The U.S. Food and Drug Administration’s focus on preventing sales of flavored vaping products by well-known mass-market brands and open-system products has created a parallel gray market of little-known disposable brands, according to industry expert Jim McDonald.
Writing for Vaping360, McDonald cites figures from the Chicago market research firm IRI showing that the disposable vape sales in the United States have grown from less than 2 percent of the convenience store e-cigarette market to 33 percent in three years.
The growth of the disposable market is a direct result of FDA actions. In January 2020, the agency banned most flavored e-cigarettes. The policy, however, permitted all flavors to be sold in devices that cannot be refilled and are designed to be disposed of after the flavored nicotine has run dry.
In 2018, then market leader Juul Labs was pressured into removing most of its flavored pods from the market in response to concerns about youth vaping.
The crackdown on flavored products sold in the regulated market coincided with the growth of the disposable gray market, which was largely unknown to regulators and the national news media.
None of the disposable vapes that are currently popular have received authorization from the FDA, although some disposable manufacturers have submitted premarket tobacco product applications, and some have challenged FDA marketing denial orders (MDOs) in court or through FDA administrative appeals.
McDonald says the developments bode ill for the vaping policies in the U.S. and elsewhere. “It will be the suckers that submitted applications and made good-faith efforts to comply with the agency’s regulations that get MDOs and warning letters while the gray market sellers will change their product names and laugh at the clumsy regulator,” he writes.
Seventy percent of respondents to an international survey conducted earlier this year said they are either “bothered” or “really bothered” when tobacco companies make money from an inhaler, medication or other devices that treat their lung conditions.
A total of 1,196 people who reported inhaler use completed the survey in early 2022.
After Philip Morris International acquired pharmaceutical company Vectura in 2021, patient advocacy groups wanted to understand patients’ attitudes toward tobacco organizations’ stake in the companies that make their respiratory inhaler devices. Vectura develops several widely used medical delivery devices and/or formulations for inhaled therapies used in people with chronic lung diseases, including chronic obstructive pulmonary disease (COPD) and asthma.
The COPD Foundation partnered with Global Allergy and Airways Patient Platform and Lung Foundation Australia to conduct the survey among people with chronic lung diseases in English, Spanish and German between January and March of 2022.
In addition to expressing concern about tobacco ownership of lung treatments, a significant share (48 percent) of patients surveyed also said they would strongly consider switching inhalers if they knew that a tobacco company made or sold their brand of an inhaler.
“This was an unexpected finding, as many patients in my own practice indicated a preference to stick to medications that work for them,” said Byron Thomashow, chief medical officer at the COPD Foundation, and co-author of the Thorax brief in a statement. “However, socioeconomic, and systemic factors such as insurance coverage, health care system limitations, and convenience strongly influence the patient’s ability to make treatment choices.”
Smoore’s flagship atomization platform, Feelm, has received an e-cigarette production license from China’s State Tobacco Monopoly.
In early 2022, China introduced new national standards for electronic cigarettes, which required companies manufacturing these devices to obtain a production license. Three Smoore factories, two of which are licensed under the Feelm brand, have been granted these licenses, with Feelm also receiving official approval to produce e-cigarettes as its own entity.
In a press note, Smoore said it welcomed the new policy framework, as it ensures that all e-cigarette manufacturers now operate in full compliance with the law. The company says it aims to use science and technology as the driving force behind its business model.
With its products available in more than 50 countries, Feelm now has a total annual production capacity of 2 billion devices and boasts a fully automated production line that can produce more than 7,200 atomizers per hour.
Earlier, the STMA issued an e-cigarette production license to Smoore’s Vaporesso brand. As of Aug. 4, more than 130 enterprises, including RLX Technology and BYD Electronics, had obtained licenses, according to Panda Daily.
The crisis in Ukraine offers an opportunity to transform tobacco use across eastern and central Europe.
By Derek Yach
Vladimir Vorotnikov, writing in Tobacco Reporter’s August 2022 issue, outlined how Russia’s invasion of Ukraine has upended well-established supply chain and business relationships that have been in effect for decades. In fact, a careful read of Balkan Smoke by Mary C. Neuberger traces the roots of these relationships way back to Bulgaria in the 1920s. Vorotnikov discussed the impact of sanctions on Russian tobacco production, the emergence of illicit trade in the region, and more recently, the reestablishment of cigarette production in Ukraine.
He does not discuss the massive growth over the past few years in new reduced-risk nicotine products—led by IQOS—across eastern and central Europe. The editor makes the point that Russia is (was) one the largest markets for IQOS. My own observations during a visit to Kyiv in late October 2021 were that a range of vape products and heated-tobacco products were readily available across the city despite posters funded by Bloomberg Philanthropies near the Parliament proclaiming that they were dangerous.
An anti-vaping poster in Kyiv (Photo courtesy of Derek Yach)
This is a time of profound transition for the region. Amid the horrors of war and the human tragedies it continues to bring to the people of Ukraine are opportunities to reduce future deaths from the single largest cause of premature death in the region—and especially among men—combustible tobacco products. As rebuilding begins—as it inevitably will—government, business and health professionals need to grasp the chance to avoid rebuilding the tobacco industry in the image of the past and rather take the high ground of health and make reduced-risk products the easily available option while phasing out combustible sales.
For governments, this means adopting risk-proportionate regulations that build on the approaches proposed by the recent Javed Khan report for the United Kingdom, and on the authorizations of a range of reduced-risk products by the U.S. Food and Drug Administration. Ukraine and the neighboring countries relied on FDA guidance in relation to Covid vaccine advice—now is the time to draw upon their guidance to accelerate access to reduced-risk products, citing the FDA’s comments that they are deemed “appropriate for the protection of public health.”
Tax and other regulatory approaches could be applied to accelerate the transition. Further, governments of the region need to step up investments in customs and excise oversight to stop large-scale illicit trade taking hold—as it has in the occupied territories of Georgia following Russian invasion in 2008.
The Russian government also has an obligation to protect the health of its people and take regulatory steps to ensure that the progress made by Philip Morris International, Japan Tobacco International and BAT is increasing their revenue from heated-tobacco products at the cost of combustibles. Slippage with regard to these gains will translate into a return to the very high smoking rates, and associated death rates, of the past.
Government actions will be limited, though, unless the three leading tobacco companies (PMI, JTI and BAT) active in the region commit to take concerted efforts to accelerate their transition out of combustibles and publicly clarify what “withdrawing from Russia” means. Are they continuing to profit from Russian cigarette sales albeit through local companies? Are those companies obliged to push ahead with reduced-risk products, or will they revert to cigarettes?
Outside of Russia, leading tobacco companies could communicate the benefits of switching, take measures to clamp down on illicit trade and tighten youth access to all nicotine products, through joint action. Such bold actions would give them a chance to show their seriousness to transformation—something investors should reward.
United Nations agencies have a role to play at this time. Evidence emerging from inside Ukraine suggests that smoking rates have increased among those in the military and possibly among displaced peoples. This is understandable given the unprecedented stress to which people are exposed. The current U.N. response has been to ignore this reality and simply continue to support policies that ban cigarette sales during conflicts—something that is probably ignored. A far better way forward is to support people who smoke or seek nicotine to have ready access to nicotine-replacement products and approved reduced-risk nicotine products. This would mean that a generation of people may well emerge from the war with lower overall risks to their health.
War and tobacco use are intimately linked and currently interacting in dangerous ways to the health of populations. We should not wait for the transition to peace and health to begin before taking steps to accelerate the transition of smokers away from combustibles.
A global health expert and anti-smoking advocate for more than 30 years, Derek Yach is the owner of Global Health Strategies. Previously, Yach was the director of the Foundation for a Smoke-Free World and a World Health Organization cabinet director and executive director for noncommunicable diseases and mental health. He was deeply involved with the development of the Framework Convention on Tobacco Control.
The government of Indonesia plans to strengthen its tobacco control laws to curb underage smoking, reports The Jakarta Post.
Among other provisions, the Ministry of Health is looking to control the promotion and packaging of e-cigarettes, which have remained unregulated since their legalization in 2018.
The ministry is also seeking to increase the size of graphic health warnings on tobacco packs to 90 percent from 40 percent, ban the advertising and promotion of tobacco products and prohibit the selling of single cigarettes.
In addition to revising the prevailing tobacco regulation, the government is also planning to further increase the cigarette excise tax next year.
Earlier this year, the Ministry of Finance raised tobacco excise by 12 percent, leading to an average 35 percent increase in cigarette prices.
As one of the world’s largest tobacco markets and home to numerous cigarette manufacturers, Indonesia has long had a reputation for lax tobacco laws. It is one of the few countries in Asia to have not ratified the World Health Organization Framework Convention on Tobacco Control.
Indonesia is also the only country in Southeast Asia that still allows cigarette advertising on television and print media. According to the 2019 Global Youth Tobacco Survey, around 65 percent of Indonesia’s children are exposed to tobacco ads through television, point-of-sale advertising and billboards.
In related news, the city of Surabaya announced that it will start imposing fines and social work on people ignoring restrictions in they city’s smoke-free and vape-free areas by the end of August.
Smokers and vapers will risk a fine of IDR250,000 ($17.04) per infraction. For institutions and businesses, the city will impose staged sanctions from written warnings, temporary closures, administrative fines up to IDR50 million and finally permit revocation.
Tobacco growers in Zimbabwe have started preparing land to plant their irrigated tobacco crop in early September, reports The Herald.
Sept. 1 is the earliest legislative date for transplanting tobacco from the seedbed to the field. The bulk of the rain-fed crop will be planted from October to early December, depending on the region. To prevent the carryover of diseases, tobacco farmers are required to destroy tobacco stalks and regrowths, which can host pest and pathogens, by May 1 each year.
Industry representatives expressed concern about the cost of agricultural inputs this year.
“The major challenge on the ground is that input prices are very high, hence the majority of farmers are finding it difficult to continue with tobacco farming,” said Edward Dune, vice president of the Zimbabwe National Farmers’ Union, urging authorities to improve the conditions of payment.
This season, tobacco farmers were paid three quarters of their proceeds in foreign currency and the balance in local currency, converted at the prevailing auction exchange rate on the day of sale.
According to the Tobacco Industry and Marketing Board, prices at the auction floors, at US$3.04, were firm because of low volumes. In 2022, tobacco growers pocketed more than US$620 million from their leaf sales.
The tobacco industry has been developing innovative packaging to minimize the impact of regulatory requirements such as graphic health warnings, particularly in low- and middle-income countries, according to a study published in BMJ Innovations.
Mounting restrictions on tobacco advertising have made the tobacco pack an increasingly important tool for the industry to communicate with its customers. Cigarette packs in effect act as miniature billboards for the product.
Confronted with requirements to print large health warning labels that leave less space for branding, tobacco companies have found ways to maximize and even increase the space available for marketing on packs, according to the study’s authors. Examples include inserts, sliding flip tops and butterfly panels exposing additional surfaces upon opening.
These surfaces often feature bright colors and patterns, intricate imagery, shiny and textured surfaces, and holograms to appeal to customers, according to the authors. The extra “real estate” can be used to include information about contests or marketing appeals and QR codes that lead current and potential smokers to websites that include engagement strategies.
In addition to examples of packaging innovations—which are generally legal—the authors also cite evidence of explicit manipulation of health warnings. Smokeless tobacco packs purchased in India in 2017, for example, featured blurred, stretched and tinted labels. Health warning labels on cigarette packs purchased in Pakistan in 2019 and 2020 were tinted, faded, blurred. In some instances, the background color was changed and the size of throat cancer included in the image was reduced.
The authors did not consider the possibility that some distortions might be a result of poor printing quality rather than deliberate manipulation.
To prevent the industry from developing packaging that reduces the impact of health warnings, the researchers urged lawmakers to require standardized tobacco packs in their jurisdictions.
The implementation date for graphic health warnings in the United States has been pushed back by another three months, to Oct. 6, 2023, reports the Winston-Salem Journal.
On Aug. 10, a U.S. District Court Judge in Texas approved the most recent launch date postponement for cigarette manufacturers. It is at least the ninth judge-ordered delay.
The FDA released its final rule requiring new graphic warnings for cigarettes in March 2020. The rule calls for labels that feature some of the lesser known health risks of smoking, such as diabetes. The graphic warnings must cover the top 50 percent of the front and rear panels of packages as well as at least 20 percent of the top of advertisements.
In April and May 2020, cigarette manufacturers and retailers sued the FDA, arguing that the graphic warning requirements amount to governmental anti-smoking advocacy because the government has never forced makers of a legal product to use their own advertising to spread an emotionally charged message urging adults not to use their products.
In a more recent challenge, tobacco companies argued that the deadline was too onerous due to the impact of the Covid-19 pandemic. They also pointed to the risk that they would lose their investments in new packaging if the graphic health warning requirement were to be thrown out in court.
In March 2021, the Texas District Court granted a motion by the plaintiffs to postpone the effective date of the final rule to April 14, 2022. The move was followed by additional postponements.
Pyxus International reported sales and other operating revenues of $343.9 million for the fiscal quarter that ended June 30, 2022, up 3.2 percent over the comparable 2021 quarter. Net loss increased 27.8 percent to $14.7 million, primarily due to a $7.6 million decrease in income tax benefit. Adjusted EBITDA increased 17.1 percent to $17.3 million.
“As expected, our first quarter was consistent with the prior fiscal year, with increased demand and more normalized timing of shipments from Asia, partially offset by the timing of shipments from Africa and South America,” said Pyxus President and CEO Pieter Sikkel in a statement.
“As of June 30, 2022, our inventory increased $126 million compared to the prior year primarily due to higher new crop green tobacco prices and processing costs in South America, and accelerated new crop buying activities in certain key markets. In addition, our processed tobacco inventory continues to be more than 90 percent committed to specific customers.
“The overall increase in inventory and our committed inventory levels for processed tobacco position us to meet near-term demand and we expect to see stronger shipments in subsequent quarters in fiscal 2023, consistent with historical trends. Despite higher green tobacco prices and processing costs in South America, we were able to effectively manage our working capital to meet our purchasing goals for the current crop cycle.
“Crop sizes in certain markets in Africa, Asia and South America are below expectations due to the adverse impacts of prevailing La Nina weather patterns during the growing season, which has exacerbated supply shortages. We continue to engage with customers in transparent dialogue regarding the impacts of La Nina and inflation on our business. In response to these and other market dynamics, we accelerated buying activities in certain key markets, and continue to invest in research trials, local programs, and additional training for our global agronomy team to further support our efforts to maximize grower efficiencies and yield despite unpredictable weather patterns.
“We continue to expect fiscal 2023 sales to be between $1.75 billion and $1.95 billion and adjusted EBITDA to be between $130 million and $160 million. Moving forward, we are committed to recovering crop sizes, and aligning volumes in future years with customer expectations, as we work to deliver stakeholder value, and together, grow a better world.”
In establishing whether a nicotine product is appropriate for the protection of public health, the U.S. Food and Drug Administration held its Center for Tobacco Products (CTP) reviewers to a lower standard than the companies submitting premarket tobacco product applications, according to Alex Norcia writing in Filter.
Citing documents obtained through the Freedom of Information Act, Filter describes procedures such as batching and bracketing, which allowed the CTP to apply conclusions to categories of products rather than evaluating them separately. “Despite imposing extremely onerous bureaucratic requirements on applicants, the agency was happy to find ways to cut through its own paperwork,” writes Norcia.
“It’s clear that FDA allows itself efficient shortcuts that it has denied to applicants,” Clive Bates, director of The Counterfactual, told Filter.
“The problem has always been that FDA’s extraordinarily burdensome process was obviously tremendously wasteful for applicants, but of course it was always going to be unmanageable for the assessors in FDA. Without this sort of shortcut, the PMTA process would have become a human resources nightmare. So FDA has allowed itself the kind of efficiencies it should have offered to the applicants—batching and bracketing thousands of near-identical products.”
