Makers of electronic cigarettes such as Lorillard Inc. (LO:US) and Altria Group Inc. will for the first time face regulatory oversight, including passing a review to stay on the market, under a U.S. plan that doesn’t ban TV ads or flavored versions of the new products.
The Food and Drug Administration today said it planned to extend its reach over the tobacco industry to include the $3 billion market for e-cigarettes such as NJOY and blu, as well as cigars. The rules, if finalized, will limit sales to minors, ban free samples and require nicotine addiction warnings.
Consumer groups have said e-cigarette companies use candy flavors, TV ads and music festival sponsorships to target youth, who doubled their use of the products in 2012 from a year earlier. Agency officials called today’s proposal a foundation that may lead to tighter control in the future.
“For the first time there will be a science-based, independent regulatory agency providing gatekeeping,” Mitch Zeller, director of the FDA’s Center for Tobacco Products, said in a briefing. “The regulator will finally be doing its job.”
The FDA gained the authority in 2009 to regulate e-cigarettes and cigars. The latest plan, open to public comment for 75 days, would require e-cigarette and cigar manufacturers to give the agency ingredient lists as well. The rules also will apply to pipe tobacco and hookah tobacco.
The agency is assessing available research on flavors in e-cigarettes, FDA Commissioner Margaret Hamburg said.
“We’re prepared for responsible regulation,” Andries Verleur, chief executive officer and co-founder of Miami-based V2 Cigs, said in an interview before the proposal was made public. “Anything that would stifle innovation or accessibility we’ll stand firmly against. I can say with certainty the electronic cigarette is not going anywhere.”
‘Massive Impact’
While Verleur said regulatory review requirements “could have a massive impact financially,” he favors prohibiting sales to those younger than 18.
Most e-cigarettes deliver nicotine while leaving out the tars, arsenic and other chemicals common in tobacco products. The tubular devices, which produce an inhalable vapor to mimic smoking, were added at the end of last year to a New York ban on smoking in restaurants, bars, offices and parks. Chicago and Los Angeles followed with similar prohibitions.
Graham Hubert, a 29-year-old set builder in New York, used traditional smokes for 10 years before switching to e-cigarettes. He views them as an alternative that may have fewer side effects.
“I’m concerned about the little bit, that we don’t know much about the long-term side effects,” Hubert said. “But I do know the long-term side effects of smoking, so I rather be smoking an e-cigarette.”
He said e-cigarettes should be regulated similarly to regular cigarettes, especially in banning sales to minors.
‘Limit Addiction’
“When you’re a young person there should be a way to limit the amount of addiction you have,” Hubert said. “I didn’t smoke when I was a teenager. Why make something available to a kid that they don’t need.”
Cigarettes already must meet FDA review standards, maintain minimum age requirements and display warnings. Traditional smokes, though, are also banned from online sales, TV advertising, sponsorship and the use of flavors. Menthol is permitted while the ingredient is under FDA review.
The industry may choose to sue the FDA to fight the proposal. Zeller said he’s confident the agency would be able to back up their regulatory attempt with science.
Regulatory Power
While companies such as Altria and Reynolds American Inc. (RAI:US) have been under the FDA’s authority since Congress gave the agency power over the $90 billion tobacco industry in 2009, e-cigarettes and cigars haven’t been subject to the same oversight. The industry has flourished with sales tripling last year to $1.5 billion, according to Bloomberg Industries.
The law passed about five years ago “and a lot has happened on a lot of different tobacco products without any regulatory activity by the FDA,” Gregg Haifley, associate director of federal relations with the American Cancer Society’s Cancer Action Network, said before the proposal was released. “We’re disappointed that it has taken this long.”
Industry sales may reach $5 billion in 2015, according to Bloomberg Industries, which had previously predicted $6 billion in sales but lowered the figure to reflect growing bans on where they can be smoked.
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