Inc., of Las Vegas, for SMPO Kit. Subsequently, in late May additional letters were sent to Myle Vape Inc. regarding Myle Products, and to MMS ECVD LLC regarding the Bo Starter Kit, to reflect additional relevant companies in the manufacturing and distribution chain.

[4]           Guidance for Industry: Extension of Certain Tobacco Product Compliance Deadlines Related to the Final Deeming Rule (Revised) (August 2017), available at: https://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM557716.pdf.

[5]              The original Deeming Rule compliance policy also had a sunset period that only permitted manufacturers who submitted timely PMTAs to continue to market those products for an additional year, i.e., until August 8, 2019. Unless an application was authorized during that year, it would have to be removed from the market at that time, and could only be re-introduced if it received FDA authorization.

[6]              Konstantinos F., M.D., MPH, et al., Patterns of flavored e-cigarette use among adult vapers in the United States: an internet survey (2018), at 6, 20.

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Defendant U.S. Food and Drug Administration (FDA) and the Right to Be Smoke-Free Coalition (RSF) recently submitted briefs to the federal district court of Maryland opposing a motion for summary judgment filed by various public health NGOs in American Academy of Pediatrics v. FDA.[1] The NGOs are challenging various extensions to premarket application compliance deadlines for deemed tobacco products that were announced as part of FDA’s new comprehensive tobacco and nicotine regulatory plan, and finalized in its August 2017 Guidance Document, Extension of Certain Tobacco Product Compliance Deadlines Related to the Final Deeming Rule (the “Guidance”). This includes the August 8, 2022 compliance deadline for filing vapor product Premarket Tobacco Applications (PMTAs), which was extended from the original August 8, 2018 cutoff for products on the market on August 8, 2016, as initially set forth in the Deeming Rule. RSF is not a party to the lawsuit, but filed an amicus (or “friend of the court”) brief defending the compliance period so that vapor product manufacturers have adequate time to prepare compliant applications. We provide background on the case and the NGOs’ opening positions in our August 2, 2018 post, linked here, and highlight below key points from FDA’s and RSF’s briefs.

FDA Argues that the Court Lacks Jurisdiction to Hear the Case or, In the Alternative, the NGOs’ Motion for Summary Judgment Fails on the Merits

In its opposition brief (available here), FDA begins by arguing that the Court does not have jurisdiction to even hear the dispute.

First, FDA maintains that the NGOs lack “standing” – i.e., that the NGOs do not have a sufficient connection to the PMTA issue to bring the lawsuit.[2] In essence, FDA claims that the NGOs will not suffer a concrete and redressable injury if the August 8, 2022 compliance date is upheld. The NGOs complain that if PMTAs are not filed until that date then they will not be able to educate the public in the near-term about information that would otherwise be contained in the PMTAs. But as FDA points out, this argument was soundly rejected by another federal court in Cigar Ass’n of Am. v. FDA after the NGOs tried to intervene in that lawsuit challenging aspects of the Deeming Rule filed by the cigar and pipe tobacco industries.[3] In that case, it was not enough for the NGOs – who are not subject to the PMTA requirements themselves – to rely on generalized and speculative allegations that it might somehow be more difficult or costly to disseminate information to the public in the absence of PMTAs. According to FDA, the same holds true here. Moreover, FDA argues that the NGOs fail to cite any authority that gives them a legal right to the type of information, whether now or at a later date, contained in a PMTA.

Second, FDA claims that the Court lacks jurisdiction because the agency was simply exercising its enforcement discretion not to require PMTAs for a specified period of time, the type of decision that typically is not subject to review by federal courts. Not only is the revised compliance period limited in duration, it is also part of a broader comprehensive policy to address tobacco-related issues and ensure that high-quality applications are filed, which will include upcoming efforts by FDA to further delineate through guidance and rulemaking what information must be included in PMTAs. For support, the agency cites to Supreme Court case law that reserves to agencies the discretion to prioritize their activities, allocate resources, and adopt overall policies – including those involving enforcement – in the absence of statutory mandates to the contrary.[4] FDA concludes that the Tobacco Control Act (TCA)[5] does not prohibit the agency from establishing reasonable compliance deadlines.

Finally, the agency relies on long-standing law that guidance documents are typically not subject to review by federal courts under the Administrative Procedure Act (APA).[6] Unlike a formal rule, guidance does not impose obligations on the agency or legal duties on regulated entities; rather, guidance only represents an agency’s current thinking, which in this case is that FDA does not intend to enforce the PMTA requirements until August 8, 2022 for products that were already on the market when the Deeming Rule went into effect on August 8, 2016. In other words, the Guidance does not have the finality of a regulation – it merely summarizes FDA’s exercise of discretion – that would lend itself to judicial review.

FDA further maintains that, even if the Court has jurisdiction to hear the case, the NGOs’ motion should be denied on the merits. The agency first argues that the Guidance does not conflict with the TCA’s PMTA provisions[7] because it does not modify any statutory requirements.[8] Manufacturers are still required to submit PMTAs. The Guidance merely describes FDA’s intention not to enforce the PMTA requirements for a limited period of time, which is a discretionary determination reserved to the agency. In fact, FDA notes that the NGOs submitted comments during the rulemaking acknowledging that the agency has discretion to establish a compliance period for new tobacco products. Moreover, FDA points to more practical reasons for setting an August 8, 2022 filing deadline, all of which are consistent with the TCA, including the agency’s need to more efficiently manage those PMTAs that are eventually filed and to ensure high-quality submissions.

Second, FDA rebuts the NGOs’ claim that the agency, before it extended the compliance period, failed under the APA to provide notice to the public, and solicit and accept comments on the Guidance.[9] Underpinning the NGOs’ argument, however, is the premise that the Guidance is a formal rule and thus subject to the APA’s notice and comment requirements. But a rule has the force of law and imposes legal rights and obligations, which contrasts with a guidance document that merely advises the public on how the agency intends to assert its discretionary power.[10] As FDA points out, the Guidance does nothing more than simply indicate when it will exercise its enforcement discretion as to the filing of premarket applications for deemed tobacco products.

Finally, FDA maintains that it sufficiently justified the extension, contrary to the NGOs’ claims.  Under the APA, agencies must explain their actions and engage in reasoned decision-making.[11] In support, FDA explicitly cited to arguments made by RSF in Nicopure, et al. v. FDA – that the original August 8, 2018 deadline was not sufficient and that the judge in that case indicated that other filing deadlines may have been reasonable.[12] The agency then noted that the new compliance period is part of an overarching comprehensive plan to regulate nicotine and tobacco, and that the extension will allow the agency to provide further direction to industry through guidance and rulemaking on how the PMTA process will work.[13] As characterized by the agency, the plan is intended “to make certain that the FDA is striking an appropriate balance between regulation and encouraging the development of innovative tobacco products that may be less dangerous than cigarettes,” such as vapor products.[14]

RSF Argues that the Original PMTA Deadlines in the Deeming Rule Were Unattainable and that Vacating the Guidance Would Virtually Ban the Industry and Deprive the Public of the Health Benefits Provided by Vapor Products 

To provide the vapor industry perspective, RSF filed an amicus brief in support of the extended compliance deadline (available here). RSF makes two arguments in favor of the new PMTA filing date: (1) that no vapor company could have met the initial two-year deadline because industry would not have had sufficient time to complete the burdensome applications, including the long-term, product-specific clinical/epidemiological studies that FDA will likely require; and (2) that the two-year deadline, were it reinstated by setting aside the Guidance and granting the NGOs’ motion, would effectively ban vapor products, which provide an important public health benefit to transitioning smokers.

Vapor product manufacturers could not have met the original August 8, 2018 deadline because of the tremendous expectations set forth by FDA in its 2016 draft guidance for PMTA submissions for Electronic Nicotine Delivery Systems (PMTA draft guidance).[15] Among other things, the PMTA draft guidance states that:

  • Manufacturers should file a separate PMTA for each “finished tobacco product”;
  • Components should be tested for each device in which they could reasonably be used;
  • The relative health risks of each new e-liquid or device should be compared to the anticipated risks of other tobacco products on the market;
  • Literature relevant to each product should be thoroughly reviewed and the findings included in any PMTA submission; and
  • Manufacturers should test each product for a broad range of characteristics, including chemical identity, constituent composition, aerosol emissions under a range of operating conditions, toxicological and pharmacological profiles, storage and stability profiles, environmental effects, and use patterns at different nicotine levels.

The most significant concern, however, is that under the PMTA draft guidance manufacturers will likely be expected to conduct exceedingly expensive and long-term clinical/epidemiological studies. In its brief, RSF presents publicly available evidence from long-term studies recently funded by the federal government showing that this type of research, on average, takes at least two years, and in many circumstances far longer. In fact, RSF points out that FDA’s own long-term epidemiological study (called the Population Assessment of Tobacco and Health or “PATH” study) on tobacco products, including e-liquids and devices, has already taken seven years and is still on-going. As such, it was completely unrealistic for FDA to expect that industry would have been able to file compliant applications by the original August 2018 deadline[16] and, as a consequence, the vast majority of manufacturers would have had to leave the marketplace after that compliance period expired.

In its brief, RSF also notes that such a large-scale market exit could have a significant adverse impact on the public health. RSF demonstrates, in particular, that having access to a large variety of products and e-liquid flavors is often a key component in any individual’s attempt to switch away from cigarettes and transition to less risky vapor products. As Julie T. Woessner, National Policy Director for the Consumer Advocates for Smoke-free Alternatives Association (CASAA), explains in an accompanying affidavit filed with the court, “a significant number of our members use more than one flavor or brand of e-liquid . . . we find those making a complete transition from smoking to vaping most often report that finding a non-tobacco flavor was instrumental in helping them distance themselves from their smoking habit, and sampling a variety of different flavors actually served to make vaping more enjoyable than smoking.”

Ms. Woessner then articulates the public health benefit that could be lost: “[I]f consumers do not have access to these products, there is a substantial risk that they will return to their old smoking habits or feel forced to rely on do-it-yourself (“DIY”) activities or an unregulated black market for e-liquids and devices. This is not merely a theoretical concern. . . [w]hen asked what they would do in response to a total ban on all vapor products – the entire product category – 93% of the CASAA [Member] Survey respondents indicated that they would continue to use the products they enjoy by either purchasing them from overseas or a domestic black market, or by engaging in DIY activities.”

The Right to be Smoke-Free Coalition is represented by Keller and Heckman Partners Azim Chowdhury and Eric Gotting. We will continue to monitor the progress of this lawsuit and will provide a summary of the court’s decision on the NGOs’ motion for summary judgment.

_________________________________________

[1] Case No. 8:18-cv-00883 (D. Md.)  It bears noting that an amicus brief in support of Plaintiff NGOs was filed on July 17, 2018 on behalf of the American Thoracic Society and other public health organizations. The brief, which is available here, addresses the health effects of all products newly-deemed by the Deeming Rule, including combustible tobacco products, like cigars. The brief does not address legal arguments in the case, nor does it address the potential public health benefits of newly available, non-combustible products for longtime smokers.

[2] See, e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

[3] Cigar Ass’n of America v. FDA, 323 F.R.D. 54 (D.D.C 2017).

[4] Heckler v. Chaney, 480 U.S. 821 (1985).

[5] 21 U.S.C. §§ 387 et seq.

[6] Bennett v. Spear, 520 U.S. 154, 177–79 (1997); Am. Tort Reform Ass’n v. Occupational Safety & Health Admin., 738 F.3d 387, 395 (D.C. Cir. 2013).

[7] 21 U.S.C. §§ 387j(a)(2), (c)(1)(A)(i).

[8]  As detailed in the Nicopure v. FDA litigation (Case No. 17-5196) (D.C. Cir.), RSF maintains that FDA had a statutory obligation to tailor the PMTA process to less risky vapor products and allow the vapor industry to submit PMTAs that do not include product-specific long-term clinical/epidemiological studies; instead, industry could rely on an existing scientific literature review showing that vapor products present substantially less risk than cigarettes on the whole and are thus appropriate for the public health.  Indeed, Congress gave FDA such authority within the PMTA provision itself, only requiring clinical studies “when appropriate” and permitting use of other “valid scientific evidence.”  21 U.S.C. § 387j(c)(5).  Unfortunately, FDA rejected this approach during the rulemaking.  See 81 Fed. Reg. at 28,997.

[9] 5 U.S.C. § 551 et seq.; 5 U.S.C. § 553.

[10] See Bennett, 520 U.S. at 178.

[11] FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009).

[12] Nicopure Labs, LLC v. FDA, 266 F. Supp. 3d 360, 399–400 (D.D.C. 2017).  That case is now on appeal before the U.S. Court of Appeals for the District of Columbia Circuit, with oral arguments scheduled for September 11, 2018.  See Update on Deeming Rule Appeal available at https://www.thecontinuumofrisk.com/2018/07/fda-commissioner-dr-scott-gottliebs-recent-remarks-vapor-products-continuum-risk-update-deeming-rule-appeal/.

[13] FDA News Release, “Protecting American Families: Comprehensive Approach to Nicotine and Tobacco,” https://www.fda.gov/NewsEvents/Speeches/ucm569024.htm (July 18, 2017) (last accessed: 08/21/18).

[14] Id.

[15] FDA, Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems: Guidance for Industry (Draft Guidance) (May 2016).

[16] Indeed, as summarized previously on this blog here, on August 2, 2018, just before the initial PMTA deadline would have expired, FDA announced it would soon be issuing additional guidance, holding a public hearing and begin a new rulemaking regarding the PMTA process.  See FDA, Advancing Tobacco Regulation to Protect Children and Families: Updates and New Initiatives, https://tinyurl.com/y8wked2z.  As such, it is not clear how manufacturers would have been able to submit complete applications by the original cutoff if FDA itself is still in the process of finalizing the PMTA framework.

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Today, August 10, 2018, is the compliance date for the health warnings contained in the FDA’s Deeming Rule and codified in 21 C.F.R. Part 1143.  In particular, as of today, roll-your-own (RYO) tobacco, cigarette tobacco, or covered tobacco products (except cigars and pipe tobacco) such as e-liquids that contain tobacco-derived nicotine manufactured, packaged, sold, offered for sale, distributed, or imported for sale or distribution within the United States must bear the required warning statement (i.e., “WARNING: This product contains nicotine.  Nicotine is an addictive chemical.”) on the package label, per 21 C.F.R. § 1143.3(a)(1).  This warning statement requirement also applies to advertising (including websites and social media) for RYO tobacco, cigarette tobacco, and covered tobacco products (except cigars and pipe tobacco).

The warning statement must also comply with certain requirements, with respect to font, text, size, placement, and formatting of the warning statement on the package labels.  Indeed, the regulation requires that the required warning statement “appear directly on the package” and “be clearly visible underneath any cellophane or other clear wrapping as follows”:

  • Be located in a conspicuous and prominent place on the two “principal display panels” of the package;
  • Comprise at least 30 percent of each of the principal display panels;
  • Be printed in at least 12-point font size and must occupy the greatest possible proportion of the warning label area set aside for the required text;
  • Be printed in conspicuous and legible Helvetica bold or Arial bold type or other similar sans serif fonts and in black text on a white background or white text on a black background in a manner that contrasts by typography, layout, or color, with all other printed material on the package;
  • Be capitalized and punctuated as indicated in 21 CFR § 1143.3(a)(1); and
  • Be centered in the warning area in which the text is required to be printed and positioned such that the text of the required warning statement and the other information on the principal display panels have the same orientation.[1]

For covered tobacco products (other than cigars), cigarette tobacco products, and RYO tobacco products that are too small or otherwise unable to accommodate a label with sufficient space to bear the required warning statement, the required warning statement must appear on one of the following: carton, outer container, wrapper, or tag firmly and permanently affixed to the tobacco product package.

Compliance Policy and Safe Harbor for Retailers

FDA created a compliance policy for the 21 C.F.R. § 1143.3 nicotine addiction warning in its Guidance Document, Extension of Certain Tobacco Product Compliance Deadlines Related to the Final Deeming Rule, which provides (on page 5):

 

The Deeming Rule also contains a retailer safe harbor, which provides that a retailer of cigarette tobacco, RYO tobacco, or covered tobacco products (other than cigars) will not be in violation of 21 C.F.R. § 1143.3 for packaging that: (i) contains a health warning; (ii) is supplied to the retailer by the tobacco product manufacturer, importer, or distributor, who has the required state, local, or Alcohol and Tobacco Tax and Trade Bureau (TTB)-issued license or permit, if applicable; and (iii) is not altered by the retailer in a material way.[2]

If you have questions about the compliance policy or the retailer safe harbor, please let us know.

Alternative Required Warning Statement for Zero Nicotine Products

For products that do not contain nicotine, but that are made or derived from tobacco, a tobacco product manufacturer is permitted to display an alternative statement (i.e., “This product is made from tobacco”) on all packages and advertisements in accordance with the requirements of 21 C.F.R. § 1143.3.  An example of such a product would be a zero-nicotine e-liquid that contains tobacco-derived flavors or extracts.  To be permitted to make such a statement, manufacturers are required to submit a confirmation statement to FDA certifying to be true that the product does not contain nicotine and that the tobacco product manufacturer has data to support that assertion.[3] If you would like to submit such a self-certification to FDA, let us know.

A zero-nicotine e-liquid that does not contain any other tobacco-derived ingredients is not a covered tobacco product subject to either the nicotine addiction warning or alternative statement.

Effect of Injunction in Cigar Association of America v. FDA

Importantly, due to a recent decision by the United States District Court for the District of Columbia, the warnings set forth in 21 C.F.R. §§ 1143.3 and 1143.5 are not applicable to cigars and pipe tobacco until 60 days after final disposition of the plaintiffs’ appeal of the courts’ order on the health warning requirements.[4]   FDA has stated that the Agency intends to comply with the court’s order in Cigar Association of America.[5]  Further, FDA explained that the Agency does not intend to enforce the labeling requirements under sections 903(a)(2) (i.e., requirement that label contain the name and place of business of the tobacco product manufacturer, packer, or distributor; an accurate statement of the quantity of contents in terms of weight, measure, or numerical count; and an accurate statement of the percentage of domestically grown vs. foreign grown tobacco) and 920(a)(1) (i.e., requirement to bear “Sale only allowed in the United States” statement) for cigars and pipe tobacco while the injunction is in effect so that firms are able to make required label changes at one time.[6]

Notably, the court’s order does not enjoin FDA from enforcing the health warning requirements for other product categories, including electronic nicotine delivery systems (ENDS) products, hookah tobacco, and cigarette tobacco and RYO tobacco.

Other Labeling Requirements

The Deeming Rule also imposed additional labeling requirements on newly deemed products. For example, tobacco products deemed under the Deeming Rule to be subject to FDA’s authority, if in package form, are required to bear a label containing:

  • the name and place of business of the tobacco product manufacturer, packer, or distributor;
  • an accurate statement of the quantity of the contents in terms of weight, measure, or numerical count; and
  • the statement “Sale only allowed in the United States” on labels, packaging, and shipping containers pursuant to Section 920(a) of the Federal Food, Drug, and Cosmetic Act (FDCA).

In addition, pursuant to Section 903(a)(2)(C) of the FDCA, a tobacco product in package form is misbranded if its label does not include an accurate statement of the percentage of foreign and domestic grown tobacco used in the product.  However, in a draft guidance document entitled, “Interpretation of and Compliance Policy for Certain Label Requirement; Applicability of Certain Federal Food, Drug, and Cosmetic Act Requirements to Vape Shops,” FDA stated that, at this time, it does not intend to enforce this requirement for products made or derived from tobacco, such as tobacco-derived liquid nicotine and e-liquid made or derived from tobacco.[7]  FDA explained that it provided this compliance policy “because it recognizes the current difficulty, in many circumstances, qualifying the percentage of foreign and domestic grown tobacco used in these products.”[8]

If you have any questions about warning requirements for product labels and advertisements or any of the other Tobacco and Control Act requirements, contact Azim Chowdhury, Partner (202) 434.4230, (chowdhury@khlaw.com).  For more information on our Tobacco and E-Vapor Practice in general, visit www.khlaw.com/evapor. You can also follow Azim Chowdhury on Twitter for updates.

[1] 21 C.F.R. § 1143.3(a)(2).

[2] 21 C.F.R. § 1143.3(a)(3).

[3] 21 C.F.R. § 1143.3(c).

[4] See Order, Cigar Ass’n of Am. v. U.S. Food & Drug Admin., No. 1:16-cv-01460 (D.D.C. July 5, 2018).

[5] See FDA, “Covered” Tobacco products and Roll-Your-Own Cigarette Tobacco Labeling and Warning Statement Requirements, https://www.fda.gov/TobaccoProducts/Labeling/Labeling/ucm524470.htm?utm_source=CTPTwitter&utm_medium=social&utm_campaign=ctp-warninglabel.

[6] See Deeming Tobacco Products to be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products, 81 Fed. Reg. 28974, 29006 (noting that the compliance date for the 903(a)(2) and 920(a)91) requirements is intended to match the date for health warnings).

[7] FDA, Draft Guidance for Industry: Interpretation of and Compliance Policy for Certain Label Requirement; Applicability of Certain Federal Food, Drug, and Cosmetic Act Requirements to Vape Shops (Jan. 2017), https://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM536997.pdf .

[8] Id., at 5-6.

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On March 27, 2018, a coalition of public health organizations including the Campaign for Tobacco-Free Kids, the Truth Initiative, the American Cancer Society and the American Academy of Pediatrics, among others, as well as several individual physicians (collectively the “NGOs”) filed a lawsuit in the United States District Court for the District of Maryland challenging the Food and Drug Administration’s (“FDA’s”) ability to extend the compliance policy deadlines for premarket authorization applications for deemed tobacco products (Case No. 8:18-cv-00883). On July 10, 2018, the NGOs filed a motion for summary judgment, available here.

The case challenges FDA’s August 2017 Guidance Document, Extension of Certain Tobacco Product Compliance Deadlines Related to the Final Deeming Rule (the “Guidance”) which, among other things: (1) extended the deadlines for premarket applications for deemed tobacco products, such as e-liquids and vapor products, as well as cigars, hookah, and pipe tobacco; and (2) ended the one-year “sunset provision” in the initial compliance policy, permitting manufacturers to continue marketing deemed products that are the subject of timely filed premarket applications that have been accepted by FDA for scientific review.

The NGOs make three main arguments: (1) the Guidance unlawfully authorizes manufacturers to continue marketing newly-deemed tobacco products without obtaining the required FDA marketing order, contrary to the requirements of the Family Smoking Prevention and Tobacco Control Act (“TCA”); (2) the Guidance is an administrative “rule” and FDA issued it without providing the public notice and an opportunity to comment in violation of the Administrative Procedure Act (“APA”);[1] and (3) the Guidance is arbitrary and capricious because it provided inadequate justification for suspending premarket review and did not account for the public health cost of the continued marketing of unreviewed new tobacco products. The NGOs seek to have the Guidance vacated, which could prove disastrous for the vapor industry.

We summarize the NGO’s motion in more detail below.

Background on Premarket Authorization and FDA Compliance Policy for Deemed Tobacco Products

When the “Deeming Rule” became effective on August 8, 2016, the FDA extended its tobacco product authority to previously unregulated categories of products including, but not limited to, e-liquids and vapor products, as well as cigars, hookah, pipe tobacco and heat-not-burn products.[2] Deemed tobacco products are now subject to the Federal Food, Drug and Cosmetic Act (“FDCA”), as amended by the TCA, including, most critically, the requirement that all new tobacco products obtain FDA premarket authorization. A new tobacco product is any product introduced or modified after the February 15, 2007 “grandfather date”. Because there are no known grandfathered e-liquids or vapor products, all such products, including those that have been on the market for years, are required to obtain FDA marketing authorization through the onerous Premarket Tobacco Product Application (“PMTA”) process, which is separately being challenged by the vapor industry.[3]

In the preamble to the Deeming Rule, although it chose not to amend the grandfather date for deemed products, FDA included a “compliance policy” which effectively created marketing grace periods for newly deemed, finished tobacco products that do not have FDA premarket authorization.[4] Pursuant to the compliance policy, manufacturers were permitted to continue marketing e-liquids and vapor products in the U.S. that were on the market on August 8, 2016 until the end of the compliance period, at which time a PMTA would be due. Initially, this compliance period was only 24 months after the effective date of the rule, meaning PMTAs would have been due by August 8, 2018 for all vapor products.[5]

Further, the initial compliance policy created a marketing sunset period that permitted manufacturers of products for which premarket applications were submitted to continue sales for only an additional 12 months, pending FDA review of the applications. After that, if FDA had not yet ruled on an application, it would “consider, on a case-by-case basis, whether to defer enforcement of the premarket authorization requirements for a reasonable time period.”[6]  In other words, companies that submitted PMTAs for vapor products by August 8, 2018 would only be permitted to continue marketing the subject products until August 8, 2019, after which they would have to remove the products from the market while FDA reviewed the applications, no matter how long that would take, unless the Agency granted an exception.

However, in July 2017, FDA announced a new “comprehensive regulatory plan to shift the trajectory of tobacco-related disease, death” that, among other things, extended the premarket application compliance period for non-combustibles, including e-liquids and vapor products, until August 8, 2022. In other words, those products on the market as of August 8, 2016 can now remain on the market at least until August 8, 2022; after that date, only products that are the subject of PMTAs that have been accepted for review can remain on the market. FDA also eliminated the 12-month sunset period, allowing companies to continue marketing products while FDA reviews the PMTAs. FDA formalized the new deadlines in its August 2017 Guidance.

Argument No. 1: The Guidance’s authorization to continue marketing newly-deemed tobacco products without the required FDA marketing order is contrary to the requirements of the TCA.

The NGOs argue first that the Guidance is contrary to the mandates of the TCA.  They emphasize that the TCA directs that an FDA order authorizing a manufacturer to sell a new tobacco product “is required” before that product “may be introduced or delivered for introduction into interstate commerce.”[7] Therefore, the NGOs argue, both the Guidance’s extension of PMTA deadlines and its compliance policy effectively grant permission to market new tobacco products before FDA authorizes their sale, contrary to the TCA’s requirements.

The NGOs further note that the TCA requires that, “as promptly as possible, but in no event later than 180 days after receipt of a PMTA,” FDA “shall” issue an order that the new product may or may not be introduced.[8] The NGOs argue that this requirement renders the Guidance’s revised compliance policy unlawful because the policy permits the indefinite sale of new tobacco products without FDA ever having to complete premarket review.

The NGOs also address a defense likely to be invoked by FDA—that of “enforcement discretion,” the principle that, in the absence of statutory text to the contrary, executive agencies prioritize their own obligations, thereby reserving to their discretion the ability to effectively delay enforcement. The NGOs argue that the TCA does not grant FDA discretion to delay and that publishing a new policy that authorizes conduct Congress made unlawful is not within an agency’s enforcement discretion as the term is understood by courts.

Argument No. 2: The Guidance is a “rule” and FDA issued it without providing the public notice and an opportunity to comment in violation of the APA. 

Second, the NGOs contend that the Guidance is effectively a final rule and thus must undergo the procedural requirements of a rule, including the obligation to give the public notice of the proposed rule and an opportunity to make comments.[9]

The NGOs argue that the Guidance is a “rule” within the meaning of the APA because it affects the “rights and obligations” of stakeholders and “constrains the agency’s discretion.”[10] According to the NGOs, the Guidance creates a “right” to market products for several years without a marketing order from FDA and constrains FDA to engage in a premarket review or to bring enforcement actions against manufacturers marketing new products without first obtaining an order. The NGOs dismiss the Guidance’s disclaimer language that it is not “binding” by citing to case law stating that courts look at the “actual function and effect” of guidance over how it labels itself.

Argument No. 3: The Guidance is arbitrary and capricious because it provided inadequate justification for suspending premarket review and did not account for the public health cost of the continued marketing of unreviewed new tobacco products.

Continuing under the premise that the Guidance is a “rule” and thus a “final agency action” as those terms are defined by APA case law, the NGOs argue that the Guidance must be struck down because it is “arbitrary and capricious.”[11] An agency action is arbitrary and capricious under the APA if it is not the product of reasoned agency decision-making.

The NGOs maintain that FDA did not advance an explanation for the Guidance. Agencies must consider factors considered important by Congress when passing the law and other important aspects of the problem addressed by the statute (the TCA in this case).[12] Further, an agency must show that there are good reasons for a change in policy.[13] FDA published a press release before the Guidance explaining industry’s need for more time to comply with PMTA deadlines,[14] but the NGOs allege that the press release’s reasoning is vague and insufficient and therefore not persuasive.

Finally, the NGOs argue that the Guidance’s effect ultimately has a detrimental impact on public health, particularly youth. The NGOs assert that the detrimental effect to public health outweighs any advantage gained by the Guidance’s effects.

Potential Impact on the Vapor Industry

If successful, the NGO’s lawsuit, which paints an unfavorable, and inaccurate, portrait of a vapor industry bent on targeting and addicting minors could have a devasting impact for vapor companies. If the Guidance is vacated, for example, and the original compliance policy reinstated, vapor products without grandfathered status or premarket authorization, of which there are none, may have to be immediately removed from the market. This would not only be potentially devasting to the public health, as millions of vapers may go back to smoking cigarettes, but it would also put thousands of small companies out of business.

The case has been assigned to Judge Paul Grimm of the United States District Court for the District of Maryland. FDA’s response to the motion is due August 7, 2018. We will continue to monitor the progress of this lawsuit and will provide a summary of FDA’s response.

____________________________________________________________________

[1] 5 U.S.C. § 551 et seq.; 5 U.S.C. § 553.

[2] Deeming Tobacco Products to be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products, 81 Fed. Reg. 28,974 (May 10, 2016).

[3] Alternative premarket authorization pathways exist through submission of Substantial Equivalence (“SE”) Reports and SE Exemption Requests, but those pathways require reference to a grandfathered or predicate tobacco product, and thus are not available for the e-liquids and vapor products.

[4] 81 Fed. Reg. at 28,978.

[5] 81 Fed. Reg. at 28,978.

[6] 81 Fed. Reg. at 28,978.

[7] 21 U.S.C. §§ 387j(a)(2), (c)(1)(A)(i).

[8] 21 U.S.C. § 387j(c)(1)(A).

[9] N.C. Growers’ Ass’n, Inc. v. UFW, 702 F.3d 755, 764 (4th Cir. 2012).

[10] Chrysler Corp. v. Brown, 441 U.S. 281, 302 (1979) (internal quotation omitted); McLouth Steel Prods. Corp. v. Thomas, 838 F.2d 1317, 1320 (D.C. Cir. 1988).

[11] 5 U.S.C. § 706(2)(A).

[12] Motor Vehicle Mfrs. Ass’n of US., Inc. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983).

[13] FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009).

[14] FDA News Release, “Protecting American Families: Comprehensive Approach to Nicotine and Tobacco,” https://www.fda.gov/NewsEvents/Speeches/ucm569024.htm (July 18, 2017) (last accessed: 08/02/18).

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due_dates

 

 

Tobacco product manufacturing establishments in the United States must register with the Food and Drug Administration (FDA) immediately upon beginning manufacturing operations (e.g., the manufacture, preparation, compounding, or processing of a tobacco product).  As part of the registration process, establishment operators must submit a detailed list of products manufactured at the establishment, along with copies of all labeling (see our full summary of the registration requirement here).  This registration must be renewed annually before midnight on December 31 (Eastern time) every year, and product lists must be updated bi-annually: by midnight June 30 and December 31 every year.

This means that operators of manufacturing establishments of newly deemed products (e.g., vapor, cigars, hookah, etc.) on the market as of August 8, 2016 that have made changes to their product offerings must update their product lists with FDA by tomorrow, June 30, 2018, or as soon as possible to avoid FDA enforcement (considering the likelihood that FURLS may crash, the sooner you start this process, the better). Specific examples of changes that need to be updated (in FURLS, if you used that system to register online) include (1) discontinuing products on your product list that you are no longer actively manufacturing, (2) adding new products that are now being manufactured (e.g., co-packers now manufacturing pre-August 8, 2016 products that were not on the co-packers’ initial product list), (3) adding a new manufacturing location for products already listed by another establishment, or (4) labeling changes (including rebranding) of existing products.

Note that if you are planning to update your labels to comply with FDA’s nicotine addiction warning and other labeling requirements (that go into effect on August 10, 2018) after June 30, you have until December 31, 2018 to update your product listing with the revised labels.

If you have any questions about Registration and Product Listing or any of the other Tobacco and Control Act requirements, contact Azim Chowdhury (202.434.4230, chowdhury@khlaw.com) or Ben Wolf (202.434.4103, wolf@khlaw.com). For more information on our Tobacco and E-vapor Practice in general, visit www.khlaw.com/evapor. Follow Keller and Heckman Tobacco and E-Vapor Partner Azim Chowdhury on Twitter.

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FDA is Coming webinar

At yesterday’s meeting with the U.S. House Subcommittee on Agriculture and Rural Development to discuss FDA’s Fiscal Year 2019 budget, Food and Drug Administration (FDA) Commissioner Scott Gottlieb discussed the Agency’s regulation of the tobacco industry and noted, among other things, that when all the requirements for the newly deemed products, including vapor products, went into effect last year, FDA now has authority to inspect and impose GMP standards and enforce age restrictions.  Gottlieb indicated that FDA would be “stepping into this fight in a vigorous way in the coming weeks.”

Being prepared for an FDA inspection is critical to maintaining compliance.  Just a few weeks ago, FDA’s recently-issued Request for Proposal (RFP), Vape Inspection Services (FDA-RFP-18-1190619), was extended on March 22, 2018 to allow for additional time for FDA to receive, review and consider responses from government contractors submitting bids to conduct inspections of establishments engaged in the retail sale of FDA-regulated tobacco products.

The RFP provides valuable insight into the Agency’s current thinking with regard to the scope of inspections that are expected to begin shortly, as mandated by the Tobacco Control Act.

Specifically, the RFP indicates that the contractor(s) shall, in the course of a facility inspection:

  • Complete and provide FDA with a signed Form FDA 482 (“Notice of Inspection”);
  • Complete an inspection form, detailing:
    • Administrative information;
    • The scope of the facility’s business (e.g., manufacturing, retail, import/export of products);
    • A list of potential violations of the Federal Food, Drug, and Cosmetic Act; and
  • Be prepared to testify on behalf of FDA in any regulatory or judicial proceeding.

The RFP focuses extensively on the type of evidence collection and storage permissible under the Agency’s guidelines – including the collection of photographic and physical evidence.  The RFP further requires that the contractor complete required Agency training regarding the permissibility of collecting reports, data, documents, and photos (including limitations on Confidential Business Information (CBI), sales data, and personnel data).

The RFP describes the scheduling of inspections on a continuing, quarterly basis, in accordance with designated quotas.  The program allocates funding for one full-time program manager, approximately 10 program coordinators, and 20 inspectors (based on 2,080 annual hours per full-time equivalent).

Keller and Heckman continues to monitor developments relating to FDA’s forthcoming inspections of tobacco and vapor manufacturing establishments, and, to help companies prepare, recently launched the Audit and Inspection Program (AIP).  The AIP provides establishments with an opportunity to conduct advance, client-confidential, independent auditing to identify and remedy any deficiencies.  In addition, the AIP provides establishments with training regarding FDA’s inspection authority, the permissibility of Agency collection of business information, and optional environmental and occupational health and safety components.  For additional details on the AIP Program and to register, click here.

On May 2, 2018 (3:00 PM ET), attorneys Azim Chowdhury and Daniel Rubenstein will be participating in a free webinar hosted by the Smoke-Free Alternatives Trade Association (SFATA), “The FDA is Coming – Are You Ready” and will be discussing Keller and Heckman’s AIP and how manufacturers and retailers can prepare for an FDA inspection. Register for the webinar here.

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ingredient listing (002)2

The vapor device industry has been requesting FDA for years to exempt devices from the Tobacco Control Act Section 904(a)(1) ingredient listing requirement, respectfully arguing, among other things, that the information required for non-consumable hardware products and components provides no meaningful information to FDA that would help it protect the public health.[1]  On April 13, 2018, just 25 days before the reporting deadline for large manufacturers of deemed tobacco products, FDA published a revised Guidance for Industry: Listing of Ingredients in Tobacco Products.  FDA now intends to enforce the ingredient listing requirement only with respect to those tobacco product components or parts that are made or derived from tobacco, or contain ingredients that are burned, aerosolized or ingested (i.e., consumed) during use.  Although the revised guidance is late – and comes after many companies have spent considerable time and funds to comply with the reporting requirement – it is welcome news for the industry.

The ingredient listing deadlines for the applicable components and parts of deemed finished tobacco products[2], however, have not changed – large manufacturers of such products still have only until May 8, 2018, while small-scale manufacturers[3] have until November 8, 2018.

Manufacturers of vapor devices and finished deemed tobacco product components and parts should keep in mind that FDA’s decision to exempt such products from ingredient listing does not change the fact that these products are still subject to FDA’s premarket authorization requirements.  It remains the case, for example, that any new vapor device intended for introduction into the U.S. market after August 8, 2016 requires Premarket Tobacco Product Application (PMTA) authorization (which requires ingredient information, along with a significant amount of additional data) before it can be marketed, and any devices on the market on August 8, 2016 have until August 8, 2022 before PMTAs are due, and can remain on the market after that date only if PMTAs for the products are accepted by FDA for review.

Components and Parts Subject to Ingredient Listing 

The revised guidance provides examples of “consumable” components and parts that still require ingredient listing including, but not limited to:

  • Cigar filler;
  • Cigar binder;
  • Cigar wrapper;
  • Pipe tobacco;
  • Waterpipe tobacco;
  • E-liquids;
  • Cigarette tobacco;
  • Cigarette paper;
  • Smokeless tobacco;
  • Roll-your-own (RYO) tobacco;
  • RYO rolling paper;
  • RYO tube; and
  • Cigarette filter that contains any ingredient that burns, aerosolizes, or is ingested during use (e.g., cigarette filter with menthol because the menthol will aerosolize during cigarette smoking).

Ingredients of tobacco product components and parts that are not made or derived from tobacco or consumed during use, e.g., pipes, hookah apparatus, vapor devices, etc., need not be submitted to FDA.  Examples of components or parts for which FDA does not intend to enforce the ingredient listing submission requirement at this time include, but are not limited to:

  • Electrical components including, but not limited to, batteries, charging systems, circuit boards, wiring, and connectors;
  • System software;
  • Digital display, lights, and buttons to adjust settings;
  • Connection adapters;
  • Cartomizers;
  • Coils;
  • Wicks;
  • Tanks;
  • Mouthpieces;
  • Pipes;
  • Waterpipes;
  • Hoses;
  • Bowls;
  • Charcoal; and
  • Cigarette filter that does not contain any ingredient that is burned, aerosolized, or ingested during tobacco use.

Based on this, e-liquid manufacturers need only provide ingredient information on the liquid component of their products, not other non-consumable components such as bottles, drippers and packaging.  FDA expects to receive ingredient information for these non-consumable components and parts during its pre-market review of finished tobacco products (e.g., Premarket Tobacco Applications and Substantial Equivalence Reports).

Single Submissions for Multiple Products

With respect to consumable components and parts, the revised guidance also now makes clear that there are a number of situations where ingredients for multiple products may be listed together under a single submission, provided all of the different brands/subbrands and product sizes for the associated products in the submission are identified.  Examples of situations allowing a single ingredient listing for multiple products are provided in the guidance as follows:

  • Identical per weight composition of ingredients for tobacco products sold under multiple brands/subbrands:
    • Pipe tobacco with identical per weight composition of ingredients sold under 30 brands/subbrands;
    • E-liquids with identical per weight composition of ingredients sold under 200 brands/subbrands; and
    • Waterpipe (shisha) tobacco with identical per weight composition of ingredients sold under 15 brands/subbrands.
  • Identical per weight composition of ingredients for tobacco products sold in multiple product sizes:
    • E-liquid with identical per weight composition of ingredients sold in volumes of 30mL, 60mL, 90mL or sold in a range of product sizes (e.g., 20mL-100mL);
    • Pipe tobacco with identical per weight composition of ingredients sold in product sizes of 5g, 10g, 50g;
    • Waterpipe (shisha) tobacco with identical per weight composition of ingredients sold in product sizes of 100g, 200g, 500g; and
    • Pouched snus with identical per weight composition of ingredients sold in a can of 12 snus sachets or a can of 15 snus sachets.

For open-system e-liquids more specifically, the revised guidance indicates that manufacturers can satisfy the ingredient listing requirement by providing one listing that corresponds to multiple products if the manufacturer sells e-liquids that (1) are identical in chemical composition to one another or (2) are identical in chemical composition to one another except the quantities of propylene glycol (PG), vegetable glycerin (VG), and/or nicotine differ.8 For example:

  • E-liquids with identical nicotine concentrations (e.g., 0.5 mg/ml nicotine) but varying PG/VG ratios (e.g., 20/80, 50/50, 80/20) and all other ingredients having identical per weight composition.
  • E-liquids with identical PG/VG ratio (e.g., 50/50) but different nicotine concentrations (e.g., 0.5, 1.0 1.5 mg/ml) and all other ingredients having identical per weight composition.
  • E-liquids with varying PG/VG ratios (e.g., 20/80, 50/50, 80/20) and different nicotine concentrations (e.g., 0.5, 1, 2 mg/mL) with all other ingredients having identical per weight composition.

However, changes to relative ratios of ingredients or to the quality or type of an ingredient will require separate submissions.  For e-liquids, the revised guidance provides several examples of when separate submissions to correspond to each brand/subbrand of a product are required:

  • E-liquids that have identical PG/VG chemical structure, but the nicotine chemical structure is different (e.g., moving from free nicotine to nicotine salt), even with identical per weight composition of all other ingredients.
  • E-liquids that have identical PG/VG chemical structure and identical nicotine chemical structure but where the per weight composition of all other ingredients is different in any way (e.g., increased amount of cherry flavor #1 added when all other ingredient ratios stay the same).
  • E-liquids where the grade of the PG/VG is different in any way (e.g., percent purity changes).

For more detailed background on the ingredient listing information needed and submission process, see here.

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If you need assistance with ingredient listing or for more information regarding other regulatory obligations facing tobacco product manufacturers, distributors, importers, or retailers, please contact Azim Chowdhury at chowdhury@khlaw.com or 202-434-4230.

 

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[1]           See e.g., comment to the FDA Ingredient Listing Guidance document submitted by Shenzhen E-Vapor Industry Association (SEVIA) in May 2017, available at https://www.regulations.gov/document?D=FDA-2009-D-0524-0034.

[2]              The term “finished tobacco product” means a tobacco product, including all components and parts, sealed in final packaging intended for consumer use. Components and parts that are sold separately from other tobacco products are finished tobacco products if they are sold in final packaging intended for consumer use.

[3]           The term small-scale tobacco product manufacturer means a manufacturer of any regulated tobacco product that employs 150 or fewer full-time equivalent employees and has annual total revenues of $5 million or less. FDA considers a manufacturer to include each entity that it controls, is controlled by, or is under common control with.