Lorillard Garners FDA's First 'Substantial Equivalence' Approvals

Food & Drug Administration OKs two new tobacco products, denies four others

WASHINGTON -- Lorillard Tobacco Co.'s Newport Non-Menthol Gold Box 100s and Newport Non-Menthol Gold Box are the first new tobacco products that the U.S. Food & Drug Administration (FDA) has approved since the Family Smoking Prevention & Tobacco Control Act of 2009 gave it the authority to regulate tobacco products.

As reported in a Raymond James/CSP Daily News flash on Tuesday, the FDA has issued marketing orders for the two new cigarette lines and denied the marketing of four others through the substantial equivalence (SE) pathway. The agency concluded that, while the new products have different characteristics than the predicate products, the new products do not raise different questions of public health.

Under the law, one way manufacturers can legally sell a new tobacco product is to establish that their product is substantially equivalent to a valid predicate product already on the market. The FDA works to ensure that any new tobacco product authorized through the SE pathway will not present more harm to public health than the product with which it was compared.

Once a company receives an SE marketing order for a product, it means only that the FDA has found that the new tobacco product is substantially equivalent to a predicate product and in compliance with the requirements of the Federal Food, Drug & Cosmetic Act. An SE marketing order is not a finding that the product it is safe or safer than its predicate product, or less harmful in general. And the law makes clear that companies cannot say their products are FDA approved.

"Today's decisions are just the first of many forthcoming product review actions to be issued," said Mitch Zeller, director of the FDA's Center for Tobacco Products (CTP). "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."

It will find any product that raises different questions of public health to be "not substantially equivalent" (NSE) and will not allow it to be marketed. A variety of factors contributed to the four NSE decisions announced today, including a lack of evidence to support that the addition of specific ingredients did not raise different questions of public health, a lack of information about the design of the product, and incomplete test data.

Additionally, the FDA has formally withdrawn 136 SE Reports at the request of the applicants. At any point during the FDA review process, a manufacturer may choose to withdraw its submission if it is not able to meet the FDA's standards, or for other business reasons.

"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," said Murray Kessler, Lorillard's chairman, president and CEO. "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 are encouraged by the agency's fulfillment of its obligation prescribed in the ... Tobacco Control Act ... and believe that the FDA has carried out is evaluation process in a deliberate manner reflecting sound science. We look forward to continuing productive engagement with the Agency moving forward."

Lorillard believes it will further strengthen its competitive position and its overall Newport brand family with the addition of Newport Non-Menthol Gold, as it will become the company's second Newport style in the non-menthol segment.

"These FDA actions are a very positive development for the tobacco sector," said Bonnie Herzog, managing director of beverage, tobacco and consumer research for Wells Fargo Securities LLC, New York, in a research note. "The lack of SE action had been an overhang. This is also very positive for [Lorillard], as we believe it has the most to gain from ''white space' opportunities where it is under-represented in the market."

She added, "However, we note that there are thousands of outstanding SE applications,so while today's development is a positive step, there is still work to be done. Now that a potential precedent has been set with today's SE approvals and denials, we believe future actions may occur more quickly."

Greensboro, N.C.-based Lorillard Inc., through its Lorillard Tobacco subsidiary, is the third largest manufacturer of cigarettes in the United States. Newport, Lorillard's flagship premium cigarette brand, is the top-selling menthol and second largest selling cigarette in the U.S. In addition to Newport, the Lorillard product line has four additional cigarette brand families marketed under the Kent, True, Maverick and Old Gold brand names. These five brands include 41 different product offerings which vary in price, taste, flavor, length and packaging. Lorillard also markets electronic cigarettes in the in the United States under the blu eCigs brand.

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