On a brilliant sunny day in January 2012, “Bopper” was in good spirits. He was garrulous, sharing stories of his medical practice and Boston sports. He was relaxed and hardly the crotchety bureaucrat many feared would lead the FDA’s Center for Tobacco Products.
Bopper, more formally known as Lawrence Deyton, is a good guy—and he’s leaving the scene. Deyton announced in mid-February that he would be stepping down, a little more than three years after he became the center’s first director. His tenure is mixed and replete with ambiguity.
Deyton met the federal mandates and regulatory deadlines set by Congress. He established pre-market applications for new and modified-risk tobacco products; his administration set up and enforced advertising and promotion restrictions, even though we disagreed with his refusal to publicize only those retail establishments that failed on-site inspections and not the more than 90% that passed.
But for all of his natural diplomatic skills and willingness to speak with tobacco-friendly interests, Deyton failed to clear the air of uncertainty. He leaves his successor, Mitchell Zeller, with a slew of unresolved questions, most notably:
- Notice of Proposed Rulemaking(NPRM): The FDA is slated to issue a proposed rule this month to regulate other tobacco products. Yet, as of late February, it remains a mystery. Will it place cigars under the FDA’s purview? Will it cover electronic cigarettes? Will it consider modified-risk status for moist smokeless?
- Menthol: The industry has been waiting for more than a year for a final ruling by the Center for Tobacco Products on menthol. In March 2011, the FDA’s Tobacco Product Scientific Advisory Committee (TPSAC) said, “Removal of menthol cigarettes from the marketplace would benefit public health.”
Based on this report, many tobacco companies and analysts expected Deyton to take some kind of action. In an interview with us in January 2012, Deyton underscored that the TPSAC recommendation was just that, and future action by the FDA concerning the sale and distribution of menthol cigarettes would be based on multiple factors, including input from retail groups. Two years after that menthol report, no decision has been rendered.
If the Deyton term were to be characterized, it would likely be with two words: data gathering. Deyton’s CTP has sought reams of data and input. Just a few months ago, the FDA solicited input on “what changes to the current smokeless tobacco product warnings, if any, would promote greater public understanding of the risks associated with the use of smokeless tobacco products.”
Here’s what two respected Wall Street tobacco analysts offered regarding the transition from Deyton to Zeller.
“Given Zeller’s background (involvement in the American Legacy Foundation, relations to pharmaceutical companies), we believe his appointments an incremental negative to the tobacco space, particularly Lorillard, given [the risk of a] menthol ban,” says UBS analyst Nik Modi. “With all this being said, we believe it is too early to hit the panic button on Lorillard. Mr. Zeller will have to operate within the very strict scientific framework of the FDA (and the science around menthol is inconclusive).”
Wells Fargo analyst Bonnie Herzog offered a glimmer of hope: “We think there will now be even greater visibility and a sense of urgency on the CTP, which could result in actions being taken. We feel this could be a silver lining of Zeller’s appointment. We feel any action—whether positive or not for the industry—will be beneficial, as the relative inaction on items such as substantial equivalence approvals and menthol and this uncertainty has been an overhang.”
Herzog’s last point nails it. The tobacco industry is holding back tens of millions of dollars in potential investment, awaiting the FDA’s thinking on electronic cigarettes, oral products, classification of MST, flavored cigars and more.
As one tobacco manufacturer shared, “Listen, we’re not going to make any major moves until we get greater clarification from the FDA. We don’t like restrictions. We don’t want anything banned. We want the customer to be able to choose. But we’re living on a fence, and we need the questions to be answered.”
As our editor Melissa Vonder Haar writes in her story on p. 9, the tobacco community is resilient and smart. But what it doesn’t like are too many questions and no answers.
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