Blog - Tobacco Reporter

Filter: FDA Cracks Down on Unauthorized Vapes

The U.S. Department of Justice is seeking court orders, threatening lawsuits and demanding the destruction of unauthorized vapor products, according to Alex Norcia, writing for Filter. The actions are remarkable given Center for Tobacco Products Director Brian King’s reluctance to say whether the agency was willing to take unauthorized vaping products off the market during a recent interview with Politico.

Filter says it has confirmed that the Food and Drug Administration, by Sept. 1, advised the Department of Justice (DOJ) that at least two open system vape companies were in violation of the Federal Food, Drug and Cosmetic Act because the manufacturers did not file premarket tobacco product applications and were continuing to sell their products.

“We plan to seek a court order to permanently enjoin you … from, among other things, directly or indirectly manufacturing, distributing, selling and/or offering for sale any new tobacco product at or from any of your facilities, unless and until, among other things, the product receives, and has in effect, marketing authorization from FDA,” reads one letter, signed by DOJ Senior Litigation Counsel Christina Parascandola and seen by Filter.

The two companies known to have received letters have been ordered to physically destroy their own products under FDA supervision.

One industry insider told Filter that the letter was “a clear escalation”—the first time, to his knowledge, that the FDA had gone beyond warnings and explicitly threatened to sue over sales of unauthorized nicotine vapes.

“It is just beyond outrageous that the FDA is now conscripting the Department of Justice in its misbegotten war on vaping,” Amanda Wheeler, a vape shop owner in Arizona and the president of American Vapor Manufacturers, told Filter. “We are talking about hardworking small businesses that are helping ordinary Americans to quit smoking, and they are now facing jaw-dropping threats from federal law enforcement agents.”

September 15, 2022

PMI Appoints Former FDA Officials

Philip Morris International has appointed two former U.S. Food and Drug Administration officials to key positions.

Badrul Chowdhury was appointed PMI’s chief life sciences officer for smoke-free products, succeeding Jorge Insuasty, who will complete his move into the recently created position of president of Vectura Fertin Pharma. After a short transition period, Chowdhury will join PMI’s senior management team in January 2023, reporting to CEO Jacek Olczak.

“I am delighted to welcome Badrul to PMI and look forward to working closely with him as he leads our talented team of scientific experts,” said Olczak in a statement. “He is an accomplished scientist and regulatory strategist, with decades of leadership experience, both in industry and as a regulator within the U.S. FDA’s pulmonary division. His wealth of knowledge and experience will be critical to help achieve our ambition of a smoke-free future. I also extend my sincere thanks to Jorge Insuasty for his contributions to the function as he moves to oversee Vectura Fertin Pharma full time.”

Chowdhury joins PMI from a U.S.-based biotech company developing inhalation products for rare respiratory diseases, where he was chief medical officer. Prior to that, he was AstraZeneca’s senior vice president and chief physician-scientist for respiratory inflammation and autoimmunity late-stage development in biopharmaceuticals R&D. From 1997 to 2018, Chowdhury served as director of the division of pulmonary, allergy and rheumatology products at the Center for Drug Evaluation and Research at the FDA.

Matthew Holman was appointed as PMI’s vice president of U.S. scientific engagement and regulatory strategy, reporting to Deepak Mishra, president of PMI Americas.

“We are delighted that Matt will be joining PMI to further accelerate our journey toward a smoke-free future, particularly here in the United States,” said Mishra. “As we transform, we recognize the importance of bringing together diverse perspectives, including those of regulatory bodies and the scientific community. Matt’s solid scientific and stakeholder knowledge, combined with his passion for tobacco harm reduction, will be invaluable.”

Holman joins PMI from the FDA, where he served for more than 20 years, most recently as director of the Office of Science at the Center for Tobacco Products (CTP). At the CTP, Holman was instrumental in building the FDA’s marketing application review programs. He served as the CTP’s chief scientist, playing a significant role in guiding policy decisions, developing rulemaking and guidance documents, and overseeing a robust regulatory science research program for tobacco products.

The appointment of these experts complements the recent hiring of Keagan Lenihan, who joined PMI in May 2022 as vice president of government affairs and public policy and head of its Washington, D.C., office. Lenihan spent two decades working in government, corporate and public policy, including as associate commissioner for external affairs and strategic initiatives and then chief of staff at the U.S. FDA.

September 14, 2022

MDO Stay Boosts Kaival’s Results

Kaival Brands Innovations Group reported revenues of $3.8 million for the third quarter of fiscal year 2022, up from $3.2 million for the same period of 2021. Gross profit was $442,100 compared to a loss of $84,300 for comparable 2021 period.

Kaival attributed its improved revenues in part to an August court ruling that set aside a marketing denial order issued by the U.S. Food and Drug Administration to the company’s nontobacco flavored Bidi Stick e-cigarettes. Arguing that the agency had insufficiently considered Kaival Brands’ marketing and sales access restriction plans, the U.S. Court of Appeals for the Eleventh Circuit ordered the FDA to further review Kaival’s premarket tobacco product applications, allowing the company to continue to market its products.

“The recent 11th Circuit ruling in favor of Bidi Vapor alleviated a significant barrier to our adult-focused B2B sales efforts, which we believe will once again allow us to materially scale our business, grow revenue, move toward net profitability in the future and increase shareholder value,” said Kaival Brands President and Chief Operating Officer Eric Mosser in a statement.

Mosser added that the company is working with Philip Morris to expand international distribution into new global markets. In June, Kaival Brands Innovations Group’s subsidiary, Kaival Brands International (KBI), entered into a licensing agreement with Philip Morris Products (PMP) for the development and distribution of electronic nicotine-delivery system products outside the U.S.

“We expect to begin recognizing revenues from this international licensing agreement in our fiscal fourth quarter,” said Mosser.

In July, Kaival announced the launch of PMP’s Veeba vapor product in Canada, with royalties due to KBI pursuant to the international licensing agreement.

September 13, 2022

Firms Settle New York Tax Evasion Case

New York’s attorney general office announced a $50 million agreement with Grand River Enterprises Six Nations of Canada (GRE) and Native Wholesale Supply Co. (NWS) of New York to settle allegations of tax evasion in the state.

According to the complaint, the two companies brought millions of cartons of unstamped cigarettes into New York from Canada.

The attorney general’s office contends that NWS purchased cigarettes and tobacco products from GRE, imported them into New York, and distributed the cigarettes to retailers in the state—despite having no license to do so. GRE allegedly knew that the cigarettes it sold to NWS would be sold into New York without going through a New York state licensed stamping agent for prepayment of state taxes and would be neither stamped nor taxed as required by New York law.

“Hardworking New Yorkers pay taxes and so should multi-million-dollar companies,” said New York Attorney General Letitia James in a statement. “Regulating and taxing cigarettes is a critical tool to protect public health from the deadly dangers of tobacco. Today’s agreement enforces New York’s laws and will stop the overflow of unstamped cigarettes into New York.”

In addition to paying the $50 million, the companies agreed to modify their business practices to prevent future sales of unstamped cigarettes in New York.

In a statement, NWS clarified that while the settlement ends the litigation, it is not an admission of wrongdoing.

“In this almost decade-long dispute, the NY Attorney General claimed that sales of cigarettes by NWS to certain Native American Nations situated within the geographic borders of New York state were subject to New York state regulation and taxation. NWS, as well as the manufacturer of those products, GRE, vigorously objected to and adamantly denied such claims. As part of NWS’ Chapter 11 plan of reorganization, NWS allowed those claims to proceed in federal court in New York State.

“The settlement announced today brings an end to that litigation, without any admission of wrongdoing or liability by NWS or GRE. The settlement payments are to be paid solely by NWS and are not denominated as payment of back taxes. They are payments that the parties agreed are payments of disputed claims payable under the trust set up in accordance with the Chapter 11 plan of reorganization.

“NWS and GRE have at all times maintained and continue to maintain that the transactions at issue do not and did not violate any federal or New York State laws, particularly in view of well-established sovereign and treaty rights established with the federal government.”

September 13, 2022

A Second Chance

How companies can make the most of a recent court ruling requiring the FDA to reassess thousands of PMTA rejection notices.

By Neil McKeganey

It would be hard to overstate the threat that youth vaping in the United States poses to the use of e-cigarettes as a means of tobacco harm reduction. Respected national surveys have shown a rising trend in youth vaping, with the threat to the vaping industry as predictable as night following day.

Former Food and Drug Administration Commissioner Scott Gottlieb could not have been clearer in signaling that threat when he said that the offramp to adult smoking could not be justifiably achieved at the cost of the on-ramp of teen vaping. If anybody was in any doubt about the risks that youth vaping poses to the entire e-cigarette industry, those doubts would have surely been extinguished in the recent ruling against Juul Labs, which required the company to pay in excess of $438 million to compensate states for the harms caused by past marketing practices increasing the likelihood of youth using their eponymously named vaping device.

For vaping companies, the threat of youth vaping may have lifted slightly in a recent U.S. court ruling requiring the FDA to pay attention to what vapor companies are doing in trying to restrict youth access to their products. Odd as it may sound, after having encouraged vapor companies to pay attention to their marketing and sales practices in light of the rising trend in youth vaping, the FDA’s position appears to have been that those efforts were almost certainly doomed to fail, with youth accessing what are often easy-to-conceal vaping products with relatively little difficulty through their social networks.

With vapor companies having invested heavily in age verification software, point-of-sale restrictions and in the removal of flavored e-liquids, it would have been a bitter pill to swallow to be told that the regulators had largely ignored those efforts to reduce youth access to their products.

The logic behind the FDA’s decision seems to have been that it would be easier to expedite the large number of premarket tobacco product applications (PMTAs) by adopting a “Fatal Flaw” approach—rejecting those applications that did not present data from either longitudinal customer studies or randomized trial evaluations and simply ignoring what the companies were doing to lessen the likelihood that their products would be found in the hands of youth.

By ruling against the FDA in legal action initiated by six vapor companies that had received marketing denial orders without the FDA even paying attention to their youth sales restriction efforts, the judges have effectively provided vapor companies with a second chance to have their PMTA applications reassessed.

So, what should vapor companies do given the legal victory that has been dropped in their lap? Clearly, it is going to be important for companies to do all they can to restrict youth access to their vapor products. But actions taken by these companies is not the same thing as being able to present evidence to the FDA that their products are not being used by youth.

To this end, research undertaken by the Centre for Substance Use Research (CSUR) in Scotland may help many of the companies concerned. For the last two years, the CSUR has been measuring the prevalence with which over 200 e-cigarette devices are being used by youth and adults within the United States. This ongoing research provides vapor companies with product-specific data showing the extent to which their products are being used, or more crucially, are not being used by youth.

Valuable as the data from this study undoubtedly are, vapor companies also have to be able to show the benefit of their products to adult smokers. The fastest route to obtaining this data is through an actual use study in which adult smokers using a company’s vapor products are monitored over a number of weeks to determine how many smokers are able to quit or reduce their cigarette smoking through using the company’s vapor products.

To obtain a marketing authorization, vapor companies have to be able to show two things—that their products are not being used by youth and that they can help adult smokers in quitting or reducing cigarette consumption. Succeed in these two things and vapor companies can have a bright future. Fail in either one and the future looks a lot bleaker.

Neil McKeganey is the director of the Center for Substance Use Research in Glasgow, Scotland.

September 12, 2022

Lucie Salhany Joins 22nd Century Board

22nd Century Group has appointed Lucie S. Salhany to its board of directors.

Salhany is a highly accomplished media executive with extensive experience in assessing and understanding the consumer landscape, positioning unique products for successful launch utilizing digital media, corporate strategy and entrepreneurial ventures.

She is widely recognized for her appointment as the first woman chair of a major broadcast network, which was earned through her unparalleled track record of successful growth and expansion in the industry. Salhany will serve as a member of 22nd Century’s corporate governance and nominating and finance committees.

“I am delighted that Lucie has chosen to join 22nd Century’s board of directors. Her well-established track record of success in business along with her strong background in and knowledge of the media industry will be extremely valuable for the company as we execute on our mission to reduce the harm caused by smoking, launch VLN and monetize our hemp/cannabis operations,” said 22nd Century Board Chair Nora B. Sullivan in a statement.

“We are confident her contributions will help raise 22nd Century’s profile in the consumer marketplace and mainstream media. Lucie’s appointment also reflects our continued commitment to the diversity of our board, and I very much look forward to her perspective and contributions in the board room.”

Salhany is currently president and CEO of her own consulting company, JHMedia. She was also one of the founding partners of Echo Bridge Entertainment and CEO and president of LifeFX Networks.

September 12, 2022

Cigar Association Meets CTP Officials

The Premium Cigar Association (PCA) briefed Brian King, the new director of the Center for Tobacco Products (CTP), on the industry’s issue set and the association’s priorities.

The briefing, which was one of King’s first engagements with stakeholders, covered material facts about the uniqueness of the products, legislative history, current health data, economics and impact of regulatory efforts.

King was joined by several other members of the U.S. Food and Drug Administration, including Michele Mital, deputy director of the CTP. The PCA was represented by Greg Zimmerman (The Tobacco Co.), Scott Regina (Emerson’s Cigars), Mike Condor (Crowned Heads), Scott Pearce (PCA), Joshua Habursky (PCA) and Patrick Anderson (PCA consultant).

“Director King is a researcher, and we urged him to lean into that part of his background and shed the current mantel that CTP wears—‘tobacco-free’ ideology is not what the Tobacco Control Act authorized,” said Zimmerman, president of the PCA, in a statement.

“A lot of time and money has been spent by the government to try and justify FDA’s efforts to regulate premium cigars. While PCA is proud of our wins in defense of the industry, what we really need them to understand is that they are not achieving their own goals when they take broad sweeping approaches to regulation,” said Pearce, executive director of the PCA.

“As long as the FDA remains our regulator, there needs to be productive dialogue. The necessity for the FDA to be aggressive toward premium cigars is not prudent, and we are hopeful that this personnel change will represent a departure from the past actions that were based on a one-size-fits-all approach,” noted Habursky, deputy executive director and head of government affairs for the PCA.

September 12, 2022

Correction

On July 14 and Aug. 6 of this year, Tobacco Reporter published two articles (“Pakistan’s Track-and-Trace System Under Fire” and “More Firms Adopt Tracking System”) with incorrect information about Inexto, a Swiss company active in the field of tracking and tracing.

The articles reference Codentify software and a legal challenge to Pakistan’s decision to award its track-and-trace system to the National Radio and Telecommunication Corp.

Unfortunately, the “news” contained in these articles turned out to be based on outdated information presented on a tobacco news aggregation website.

Codentify has long been replaced by a product called Inextor, and the referenced legal challenge was decided in May 2020 when the Islamabad Court canceled the bidding process for procedural motives unrelated to Inexto or its product.

Tobacco Reporter regrets the error and any harm caused to Inexto. The articles were removed from our website on Aug. 29.

September 12, 2022

‘FDA Downplays PMTA Acceptance Numbers’

The U.S. Food and Drug Administration is understating the number of nontobacco nicotine (NTN)-related premarket tobacco product applications (PMTAs) it has accepted for review in order to avoid criticism from tobacco control groups that seek prohibition of all vaping products, reports Vaping360, citing American Vapor Manufacturers Association (AVM) President Amanda Wheeler.

On Sept. 8, the FDA announced it has accepted over 350 PMTAs (out of nearly 1 million applications) for NTN products. Wheeler insists that AVM member companies alone have received acceptance letters for 4,700 PMTA submissions.

“Once again, the FDA and its Center for Tobacco Products are misleading the public and press on crucial data and methods in its approval process for vaping products,” Wheeler said in a statement. “The figures stated in its press release today on synthetic nicotine applications are demonstrably inconsistent with FDA letters to our own members indicating many thousands more applications successfully filed than FDA now claims.”

An acceptance letter indicates that the application has met the basic requirements to move forward in the review process. It does not authorize the applicant to market the product.

The AVM also says the FDA altered required PMTA forms close to the submission deadline to disqualify already-submitted applications. According to Wheeler, the application forms were “abruptly altered” without public notice, “apparently as a means to disqualify wide swaths of already-filed applications.”

In March, U.S. President Joe Biden signed legislation authorizing the FDA to regulate synthetic nicotine products. Manufacturers had until May 14 to submit PMTAs and were given two additional months to continue selling products with pending PMTAs. When the grace period ended July 13, all synthetic nicotine-based products became subject to FDA enforcement.

September 12, 2022

Startup Uses Tobacco to Cultivate Meat

An Israeli food technology startup company is using tobacco plants to help it create vegetarian hamburgers, reports The Jerusalem Post.

BioBetter has deployed tobacco plants as natural bioreactors to create the growth factors necessary for the cellular development of cultivated meat.

According to the firm, this development could significantly reduce the cost of cultured meat and help rapidly advance its commercialization. Cultured meat could eventually replace beef cows, which are a major factor in producing greenhouse gases and promoting hazardous global warming.

“World population growth and dwindling natural resources are going to put incredible strain on meat supply and the already fragile environment in the coming decades,” said BioBetter CEO Amit Yaari. “Cultivated meat offers a promising solution to these problems and can ensure a more resilient supply chain with better economic and environmental returns.”

In addition to addressing environmental challenges, the work will also create a new source of income for local tobacco farmers, who have suffered losses as cigarette consumption dwindles.

Boosted by a fresh injection of venture capital, BioBetter plans to scale up production in 2023 and commercialize its tobacco plant-derived, food-grade growth factor portfolio by 2024.

September 12, 2022