Comment on the FDA’s cigar regulations

If you’ve been following my writing on the subject, you know that FDA regulation has the potential to devastate the market for cigars, pipes, and e-cigarettes. Tomorrow is the final day to submit public comments on the agency’s proposal to extend their authority to these products. Comments can be submitted here. Helpful suggestions for commenting can be found here from the site Halfwheel. My own comment, limited to cigars, is below.

Comments submitted for FDA regulations regarding premium cigars, Docket No. FDA-2014-N-0189:

As an avid, though only occasional consumer of premium cigars, I have been following closely the FDA’s regulation of tobacco products. The Tobacco Control Act empowered the FDA to review all new tobacco products before they come to market, with the aim of ensuring that these products are, at minimum, no more harmful to the health of society as a whole than the products already being sold in 2007. While this is arguably a laudable goal, in practice the implementation of pre-market review has been hampered by infeasible standards that render the market for tobacco less competitive without corresponding benefits to public health.

Though this consequence is unintended, it was not unforeseen. Testifying to Congress in 2007, then commissioner of the FDA Andrew C. von Eschenbach predicted that the law would not allow enough sufficient time for the agency to develop science-based rules regarding tobacco and would “unduly and unfairly raise the public’s expectations about what the Agency could accomplish.”

The agency’s record so far has shown that Eschenbach was correct. Since taking over regulation of cigarettes, the FDA has received nearly 4,000 applications for substantial equivalence. Only a tiny percentage of these have been approved, and these have mostly involved either very basic products (i.e. rolling papers) or very minor changes to existing products (i.e. substituting one type of cigarette paper for another). The vast majority of applications remain stuck in regulatory limbo.

The experience of companies trying to bring new products to market suggests that doing so is nearly impossible. Lorillard, one of the largest tobacco companies, was able to do so only after extensive delays going well beyond the 90 or 180 day deadlines implied by the Tobacco Control Act. The smaller startup Hestia has found itself mired in insurmountable bureaucracy. Documents provided by Hestia show that more than two years into the review of its substantial equivalence application, the FDA has not even begun to examine the physical characteristics of its cigarettes, focusing instead on marketing materials relating to identification of the predicate product. These details are irrelevant to the health impact of Hestia’s cigarettes and call into question the scientific basis of pre-market review. (Since pending applications are not made public, the experience of the vast majority of applicants remains unknown.)

The unintended consequence of this lengthy review process has been to freeze the market for cigarettes as it was in 2009, protecting the brands that dominated then from competition. The health benefits of restricting the entrance of competitors are unclear, especially when reviews do not reach the stage of evaluating the actual physical characteristics of new products.

Given that the market for premium cigars is much more dynamic than the market for cigarettes, with potentially thousands of new products being introduced each year, applying the FDA’s current rules and procedures to cigars would be devastating both to producers and to cigar smokers who value variety. It would also overwhelm the agency with applications, assuming producers bother attempting to navigate the review process.

This raises the question of how the FDA can regulate cigars without unduly burdening manufacturers. One possibility is to simply not apply the deeming regulation to cigars. This is my preferred course of action, though it is obviously unlikely that the FDA will accept it.

A second option is that proposed by the agency to exempt premium cigars from many of the regulations that apply to cigarettes (“Option 2” in the FDA’s proposal). This requires the creation of a legal distinction between premium and non-premium cigars. The agency’s proposal suggests eight factors that would distinguish premium cigars. They would be wrapped in whole tobacco leaf, contain 100% leaf tobacco binder and primarily long filler tobacco, be made by hand, lack any filter or mouthpiece, have no characterizing flavor other than tobacco, weigh no more than six pounds per 1,000 units, and retail for no less than $10 per cigar.

This definition shares many similarities with that in proposed legislation to exempt premium cigars from FDA regulation. The most glaring difference is the retail price requirement, which would set an effective price floor of $10 for all new cigars. This would be a very large price increase for consumers; one industry analysis finds that only about 15% of premium cigars currently sell for $10 or more.

The price of a cigar obviously has nothing to do with its objective characteristics that could affect a smoker’s health. A $5 cigar is no less or no more healthy than a $25 cigar. A $10 price floor would rightly be seen as politically expedient rather than scientifically justified, a means of keeping wealthy cigar smokers happy.

Another likely consequence of instituting a $10 price floor would be to incentivize black market sales. If all new premium cigars in the United States are required to retail for at least $10, consumers will be attracted to the greater variety and lower prices of cigars sold abroad (including those from Cuba, which are already illegal in the United States). Internet sales and in-person smuggling of foreign cigars would certainly increase. These black market cigars would not be regulated by the FDA at all, undermining the goals of regulation.

Nonetheless, the agency may conclude that some price floor is necessary to separate premium cigars from the cheap that allegedly draw in youth smokers. In that case, a compromise implementing a much lower price floor would better reflect the reality of the market.

A second objection to the proposed definition is the ban on all characterizing flavors other than tobacco. It is unclear what this would entail. Some flavors in cigars arise from ageing them in various woods. Many flavors such as whiskey or rum are not the kind one thinks of as being aimed at teenagers and are marketed to adults. A blanket ban on all flavors would be overly broad. Instead, the agency should work with the industry to identify types of flavoring that are of particular concern and evaluate them on a case-by-case basis.

A third objection is to the requirement that all premium cigars be produced entirely by hand. This also is unrelated to the health impact of cigars and would advantage producers in places with low labor costs. It would likely end some cigar production in the United States, which is often assisted by machine. This, too, is an area in which the agency could consult with the industry to refine its definition of premium cigars.

Finally, I would like to suggest broader changes to the way the FDA handles substantial equivalence applications. In current practice, applicants must identify a specific predicate product and provide detailed empirical analysis showing that their proposed new product is substantially identical to it, raising no new questions of public health. This is unduly burdensome on new producers and unfairly advantages existing players, who possess information about their own products and the funding to analyze them. Even when proposed new products raise no new questions of health, applicants may not have access to information about predicate products that would allow them to reach the empirical stage of FDA review. For example, applicants are expected to provide documents such as bills of lading from more than a decade ago to prove that their selected predicate product was marketed in 2007. If the owner of the predicate product is a potential competitor, they obviously have no incentive to assist in the provision of such materials.

To make the substantial equivalence application process more equitable, the agency should establish objective guidelines for new products that would allow them to be considered substantially equivalent to products already on the market. Current applicants do not know how much variation from predicate products is acceptable and often cannot access information about predicate products in the first place. Clear guidelines established by the FDA would give smaller producers a chance at navigating the process without sacrificing public health. The current substantial equivalence pathway would also remain open to those who prefer it.

Regardless of whether the substantial equivalence pathway is streamlined, I hope that the FDA will adopt some variation of Option 2, exempting premium cigars from most of the requirements of the Tobacco Control Act. The market for premium cigars is akin to those for craft beer, wine, or coffee, defined by skilled producers and specific origins of product, and completely unlike the relatively commodified market for cigarettes. It is incompatible with the expensive and time-consuming review currently required of new tobacco products. And as the FDA itself has noted in its proposal, requiring such review would likely accomplish little for public health, given that premium cigars are consumed and marketed to adults and that their use is less likely to lead to addiction. Existing research also suggests that moderate use of cigars is much less harmful to health than use of cigarettes.

The differences in the impact on population-level public health among individual cigars would be so small as to be impossible to ascertain. Given that the FDA’s Center for Tobacco Products has limited resources, its employees’ time can be put to much better use than the review of countless substantial equivalence applications for premium cigars.

– Jacob Grier
Portland, Oregon
August 7, 2014

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