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Banning menthol cigarettes doesn't appear to be FDA priority entering 2021

Banning menthol cigarettes doesn't appear to be FDA priority entering 2021

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Two prominent federal health agencies do not appear to have as 2021 priorities banning menthol cigarettes or reducing nicotine levels in traditional cigarettes.

The U.S. Department of Health and Human Services and the Food and Drug Administration released Wednesday their unified agenda and regulatory agenda through at least August.

However, that could change significantly in the expected Biden administration, according to analysts.

There were six tobacco-related items, with only one — premarket tobacco product applications and recordkeeping requirements — in the final rule stage that is set for January.

The premarket standard requires the FDA to consider products’ risks and benefits to the population as a whole, including users and non-users.

Barclays analysts said in a note Thursday that "notably, there is again no mention of a rule to ban menthol cigarettes or reduce nicotine level in cigarettes to non-addictive levels."

A ban on menthol traditional and electronic cigarettes could deliver a major financial blow to the tobacco industry, in particular to British American Tobacco Plc, which owns top-selling U.S. menthol cigarette brand Newport.

22nd Century Group Inc., which has its manufacturing plant in Mocksville, has staked its existence on persuading the FDA to approve the company marketing and sell very-low-nicotine traditional cigarettes. 

22nd Century's ultimate goal is for the FDA to mandate tobacco manufacturers only sell very-low-nicotine traditional cigarettes.

James Mish, 22nd Century's chief executive, said in a statement that "it isn’t surprising that the nicotine cap reduction was left off the fall 2020 unified agenda, as we are in the middle of a transition to a new administration."

"We believe the new administration is in favor of and will make the proposed plan to place a nicotine cap on combustible cigarettes a priority.

Misch said his optimism comes in part from President-elect Joe Biden nominating Xavier Becerra at secretary of the U.S. Department of Health and Human Services.

"(Becerra) took an aggressive stance against addictive tobacco products in his current role as attorney general of California," Misch said. "In November, he issued a ban on the retail sales of flavored tobacco in the state, and in 2019, he sued Juul Labs for illegally selling and marketing their products to children."

"We are confident that 22nd Century Group is poised to lead the market as the first and only company to offer an MRTP-authorized combustible cigarette," Misch said.

"Once we receive authorization, we are also planning to make our VLN technology and intellectual property available to the entire industry in order to help it meet the FDA’s reduced nicotine mandate."

FiscalNote Markets managing director Stefanie Miller said in a recent investor note that a Biden administration FDA "is likely to begin working anew on nicotine cap regulations for cigarettes."

"Because of likely inaction in Congress, we now expect the Biden administration to also reopen stalled menthol/flavor regulations.

In February, the U.S. House of Representatives passed a bill by a 213-195 vote that would dramatically tighten federal tobacco regulations, including banning all non-tobacco flavorings for tobacco products.

However, the Democratic-sponsored H.R. 2339, titled “Reversing the Youth Tobacco Epidemic Act," is opposed by the Trump administration and has not been taken up by the U.S. Senate.

The Office of Management and Budget issued a statement in which it said “this bill contains provisions that are unsupported by the available evidence regarding harm reduction and American tobacco use habits, and another provision that raises constitutional concerns.”

“If presented to the president in its current form, the president’s senior advisers would recommend that he veto the bill.”

The Barclays analysts said that "we don’t expect any flavored tobacco ban or other draconian anti-tobacco measure to pass the (U.S.) Senate."

"There are a number of more important issues that the incoming Biden administration needs to deal with — COVID and climate change in particular — and tobacco control doesn’t feature on Biden’s election agenda.

"Biden-Harris have spoken of cannabis decriminalization, the biggest beneficiaries of which are flavored cigars, which will remain on the market for at least the next four years, if not longer."

FDA priorities

Of the remaining five USDHHS and FDA agenda items, four in the proposed rule stage:

* Modified-risk tobacco product applications (January timeline);

* Requirements for tobacco product manufacturing practice (February timeline);

* Administrative detention of tobacco products (August timeline); and

* Tobacco product standard for characterizing flavors in cigars (August timeline).

A modified-risk tobacco product application seeks authorization to advertise products as reduced harm or reduced risk compared with traditional cigarettes.

22nd Century said again this week that it “believes that authorization of the company's (modified-risk tobacco) application is imminent.” The application was the subject of a FDA review on Feb 14.

The company said it is prepared to begin shipping its very-low-nicotine cigarettes within 90 days of FDA authorization.

If the FDA does implement very-low nicotine standards in traditional cigarettes, the end result could be 22nd Century having a sharp increase in revenue and a potential buyout by a global tobacco manufacturer.

However, some analysts continue to question the appeal of very-low nicotine traditional cigarettes, and whether they could lead smokers to more consumption to obtain the nicotine levels to which they are accustomed.

Investors have kept 22nd Century's share price on a rollercoaster ride over the past year.

The 52-week share price range is 55 cents to $2.24, the latter reached Thursday before finishing up 19.1%, or by 34 cents, to $2.12.

"We believe the FDA’s focus is going to revolve around the evaluation of premarket tobacco applications of deemed products, notably e-cigarettes, in the next few months," the Barclays analysts said.

"We acknowledge that a new FDA commissioner might be appointed under the Biden administration, and it could lead to a change in FDA’s agenda with respect to tobacco."

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