Turning Point Brands (TPB) announced the proposed private offering of $250 million aggregate principal amount of its senior secured notes due 2026. The notes will bear cash interest semi-annually beginning in 2021. The notes will be TPB’s senior secured obligations and will be guaranteed on a senior secured basis by each of TPB’s wholly owned domestic subsidiaries (except for certain specified subsidiaries).
TPB intends to use the proceeds from the offering to repay all obligations under and terminate its existing term loan and revolving credit facility; to pay related fees, costs and expenses; and for general corporate purposes. The offering is subject to market conditions.
TPB also announced that in connection with the offering, it intends to enter into a new $25 million senior secured revolving credit facility. The offering is not conditioned on the entry into the revolving credit facility.
In connection with its proposed offering, TPB announced certain preliminary operating results for the fourth quarter and full year ended Dec. 31, 2020.
TPB estimates that for the fourth quarter of 2020 net sales will be between $103.5 million and $105.5 million, income before taxes will be between $16 million and $17 million and adjusted EBITDA will be between $25 million and $26 million. Each of net sales and adjusted EBITDA will be near or above the high end of TPB’s previously disclosed guidance for the fourth quarter of 2020. TPB plans to release its full year end 2020 financial results on Feb. 10, 2021.
The company will hold a conference call to review fourth quarter and fiscal year 2020 results on Feb. 10.
Altria Group received a score of 100 on the Human Rights Campaign Foundation’s 2021 Corporate Equality Index (CEI), a prominent benchmarking survey and report measuring corporate policies and practices related to LGBTQ workplace equality. Altria joins the ranks of 767 major U.S. businesses, including Reynolds American Inc., that also earned top marks this year. This is the fourth year in a row Altria has received a score of 100.
“We know that to be successful in our 10-year vision to responsibly lead the transition of adult smokers to a noncombustible future, we need to be a diverse, inclusive and welcoming place to work,” said Billy Gifford, Altria’s CEO, in a statement. “This recognition is a testament to our employees and Mosaic, our LGBTQ employee resource group, who continuously work to ensure that our LGBTQ colleagues are included and have equal opportunity to grow and thrive.”
The CEI rates companies on detailed criteria falling under four central pillars: nondiscrimination policies across business entities; equitable benefits for LGBTQ workers and their families; supporting an inclusive culture; and, corporate social responsibility. Altria’s efforts in meeting all of the CEI’s criteria earned a 100 percent ranking and the designation as one of the Best Places to Work for LGBTQ Equality.
U.S. Federal Trade Commission staffers urged the commission to start its trial against Altria Group’s $12.8 billion investment in Juul Labs in April as scheduled, reports Law360.
The cigarette giant had requested a three-month delay from the current April 12 start, speculating that it will be safe to hold an in-person trial by mid-July. The current April trial will be virtual due to the Covid-19 crisis. The trial was previously moved from Jan. 5 to mid-April because of the pandemic. Altria and Juul said a virtual hearing would diminish their attorneys’ ability to assess the credibility of the testifying witnesses.
In a filing Thursday to the agency’s commissioners, the FTC’s trial staff said that hopes for an in-person, Covid-free proceeding by July are “highly speculative.”
“While the vaccine news is promising, the timetable for the chief administrative law judge and his staff, witnesses and counsel to receive vaccinations is highly uncertain at this time,” the staffers said. “And, while complaint counsel shares respondents’ concerns regarding the severity of the pandemic, these concerns can be remedied by proceeding with a virtual hearing.”
The FTC case alleges that that Altria shut down its own e-cigarette business to pave the way for the investment, in the process eliminating competition in violation of antitrust laws.
For the second consecutive year, the BAT Group’s U.S. subsidiary Reynolds American Inc. (RAI) and its operating companies scored 100 percent on the Human Rights Campaign Foundation’s 2021 Corporate Equality Index (CEI), a prominent benchmarking survey and report measuring corporate policies and practices related to LGBTQ workplace equality.
Guy Meldrum
“Across every aspect of our business, we boldly embrace diversity as a key pillar of our ethos,” Our organization is rich with talent, and everyone is encouraged to be their authentic selves as we work to build ‘A Better Tomorrow,’” said Guy Meldrum, RAI president and CEO, in a statement.
Companies rated in the CEI include Fortune magazine’s 500 largest publicly traded businesses, American Lawyer magazine’s top 200 revenue-grossing law firms, and hundreds of publicly and privately held mid-sized to large-sized businesses.
The CEI rates companies on detailed criteria falling under four central pillars: non-discrimination policies across business entities; equitable benefits for LGBTQ workers and their families; supporting an inclusive culture; and corporate social responsibility.
“From the previously unimaginable impact of the Covid-19 pandemic to a long overdue reckoning with racial injustice, 2020 was an unprecedented year. Yet, many businesses across the nation stepped up and continued to prioritize and champion LGBTQ equality,” said Alphonso David, Human Rights Campaign president.
“This year has shown us that tools like the CEI are crucial in the work to increase equity and inclusion in the workplace, but also that companies must breathe life into these policies and practices in real and tangible ways.”
The U.S. Food and Drug Administration should encourage harm reduction products and help smokers give up cigarettes, according to Markus Lindblad, head of external affairs at the Haypp Group, the parent company of NicoKick, which describes itself as the world’s largest American e-commerce company in the smokeless industry.
In a letter to Acting Food and Drug Administration (FDA) Commissioner Janet Woodcock, Lindblad encouraged her to prioritize the goal she helped set at the FDA in previous years to enable greater use of healthier harm reduction products and help smokers quit combustible products.
“Our mission at NicoKick is to drive real change in the industry and encourage alternative nicotine enjoyment for adults seeking products other than inhalants,” Linblad wrote.
“We recognize that your focus is understandably on addressing the coronavirus pandemic, but we hope as you lead the Food and Drug Administration that you continue to prioritize tobacco harm reduction products that will produce better health outcomes for millions of American smokers. We can all agree any effort to transition from traditional tobacco products to those that reduce harm to the consumer should be supported and would be an important win for public health.”
ITG Brands is suing Capna Intellectual for infringing its Kool trademark, according to Bloomberg Law.
According to ITG, the interlocking “O” letters in Capna’s Bloom cannabis e-cigarette brand logo confusingly resemble ITG’s famous Kool logo.
The suit was filed late January in the U.S. District Court for the Central District of California.
Capna reportedly applied for federal trademarks covering Bloom for e-cigarettes and oral vaporizers. ITG says it sent Capna a cease-and-desist letter in December.
The complaint says the Bloom marks are intended to capitalize on Kool’s well-known branding.
Will the EU consider the relative risk of e-cigarettes when it revises its Tobacco Products Directive?
By Stefanie Rossel
Two days at the beginning of next month are likely to have a significant impact on the future of tobacco harm reduction (THR) in the European Union (EU). In its plenary meeting on March 3–4, 2021, the EU Scientific Committee on Health, Environmental and Emerging Risks (SCHEER) will adopt its final opinion on e-cigarettes. Whether it substantially differs from the committee’s preliminary opinion, published in September 2020, remains to be seen.
Under article 28 of the EU Tobacco Products Directive 2014/40/EU (TPD), the European Commission (EC) has been tasked with reporting to the European Parliament, the European Council and other committees on the application of the directive by May 20, 2021. The article stipulates that the commission shall review the directive in light of scientific and technical developments in order to consider legislative amendments and that it shall pay special attention to e-cigarettes. In this, it is to be assisted by experts such as those from SCHEER so that it has all the necessary, most recent and up-to-date information at its disposal.
In article 20 of its 2014 version, the TPD standardizes safety and quality requirements for nicotine-containing e-cigarettes, such as provisions on the ingredients that can be used in e-liquids and maximum nicotine content. The SCHEER report, meant to be a scientific review of the health effects of e-cigarettes, was one of several studies the EC mandated on the application of the TPD on the use and opinions of consumers of tobacco and related products and on product perception. It is important as it may be part of the basis for a further revision of the TPD, which is under consideration. And it could have contributed to making the EU a forerunner in sensible regulation of tobacco and nicotine products, proportionate to their risk.
However, vapor advocates were dissapointed when the SCHEER committee released its preliminary opinion on Sept. 23, 2020. The Independent European Vape Alliance (IEVA) called the report “fundamentally flawed.” Christopher Snowden, head of lifestyle economics at the Institute of Economic Affairs, described the document as a “step backward.” Clive Bates, director of Counterfactual Consulting, called the report “misjudged, poorly executed and unhelpful.”
Areas of concern included the committee’s conclusion that there is insufficient evidence that e-cigarettes are a useful tool for smokers seeking alternatives, despite quoting two randomized control trials stating the opposite. The committee was also accused of ignoring scientific literature published after April 2019, most of which supports the argument that vaping facilitates THR. In its risk assessment, critics said, the SCHEER committee had not chosen a comparative risk-based approach but a simpler hazard-based approach, stating the potential risks of using e-cigarettes without even attempting to compare these with the risks from cigarette smoking, which are exponentially higher.
According to the report’s findings, there is strong evidence that e-cigarettes are a gateway to smoking. The data on which this conclusion is founded, however, is almost exclusively from the U.S., which has an entirely different regulatory regime. The committee also failed to acknowledge that in the EU, smoking among young people has declined significantly.
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Ignoring relative risks
Abrie du Plessis
“My view, from a regulatory perspective, is that the preliminary SCHEER opinion does not really address the most pertinent question on harm reduction, which has become even more pressing since the 2014 TPD,” says Abrie du Plessis, an associate at the South African Trade Law Center in Cape Town, who spent more than a decade following the developments of the World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC) and the the 2014 TPD. “This question is about positioning e-cigarette effects and impacts relative to those of combustible cigarettes. There is, in my view, an urgent need to do this in a comprehensive and evidence-based manner. The preliminary opinion unfortunately fails to do this.”
A possible explanation is that the SCHEER committee simply considered such a comparison to be outside of its remit. In the minutes of its most recent working group meeting on Dec. 2, 2020, it states, “The mandating Commission service clarified that there was no specific mentioning of harm reduction in the terms of reference.”
“This is very significant,” du Plessis explains. “What it means is that there is a strong possibility that any further submissions on this topic could be disregarded and that the final opinion, to be adopted on [March 3 to March 4, 2021], will still not address the wider issue of harm reduction. The final opinion will then probably not make any real contribution in respect of the wider policy debate on tobacco harm reduction, and this narrow focus may therefore limit its value for EU policymakers. If the opinion indeed stays the same, then the Commission will have to look elsewhere for answers to the policy questions on harm reduction that it may want to address in the next TPD.”
The public health community, du Plessis adds, is divided on which tobacco harm reduction policies to support. The WHO holds an ideological bias against e-cigarettes, favoring cessation of all nicotine consumption. As party to the WHO’s FCTC, the EU is likely to take its cues from the global health body.
“This bias could have played a role at the SCHEER level, but I think that there is another possibility, which is that the committee simply opted for quite a narrow interpretation of its mandate, and in the end did not really address the wider issue of tobacco harm reduction or its rapidly evolving evidence base,” says du Plessis. “The SCHEER report is, however, only one of the inputs into the upcoming Commission report to the European Parliament, and the debate could soon shift to the actual mooted proposals, to a wider range of inputs to be considered and to inclusive participation in the further legislative process.”
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Under pressure
In line with its formal stakeholder dialogue procedures, the SCHEER is obliged to seek feedback from the scientific community and other stakeholders before publishing its final opinion. During the commenting period following the release of the preliminary opinion, which ended on Oct. 26, 2020, the SHEER received 691 contributions. Any proposed changes to the opinion had to be tabled by Jan. 12, 2021.
However, the SCHEER may not feel obliged to take all comments into consideration; the EU has received much criticism about the level of tobacco influence in the shaping of the 2014 TPD. Besides, provisions in the TPD require it to respect international treaties such as the FCTC and its article 5.3, which discourages tobacco industry involvement in policymaking.
“My view is that the committee will certainly consider the comments it receives, but it will act in line with its stakeholder dialogue procedures,” explains du Plessis. “The point to keep in mind is that the committee will carefully vet all comments received for relevance to the preliminary opinion and to its interpretation of its mandate.
“On top of this, all submissions will have to comply with its further detailed rules of procedure. This means that there is a clear risk that a significant number of submissions may be disregarded. There is also significant time pressure as the final opinion is now almost two months overdue and must feed into the article 28 report planned for [May 20, 2021].
“I agree that article 5.3 of the FCTC can create pressure on the committee to exclude studies or evidence originating from [the] industry. I, however, think that openly disqualifying peer-reviewed scientific studies simply on this basis would be detrimental to the standing of the committee.”
The EU Commission finds itself in the less-than-ideal situation that its TPD review will commence before the next FCTC Conference of the Parties (COP9), which had to be postponed to November 2021 due to the coronavirus pandemic. “The 2014 Tobacco Products Directive confirms that developments, such as internationally agreed rules and standards on tobacco and related products, are relevant to the EU legislative process,” says du Plessis. “Before the Covid-19 pandemic, the EU was in a position that it could benefit from possible discussions at COP9, which was originally scheduled for November 2020, before it had to publish its own article 28 report—with proposed amendments to the TPD—by [May 20, 2021]. The postponement of COP9 by one year means that the EU Commission will no longer enjoy this benefit. With its own scientific opinion not addressing key questions on harm reduction in sufficient detail, a valid question would be whether it is at this stage in a position to propose any further evidence-based measures on tobacco harm reduction.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
FDA Center for Tobacco Products Director Mitch Zeller explains the agency’s compresive plan on tobacco and nicotine regulation during the 2017 Global Tobacco and Nicotine Forum in New York City. (Photo: David Parker)
FDA’s comprehensive plan on tobacco and nicotine regulation, three years later
By Beth Oliva and Philip Langer
In July 2017, FDA unveiled its “Comprehensive Plan on Tobacco and Nicotine Regulation”—a plan that, in FDA’s words, “places nicotine, and the issue of addiction, at the center of the agency’s tobacco regulations.”1 While the comprehensive plan outlined several areas of focus (such as regulation of flavored products and the use and impacts of premium cigars), in announcing the comprehensive plan, FDA placed significant emphasis on two specific issues. First was the prospect of reducing nicotine levels in combustible cigarettes to nonaddictive levels through “achievable products standards;” second was “fostering innovation where innovation could truly make a public health difference.”2 When introducing the plan, former FDA Commissioner Scott Gottlieb said this:
Looking at ways to reduce nicotine levels in cigarettes so that they are minimally or nonaddictive, while not altering the nicotine content of noncombustible products such as e-cigarettes, is a cornerstone of our new and more comprehensive approach to effective tobacco regulation.
[W]e must recognize the potential for innovation to lead to less harmful products, which, under FDA’s oversight, could be part of a solution. While there’s still much research to be done on these products and the risks that they may pose, they may also present benefits that we must consider.3
Nearly 3.5 years after FDA’s rollout of the comprehensive plan, it is worthwhile to explore what FDA has done—and not done—in pursuing its quest to reduce nicotine in combustible cigarettes and foster innovation for noncombustible products. Has FDA made meaningful progress toward achieving the ambitious goals it set in 2017? Or has FDA simply paid lip service to the comprehensive plan without any serious action? A review of FDA activity over the last few years suggests a mixed record of accomplishment in the development of a national reduced nicotine standard and progress toward turning the vision of reduced-risk tobacco products into a reality. FDA in its public-facing comments remains steadfastly committed to the initiative, and while progress on complex issues such as these must be measured over years rather than months, it has been slow. Recent developments and the current posture of tobacco regulation, however, suggest the coming years will be critical to the success or failure of the comprehensive plan.
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2018—Progress in the exploration of a reduced nicotine standard
There is no question that FDA has taken steps to explore the reduction of nicotine in combustible cigarettes since announcing the comprehensive plan in July 2017. The first significant step was in March 2018 when FDA issued an Advance Notice of Proposed Rulemaking (ANPRM), seeking public comment on the development of a reduced nicotine product standard.4 Specifically, FDA sought comments, research and data on myriad topics, including a potential appropriate maximum nicotine level; whether a nicotine product standard should cover other combustible tobacco products; and what unintended consequences could result from a nicotine product standard (such as illicit trade or increase in smoking). The comment period remained open for about four months and by its close, the public docket had garnered nearly 8,000 comments.5
Around the same time, FDA funded research and an article by agency researcher Benjamin Apelberg and others in The New England Journal of Medicine titled “Potential Public Health Effects of Reducing Nicotine Levels in Cigarettes in the United States.”6 The article acknowledged “a continuum of risk for products that deliver nicotine” and used a simulation model to conclude that “enacting a regulation to lower the nicotine content of cigarettes to minimally addictive levels in the United States would lead to a substantial reduction in tobacco-related mortality, despite uncertainty about the precise magnitude of the effects on smoking behaviors.”7
In a continued show of dedication to the prospect of developing a reduced nicotine standard, in May 2018, Center for Tobacco Products Director Mitch Zeller submitted an article to the Society for Research on Nicotine and Tobacco titled “The Future of Nicotine Regulation: Key Questions and Challenges.”8 In the article (eventually published in 2019), Zeller stated that FDA’s “renewed focus on nicotine” was premised on the “continuum of risk” and invited FDA’s stakeholders to contribute perspective as FDA continued to “shape its tobacco regulatory strategy.” In the article, Zeller stated that a policy centered on nicotine was the priority in FDA’s tobacco regulatory strategy and that “FDA’s strategic regulatory approach is designed to support innovation in developing products with net public health benefits.”9
Overall, throughout 2018, FDA appeared to “hit the ground running” in exploring reduced nicotine levels in cigarettes through a national product standard. The ANPRM, along with funding research and submitting content to scientific journals, indicated a strong start. Yet at the same time, little was being done publicly on the second prong of the comprehensive plan—encouraging innovation in new products with potential public health benefits.
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2019—FDA hits a stall
While 2018 showed commitment to the first prong of the plan, 2019 did not build on the prior year’s advances. The agency did, however, move forward in certain ways in encouraging innovation for potentially reduced-risk products.10 In 2019, FDA issued the draft guidance on enforcement priorities for e-cigarettes (March 2019); the proposed substantial equivalence (SE) rule (April 2019); the proposed premarket tobacco product applications (PMTA) rule (September 2019); and the final guidance document for PMTAs for e-cigarettes. These documents showed an expanded FDA focus from the reduced nicotine prong of the comprehensive plan to also encouraging at least some limited innovation in potentially reduced-risk products. The agency also, helpfully, began to look at providing more transparency and predictability to tobacco regulation. While FDA has issued draft rules, however, nothing has been finalized; in addition, the final PMTA guidance document for e-cigarette products is just that—only useful for those products and not any other potentially reduced-risk product.11 Further demonstrating that FDA’s focus shifted is that while FDA’s spring 2019 unified agenda included a potential regulation to reduce or “cap” nicotine in cigarettes (as did the 2018 agenda), such a regulation was entirely absent from FDA’s fall 2019 unified agenda.
What FDA most notably accomplished in 2019 was the approval of two PMTAs and the granting of the first modified-risk tobacco product (MRTP) order. First, in April 2019, FDA issued PMTA marketing orders for the IQOS tobacco-heating system and charger along with the Marlboro Heatsticks in regular, smooth menthol and fresh menthol flavors, finding that “the marketing of the products is appropriate for the protection of the public health.”12 In December 2019, FDA authorized the marketing of 22nd Century’s two reduced nicotine cigarettes—Moonlight and Moonlight Menthol, similarly finding that “the marketing of the products is appropriate for the protection of the public health.” Second, in October 2019, FDA issued the first MRTP orders, authorizing Swedish Match North America to use specific modified-risk messaging on its General snus products—the culmination of a five-year process for the company and FDA.
Regarding the reduced nicotine standard, however, there was no public indication by FDA of progress toward promulgation of a standard. In response to inquiries from the public on why the initiative did not appear on the fall 2019 unified agenda, FDA stated that the omission of a reduced nicotine standard regulation did not mean FDA was not continuing to work on the initiative. Still, this shift change was understandably interpreted by the public as a possible wavering in FDA’s dedication to the initiative.
2020—A continued stall and concern from the public
In response to a reduced nicotine regulation being absent from FDA’s fall 2019 unified agenda, Congressman Frank Pallone submitted a letter to FDA Commissioner Stephen Hahn in February 2020 to “voice [his] concern” that FDA “appears to be reconsidering regulations that would set a maximum nicotine level in cigarettes in order to make them less addictive.”13 In a similar vein, John Pritchard—vice president of regulatory science at 22nd Century—penned an op-ed in November 2020 noting, “late last year, without warning or significant explanation, the FDA abruptly removed the proposed rule-making to reduce nicotine levels in cigarettes from its regulatory agenda. Even before the Covid-19 pandemic struck, policymakers decided there were more immediate priorities than cigarette addiction and the roughly half [a] million Americans who die from it each year.”14 Pritchard pleaded with FDA to revisit its plan and accelerate its own actions.
Last year brought the unexpected tragedy of the pandemic, which obviously and understandably impacted all FDA efforts. Perhaps partly as a result, it also brought little public progress with respect to FDA’s development of a reduced nicotine standard. There were no requests for proposal, research or articles released in conjunction with the nicotine reduction initiative, and the initiative continued to remain absent from FDA’s unified list and long-term actions list throughout the year.
On the innovation front, in July 2020, FDA did issue an MRTP order authorizing IQOS to be marketed with a reduced exposure claim, but not a reduced-risk claim. The MRTP application by Philip Morris International included requests for MRTPs for both claims. While this second MRTP order is undoubtedly an important step, to date, FDA has still not decided upon the separate MRTP applications for the 22nd Century reduced nicotine cigarettes. Such an approval would be a significant endorsement of the reduced nicotine approach and its impact on harm reduction.
Closing out 2020—a renewed interest?
After this period of inactivity on the reduced nicotine standard, the end of 2020 brought an unexpected move from FDA: In December 2020, 22nd Century announced that FDA (along with the National Institute on Drug Abuse) submitted an order for 3.6 million very low nicotine research cigarettes. FDA stated that the cigarettes are to be used for numerous research initiatives, including the potential implementation of a national reduced nicotine standard. Further, at the Food and Drug Law Institute’s Tobacco and Nicotine Products Conference in September 2020, Zeller confirmed that FDA remained committed to everything contained in the comprehensive plan, including focus on reduction of nicotine in combustible cigarettes. Starting research on this issue would indicate a step toward that commitment.
On the issue of potentially reduced risk products, however, FDA has not yet indicated how it will look at the hundreds of thousands (if not millions) of PMTAs it received in September 2020 for products across the continuum of risk. These include applications for e-cigarettes as well as tobacco-free nicotine pouches, nicotine toothpicks, nicotine dissolvable products and other innovative products to deliver nicotine without the combustion elements of cigarettes. No further guidance documents have been issued from the agency nor has the agency provided further clarity on how it will determine if these products are “appropriate for the protection of the public health.”
Therefore, FDA closed out 2020 with continued public-facing dedication to the initiative as well as a potentially significant step toward achieving it. The reduced nicotine regulation continues, however, to be absent from FDA’s unified agenda and long-term actions list, including that released in December 2020. That unified agenda does, however, indicate FDA’s intention to continue to work on other important rules, such as the final rule for PMTAs, the final rule for SEs and a proposed rule for MRTPs.
Looking forward
In summary, FDA’s progress toward developing and implementing a reduced nicotine product standard and encouraging innovation for potentially reduced-risk products and products authorized to use modified risk or exposure claims has arguably been unsteady. Of course, the public does not have insight into FDA’s internal workings, and there is the distinct possibility (or perhaps probability) that progress is occurring (such as continued review of comments to the ANPRM, development of a proposed rule and other research initiatives as well as developing guidance documents for other noncombustible products) out of public sight.
FDA’s recent order of 3.6 million research cigarettes is a promising step as was the granting of the first MRTP orders. The new year, which will include agency evaluation of PMTAs, will hopefully demonstrate continued advancement toward the goals of the 2017 comprehensive plan. While some may have expected that the agency would already be much further along, measuring progress is a subjective exercise. There should be agreement by all, however, that in 2021, FDA must show—by action, not just word—its continuing commitment to the public health goals outlined in 2017.
Beth Oliva is a partner at Fox Rothschild LLP
Philip Langer is an associate at Fox Rothschild LLP
10 In order to receive a marketing order, any innovative new tobacco product must be found to be “appropriate for the protection of the public health” and thereby at least demonstrate the potential to be a reduced-risk product.
11 On Dec. 31, 2020, FDA sent both the “Final Rule on Content and Format of Substantial Equivalence Reports” and the “Final Rule on Premarket Tobacco Product Applications and Record Keeping Requirements” to the Office of Management and Budget for its review.
12 In December 2020, FDA issued a further PMTA order for the IQOS 3 device (the initial order was on the IQOS 2.4 device), finding “the similarities in the product designs of IQOS 2.4 and IQOS 3, as well as the fact that the same Heatsticks are used in both devices, make it unlikely there are new concerns related to health effects, product quality, human factors or product misuse for IQOS 3 as compared to IQOS 2.4. As the two devices have similar operating procedures, use the same tobacco sources and produce comparable aerosols, FDA has no reason to believe the IQOS 3 device will result in different nicotine exposure, use patterns, user populations or abuse liability.”
The most confusing part of an FDA application explained
By Cheryl K. Olson
In October 2020, the U.S. Food and Drug Administration’s (FDA) Center for Tobacco Products issued draft guidance sharing “current thinking” about “principles for designing and conducting tobacco product perception and intention studies.” As a researcher, I raise a glass in celebration. Unlike toxicology, behavioral science is fuzzy and subject to interpretation. We need signposts to follow.
The guidance applies to premarket tobacco product applications (PMTA), modified-risk tobacco product (MRTP) applications and substantial equivalence reports. If you understand why and how to do tobacco product perception and intention (TPPI) research, your application is more likely to be approved. Let’s stroll through the guidance, highlighting key points and noting ways to put the FDA’s suggestions into action.
Why TPPI?
Behavioral research is one type of evidence the FDA uses to decide if a new tobacco product is “appropriate for the protection of public health.” As the guidance notes, perceptions refers to “beliefs, attitudes, judgments and expectancies” about a tobacco product. In other words, how do you—a tobacco user or nonuser—understand what the label says, what the risks are or who this product is meant for?
Why do we ask about intentions? As the guidance says, “intentions to use tobacco products may help predict future tobacco use behavior,” especially near-future actions. The FDA wants to know whether smokers will switch to your smokeless, electronic nicotine-delivery system (ENDS) or heat-not-burn product (a good thing) and whether nonsmokers or former smokers will take it up (a bad thing). But it’s seldom practical or affordable to follow people around to watch what they do or to survey them repeatedly.
So, we fall back on measuring behavioral intentions as the next best thing. We compare smokers intending to quit—now or within the next six months—to smokers with no plans to quit. We measure whether smokers’ quit intentions change after reading about your product and seeing pictures of your packaging or advertising.
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TPPI study aims: your essential roadmap
“[The] FDA recommends that you develop TPPI study aims (the overall goals of the study) prior to conducting the study.” This step is not a nice-to-have; it’s essential. Defining the aims of your study and turning them into answerable research questions creates a roadmap for everything you do. Just as important, study aims tell you what not to pay attention to. If you skip this step, you’ll end up wading through confusing piles of data, perhaps shoveling it all into your application and hoping the FDA can make sense of it.
As you write your survey questions, figure out your sample quotas and review your data tables, you will periodically get lost in the details and need a touchpoint. Referring to your study aims will reorient you and keep you moving in the right direction.
Here’s another way to look at study aims. What product story do you want to tell the FDA? There are some research questions all PMTAs need to address, such as perceptions of risk (more on that later). Others will be specific to your product and your story.
Perhaps your smokeless product appeals more to a particular group, such as female or lower income smokers, than competing products do; your story includes addressing the needs of that underserved group of smokers. Or your high-nicotine vape product is “appropriate for the protection of public health” in part because it attracts heavily nicotine-dependent smokers who, to use FDA-speak, perceive it as an acceptable substitute for cigarettes. If your less-toxic tobacco product appeals to smokers not intending to quit—who are discouraged or unmotivated—that’s a further public health win. If your product and its various flavors do not appeal disproportionately to youth or you have a solid method of restricting youth access, say so.
From market research or conversations with customers, you might have a good idea of your story. But to tell that story to the FDA, you must design research questions and collect data to support it.
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Study types (qualitative or quantitative) and methods
Are you telling your story with words or numbers? When you don’t know a lot about perceptions and intentions (say, a new product or target population), start with focus groups or individual interviews. But qualitative doesn’t equal free-form; a structured set of questions, an unbiased interviewer and an analysis plan are a must if the FDA is going to take you seriously.
Some research questions might be answered with experimental studies. For example, you could test effects of new labeling by seeing how subjects randomly assigned to view that labeling answer questions about product perceptions differently than a control group. Another option is an observational study: for example, watching a subject follow directions to operate or charge a new vaping device without prompting from researchers.
Often, your behavioral research aims can be met entirely through cross-sectional quantitative studies: one-time surveys of people who’ve used your product and people who haven’t.
You can get some of the benefits of a qualitative study by adding open-ended questions to your multiple-choice survey. Let’s say you’re surveying users of Vape A. You ask, “Why did you choose to try Vape A? (Select all that apply).” You then invite those who clicked on “To help me quit smoking cigarettes” to “Please tell us more about your experience using Vape A to cut down or quit.” This offers two benefits: It helps you better understand how people use Vape A. And, when paired with solid numbers, user quotes help make your case to FDA reviewers that Vape A deserves a spot on that continuum of risk.
Study measures
Your best bet is to adapt questions from research published in academic journals, especially studies by authors who work for the FDA or other government health agencies. Next best are validated measures from the industry—for example, Philip Morris International has tested questions on addiction and health risk perceptions. Note that your questions need to “be written or adapted in a manner that specifically refers to the product (by name) that is the subject of the study.”
Perception questions should include risks to health and risk of addiction asked in several ways: the absolute risk of using your product; the relative risk as compared to other products in the category as well as cigarettes, nicotine-replacement therapies and no tobacco use; and the effects of dual use (health risks of sticking with smoking, partly substituting your product or switching completely). A good question will be direct, specific and unambiguous: Ask about perceived personal risk of specific types of serious illnesses or earlier death from using Vape A not generically about harm to health.
Behavior intention questions include intent to buy, try, use or stop use of your product. Detailed questions, such as intent to partially or completely replace cigarettes with Vape A, are best left to surveys of Vape A users; it’s too much guesswork for people new to the product. (The guidance doesn’t cover “actual use” studies, but don’t forget to ask your customers about monthly and daily use, reasons for use and use situations.)
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Participant sampling and recruitment
Now that you know what to ask … who do you ask, and where do you find them?
For the who part, you need a sampling plan and eligibility criteria. You want to show that Vape A appeals to intended users (smokers or users of other tobacco products) and not to unintended users (nontobacco users and former users, especially youth). Your sampling plan might call for equal numbers of smokers intending to quit, smokers not intending to quit, never-smokers and former smokers—making sure to include a disproportionate number of young adults and a minimum number of people with vaping experience.
Eligibility criteria can be tricky; check the published research. For example, a “never-smoker” is often defined as someone who has smoked fewer than 100 cigarettes in their lifetime!
As to the where … the FDA is open to a variety of modes of data collection (e.g., online, phone, in person) and subject recruitment methods (such as online panels and random-digit dialing). All methods will introduce some bias; online panels may have fewer low-literacy participants, for example. Have a scientific justification for the approach you choose. And phrase your screening questions carefully, so online panel members who just want the dollars can’t guess the “right” answers to join.
Common TPPI mistakes
Not documenting your research methods (e.g., survey response rates, how you recruited)
Biased recruiting; for example, if you offer product coupons as an incentive to fill out your survey, people who don’t like your product won’t respond, and your study sample won’t be representative of the larger population. Use neutral incentives (like a choice of retailer gift cards).
Not enough people in your study—this might be a too-small total sample size or not enough members of important subgroups to detect between-group differences (e.g., women versus men).
Unclear questions or incomplete response options: Prevent confusion by pre-testing your survey with individuals from your target groups (including less-educated folks).
Generic questions—the FDA doesn’t want general perceptions of vapes or snus. They need to draw conclusions about your product, including any flavor or strength options.
Not protecting privacy of research subjects—document your “adequate procedures for human subjects protection;” that is, their “rights, safety and welfare.”
Treating TPPI studies like market research—the FDA asks that companies “select appropriate study personnel for TPPI studies … who have sufficient formal education, training and experience in conducting social or behavioral science research to ensure the study is designed or conducted appropriately.” Translation: We want to hear from academics like us who speak our lingo.
Cheryl K. Olson is a California-based public health researcher and consultant who specializes in behavioral health issues. She spent 15 years on the faculty of Harvard Medical School.
Indonesia commits to eliminating all forms of child labor by 2022.
By Stefanie Rossel
Child labor affected an estimated 152 million children globally in 2018. It’s also present in Indonesia, which in 2002 committed to eliminating all forms of child labor by 2022 to fulfill global development pledges. Over the past four decades, the island state has developed from one of the world’s poorest countries into a low-to-middle income nation with a poverty rate in the single digits. Progress has also been made in the elimination of child labor. According to the United Nations, the number of child workers declined from more than 4 million in 2009 to 2.9 million in 2018. Today, 7.4 percent of Indonesian children are working, mostly in agriculture. Perhaps unsurprisingly, considering the size of the tobacco sector in Indonesia, an estimated 60 percent of them labor in the tobacco sector.
In a recent report, the U.S. Department of Labor (DoL) attested Indonesia had made “moderate advancement” in 2019 in its efforts to eradicate the worst forms of child labor, which include commercial sexual exploitation and performing dangerous tasks in plantation agriculture. In addition to publishing a report with the most recent data on child labor, Indonesia’s government had increased its labor inspectorate funding from $10.2 million in 2018 to $16.7 million in 2019, with specific funds allocated to enforcing child labor regulations, according to the DoL. The country’s Ministry of Manpower, however, still lacked the financial and staff resources to fully enforce child labor laws throughout the country, the DoL study found, and there was no information available on the number of investigations conducted, violations found, prosecutions initiated and convictions secured.
Although Indonesia has ratified the key international conventions concerning child labor, 3.7 percent of the country’s 10-year-olds to 14-year-olds are working, the DoL report said. The majority (61.6 percent) work in agriculture where they fulfill tasks such as harvesting kernels for palm oil or applying fertilizer to tobacco. Many of them work long hours in extreme heat, a condition also considered hazardous for children. The minimum age for work in Indonesia is 15 years and that for hazardous work is 18.
Several institutions have been established to enforce child labor laws. The Ministry of Manpower, for example, provides legal information to employers and works with law enforcement officials to investigate and address instances of child labor. The Ministry of Women Empowerment and Child Protection coordinates the provision of social services to children, including those involved in child labor. Labor inspectors are regularly trained; they are authorized to conduct unannounced inspections and assess penalties. To coordinate its efforts down to the local level, the government has established regional action committees and task forces at provincial and district levels. A National Plan of Action (NPA) provides a framework for the elimination of child labor, whereas a roadmap toward a child labor-free Indonesia in 2022 supports implementation of the NPA for the elimination of the worst forms of child labor. Social programs provide block grants for schools and cash transfer programs.
Difficult mission
Karina Jabulatova
Despite increased efforts, eradicating child labor within the next two years will be a tall order, in part due to the country’s demographic and geographical particularities. With 267 million people, Indonesia is the world’s fourth most populous country. Its 17,508 islands make it the largest archipelago in the world. Half of the population lives in Java. Agriculture employs roughly one-third of the workforce.
The country is also the world’s second-largest cigarette market, after China, and ranks fifth among global top tobacco producers. Six million Indonesians are involved in the tobacco industry. Smoking prevalence is high, standing at 29 percent among people aged 15 and older. Indonesia also struggles with significant child smoking. In 2018, the Health Ministry reported 0.7 percent of children between the ages of 10 and 14 were smokers.
“There are many challenges, the most recent one being the Covid-19 pandemic. We are supporting the government in the implementation of child labor-free policies, and maintaining this positive relationship with the government is always a priority for us,” says Karima Jambulatova, executive director of the Eliminating Child Labor in Tobacco-Growing (ECLT) Foundation, which is present in the country as a founding member of the Partnership for Action Against Child Labor (PAACLA) and its Kesempatan project.
The latter project was initiated in 2019 in five districts in East Java Province and West Nusa Tenggara Province—Indonesia’s largest tobacco planting areas—to reduce the prevalence of child labor in the agriculture sector. At the subnational level, the program advocates child-friendly villages through engagement with local institutions, information dissemination for members of the village community, including farmers and farm workers, and activities for children. The PAACLA partnership works toward eliminating all forms of child labor by 2025 in line with the UN Sustainable Development Goals and is coordinated by the government. According to the ECLT, this cross-sector initiative promotes shared accountability and strong commitments necessary to mitigate the risk of child labor and promote sustainable change.
Stephanie Garde
To support the government’s efforts, ECLT closely cooperates with various stakeholders and helps by providing models and best practices. “Our project in Indonesia focuses on prevention of child labor, on protecting children’s needs and rights and on increased commitment in the villages,” says Stephanie Garde, ECLT’s program manager. “The child-friendly village approach modeled from the namesake government program and implemented by the project includes activity centers where children get support doing their homework or do sports and other educational activities instead of hanging around the fields.”
Child labor in Indonesia usually occurs in informal settings, whereas laws and conventions are better placed to cover formal employment, Jambulatova explains. “The problem with child labor on smallholder farms, where income-generating crops like tobacco are grown alongside food crops, is that the whole family often goes to work to meet their needs,” she says. “Obviously, there is no employment contract between children and their parents. ECLT’s programs are designed to not simply remove children from child labor in one supply chain but to adopt a more systemic response focusing on cross-sector collaboration and multistakeholder engagement, which support government efforts to make sure no child is left behind.”
When talking about child labor, it is necessary to understand its nature. “The causes of child labor are far-reaching and complex, including poverty and lack of access to quality education and infrastructure,” says Jambulatova. “As with anything that affects the way people live, these issues become part of cultural practices as well, meaning that encouraging change also requires investment in awareness-raising to shift mindsets. To bring long-lasting change for children and their families, we need to understand the root causes of child labor and how they relate to each other in a wider system.”
A question of awareness
Eradicating child lavor is made more challenging due to farmers’ heavy dependence on the tobacco. There is less government support available to diversify their incomes with complementary crops than in other countries. What’s more, most farmers in Indonesia also don’t own the land they cultivate. During the harvesting season, it is common that neighbors come with their children and help.
Elimination of child labor is further complicated by the structure of the Indonesian tobacco market. While leading multinational manufacturers and leaf merchants are members of the ECLT and PAACLA and have committed themselves to keep their farms free of child labor, some of the domestic companies still have work to do. Moreover, a large number of “free” tobacco farmers sell their tobacco to traders and middlemen, which makes tracing within supply chains more difficult. Many small-scale farmers prefer selling their tobacco to these middlemen as they can sometimes offer higher prices than those fixed at the beginning of a season through contract farming.
ECLT member companies represent only approximately 35 percent of the tobacco sector in Indonesia. There is, however, progress among domestic manufacturers. “Some national companies are moving to vertical integration, with suppliers to these companies also opening up to this,” says Jambulatova. “PAACLA presents a unique opportunity for national companies to form a part of a partnership for the elimination of child labor specifically in Indonesia to step up to the challenge and close the gaps for sustainable change.”
As in many countries, tobacco in Indonesia is grown only during a short period of the year. During the remaining months, the farmers cultivate other crops, such as rice. “This is why we can’t limit our support to farmers to the tobacco supply chain only,” says Jambulatova. “It’s not a supply chain issue but an agricultural issue. Until there are collaboration and investment to address root causes and fight child labor across crops, we risk simply pushing children out of tobacco fields and into another crop down the road or during another season.
“The fact that this is a global issue across regions and industries shows that no one actor can solve this alone. Our long-term strategic vision is to engage across crops and levels building commitments and coordination that support economic growth for thriving farming communities free of child labor. We invite the government, companies and other industries to renew and deepen commitments so that we can reach this necessary goal as fast as the UN Sustainable Development Goals demand.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
