Well, friends, for better or worse, the wait it over: On May 5, the U.S. Food and Drug Administration (FDA) issued its final “deeming” regulations that extend the agency’s regulatory authority over all tobacco products—notably electronic cigarettes, cigars, hookah tobacco and pipe tobacco.
The FDA received more than 135,000 comments during the public comment period, and it considered all of them, according to Mitch Zeller, director of the FDA’s Center for Tobacco Products (CTP).
“We believe our approach in this final rule is both reasonable and balanced,” Zeller said during a media briefing. “This historic rule allows the FDA to use a variety of regulatory tools to improve public health and protect future generations from the dangers of tobacco use.”
Ultimately, the final deeming rule—which goes into effect Aug. 8—did not differ greatly from the proposed regulations the FDA first issued in April 2014. One issue in question was how the FDA would treat premium cigars. In the proposed rule, there was an option to exempt premium cigars from FDA regulation altogether. That path was not taken.
“The FDA has concluded there is no appropriate public health justification for excluding premium cigars,” Zeller said. “All cigars pose serious health risks. To exclude such a product from FDA regulation would be neglecting our duty to protect public health.” (See “4 Cigar Concerns Post-Deeming.”)
And so here we are. Once the deeming rule goes into effect, manufacturers of newly regulated products will be required to submit a premarket tobacco application (PMTA) to the FDA unless the product (or a substantially equivalent predicate product) was on the market as of Feb. 15, 2007.
This February 2007 predicate date (also known as the grandfather date) refers to part of the 2009 Tobacco Control Act that allowed tobacco products on the market before Feb. 15, 2007, to be “grandfathered” in—meaning manufacturers did not have to submit a PMTA to the FDA. Equally important, manufacturers would have the option to submit less costly substantial-equivalence (SE) applications for new products that were similar or substantially equivalent to a product on the market as of February 2007.
But this does no good for the e-vapor industry. E-cig manufacturers and advocates had called for the FDA to adjust the grandfather date for newly deemed products. The industry, they argued, was relatively nonexistent in 2007, meaning vaping products could remain on the market only through the very expensive PMTA pathway.
“All cigars pose serious health risks. To exclude such a product would be neglecting our duty to protect public health.”
That didn’t happen. Instead, the FDA addressed concerns by establishing a “staggered timeline” that would give nongrandfathered products more time to submit a PMTA than those seeking SE approval. Under the final rule, such manufacturers would be allowed to keep products on the market during the two years they have to submit a PMTA, as well as up to one additional year as the FDA reviews said applications.
Zeller has repeatedly insisted the FDA does not have the authority to change the predicate date. Only Congress can—and some legislators are trying to.
Weeks before the final deeming regulations were announced, the House introduced a rider included in the Agricultural Appropriations Bill (known as the Cole/Bishop Amendment) that would move the predicate date from Feb. 15, 2007, to Aug. 8, 2016, the date deeming goes into effect.
But proponents of the change face a steep hill: A similar amendment was nixed last year, and while it may not have the authority to make the change, Zeller said the FDA and the Obama administration oppose any legislation that would change the grandfather date.
Taking Care of Grandfather
There are two ways the grandfather date might play out:
Option 1: Predicate date remains Feb. 15, 2007. Numerous vaping advocates and manufacturers have decried the steep cost of the PMTA process. While the FDA had initially estimated each PMTA would take 500 hours, those estimates went up significantly in the final regulations.
“The FDA now estimates that filing a PMTA will take over 1,700 hours per product, which brings the estimated cost for a single application up to over $1 million,” says Gregory Conley, president of the American Vaping Association, Hoboken, N.J. “In all reality, the true cost of a PMTA is likely to exceed several million dollars.”
That’s several million dollars per application. During a media briefing, Zeller acknowledged that most manufacturers will need to submit multiple PMTA applications.
“Will each SKU require a separate application?” he said. “It will depend on how many flavor combinations survive down the road. But it’s possible that, yes, each flavor/nicotine combination would be its own new product.”
This is especially problematic for vaping and e-liquid manufacturers specializing in multiple flavors and nicotine strengths. Michael Siegel, professor of community health sciences at the Boston University School of Public Health, pointed out that given the FDA’s own “gross underestimate” of $330,000 per PMTA, a manufacturer with 20 e-liquid flavors in three nicotine strengths would have to spend $19.8 million in order to comply.
“Quite clearly, this is a cost that only a very small number of manufacturers can afford,” Siegel wrote on his Tobacco Analysis blog.
Ray Johnson, operations manager for Las Vegas-based Speedee Mart, is one retailer who actually was in the electronic-cigarette business prior to the 2007 grandfather date.
“I sold one e-cigarette at that time,” he says. “You couldn’t give that thing away today. Right now Juul (by Pax) is my No. 1 seller; nobody dreamed of that product in 2007.”
“The grandfather date is huge,” says David Sweanor, adjunct professor of law at the University of Ottawa’s Center for Health Law, Policy & Ethics. “You essentially banish the category if you use that earlier date. I don’t think any of the innovative companies can come anywhere close to covering the cost.”
Option 2: Congress moves the grandfather date. Thomas Briant, executive director of Minneapolis-based NATO, addressed the Cole/Bishop Amendment at the NATO Show in April.
“If that change is enacted, the deeming regs would not require a PMTA to be filed on the hundreds of thousands of cigar products, pipe-tobacco products, e-cigarette and vapor products that were on the market the day the deeming regs go into effect,” he said. “Everybody’s grandfathered.”
This, Zeller said during a media briefing, would have “an enormously adverse impact on public health and the ability of the FDA to do its job.”
“It will exempt all of these products from any premarket review,” he continued. “Worse, those unreviewed products will be able to serve as predicates for new products coming down the road.”
Briant and others disagree with this sentiment, pointing out that, like cigarettes, smokeless and roll-your-own products that were grandfathered in back in 2009 (when the Tobacco Control Act was passed), newly deemed products would be under FDA authority.
“All those products would be subject to all of the regulations that currently apply to cigarettes, roll-your-own and smokeless,” Briant said at the NATO Show. “They would also be subject to any regulations the FDA adopts in the future.”
Duking It Out in Court
The Cole/Bishop amendment aside, the courts will also have their way with the deeming regulations. Just one week after the regulations were announced, Nicopure Labs LLC filed suit in the U.S. District Court for the District of Columbia. The Tampa, Fla.-based e-liquid manufacturer claimed the FDA’s rulemaking process violated the Administrative Procedure Act and that the deeming rule violates the company’s First Amendment rights.
It’s likely the first of many lawsuits on deeming, something the FDA seemingly anticipated.
“The FDA states that the new deeming regulations are intended to be severable, which means that if the courts strike down one regulation, the other regulations remain in force,” Briant says. “In the event any court or other lawful authority were to temporarily or permanently invalidate, restrain, enjoin or suspend any provision of this final rule, the FDA believes that the remaining regulations would continue to be valid.”
“We anticipate litigation from several manufacturers, which could unfortunately prolong the uncertainty plaguing the entire industry,” said Bonnie Herzog, tobacco analyst for Wells Fargo Securities, New York, in a research note.
In other words, these “final” regulations are far from the final word. Zeller and others at the FDA pointed out that the final deeming rule is just the start of regulatory actions to come. Expect the agency to look to extend the ban on flavored cigarettes to also include the use of characterizing flavors in cigars.
“This is just a foundational rule,” said David Ashley, director of the CTP’s Office of Science, of the deeming rule. “The vast majority of actions are still down the road.”