FDA Stifling Innovation?
Modi claims new-product approvals process holding up major tobacco players
NEW YORK-- It's no secret that 2012 was a slow year in terms of the FDA and tobacco: the public is still awaiting announcements on good manufacturing practices, graphic health warnings, menthol regulation and deeming regulations for other tobacco products, including electronic cigarettes.
However, as UBS senior analyst Nik Modi outlined in last week's CSP Tobacco Update CyberConference, the most pressing issue facing the tobacco industry when it comes to the U.S. Food & Drug Administration could be new product approvals--or a lack thereof.
"Innovation has basically been stifled as the FDA tries to get its act together regarding approval of some of these new products," he said. "What we're finding as we do our research is that the FDA is being very nitpicky in terms of approvals."
Modi noted that up until now, no new products have been approved under the FDA's Standard Equivalency Clause. This lack of movement has been particularly frustrating to the Greensboro, N.C.-based Lorillard Tobacco Co., which filed a citizen's petition asking the FDA to allow companies to market new tobacco products in good faith so long as the manufacturer submits a report under Section 905(j) of the Tobacco Control Act at least 90 days before bringing the product to market.
"While we are in communication with the FDA on our SE [Substantial Equivalence] submissions, none have been approved," Lorillard CEO Murray Kessler has been quoted as saying. "We need the FDA to do their jobs and be transparent and expeditious as they're required to be."
Lorillard is not the only major player to voice concerns over the FDA's slow (or nonexistent) turnaround on new product approvals: Daan Delen, president of Winston-Salem, N.C.-based R.J. Reynolds Tobacco Co., has also spoken out, stating his biggest issue with the FDA has been "the impact it has on innovation and largely speed to market of innovation."
"Even though the cigarette category is declining, innovation is still very important," Modi said. "There are a lot of these little things, very small changes that are being held up by the FDA. Hopefully they get the infrastructure in place where they can start making some quick decisions--especially on products where there's really no change on the impact to public health."
With Lorillard's citizen's petition on file and mounting pressure from both tobacco manufacturers and retailers, Modi said that he believes the FDA will eventually show some movement on this issue.
"I do think we're going to see some approvals in 2013," he said. "But I do think it's going to take some time."