Sam Jockel has been published in the Food and Drug Law Institute’s Update Extra, an electronic-only feature of Update Magazine. The article “FDA Holds Public Hearing on Strategies to Address Youth E-Cigarette Use” is available online here. This article is republished with the permission of FDLI.

Photo of Azim Chowdhury

As previously reported on this blog, on November 15, 2018, citing new data from the 2018 National Youth Tobacco Survey (NYTS) that showed a surge in e-cigarette use among youth, U.S. Food and Drug Administration (FDA) Commissioner Scott Gottlieb, M.D. announced new steps aimed at curtailing illegal underage use of e-cigarettes by limiting where such products can be purchased.  More specifically, the Commissioner indicated that FDA would seek to limit the sale of flavored e-cigarettes (excluding tobacco, mint and menthol flavored products) to (1) brick-and-mortar retailers that permit entry only to adults (18+), or that have a walled-off adult-only section where flavored products can be viewed and purchased; and (2) in online stores that implement soon-to-be-announced “heightened” age-verification measures.[1]

With respect to online sales of flavored e-cigarettes, while FDA has not yet provided direction on how companies should verify the age of those purchasing such products over the internet, FDA said that it plans to identify and publish a list of best practices for online retailers. It is possible that the Agency will implement guidance that includes similar requirements to those found in California’s Stop Tobacco Access to Kids Enforcement Act (STAKE Act) – a law which California authorities are increasingly enforcing.

California’s STAKE Act

California law prohibits the sale of tobacco products to anyone under the age of 21[2], and the STAKE Act imposes mandatory steps that online distributors and sellers of tobacco products are required to follow to verify that a purchaser of these items is 21 years of age or older. The Act defines “tobacco products” to include an “electronic device that delivers nicotine or other vaporized liquids to the person inhaling from the device, including, but not limited to, and electronic cigarette, cigar, pipe, or hookah.”[3]

The steps required under the STAKE ACT are summarized below.

  • Attempt to match the name, address and date of birth provided by the customer to information contained in records in a database of individuals whose age has been verified to be 21 years or older by reference to an appropriate database of government records kept by the distributor, a direct marketing firm or any other entity.
  • Verify that the billing address on the check or credit card offered for payment by the purchaser matches the address listed in the database.
  • If unable to verify that the purchaser is 21 years of age through the above, require the customer or recipient to submit an age-verification kit consisting of an attestation signed by the customer that he or she is 21 years of age or older and a copy of a valid form of government identification.
  • Verify that the billing address on the check or credit card provided by the consumer matches the address listed in the form of government identification.
  • For credit card transactions, submit information to each credit card company so that the words “tobacco product” may be printed in the purchaser’s credit card statement.
  • Regardless of the form of payment, prior to shipping the tobacco product to a California customer, make a telephone call after 5 p.m. to the purchaser or recipient confirming the order. The call may be a recorded message left on voicemail.
  • Deliver only to the purchaser or recipient’s verified billing address on the check or credit card used for payment. Delivery to a post office box address is prohibited.[4]

Enforcement of the STAKE Act

California is actively pursuing businesses that violate the STAKE Act, both through warning letters from the state Department of Justice, as well as legal action. The warning letters, which may include violations of additional statutes (e.g., Propositions 56 and 65), outline the obligations to businesses and the requirements that they must to take to ensure that their tobacco products—including electronic cigarettes and vapor devices—are not being sold to anyone under 21 years of age. The letters also remind recipients that:

“Section 22963 [the STAKE Act] provides for civil penalties of up to $2,000 for the first violation of its requirements, $3,500 for the second violation, $5,000 for the third violation, $6,500 for the fourth violation, and $10,000 for each subsequent violation in a five-year period.”

Legal action taken by California includes a lawsuit filed in the Superior Court of the State of California, County of Los Angeles on October 31, 2018, naming Kandypens Inc., a manufacturer and online retailer of vaping products, as the defendant. The enforcement action seeks injunctive relief and civil penalties for violating the STAKE Act, and other statutes.

Noting that “…any child with a prepaid gift card and an internet connection can easily purchase Kandypens’ vaping devices and e-liquids through Kandypens’ website because Defendant fails to follow state-mandated procedures for verifying a purchaser’s age,” the enforcement action requests that Kandypens be enjoined from selling vaping products over the internet without first verifying the purchaser’s age. It also requests that the Defendant be assessed civil penalties for each violation of the STAKE Act, in addition to penalties for violating of other statutes.

While we await FDA’s final guidance for online e-cigarette retailers, businesses selling tobacco products to consumers in California over the internet need to be in compliance with the STAKE Act now. Although it is not yet clear what “heightened” online age-verification measures FDA will require, it is certainly possible that the Agency will turn to states like California for guidance.

______________________________________

[1]           U.S. Food & Drug Admin., FDA Statement, Statement From FDA Commissioner Scott Gottlieb, M.D., on Proposed New Steps to Protect Youth by Preventing Access to Flavored Tobacco Products and Banning Menthol in Cigarettes (Nov. 15, 2018) (hereinafter, the “FDA Nov. 15, 2018 Statement”), https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/UCM625884.htm?utm_campaign=111518_Statement_FDA%20Commissioner%20statement%20on%20p

[2] Cal. Bus. & Prof. Code § 22958(a).

[3] Cal. Bus. & Prof. Code § 22963(a).

[4] SB 7, amending Cal. Bus. & Prof. Code § 22963.

Photo of Azim Chowdhury

Keller and Heckman is pleased to announce the agenda for this year’s E-Vapor and Tobacco Law Symposium. This comprehensive 2-day course will provide you with guidance on how to stay in compliance with FDA’s recent announcements and much more. Click here to view the agenda.

Topics that will be covered include: FDA and State law compliance, HPHCs and PMTAs, Advertising and Marketing, European Union and Global laws, Environmental, OSHA and CPSC compliance, CBD and cannabis-derived products, and more!

To register, click here.

Seminar Details:
Date: January 29 – 30, 2019
Cost: $899 if you register by January 4, 2019; $1,099 if you register after January 4, 2019
*register 3 or more attendees from the same company and receive a 10% discount. Email seminars@khlaw.com for additional information.

Continuing Legal Education (CLE)
CLE credits are available, pending state approval

Location

Marriott Miami Biscayne Bay
1633 N Bayshore Drive
Miami, FL 33132

Keller and Heckman has negotiated a preferred room rate of $259 per night, plus tax at the Marriott Miami Biscayne Bay. Reservations must be received no later than January 7, 2019. To make your reservation, please click here.

This year’s E-Vapor and Tobacco Law Symposium will feature a conference app; stay tuned for details on downloading the app!

Learn how to stay in compliance with FDA’s recent announcements and much more at Keller and Heckman’s upcoming E-Vapor and Tobacco Law Symposium on January 29 – 30, 2019, in Miami, Florida. Below is a sampling of topics that will be covered at the event. Sign up now and take advantage of our early bird discount!

FDA Regulation Update and Preparing for What’s Next
Azim Chowdhury

  • FDA’s New Announcement: How it Will Impact Your Business
  • Product Compliance Overview: Vapor, Cigars, Hookah
  • Flavors and Product Standards
  • Reporting on Harmful and Potentially Harmful Constituents (HPHCs)
  • Premarket Review for Deemed Tobacco Products
  • PMTAs, SE Reports, and Using Master Files
  • Potential Over-the-Counter Drug Pathway
  • Status of Proposed Rulemakings
  • Modified Risk Tobacco Products
  • Online Sales – “Heightened” Age-Verification
  • Retailer Compliance and Adults-Only Requirement
  • Enforcement and Penalties
  • …and much more!

FDA Inspections: Are You Prepared?
Azim Chowdhury and Daniel Rubenstein

  • Overview of FDA Inspection Authority
  • Update on Tobacco Product Manufacturing Practices
  • The FDA Inspection: Before, During and After
  • Enforcement and Penalties
  • Keller and Heckman’s Audit and Inspection Program (AIP)

Key Litigation Update
Eric Gotting

  • Nicopure and Right to be Smoke-Free Coalition v. FDA (Deeming Rule Appeal)
  • American Academy of Pediatrics v. FDA
  • Potential Upcoming Litigation (e.g., flavor and convenience store bans)

Environmental Issues Affecting Nicotine-Containing Products
JC Walker

  • Overview of Hazardous Waste Regulations Governing E-Liquid Manufacturers and Distributors
  • Considerations for Minimizing Regulatory Exposure

OSHA’s Hazard Communication Standard and Considerations for the E-Liquid Industry
Manesh Rath

  • Overview of OSHA’s Hazard Communication Standard (HCS)
  • Scope of Standard and Exemptions
  • Safety Data Sheets (SDSs)
  • Labeling
  • Employee Training
  • Future Challenges for E-liquid Industry

Advertising and Marketing: Implications for Global Public Policy and the Role of Self-Regulation
Sheila Millar

  • Marketing Practices: Impact on Public Perception, Regulations, Enforcement and Litigation
  • Expanding Global Concerns About Child-Appealing Marketing
  • Creating and Implementing Effective Advertising Self-Regulation

Business, IP, and Advertising Issues – How to Stay in Compliance                                       
Tracy Marshall and Bob Niemann

  • Drafting and Negotiating Vendor, Manufacturing, and Distribution Agreements
  • Insurance Policies for Vapor Companies
  • Protecting Trademarks, Copyrights, and Trade Secrets and Avoiding IP Infringement
  • Privacy and Data Security
  • Using Digital Marketing to Promote Your Business
  • Conducting Contests, Sweepstakes, and Other Promotions

State Law Update
Azim Chowdhury

  • Overview of State permit, licensing and tax requirements for tobacco and vapor products
  • Age-verification and delivery requirements

How to Sell Your Products in the EU (Without Getting into Problems): TPD and Beyond
Marcus Navin-Jones

  • Refresher on TPD Requirements
  • EU Requirements which Apply in Addition to the TPD
  • EU Law vs National Law: Areas where EU Countries are Allowed to Have their Own Rules
  • Recalls Withdrawals and Legal Crisis Management.
  • Brexit and How Brexit is Affecting the Vape Industry

Going International: Preparing Your Business for Global Compliance
David Ettinger

  • Current Regulatory Status of Vapor Products Around the World
  • China and Asia
  • New Zealand
  • Australia
  • Russia, India, Middle East, and More
  • World Health Organization

In addition to the topics above, we will also have special guest speakers from Cardno ChemRisk, Broughton Laboratories and others on topics including Premarket Tobacco Product Applications and HPHC Reporting. Stay tuned for the full agenda!

To register, click here.

Seminar Details:
Date: January 29 – 30, 2019
Cost: $899 if you register by January 4, 2019; $1,099 if you register after January 4, 2019
*register 3 or more attendees from the same company and receive a 10% discount. Email seminars@khlaw.com for additional information.

Continuing Legal Education (CLE)
CLE credits are available, pending state approval

Location
Marriott Miami Biscayne Bay
1633 N Bayshore Drive
Miami, FL 33132

Keller and Heckman has negotiated a preferred room rate of $259 per night, plus tax at the Marriott Miami Biscayne Bay. Reservations must be received no later than January 7, 2019. To make your reservation, please click here.

For additional information, please contact:

Sara A. Woldai, CMP
Manager, Marketing Meetings and Events
woldai@khlaw.com
202.434.4174

Photo of Azim ChowdhuryPhoto of Adam Susser

Following a series of actions over the last several months, on November 15, 2018, the U.S. Food and Drug Administration (“FDA”) announced new steps aimed at protecting youth from tobacco, including, among other things, preventing access to flavored electronic nicotine delivery system (“ENDS”) sold in certain retail locations, and potentially banning menthol in combustible tobacco products.[1]  Spurred by the release of new data from the 2018 National Youth Tobacco Survey (“NYTS”) showing a rise in e-cigarette use among youth over the past year, FDA Commissioner Scott Gottlieb, M.D., announced a number of steps to prevent youth access to, and use of, tobacco products, including: (i) directing the Center for Tobacco Products (“CTP”) to revisit FDA’s premarket review compliance policy for flavored ENDS, other than tobacco, mint and menthol flavors, sold in retail outlets that are not adult (18+) only; (ii) directing CTP to publish additional information regarding best practices for age-restricting online sales; (iii) issuing a Proposed Rulemaking that would seek to ban menthol in combustible tobacco products, including cigarettes and cigars; (iv) issuing a Proposed Rulemaking to ban, through appropriate means, all flavors in cigars; and (v) advancing a policy that aggressively pursues the removal of ENDS products that appear to too kid-friendly.

National Youth Tobacco Survey Data

On November 15, 2018, the FDA and the U.S. Centers for Disease Control and Prevention (“CDC”) released new findings from the 2018 National Youth Tobacco Survey showing that more than 3.6 million middle and high school students were “current e-cigarette users” – defined as having used e-cigarettes once in the past thirty days – in 2018, which FDA described as a “dramatic increase of more than 1.5 million students since last year.”[2]  As background, the NYTS “is a cross-sectional, voluntary, school-based, self-administered, pencil-and-paper survey of U.S. middle and high school students.”[3]

According to the FDA news release, “the number of U.S. high school students who reported being current e-cigarette users increased 78 percent between 2017 and 2018 to 3.05 million (or 20.8 percent).”[4]  Further, “among middle school students, numbers rose 48 percent [from the previous year] to 570,000 (or 4.9 percent) [of total middle school students].”  What is more, the NYTS data showed that high school students who reported being current e-cigarette users reported using these products more frequently.  Indeed, “[i]n the last year, the proportion of those [high school students] using the product more regularly (on 20 or more of the past 30 days) increased from 20 percent to 27.7 percent[.]”[5]  The study authors suggest that rising e-cigarette use in the last year is likely attributable “to the recent popularity of certain types of e-cigarettes, such as JUUL,” noting that these and similar products “have a high nicotine content and come in appealing fruit and candy flavors.”[6]

In his statement, FDA Commissioner Scott Gottlieb, M.D. explained that “[w]e still believe that non-combustible forms of nicotine delivery, such as e-cigarettes, may be less harmful alternatives for currently addicted adult smokers who still seek nicotine[,]” but clarified that “FDA will not allow” the opportunity presented by e-cigarettes “to come at the expense of addicting a whole new generation of kids to nicotine.”[7]  CDC Director, Robert R. Redfield, M.D., echoed these concerns stating that “[t]he markedly accelerating rate of e-cigarette use among U.S. youth within the past year is a cause for grave concern” and noting that it is “critical that we implement proven strategies to protect our Nation’s youth from this preventable health risk.”[8]

FDA Announces New Policy Framework to Combat Rising Youth Use of Tobacco Products, Including ENDS

In response to the NYTS data, FDA announced a new policy framework designed to address rising youth use of tobacco products, including ENDS.

Limiting Sales of Flavored ENDS (Other Than Tobacco, Mint and Menthol) to Adults-Only Retailers  

First, FDA announced that all flavored ENDS products (other than tobacco, mint, and menthol flavors, or non-flavored products) will be required to be sold in age-restricted, in-person locations, or else potentially be subjected to a revised Premarket Tobacco Product Application (“PMTA”) deadline.  This policy revision would apply to all ENDS products, including e-liquids, cartridge-based systems and cigalikes, in flavors except tobacco, mint, and menthol, sold in physical locations where people under age 18 are permitted.[9]  This policy revision would not apply to ENDS products sold exclusively in age-restricted locations (e.g., a stand-alone tobacco retailer (such as a vape shop)) that adequately prevent persons under age 18 from entering the store at any time; or, a section of an establishment that adequately prevents entry of persons under age 18 and prevents persons under age 18 from viewing or accessing flavored ENDS products.[10]  As noted, this policy revision does not apply to ENDS products with tobacco, mint, or menthol flavors, as well as to non-flavored ENDS products, sold in any location.

In other words, vape shops that restrict access to adults (18+) only will be able to continue to sell a wide variety of flavored e-liquids/ENDS.  ENDS products sold in locations that are not adults-only, however, will be limited to only tobacco, mint and menthol flavored products; other flavors (e.g., cherry, vanilla, crème, tropical, melon, etc.) sold in such locations, while not “banned” per se, will be subject to a revised compliance policy that could move the PMTA deadline earlier than the current August 8, 2022 deadline for ENDS products on the market as of August 8, 2016.

The Commissioner also noted that FDA plans to continue to aggressively pursue removing ENDS products marketed to children and/or appealing to youth from the market.  These marketing practices may include “using popular children’s cartoon or animated characters” or “names of products favored by kids like brands of candy or soda.”[11]

Heightened Age Verification for Online Sales

Second, FDA announced that it would seek to curtail the sale of flavored ENDS products (other than tobacco, mint and menthol) that are sold online without “heightened age verification” processes.  To advance this goal, FDA plans to identify and publish a list of best practices for online retailers.

Earlier this week, in addition to promising to cease selling flavored products (other than tobacco, mint and menthol) in all brick-and-mortar retailers, JUUL announced its own comprehensive online age-verification process:

Flavored Cigars and Menthol Cigarettes

Third, FDA announced that flavored cigars will no longer be subject to the extended compliance date for premarket authorization (which currently sets the premarket application deadline for cigars on the market on August 8, 2016 to be August 8, 2021).  However, this policy does not apply to the entire product category, as certain flavored cigars are considered “grandfathered” and exempt from premarket review if they were on the market as of February 15, 2007.[12]  To address this gap in regulatory authority, FDA plans to propose a product standard that would ban all flavored cigars.

Fourth, FDA announced plans to publish a Proposed Rule in the Federal Register that would seek to ban menthol in combustible tobacco products, including cigarettes and cigars.

Implications for the ENDS Product Category

FDA’s approach to addressing rising youth use of certain flavored (e.g., non-tobacco, mint, and menthol flavored) cartridge-based e-cigarette products may be effective, but is also potentially subject to legal challenge.  Section 906(d)(3) of the Tobacco Control Act expressly states that “no restrictions under [906(d)(1)] may — (i) prohibit the sale of any tobacco product in face-to-face transactions by a specific category of retail outlets.”  Nevertheless, a prohibition on the sale of flavored ENDS at retail outlets (e.g., convenience stores) appears to be precisely what FDA plan to accomplish, albeit through indirect means.

In particular, FDA’s announcement is framed as a withdrawal of an “enforcement discretion” policy, previously applicable to certain flavored ENDS products.  Arguably, the practical effect of this compliance policy revision is a prohibition on the sale of a tobacco product in face-to-face transactions by a specific category of retail outlets (e.g., generally accessible convenience stores).  That said, FDA will likely argue that it is simply reverting to the state of the law at the time of the Deeming Rule.  Further, FDA is likely to justify its policy by noting that it expressly allows sales of flavored ENDS products at all retail outlets, provided that the retail outlet has an “adults-only” section where flavored ENDS products are not visible to youth who may otherwise be in the store.  This action aligns with the requirements currently applicable to the distribution of samples of smokeless tobacco products in “qualified adult[s]-only” facilities.[13]

In any case, only time will tell whether FDA’s actions to address the rise in youth use of tobacco products, including flavored ENDS products, will be effective at curtailing youth access.  In the interim, e-liquid manufacturers will increasingly rely on specialty tobacco product retailers (e.g., “vape shops”) and age-verified online channels to distribute their products to adults.

If you have any questions regarding FDA’s recent announcements contact Azim Chowdhury (chowdhury@khlaw.com) and be sure to register for Keller and Heckman’s 3rd Annual Tobacco and E-Vapor Law Symposium in Miami, Florida on January 29-30, 2019 here.

_____________________________________________________

[1] U.S. Food & Drug Admin., FDA Statement, Statement From FDA Commissioner Scott Gottlieb, M.D., on Proposed New Steps to Protect Youth by Preventing Access to Flavored Tobacco Products and Banning Menthol in Cigarettes (Nov. 15, 2018) (hereinafter, the “FDA Nov. 15, 2018 Statement”), https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/UCM625884.htm?utm_campaign=111518_Statement_FDA%20Commissioner%20statement%20on%20proposals%20to%20address%20youth%20tobacco%20use&utm_medium=email&utm_source=Eloqua.

[2] U.S. Food & Drug Admin., FDA News Release, Results from 2018 National Youth Tobacco Survey Show Dramatic Increase in E-Cigarette Use Among Youth Over Past Year (Nov. 15, 2018), https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm625917.htm?utm_campaign=111518_PR_New%20federal%20findings%20show%20dramatic%20increase%20in%20youth%20e-cigarette%20use&utm_medium=email&utm_source=Eloqua.

[3] Id., supra n.2.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] FDA Nov. 15, 2018 Statement, supra n.1.

[10] Id.

[11] FDA Nov. 15, 2018 Statement, supra n.1.

[12] Family Smoking Prevention and Tobacco Control Act, Pub. L. 111-31, 123 Stat. 1776 (June 22, 2009) (hereinafter, the “Tobacco Control Act”), at § 910(a)(1)(A) (defining a new tobacco product” as “any tobacco product (including those products in test markets) that was not commercially marketed in the United States as of February 15, 2007”).

[13] Tobacco Control Act, supra n.11, at § 102(d)(2)(A).

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

Photo of Azim ChowdhuryPhoto of Eric GottingPhoto of Adam Susser

On September 11, 2018, Nicopure Labs, LLC and the Right to be Smoke-Free Coalition (the “Appellants”) appeared for oral argument before a three-judge panel in the United States Court of Appeals for the District of Columbia Circuit to appeal a decision issued last year by the U.S. District Court for the District of Columbia, which ruled in favor of the U.S. Food and Drug Administration (“FDA”) in the first lawsuit challenging various provisions of the Family Smoking Prevention and Tobacco Control Act (“TCA” or “Act”) and FDA’s Deeming Rule as they are being applied to the vapor industry.[1]

During oral argument, the Appellants argued that the Modified Risk Tobacco Product (“MRTP”) preclearance requirement imposed by Section 911 of the TCA violates the First Amendment as applied to vapor products. In addition, the Appellants argued that application of the Act’s free sample ban to vapor products violates the First Amendment, and that FDA failed to tailor the Premarket Tobacco Application (“PMTA”) requirements to ensure the continued availability of vapor products.  Below, we provide a brief overview of the issues discussed at the oral argument. The recording of the hearing is available here.[2]  For background on the appeal, see our previous blog posts, including copies of the legal briefs, available here and here.

Modified Risk Claims

Appellants argued that the dichotomy in the current law – that manufacturers are legally permitted to sell vapor products for recreational purposes, but not allowed to make objectively truthful statements about those products (e.g., that they do not contain or produce tar, ash, or smoke, among other harmful chemicals found in cigarette smoke), or simply repeat FDA’s and various public health organizations’ statements that vapor products pose less risk than cigarettes – runs afoul of the First Amendment, which protects commercial speech. Indeed, Appellants stated that the requirement to ask permission is a First Amendment injury itself. Further, the Appellants contended that under current law, even if every federal judge in the country found a vapor company’s statements about its products to be true, if FDA determines that such a statement does not benefit public health, it would still be prohibited.

Appellants also discussed application of the Supreme Court’s intermediate scrutiny test to the MRTP provision. Under that approach, restrictions on commercial speech are judged under the four-pronged Central Hudson test, in which Courts ask whether: (1) the speech concerns a lawful activity and is not misleading; (2) the asserted government interest is “substantial”; (3) the restriction directly and materially advances the governmental interest; and (4) the restriction is no more extensive than is necessary to serve that interest.[3] As to the third prong, Appellants maintained that the MRTP provision does not directly and materially advance the government’s interest because others can make similar public statements without any preclearance approval.

The Appellants also noted that the clear trajectory of modern U.S. Supreme Court First Amendment jurisprudence requires that, under the fourth prong of Central Hudson, if the government can achieve its interest in a way that is less restrictive than a prior restraint, it must do so. For example, FDA could rely on non-speech alternatives standing alone or in combination with each other to prevent potentially misleading modified risk claims, such as enforcing the TCA’s misbranding and adulteration provisions, requiring manufacturers to maintain records substantiating such claims, requiring the use of disclaimers, and conducting post-market surveillance.

Free Sample Ban & PMTA Tailoring

Appellants also argued that under the Supreme Court’s decision in Tex. v. Johnson free samples are protected under the First Amendment. [4] Under that case, whether conduct is “sufficiently imbued with elements of communication” to warrant First Amendment protection depends on whether there is “an intent to convey a particularized message” and “the likelihood [is] great that the message [will] be understood by those who view it.”[5] Here, vapor companies intend to send a message to consumers through their distribution of free samples; thus sampling is a form of protected speech. Appellants argued that it is not enough for vapor companies to simply state that their e-liquid tastes better than a conventional cigarette, for example, but instead the only way to convey this information – the personalized experience of vaping a particular flavor – is through providing a sample. This is expressive conduct. Appellants also maintained that the ban on free samples violates the third and fourth prongs of Central Hudson. For instance, neither Congress nor FDA produced any evidence that minors are, in fact, obtaining access to vapor products through free samples, and there are ample non-speech restrictions that could limit access by youth, such as enhanced enforcement initiatives and minimum age verification at retailers.

In addition, Appellants argued that the PMTA requirements were insufficiently tailored to ensure the continued availability of vapor products. Specifically, given that FDA determined that the vast majority of manufacturers will exit the market before filing PMTAs due to the high cost of long-term, product-specific studies (for more on this see here), Appellants maintained that FDA should have considered accepting for scientific review PMTAs for vapor products that do not contain such studies but otherwise comply with the PMTA informational requirements. FDA could still do a complete review of those PMTAs, which would include a scientific literature review of the population effects of vapor products as such evidence exists in 2022, when PMTAs are expected to be filed under FDA’s current compliance policy for products on the market as of August 8, 2016.

Post-Argument Activity

One day after the oral argument, FDA submitted a letter to the D.C. Circuit Clerk of the Court, informing the court that, on September 12, 2018, FDA announced significant new actions, including enforcement initiatives, to address an alleged “epidemic of e-cigarette use among teenagers.”[6] We previously blogged about FDA’s enforcement “blitz” here.  The letter notes that “FDA is reconsidering the extended compliance dates for the submission of new product applications when it is apparent that there is widespread youth use of the product, and is also considering a policy change that would lead to the immediate removal of flavored e-cigarette products from the market.”

Indeed, in letters to several large manufacturers of cartridge-based e-cigarettes, FDA threatened to revisit the August 8, 2022 PMTA compliance date (for those companies’ and potentially similar products), if the targeted companies failed to submit within 60 days comprehensive plans to address sales of their products to minors.

On September 17, 2018, Appellants submitted a response to the FDA’s letter, arguing that it “provides no new authorities [as required by Federal Rule 28(j)] and instead describes enforcement actions that have nothing to do with appellants and target a portion of the e-cigarette industry.”[7] Appellants point out that FDA’s enforcement actions, which ostensibly target 97 percent of the e-cigarette market – actually only address the “cartridge-based” e-cigarette market, which is only a portion of the overall vapor products market. Indeed, FDA Commissioner Dr. Scott Gottlieb pointed out that sales of open-tank vaping products, which Appellants primarily market, do not appear to be driving the government’s claimed increase in underage use. Regardless, Appellants maintained that FDA’s recent enforcement actions prove their point: if FDA is concerned about purchases by or marketing of vapor products to youth, it can and should advance that interest through actions targeted at that problem (e.g., warning letters to retailers), not through a blanket prohibition on all truthful, non-misleading speech by manufacturers to adults.[8]

Next Steps

While it is impossible to state with certainty when the D.C. Circuit will rule on the case, we believe it is reasonable to expect a decision sometime in early 2019. We will keep readers of this blog updated on the outcome of the case.

______________________________________

[1] At the hearing, Miguel Estrada of Gibson, Dunn & Crutcher represented Nicopure Labs, and Eric Gotting of Keller and Heckman represented both Nicopure Labs and the Right to be Smoke-Free Coalition.

[2] Oral argument, Nicopure Labs et al. v. FDA, Case No. 15-5196 (D.C. Cir. Sept. 12, 2018), recording available at https://tinyurl.com/y8xzmsr4.

[3] Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 554-55 (2001) (summarizing test outlined in Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557 (1980)).

[4] See Tex. v. Johnson, 491 U.S. 397 (1989).

[5] Id. at 404 (citations and internal quotations omitted).

[6] See Letter from Tyce R. Walters to Mr. Mark Langer, Clerk of the Court re: Nicopure Labs, LLC v. FDA, No. 17-5196 (oral argument heard Sept. 11, 2018);  See also 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), https://tinyurl.com/y9gh3dyg; U.S. Food & Drug Admin., FDA Statement, Statement From FDA Commissioner Scott Gottlieb, M.D., on New Steps to Address Epidemic of Youth E-Cigarette Use (Sept. 12, 2018), https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm620185.htm.

[7] See September 17, 2018 letter from Miguel A. Estrada and Eric P. Gotting to Mr. Mark Langer, Clerk of the Court re: Nicopure Labs, LLC v. FDA, No. 17-5196 (oral argument heard Sept. 11, 2018).

[8] Id.; See also Thompson v. W. States Med. Ctr., 535 U.S. 357, 371 (2002) (“[I]f the Government could achieve its interests in a manner that does not restrict speech, or that restricts less speech, the Government must do so.”) (emphasis added).

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In a widely anticipated move, FDA has significantly increased the frequency of inspections of vapor manufacturing and retail facilities over the past few weeks, with some inspections spanning two days. We have received reports from vapor businesses across the country that they are receiving unannounced visits from FDA investigators conducting biannual inspections pursuant to Sections 704 and 905 of the Food, Drug, and Cosmetic Act as amended by the Tobacco Control Act. Under the Act, FDA is required to inspect every tobacco manufacturing facility at least once every two years. FDA uses a broad definition of manufacturing – repacking and relabeling are considered manufacturing acts and retailers that mix e-liquids for consumer sale are considered manufacturers.

During the course of their inspection, FDA investigators have requested product samples, labeling and invoices for raw materials, and labeling and invoices for finished goods. We understand that inspections have included both production (cleanroom) and non-production areas and have made use of photography and recordings. FDA appears also to be doing a lot of “fact finding” – learning as much as they can about the industry and how these products are manufactured and distributed, potentially for use in the development of future guidance documents and rulemakings.

We have also received reports of inspectors visiting vapor businesses from other agencies, including the Federal Aviation Administration (FAA), federal and state Environmental Protection Agencies (EPA), as well as state inspectors (e.g., California Department of Tax and Fee Administration).

As FDA continues to visit facilities across the country, it is critical that manufacturers, including retailer-manufacturers, understand the types of information that they are required to provide to the Agency upon request, as well as the type of that information that can or should be withheld. Similarly, Companies should understand the scope of authority that an FDA Investigator has in asking for specific product details. Vapor product manufacturers should fully prepare for their impending inspection now, so that they can demonstrate a high-degree of confidence when FDA arrives. Critically, and as third-party consultants begin to enter the Good Manufacturing Practice (GMP) space, manufacturers and retailer-manufacturers should ensure that the guidance they receive from outside counsel is accurate and based on experience in sound science and law and is protected from disclosure to FDA by attorney-client privilege.

Audit and Inspection Program Completes Coast-to-Coast Site Visits in First Half of 2018

Keller and Heckman’s Audit and Inspection Program (AIP) provides companies that are involved in any aspect of the tobacco or vapor product supply chain with assurance that their facilities are operating in accordance with FDA requirements. AIP Program attorneys have completed audits from Florida to California since the Program first began in early 2018, and feedback has been overwhelmingly positive:

Having your team run a thorough inspection was extremely helpful in preparing us for a “real” FDA inspection. The knowledge and insight you guys were able to provide my “Team Awesome” will certainly help us navigate through the regulations and future inspections. During this interesting time for the industry, and as a responsible manufacturer, we must do everything possible to ensure we are going above and beyond what potential GMP’s may be down the road to keep consumers and the industry’s reputation safe.

As “cool” as some people think it is to be a manufacturer in the vape industry, it’s not to be taken lightly. We try to do everything possible to provide our consumers and retailers with top quality products that are manufactured in a clean and safe environment. Having your team come in to review our facility and manufacturing practices gives us confidence that we are doing exactly what we have set out to accomplish!

The AIP Program includes both audit and training components from attorneys experienced in tobacco and vapor law, inspections, and good manufacturing practices, and addresses a broad range of inspection activities, including: recordkeeping, product labeling, product samples, requests for video/audio/photographic recordings, standard operating procedures, cleanliness and sanitation, inventory control, and personnel interviews.

Audits by the AIP Program staff are covered by attorney-client privilege and attorney work-product privilege.

Pre-registration for the AIP is available immediately by filling out the form available here:

Tobacco and Vapor Product Manufacturing Establishment Audit and Mock Inspection Program Pre-Registration Form

The completed pre-registration form can be E-mailed to chowdhury@khlaw.com, faxed to (202) 434-4646, or mailed to:

Keller and Heckman LLP
Attn: Azim Chowdhury
1001 G Street NW, Suite 500 West
Washington, D.C. 20001

Space is limited, and scheduling is generally available on a first-come, first-serve basis.

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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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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).