Is a Menthol Ban Within the FDA’s Reach?
Could menthol be banned?
Dating back to the Tobacco Control Act being signed into law in 2009, the conversation is picking up steam again. And the stakes could not be higher.
Here’s a refresher on how we got to the current state.
The Tobacco Control Act officially banned the use of flavors in cigarettes, but it exempted menthol, tasking the U.S. Food and Drug Administration (FDA) with convening a Tobacco Product Scientific Advisory Committee (TPSAC) to further study the subsegment’s effect on public health.
Since then, the FDA and tobacco manufacturers have entertained a legal merry-go-round, centered on the use of the 2011 TPSAC report, which unanimously supported a menthol ban.
The FDA issued an Advance Notice of Proposed Rulemaking on menthol in 2013, only to have Reynolds American Inc. and Lorillard Tobacco Co. successfully sue to block the agency from using that key TPSAC report.
But most recently, in January, the U.S. Court of Appeals for the D.C. Circuit said the FDA could use the report, prompting Reynolds to file an appeal.
For Reynolds, one could argue that no issue is more important. The Winston-Salem, N.C.-based No. 2 tobacco player doubled (or tripled) down on menthol when it purchased No. 3 player Lorillard for $27.4 billion in June 2015. At the heart of the deal was Lorillard’s menthol-dominant Newport line, which overnight boosted Reynolds to a 57% share of the menthol market.
And menthol is huge for retailers too, with Reynolds estimating it accounts for more than one-third of all cigarette sales. FDA data suggests it accounts for nearly half of all cigarette sales among 18- to 24-year-olds.
“Menthol regulation would have a devastating impact on communities, help foster more illicit tobacco sales and hurt jobs.”
Not only is menthol a huge seller, but it also is an important market-basket driver, spurring “ancillary sales of higher-margin products,” says David Bishop, managing partner of Barrington, Ill.-based sales and marketing firm Balvor LLC.
Losing those sales would be hugely problematic for retailers, especially in the wake of the Reynolds-Lorillard deal. In a December 2015 Wells Fargo “Tobacco Talk” retail survey, nearly 60% of respondents indicated participation in an everyday low price (EDLP) program would increase due to Newport’s inclusion, resulting in as much as 75% of industry volumes being represented in EDLP.
So while menthol today is legal, the re-emergence of the TPSAC report has created genuine concern for the tobacco and retail community.
“Menthol cigarettes are very important not because of menthol per se, but due to the importance of adult smokers,” says Anne Flint, senior tobacco category manager for Cumberland Farms, Framingham, Mass., the largest convenience chain in New England. “Adult smokers are some of the most important consumers we serve. Responsibly providing them with their brands of choice is important.”
An Outright Ban?
Does reinstatement of the TPSAC report automatically tip the scales in favor of menthol restrictions, if not an outright ban?
“Broadly, I don’t think that report is all that material,” says Vivien Azer, a tobacco analyst for New York-based Cowen Group. “The FDA’s own report was quite comprehensive. It really covered all of the mandated questions TPSAC had been charged with answering.”
Azer is referring to the FDA’s 2013 scientific evaluation of menthol, which came in at 153 pages with an equally long title: “Preliminary Scientific Evaluation of the Possible Public Health Effects of Menthol Versus Non-Menthol Cigarettes.”
In that lengthy document, the agency divided the scientific evidence into nine categories, finding the use of menthol in cigarettes is “likely associated” with a greater risk to public health in five of nine buckets. Those categories included:
- Physiology (menthol’s effect on cooling and desensitizing a smoker’s physiology)
- Patterns of use (general trends and patterns)
- Initiation and progression to regular use (possible effect on an individual’s initiation and progression to regular use of cigarettes)
- Dependence (number of cigarettes per day, time upon waking to first cigarette, and cravings)
- Cessation (whether menthol smokers are more likely to be successful at quitting)
Though the FDA’s scientific evaluation did not state that the agency intended to restrict or ban menthol, its strong wording led many to read between the lines—TPSAC report or not.
“The independent FDA report was actually more negative than the TPSAC report,” Azer says. “That’s really where the agency put their stake in the ground on menthol.”
Continued: A Question of Risk