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Devastating News for the Vaping Industry

June 15, 2019

Devastating new developments in the last 24 hours may have just dealt the fatal blow to the vaping industry as we know it.

Devastation for the Vaping Industry

Readers of this blog know that about a month ago, an ominous ruling was handed down by Judge Paul Grimm in the District Court of Maryland. That ruling was in the court case American Academy of Pediatrics et al v. FDA. A coalition of public health entities along with five individual pediatricians sued the FDA over the deadline required for vape companies to submit Premarket Tobacco Product Applications.

The deadline had initially been set for August of 2017. It required vape companies to submit applications in order to keep their products on the market. The FDA realized that the deadline was unfeasible for the vape industry to comply with, in part due to the FDA's own lack of clear guidance on how to do so. It issued a much needed reprieve, pushing the deadline back to 2021.

That is until the FDA was sued by the coalition led by the American Academy of Pediatrics (AAP) who claimed that the FDA was shirking its duties to public health by giving the industry more time to comply. APA complained to the court that the delay was "so extreme as to amount to an abdication if [the FDA's] statutory responsibilities." The appropriately named Judge Grimm sided with the Pediatricians against the FDA and ordered the FDA to begin demanding industry compliance within 30 days.

Judicial Ruling in American Academy of Pediatrics et al v. FDA

Yesterday we reported that the FDA had, indeed, just issued the long awaited guidelines required for vape product manufacturers to submit these applications. However, it still wasn't clear what this actually meant. There was the possibility that the FDA would exercise its option to appeal the ruling and there was still hope that the issuance of the guidelines was just butt covering on the part of the FDA.

Today it has become clear that isn't the case. It appears that the FDA has decided not to appeal the court order and the application deadline is certainly going to be moved up significantly. The only thing remaining is haggling over the exact timing.

(UPDATE: Wa have come across a few conflicting reports, some suggesting that the FDA may still have the opportunity to appeal. We have a call in to The Smoke Free Alternatives Trade Association to try to gain clarification. We will update this post as soon as we have a definitive answer as well as add a new blog post with any further information.)

Initially the AAP asked the court to require applications be filed within 30 days.

“The AAP is a prohibitionist group and that fact is reflected in their proposed order. With the exception of large tobacco companies and perhaps JUUL, no company is prepared to file a PMTA in the timeframe they propose," said attorney Gregory Conley, President of the American Vaping Association.

Gregory Conley, President American Vaping Association

Gregory Conley, President of the American Vaping Association

Apparently even the AAP realized that 30 days was ridiculous and they have filed a proposed remedial order asking for a 120 day deadline. But even that deadline is preposterous. Any vape companies that can't afford to or are unable to prepare the extraordinarily extensive applications in that window of time will have their products pulled from the market the day the deadline hits.

The FDA has submitted a counter proposal to the court asking for a period of 10 months. As Mitch Zeller, Director of the FDA's Center for Tobacco Products stated along with the FDA's counter proposal, a four month deadline will likely "cause significant public health concerns as well as implementation challenges."

Mitch Zeller, FDA

Mitch Zeller

“It could suddenly clear the market of thousands of e-cigarette products, raising the risk that some former smokers addicted to nicotine might migrate back to conventional cigarettes, and is likely to flood the Agency with thousands of low-quality applications that would strain Agency resources and significantly delay processing… if the Court orders a deadline for the submission of premarket applications, it should set that deadline no sooner than 10 months," the FDA stated in its response to the court.

To give you an idea of the kind of chaos that could ensue if the deadline required is too short, according to the FDA, as of April 30, 2019 a total of 401 applications had been submitted out of which 373 were for deemed products (vape products the FDA has "deemed" fall under the FDA's regulatory umbrella that previously only covered traditional tobacco products). Of those, 369 or 99% of the applications "were closed as insufficient to accept or file, largely for failure to include an environmental assessment." Only 4 products remained, however, none of them were for e-cigarettes as they covered "heat not burn" products like Phillip Morris's IQOS.

Keep in mind that by the FDA's own initial estimates, a PMTA application will cost vape manufacturers between $117,000 and $400,000 per product. Vape industry experts have put the number even higher, as high as several million dollars. Even worse, the way the FDA's guidelines are written, a product is not just defined as a single vape juice flavor. Every individual nicotine level of every single flavor will have to have its own application. Needless to say, there are only a handful of vape companies who can afford these exorbitant costs--namely those companies owned by Big Tobacco.

As many have pointed out, the FDA's rules could have been written by Big Tobacco as a business plan to wipe out the competition and many believe that, behind the scenes, that's exactly what happened. Small business, boutique e-liquid manufacturers and vape shops will be the ones who will be wiped out, effectively handing the industry to Big Tobacco.

The fact that the regulations are vague, confusing and monstrously expensive while doing little to effectively protect the public from the actual problems caused by the unregulated vape industry adds credence to this theory.

Barrier to Entry

This is a Big Business ploy known in many industries as a "barrier to entry." Here's how it works. Big Businesses will counter intuitively support increased government regulation over their market sector. They will lobby for the passage of regulations, fund studies and think tanks to help shape the public discussion pushing it in the direction of regulatory tightening and garner public support from citizens who mistakenly believe that the increased regulations are actually there to protect them.

This tactic allows large corporations to "virtue signal" that they support government regulation while in actuality, what they are doing is using the government to make it prohibitively expensive for new or smaller players to enter the market, effectively handing them a government enforced monopoly. It's easy to see why many believe this is what's really behind the FDA's apparently nonsensical and onerous regulation of the vaping industry.

What happens now? The next development expected is a ruling from the court on the exact deadline. As it stands, the original court order requires 30 days. However, the APA is asking for 4 months and the FDA has countered with 10. The judge will issue a decision and the future of vaping hangs in the balance. 

98% of FDA Rules Deemed Unconstitutional

After that, expect to see legal challenges to the FDA from some of the bigger players in the industry. There is a small measure of hope that these will be successful. As we previously reported, a recent study by the Pacific Legal Foundation found that 98% of the rules issued by the FDA in the past 10 years were unconstitutional due to the fact that they were written and signed by low level employees who had no authority to do so. However, given the fact that with a stroke of a properly authorized pen the rules can be properly authorized, this angle is at best likely only to buy some additional time.

Unlike previous developments in this ongoing saga, this appears to be the real deal. It is with heavy hearts that we let you know that the end to vaping as we know it may truly be on the horizon.

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