Category: News This Week

  • ‘No outright ban’

    ‘No outright ban’

    

    The U.S. Food and Drug Administration (FDA) plans to “enforce existing law” rather than ban flavored cigarettes outright, the agency’s Acting Commissioner Ned Sharpless testified on Wednesday before the House Energy and Commerce Subcommittee on Oversight and Investigation.

    Earlier this month, Head of the Health and Human Services Department Alex Azar said the Trump administration intends “to clear the market of flavored e-cigarettes.” Some interpreted that to mean the FDA would ban the flavors outright, but Sharpless made clear during the hearing that isn’t the case.

    Manufacturers have until May 2020 to apply to the FDA for marketing applications. If companies don’t have an approved application by then, they will be required to pull their products from the market.

    “Anyone who thought their product was good for public health can file an application at any time” even before the May deadline, said Sharpless. “If the product can demonstrate a public health use, then it would be authorized for sale.”

    The FDA released a proposed rule this month outlining what manufacturers should put in their marketing applications.

    Vaper companies have expressed concern about the resources required to prepare the applications.

    Responding to lawmakers’ criticism that the FDA’s 2017 decision to delay the review of vapor products contributed to the current spike in teen e-cigarette use, Sharpless said that the agency should have acted sooner.

    The recently announced accelerated investigation should help the agency “catch up,” he added.

  • New Juul leadership

    New Juul leadership

    K.C. Crosthwaite has joined Juul Labs as CEO, replacing Kevin Burns. The move comes as Juul faces fierce criticism in the U.S. for its marketing practices.

    Crosthwaite brings more than two decades of global operational, management, stakeholder and regulatory engagement experience. As chief growth officer at Altria Group, which owns a 35-percent stake in Juul, Crosthwaite oversaw the company’s expansion into smoking alternatives and played a key role in the commercial and regulatory efforts related to the U.S. launch of Altria’s heat-not-burn device,  IQOS.

    Hyunseob Kim, professor of finance in the Johnson Graduate School of Management at Cornell University called Crosthwaite “a natural pick” for Juul, given his experience with federal regulators.

    Concurrent with the leadership change, Juul Labs announced it would suspend all broadcast, print and digital product advertising in the U.S. and refrain from lobbying the administration on its draft guidance and committing to fully support and comply with the final policy when effective

    “I have long believed in a future where adult smokers overwhelmingly choose alternative products like Juul,” said Crosthwaite. “That has been this company’s mission since it was founded, and it has taken great strides in that direction. Unfortunately, today that future is at risk due to unacceptable levels of youth usage and eroding public confidence in our industry.

    “Against that backdrop, we must strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate. That includes inviting an open dialogue, listening to others and being responsive to their concerns.”

    Juul critics were unimpressed. “This announcement strips away any doubt about Juul,” said Matthew Myers, president of the Campaign for Tobacco-Free Kids. “It is Big Tobacco.”

  • Merger plan abandoned

    Merger plan abandoned

    Philip Morris International (PMI) and Altria have called off talks to reunite their businesses in the face of investor pushback and a regulatory crackdown on vaping in the United States.

    Altria’s $12.8 billion investment in e-cigarette manufacturer Juul has soured as regulators in the United States and other markets have started restricting flavored vapor products in response to a series of vaping-related deaths and hospitalizations and concerns about increased youth vaping.

    Walmart, the world’s largest retailer, announced last week it would stop carrying e-cigarettes altogether.

    “While we believed the creation of a new merged company had the potential to create incremental revenue and cost synergies, we could not reach agreement,” said Howard Willard, Altria’s chairman and CEO.

    “After much deliberation, the companies have agreed to focus on launching IQOS in the U.S. as part of their mutual interest to achieve a smoke-free future,” said PMI CEO Andre Calantzopoulos.

    IQOS is the only heated tobacco product with premarket authorization from the U.S. Food and Drug Administration (FDA). PMI has also submitted a modified risk tobacco product application for IQOS, which the agency is still reviewing.

    Global data, based on four years of use, show that IQOS is not significantly appealing to youth or to nonsmokers, according to PMI.

    The potential for Juul and iQOS to dominate the world’s biggest vapor markets was seen as central rationale of a deal when the merger talks were announced last month. It would have created an industry heavyweight with a combined market value of $187 billion, triple its closest rival, British American Tobacco.

    However, some investors were skeptical of the synergies the deal would generate and a steady rise in number of vaping-related deaths and illnesses reported in the U.S. may also have changed the companies’ thinking.

    “It appears that both management teams clearly listened to shareholder feedback and certainly couldn’t ignore the barrage of negative headlines,” wrote Bonnie Herzog, managing director of equity research at Wells Fargo.

    Philip Morris’ stock jumped more than 6 percent after the merger talks were canceled, bringing its market value to about $118 billion. Shares of Altria were down 2.4 percent Wednesday afternoon, valuing the company at around $74 billion.

    Altria spun PMI off in 2008, remaining focused mostly in the U.S. through its Marlboro cigarettes, while PMI has focused on selling cigarettes outside the U.S.

  • Leaking revenue

    Leaking revenue

    The Research Intelligence Unit (RIU) criticized the Sri Lankan government for its failure to correct the loopholes that exist in the nation’s tobacco excise tax policy that has led to greater illicit trade and significant losses in tax revenue for the government.

    “The high price differentials between legal and illicit cigarettes caused by taxation have contributed to significant market distortions and growth in smuggling. Cross-country experiences explored also established the connection of high taxes and illicit growth. It is imperative the government adopts a pragmatic tobacco policy to maximize revenue, achieve national health objectives and curb the growth of the illicit tobacco market,” said RIU research economist Lalinda Sugathadasa.

    RIU estimates that the Sri Lankan government has lost over SLR14 billion ($77.1 million) due to illicit trade while the legal tobacco industry has lost as much SLR24 billion in revenue.

  • Consultation urged

    Consultation urged

    British American Tobacco (BAT) Malaysia managing director Erik Stoel said that the tobacco product manufacturer supports the Malaysian government’s plans to introduce legislation to regulate vapor products and asks that the industry be consulted to ensure that “robust quality and safety standards requirements were considered” in their rulemaking.

    Stoel added, “Banning e-cigarettes will only encourage consumers to continue buying unregulated products. Already, Malaysian law enforcement agencies are facing a huge task of clamping down on illegal cigarettes. The last thing Malaysia needs to deal with is another illegal product boosting an already thriving black economy. It is disappointing that up until today, we have not been consulted on these new regulations, especially at a time when effective regulations and policies are required to ensure that vaping products are safe and not sold to the underaged.”

    Stoel cited the news concerning deaths arising from vapor use in the U.S. as to why it is necessary to have “effective regulations and enforcement to ensure product safety and to prevent youth access.”

    BAT Malaysia currently does not sell vapor products in Malaysia.

  • Massachusetts bans flavored vapes

    Massachusetts bans flavored vapes

    Massachusetts Governor Charlie Baker on Sept. 24 imposed a temporary sales ban on all vapor products effective immediately that will extend to Jan. 25, 2020. The retail and online sales ban includes all nicotine and marijuana vapor products. Retailers have been told to remove vapor products from their shelves but not to destroy their products.

    The proposed ban, which was approved by the state’s Public Health Council later in the day, could be extended past Jan. 25 if the governor and the board choose to extend it.

    Governor Baker said, “The use of e-cigarettes and marijuana vaping products is exploding, and we are seeing reports of serious lung illnesses, particularly in our young people. The purpose of this public health emergency is to temporarily pause all sales of vaping products so that we can work with our medical experts to identify what is making people sick and how to better regulate these products to protect the health of our residents.”

    According to the Baker administration, the four-month long ban is meant to give the medical community and federal officials time to investigate the recent spike in illnesses and deaths connected with vapor product usage. Baker referred to an upcoming meeting with the medical community that will examine many questions including what types of additives and what parts of the vapor devices can attributed to these illnesses and deaths.

  • Plastic alternative

    Plastic alternative

    Researchers at the California Institute of Technology have found a way to turn cells from tobacco plants into a strong material with wood-like mechanical properties, offering a potential alternative to unsustainable plastic, reports MIT Technology Review.

    The material’s stiffness and strength reportedly surpass that of commercial plastics of similar density, like polystyrene and low-density polyethylene, while being entirely biodegradable.

    To test the biodegradability of the new material, the researchers buried their samples in agricultural soil along with ordinary wood and watched what happened. Both samples initially gained weight by absorbing water from the soil, but then both broke down naturally.

    “We observe an almost complete biodegradation of the biocomposite 14 weeks after initial incubation,” a team member said.

  • Risk may extend to all vapers

    Risk may extend to all vapers

    Researchers are investigating whether the vaping-related illnesses that have been making headlines in the U.S. recently have been occurring undetected all along, reports Reuters.

    Many of the recent victims reportedly had pockets of oil clogging up cells responsible for removing impurities in the lungs.

    Researchers have begun to re-examine lung cell samples they have collected in recent years for evidence of these oil-filled immune cells in people who vaped but didn’t get sick.

    Some suspect the oils are formed inside the lungs as part of the body’s natural response to chemicals found in many commercial vapor devices. One theory is that vaping these chemicals may impair the immune system and make people who vape more vulnerable to respiratory distress.

    A study published in the Journal of Clinical Investigation earlier this month found that mice exposed to aerosols of propylene glycol and vegetable glycerin—common solvents used in conventional nicotine vapor devices—developed these same fat-clogged immune cells even though they were never exposed to vaping oils.

    These mice also had impaired immune systems.

  • Halting pod sales

    Halting pod sales

    A court has temporarily suspended sales of Juul cartridges in Germany, citing incorrect nicotine disclosures and missing statements about the proper disposal of electronic waste, reports Der Spiegel.

    The ruling followed a complaint by Juul competitor Niko Liquids.

    Juul denied the allegations and vowed to appeal the ruling, saying its products confirmed to both German and EU legislation.

  • BAT accused of tax evasion

    BAT accused of tax evasion

    Dutch authorities are pursuing British American Tobacco (BAT) for £902 million ($1.13 billion) in unpaid taxes, accusing the cigarette maker of avoiding tax on money channeled through the Netherlands, reports The Guardian.

    The claim relates to taxes the company is said to owe between 2003 and 2016 and concerns internal fees paid by Dutch subsidiaries for loans provided by its U.K. holding company.

    The internal fees at the center of the claim are said to have been artificially inflated in order to lower taxes due in the Netherlands.

    BAT disputes the claim.

    “We strongly disagree with the Dutch tax authorities’ assessment, and as such, we are appealing this claim,” a BAT spokesman said, adding that the company complies with all applicable tax legislation in each of its 200 markets.