Just weeks into his new position as the U.S. Food & Drug Administration’s (FDA’s) director of the Center for Tobacco Products (CTP), Mitch Zeller faced a firing squad of questions from tobacco retailers and suppliers attending the 2013 NATO Show in April. Not surprisingly, those questions centered around long-awaited decisions on hot-button issues such as menthol.
“You don’t actually expect me to make an announcement on menthol today, do you?” Zeller joked at the April event.
But that doesn’t mean Zeller wasn’t feeling political pressure to move on such important tobacco-related concerns.
“All I can say is when I started, there were a series of very critical, urgent issues, and menthol was one of them,” he continued. “The first four to five weeks of my return to the FDA were fully occupied by dealing with menthol, deeming [regulations] and substantial equivalency. There’s nothing I can say publicly about any of those topics.”
Many in the industry were understandably skeptical about Zeller’s ability to make any headway on these priorities. After all, Zeller’s CTP predecessor, Lawrence Deyton, failed to even propose rules on any of these major issues during his more than three-year tenure.
Yet it took Zeller only until June 25 to tackle the first of those critical issues he outlined at The NATO Show, granting the agency’s first-ever substantial equivalence (SE) approvals. Fast-forward a month, when Zeller issued an advance notice of proposed rulemaking (ANPRM) on menthol. And though the April deadline for a notice of proposed rulemaking (NPRM) on OTP deeming regulations came and went, an announcement on Zeller’s third-named priority is now expected in October.
Making progress on not just one but three major issues within the first six months of his tenure has impressed industry experts such as Bonnie Herzog, Wells Fargo’s managing director of beverage, tobacco and convenience-store research.
“I’m optimistic that [Zeller] can get action,” she says. “We are starting to see things happen.”
But even Herzog acknowledges the substantial-equivalence announcement wasn’t quite as “historic” as Zeller described. Yes, the agency approved two products and rejected four, but there is still a backlog of thousands of applications awaiting a decision.
Similarly, while Zeller has at least set up a timetable for menthol, any actual decisions are a ways off.
“The regulatory process is very long,” says Greg Wilson, director of regulatory affairs, engagement and information for Richmond, Va.-based Altria Group Inc. “If the FDA was to propose to do anything on menthol, I think that they would first put out a proposed regulation and take public comments. Then they’d have to review those public comments, react to those public comments and ultimately arrive at what they would propose to be a final rule and put that out for public comment. It’s a very lengthy process.”
And with no official notice or ANPRM on deeming regulations, the industry may have to wait even longer to learn whether or not the FDA will exert its authority over products such as cigars, pipe tobacco or electronic cigarettes. All of which has led many to question whether or not Zeller’s actions signify a faster, more efficient rulemaking process by the CTP or more of the same waiting game.
Substantial Work to Be Done
The issue of substantial equivalence came about as part of a special provision included in the 2009 Family Smoking Prevention & Tobacco Control Act regarding new tobacco products introduced into the market between Feb. 15, 2007, and March 22, 2011, though it can also be applied to existing tobacco products that were changed during that time period.
“If you want to sell a product that didn’t make it to market by February 2007, you must first either qualify the product as a new product or demonstrate that the product is substantially equivalent to one of those earlier products,” explains Seth Gold, legal counsel for Glenview, Ill.-based Republic Tobacco. “If you apply as a new product, you have to persuade the FDA that there are no additional health risks in this product. The statute implies that this is a difficult task, but the FDA must act within 180 days. Substantial equivalence is supposed to be less difficult for the manufacturer.”
However, with no clear guidelines on what is needed to convince the FDA that a new product is substantially equivalent to an existing product, and a seemingly never-ending review period, manufacturers have found the process far from easy. In fact, Gold describes Republic’s experience with substantial equivalence as a “Kafka-esque nightmare.”
Yet the complicated process has paid off for at least one manufacturer: On July 25, the FDA granted Lorillard Inc., Greensboro, N.C., permission to market two Newport Non-Menthol Gold products.
“We are very pleased that the FDA has found that Lorillard’s Newport Non-Menthol Gold products are substantially equivalent to existing tobacco products currently marketed,” Lorillard chairman, president and CEO Murray Kessler said after the FDA’s announcement. “As such, we are proud to be the first company in the industry to receive authorization to begin marketing these new products in the U.S. through the FDA’s substantial-equivalence pathway. We believe that the FDA has carried out its evaluation process in a deliberate manner reflecting sound science.”
Zeller also focused on the scientific rationale behind the agency’s first SE announcement in an FDA-issued press release.
“The FDA is committed to making science-based decisions on all product applications and providing the agency’s scientific rationale behind its actions to ensure the most transparent and efficient process possible for all involved parties, according to the law,” he said. “Today’s decisions are just the first of many forthcoming product review actions to be issued.”
Others, such as Republic’s Gold, are more skeptical about these initial SE approvals.
“It has been two and a half years and there are roughly 3,500 products (waiting for a ruling on SE): six have been ruled on,” he says. “We’re in the bakery line; we hold No. 3,500 and have been waiting in line for two and a half years. The sign at the counter says, ‘Now serving No. 7.’ ”
Does the June SE announcement represent a new era in which the FDA will issue decisions (both on SE application and other important issues) in a more timely, transparent fashion, as suggested by Zeller? Or did the literal handful of decisions only further highlight how much more work the agency has to do on substantial equivalence? The truth probably lies between these two extremes.
“Zeller had recently suggested that the FDA was making progress on SE applications, and I am pleased that the agency has taken action,” Herzog says, acknowledging that there are still thousands of applications to be reviewed. “While [this] development is a positive step, there is still work to be done. Now that a potential precedent has been set with (June’s) SE approvals and denials, I believe future actions may occur more quickly.”
Menthol Mayhem
Herzog—and likely others—are feeling much less certain about where the FDA will go with menthol. Indeed, the July 23 ANPRM gave few clues as to if or how the FDA might regulate menthol products, instead asking for public comments and data on the subject.
Even the CTP’s preliminary scientific evaluation of public health issues related to the use of menthol in cigarettes (also released July 23) shed little light on what the agency might do. Titled “Preliminary Scientific Evaluation of the Possible Public Health Effects of Menthol Versus Nonmenthol Cigarettes,” the report both acknowledged that there is little evidence that menthol cigarettes were more toxic than regular cigarettes, while also suggesting that menthol smokers tend to start at a younger age and have a harder time quitting.
“These findings, combined with the evidence indicating that menthol’s cooling and anesthetic properties can reduce the harshness of cigarette smoke and the evidence indicating that menthol cigarettes are marketed as a smoother alternative to nonmenthol cigarettes, make it likely that menthol cigarettes pose a public health risk above that seen with nonmenthol cigarettes,” the report reads.
Further compounding matters is Zeller’s insistence that the information in the ANPRM and CTP report does not actually represent the agency’s intentions on menthol.
“Questions posed in the ANPRM are simply that: They are questions,” he said in a telebriefing on the ANPRM. “They do not foreshadow any particular regulatory action.”
This gray area on menthol has been a source of anxiety, both for manufacturers and retailers.
“This definitely will impact the large manufacturers’ businesses,” says Herzog, who reports her phone rang nonstop for two days following the ANPRM on menthol.
“Menthol represents around 31% of total cigarette industry volume in the United States; for Lorillard, it’s the vast majority of their business. Lorillard’s stock trades a lot cheaper than the others because of this uncertainty. Nobody on Wall Street or in the c-store business likes uncertainty. We just want some clarity.”
Will the clarity come from scientific findings on menthol? Zeller did promise that “any decision on menthol on my watch will be based on rigorous science and the potential to produce the greatest advances in public health.”
It’s for this reason that manufacturers such as Altria have been closely monitoring scientific literature released on menthol in cigarettes—literature that may actually strengthen the argument against an outright menthol ban.
“There’s really nothing different with menthol [vs.] non-menthol cigarettes in terms of increasing the otherwise inherent health risks of cigarettes,” Wilson says. “We don’t believe there are any actions necessarily warranted and that the scientific evidence doesn’t really support any further actions on menthol.”
Besides scientific evidence, Zeller and the CTP will also have to consider any “unintended consequences” menthol regulations might have on public health. For many, these unintended consequences refer to one major issue.
“Zeller and the FDA stated over and over again that it needs to be a science-based recommendation and there cannot be any unintended consequences,” Herzog says. “If they were to ban menthol, you would very likely have a black market.”
For a real-life example of how those unintended consequences could play out, Zeller and his counterparts need look no further than Canada, where menthol cigarettes have already been banned. Combined with high tax rates on legal cigarettes, the ban has led to a rampant black-market state in our neighbor to the North: It’s estimated that as much as 50% of all cigarettes consumed in Canada come from illicit trade.
Not only does this hurt legitimate retailers, but it also hurts public health by making it easier for minors to access tobacco products through the black market. And it also hurts local governments, which lose necessary tax revenue for their coffers.
“If menthol is banned or severely restricted, retailers will be competing with a greatly expanded black market for cigarettes,” reads NACS’ letter to the FDA in response to the menthol ANPRM. “Cigarette sales won’t occur across the counter in our stores. Instead, they will take place down the street, outside our stores, and you can be sure that these street-corner vendors won’t be checking IDs for birthdates.”
Assuming that the FDA makes its menthol decision based on the science and the potential unintended consequences, Herzog finds it difficult to believe that the agency will propose an outright ban.
“Zeller keeps repeating that the decision needs to be very much science-based, rigorous in their testing, and certainly needs to consider the unintended consequences,” she says. “That’s [how] I’m basing my prediction that menthol will not be banned.”
That’s not to say that a complete ban on menthol is the FDA’s only option, especially with the CTP and earlier-released Tobacco Products Scientific Advisory Committee (TPSAC) reports providing a number of ways in which menthol cigarettes pose a threat to public health.
“If the FDA believes the science supports doing something on menthol, there are things they could consider,” says Wilson, pointing to additional labeling requirements for menthol products or distributing public health messages constructed by the agency as possible alternatives to a ban. “I think they’ve got some other tools available that would allow them to raise awareness on issues that they’re concerned about and take some action as long as the science and evidence supports it.”
For her part, Herzog believes an outright ban on menthol is unlikely but anticipates that the agency could instead regulate the amount of menthol allowed in cigarettes.
“I believe the most realistic outcome on the menthol issue is that they possibly lower the levels of menthol over a number of years without banning it,” she says, also admitting that the timing on any regulations is significantly more difficult to predict. “I have no idea when we’re going to get resolution—or if we’re ever going to get full resolution—on the menthol issue.”
A Participatory Process
Whether or not Zeller’s actions so far on substantial equivalence and menthol signify a faster regulatory turnaround for the FDA, it’s crucial for retailers to make their voices heard in the process. The ANPRM on menthol posed many questions and opened the door for comments from any interested party, something Thomas Briant, executive director of NATO, believes it’s imperative for retailers to do.
“The FDA has told us they read every single comment submitted,” says Briant. “We need retailers to submit comments about your everyday sense of what’s going on out there and in the industry because they will take that into account.”
Zeller echoed Briant’s sentiments at the NATO Show. “Some would describe [the rule-making process] as being a participatory sport, not a spectator sport,” he said. “It is extremely important for you to participate in this very public process. If you have a point of view and it’s not submitted to the official docket that we create, legally, we’re not obligated to consider it. If you submit it, legally, we are. We consider all of that when we transition from a proposed rule to considering what—if any—changes should be made to that proposed rule.”
Which is ultimately important for those in the industry to keep in mind as actions on substantial equivalence and menthol are dragged out. The lack of movement may be frustrating, but this slow pace in part stems from the fact that the FDA is literally reviewing every single comment submitted on these issues, which they are legally required to consider when drafting any new tobacco-related regulations.
“The regulatory process is just that: It’s an ongoing process,” Briant says. “We submit our comments, we give our input, and though we may not always agree with the FDA, we know they’re listening.”
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