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Finding marketing balance for e-cigarettes will challenge FDA, Reynolds
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Finding marketing balance for e-cigarettes will challenge FDA, Reynolds

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Electronic Cigarettes

On Oct. 12, heath officials authorized the first electronic cigarettes in the U.S., saying R.J. Reynolds vaping products can benefit adult smokers.

A Rolling Stones song comes to mind with last week’s decision by the Food and Drug Administration to officially approve one electronic-cigarette product for the U.S. marketplace.

“You can’t always get what you want, but if you try sometime you just might find you get what you need.”

The chorus is applicable — at least in this moment in time — for a wide variety of groups: the FDA, British American Tobacco Plc, R.J. Reynolds Vapor Co., and public-health and anti-smoking advocacy groups.

The FDA has been hesitant for years to permit the marketing of any e-cigarette.

Therefore, approving the tobacco-flavored version of Vuse Solo serves as an acknowledgement that at least one product may play a role in adult smokers switching to a potentially less harmful nicotine option.

The FDA’s order covers the Vuse Solo closed electronic nicotine delivery system, its power unit and two replacement cartridges.

The FDA’s ruling “has opened an important path for products that can reduce harm for people who currently smoke, have been unable or unwilling to quit, and are looking for ways to improve their health,” said Eric Donny, director of Atrium Health Wake Forest Baptist’s Tobacco Control Center of Excellence. “This authorization opens the door for other products, although the question of whether non-tobacco flavored products, including menthol, will be approved is unclear.”

For BAT and Reynolds Vapor, they gain the ability to inform smokers of an FDA-approved message that Vuse Solo products “are appropriate for the protection of the public health.”

However, the FDA denied approval of 10 Vuse Solo flavored products, while the menthol-flavored version remains under review.

Reynolds said in a statement that the FDA “is required to evaluate vapor product PMTAs against a rigorous, science-driven standard.”

“It underscores years of scientific study and research dedicated to ensuring that adult nicotine consumers age 21-plus have access to innovative, and potentially less harmful, alternatives to traditional tobacco products.”

How we got here

The FDA approval came two years and one day after Reynolds Vapor made its premarket tobacco application (PMTA) submissions for multiple Vuse products on Oct. 11, 2019. The FDA agreed to review the submissions on Dec. 1, 2019.

Vuse is the No. 2-selling e-cigarettes in the U.S. with a 33% market share, according to the Sept. 25 Nielsen survey of convenience store sales. Top-selling Juul was at 41%.

“For these (Vuse) products, the FDA determined that the potential benefit to smokers who switch completely or significantly reduce their cigarette use would outweigh the risk to youths (of usage), provided the applicant follows post-marketing requirements aimed at reducing youth exposure and access to the products,” according to the FDA’s news release.

“While today’s action permits the tobacco products to be sold in the U.S., it does not mean these products are safe or ‘FDA approved.’ All tobacco products are harmful and addictive, and those who do not use tobacco products should not start.”

While Reynolds is the first tobacco manufacturer across the regulatory gauntlet finish line, “everyone is evaluating a 20-page marketing order filled with restrictions,” said Marc Scheineson, partner and co-leader of Alston & Bird’s Food and Drug Law Practice’s office in Washington, D.C.

Scheineson played a role in drafting the federal Tobacco Control Act. He is a former associate commissioner for legislative affairs at the FDA and currently provides counsel to product manufacturers and industry associations.

“It wasn’t all good news for RJR because it has been given a very limited track to market by the FDA,” Scheineson said. “While FDA officials gave on one hand, they took away a lot with the other.”

Scheineson said companies are allowed to market and sell lawful products as long as that marketing isn’t false or misleading.

“If the FDA is going to be scrutinizing all the advertising, social marketing; the FDA is going to quickly run into some of the commercial free-speech restrictions in the First Amendment,” Scheineson said.

The interesting question will be how many of these restrictions will be challenged by manufacturers, and how happy will Reynolds be to be through this labyrinth.”

“The FDA is going to be RJR’s partner every step of the way,” Scheineson said. “I’m not sure whether RJR is going to agree to all this, or they will choose to elbow their way to widen the track.”

Intense debate

The ruling lends a level of credibility to FDA oversight over the sector, analysts said.

The FDA has been swept up in a decade of intense debate, highlighted by several dozen scientific studies touting or refuting the public-health role of non-combustible nicotine and tobacco products.

The FDA said it “considered the risks and benefits to the population as a whole, including users and non-users of tobacco products, and importantly, youth. This included review of available data on the likelihood of use of the product by young people.”

“Under the premarket tobacco application (PMTA) pathway, manufacturers must demonstrate to the agency that, among other things, marketing of the new tobacco product would be appropriate for the protection of the public health.”

“These (Vuse) products were found to meet this standard because, among several key considerations, the agency determined that study participants who used only the authorized products were exposed to fewer harmful and potentially harmful constituents from aerosols compared with users of combusted cigarettes.”

Scheineson said the balance that the FDA needs to find is limiting e-cigarette and other non-combustible products that could be attractive to youths, but not so much that adult smokers get frustrated and stick or return to the more harmful traditional cigarettes.

“By allowing at least Vuse Solo in a very restricted way, it does provide adult smokers with an alternative that could play a role with their health,” Scheineson said.

Gregory Conley, as president of American Vaping Association, has been urging the FDA for a decade to embrace the potential reduced-risk role of vaping.

“The importance of the FDA authorizing a vaping product as ‘appropriate for the protection of public health’ should not be understated,” Conley said. “For over a decade, state and local governments have relied on inaction by the FDA to resist any recognition of harm reduction as a strategy to reduce smoking.

“Now that the FDA has acted, we are hopeful that adult consumers and health communicators will begin to understand the harm-reduction benefits offered by these and other smoke-free products.”

Advocate perspectives

For public-health and anti-smoking advocates, they can accentuate what they consider as the positives out of the FDA ruling, while still being concerned that the agency may have gone too far, or not far enough.

For example, Dr. Gerald Harmon, president of American Medical Association, said the group “is deeply disappointed by the FDA’s action authorizing the marketing of R.J. Reynolds’ e-cigarette products with high nicotine levels.”

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The AMA’s stance has been “an immediate ban on all e-cigarette and vaping products from the market.”

“With this action, the FDA risks hooking another generation of young people on tobacco products,” Harmon said. “Allowing this product into the marketplace signals that it’s safe, and nothing could be further from the truth.”

Scheineson recognizes that anti-tobacco and anti-smoking advocates are in their own “damned if you do, damned if you don’t” status.

“They don’t like the thought of the FDA approving ads (for electronic cigarettes), but the FDA did a lot of what they asked for in restrictions on the flavors side,” he said.

The FDA has been in a legal tug of war for several years with both tobacco manufacturers and anti-tobacco advocates who have been applying pressure to limit or ban non-combustible nicotine and tobacco products.

The FDA’s ruling is representative of a “data-driven agency, and the data had to show these tobacco products offered appropriate protections for public health ... to the FDA’s satisfaction,” Scheineson said.

Pressure off?

Some anti-smoking advocates expressed concern that FDA officials may feel that the public pressure is off now that they have authorized the one Vuse Solo product.

FDA officials, as well as several state attorneys general that include North Carolina’s Josh Stein, have had success in pressuring Juul Labs Inc. to change its product mix to lessen its appeal to those under age 21.

For example, Juul Labs agreed in June to pay $40 million over six years to North Carolina to settle a legal complaint by Stein.

In May 2019, Stein filed a lawsuit targeting Juul’s business and marketing practices, most notably accusing Juul of violating the state’s Unfair and Deceptive Trade Practices Act. Stein said the consent order requires Juul “to make drastic changes to the way it conducts business.” Stein said North Carolina is the first state “to successfully hold Juul accountable for its role in spiking teen use and dependence on e-cigarettes.”

Juul said the settlement “is consistent with our ongoing effort to reset our company and its relationship with our stakeholders as we continue to combat underage usage and advance the opportunity for harm reduction for adult smokers.”

Scheineson said “it looks promising for Juul to follow in RJR’s trailblazing path” to secure FDA approval of its tobacco-flavored product.

Scheineson said he doesn’t believe the controversy about Juul’s appeal among youths will taint the FDA’s approval process because the pathway to approve is so narrowly focused on marketing to just adults.

“If not, Juul is going to sue the FDA based on how Reynolds’ e-cigarette product was approved,” Scheineson said.

Barclays analyst Jain Gaurav wrote in an investor’s note published Oct. 1 that there was an 80% probability the FDA will approve PMTA applications for Juul, Vuse and blu eCigs tobacco-flavored products, while the odds shrink to 50-50 for their menthol products, and “highly unlikely for their flavored e-cigs, if they have filed for those” products.

The FDA decision “is a start, but much more is needed,” said Michelle Minton, a senior fellow with the Libertarian think tank Competitive Enterprise Institute of Washington, D.C.

“In approving the first vapor product for sale in the U.S., the FDA finally acknowledged the overwhelming scientific evidence that vapor products offer adults a safer and potentially life-saving alternative to smoking,” Minton said.

Cost-prohibitive?

Ever since the FDA began flexing its Congress-approved regulatory authority over the tobacco products sector, anti-smoking advocates have been vocal in saying the cost of going through the PMTA gauntlet process would favor the largest manufacturers.

Analysts have projected that the cost of an FDA regulatory review would be several million dollars for each PMTA. An application is expected to be required for each flavoring and nicotine content level.

By comparison, the FDA estimated in 2017 that the average cost of a PTMA application was $466,563 each.

“As an arm of a tobacco company with hundreds of millions of dollars to spend on science, Reynolds Vapor’s applications for their flavored Solo products were likely among the most rigorous and detailed of those submitted across the entire industry,” Conley said.

“If even Reynolds cannot get a single flavor authorized, it calls into question whether the agency is disregarding the statutory requirements of the Tobacco Control Act to impose its own ideological standard.”

That’s why some anti-smoking advocates were pleased that the FDA authorized the Vuse Solo product, but still lamented the denial and rejection of thousands of PMTA applications and millions of vapor products from smaller e-cigarette makers in recent months.

“Unless vapor products are at least as attractive as smoking, that (public health) potential could be lost,” Minton said.

“The FDA should support a vibrant market by streamlining the approval process for small, independent manufacturers, and ignore activist demands to prohibit flavored vapor products as unscientific and detrimental to public health.”

Marketing pitch

Conley said it remains to be seen how much Reynolds Vapor will be able to market the Vuse Solo product under the FDA’s authority.

“While some adults who vape flavors today will switch to authorized tobacco imitations, more will move to gray market products or return to smoking cigarettes,” Conley said.

Conley said that disposable e-cigarettes and e-liquid brands “aren’t just going away.”

“Synthetic nicotine is perfectly legal, but nonetheless will be looked at with extreme suspicion by policymakers because it’s not being sold with the FDA’s permission.”

Conley said the more that the FDA and anti-vaping activists “succeed at shutting down the legal market, the greater your chances of homemade e-liquids, foreign imports, etc. gaining more users.”

“Smoke shops and vape shops that are willing to adapt to survive won’t give up,” Conley said. “This could be a public health disaster, and the biggest beneficiaries will be large tobacco companies.”

Being the first e-cigarette to gain FDA marketing approval could be a major selling point of Vuse Solo and for Reynolds Vapor, said Roger Beahm, executive director of the Center for Retail Innovation at the Wake Forest University School of Business.

“While there are notable limitations in what the FDA is allowing, the fact that Reynolds is now permitted to introduce and market these new products opens the door to new revenue opportunities and potential growth, which has heretofore been very limited,” Beahm said.

“Taste preference is often an acquired phenomenon, and if the combined benefits of the new products are motivating enough, smokers will be willing to stay with them long enough to actually acquire a taste preference for them. That would truly be a major win for the company.”

Beahm said one key for Reynolds Vapor is attracting smokers who haven’t tried or cared for an e-cigarette, but are willing to try now with a reduced-risk aspect to Vuse Solo.

“Will they be positioned in smokers’ minds around taste satisfaction or will it be about reduced risk?” Beahm asked. “The true success will come if the concept is successful among early adopters.”

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