How the FDA Is Keeping New Cigarettes Off the Market

In essentially ignoring thousands of applications to create new cigarette brands, the U.S. Food and Drug Administration is interfering with market competition, not promoting public health.

David Sley wants to sell cigarettes. This, by his own admission, does not make him the most sympathetic person to feature in an article about excessive government regulation. Yet Sley, an aspiring entrepreneur who has spent more than two years trying to navigate the Food and Drug Administration's new tobacco regulations, has legitimate cause to complain. The entire cigarette industry has been brought to a standstill by the FDA, forbidden from introducing any new products since March 2011. Tobacco companies contend that the agency's actions rest on uncertain scientific and legal grounds -- and, for once, they may be right.

The Tobacco Control Act of 2009 granted the FDA unprecedented authority to regulate cigarettes. Among its new powers is pre-market review: New cigarettes cannot be introduced without an order from the agency. The law provides two routes to approval. One route is for completely new tobacco products and requires a highly detailed review. The other is for products that are "substantially equivalent" to those already on the market.

The latter option has become a source of contention between applicants and the FDA. As first reported by Michael Felberbaum of the Associated Press, since 2009 the agency has received about 3,500 substantial equivalence reports. Approximately 115 employees work on reviewing them. And to date they have issued exactly zero rulings.

Products introduced before March of 2011 have been allowed to enter the market provisionally, although the agency may order their removal at any time. The approximately 500 products submitted for review since then, however, are hostage to an approval process that progresses glacially, presents vague standards, and makes no promise of reaching a conclusion.

Hence David Sley's complaint. Sley, 28, works in the financial sector in Chicago. A few years ago he saw an opportunity to compete with Natural American Spirit cigarettes, a formerly independent brand now owned by Reynolds American. Sley created his own brand named Hestia Tobacco, lined up investors, and made arrangements with a manufacturer to produce the cigarettes. What he didn't count on was the slog of getting his product through the FDA's approval process.

Sley's first contact with the agency came in November 2010 with an email seeking advice on what a small business must do to get market approval. This was the beginning of more than two years of communication, during which the agency was often slow to provide needed information, or never provided it at all. His frustration has driven him to reveal the entirety of this correspondence, presenting the first inside look inside look at how the FDA handles applications for new cigarettes.

Simply getting approval for the Hestia Tobacco brand name required multiple inquiries over an entire year. Sley first asked about the acceptability of Hestia, an allusion to the Greek goddess of the hearth, in October 2011. Seven more inquiries with three different FDA employees followed before he finally received word in October 2012 that the agency would allow it.

Also in October 2011, Sley asked whether his plan to age tobacco in cedar, a common practice in the cigar industry, would violate the Tobacco Control Act's ban on characterizing flavors. David Ashley, director of the Office of Science at the FDA's Center for Tobacco Products, replied by merely quoting the statute without clarification. Despite multiple follow-ups, Sley still has not received an answer. In an interview in February, Ashley said that he had not thought about the question. A spokesperson for the FDA has declined any further comment on the issue.

Then there is the substantial equivalence report, which Sley submitted in June of 2012. A new product is considered substantially equivalent to an existing product if it has the same characteristics, "characteristics" legally defined as "materials, ingredients, design, composition, heating source, or other features." The law also allows for a finding of substantial equivalence when a product differs in characteristics but raises no new questions of public health.

Hestia Tobacco's report details in minute specification the components of its cigarettes along with those of Natural American Spirit. One page lists the main ingredients, of which there are only two: flue-cured tobacco and water. Additional pages examine the filter and paper, everything down to the decorative ink. A final page looks at construction: Both cigarettes measure 84 millimeters in length and 24.5 millimeters in circumference. They are nearly identical in weight. They are, one might conclude, substantially equivalent.

This was insufficient for the FDA. Nearly four months later the agency responded with a letter demanding eight more categories of information, including "a comparison of your new tobacco product and predicate tobacco product with respect to heating source" -- in other words, how are the cigarettes lit? Other demands include an environmental impact assessment and a list of harmful and potentially harmful constituents for each cigarette.

Lisi Niesner/Reuters

This last request goes beyond the explicit requirements of the law and entails expensive lab testing. It's an especially burdensome requirement for a start-up -- and a risky one, too, since no one knows what variations the agency may allow.

Though unable to meet all of the FDA's demands, Sley responded as best he was able and beseeched the agency to rule on his case by December 2012. "We want a license to fail," he wrote to one of the regulators reviewing his application. "The freedom to see if consumers want this product. We're just asking for the ability to market our product, and see if it sells. Currently, we remain unable to do so."

The Tobacco Control Act requires that the FDA rule on new product applications "as promptly as possible, and in no event later than 180 days after an application is received." That's for completely new products; whether this deadline applies to products applying via the substantial equivalence pathway is a matter of dispute. The law suggests that companies submit these reports ninety days prior to launch, implying that this type of review is less time-consuming. However the FDA contends that the statutory deadline does not apply at all to substantial equivalence reports. Under its interpretation, these applications can be held in perpetual limbo.

Bryan Haynes, a partner in the Tobacco Team at the law firm Troutman Sanders, explains why tobacco companies believe this violates the obvious intent of the law. "Why would you have a 180-day review for a presumably more complex process, and not for a presumably streamlined process?" It's a question the cigarette maker Lorillard has posed in a public petition to the FDA, requesting that the agency return to the practice of provisionally allowing new products onto the market until it can expedite its reviews. Haynes suggests the issue may be decided in court.

The FDA defends the lengthy review process, citing its mandate to study the potential impact of new or modified products on the population as a whole. According to David Ashley, the agency examines the health effects of a new product in three primary measures: "Does it impact initiation? Does it impact cessation? And does it cause more or less harm to the user?" Ashley says that minor differences in composition or design could make cigarettes significantly more dangerous or addictive.

This view is not always shared within tobacco control. Michael Siegel, a professor at the Boston University School of Public Health and a career anti-smoking researcher, notes that this obsession with minor differences represents a curious role reversal, with cigarette companies now reminding regulators that "indeed all cigarettes are hazardous and there is no such thing as a safer cigarette."

"My opinion is that most, if not all of the substantial equivalence applications involve minor changes that have no substantial bearing on altering the public health significance or impact of the products," says Siegel. "Cigarettes are, by their nature, so hazardous that these minor changes do not raise significant questions of public health and they do not merit such protracted scrutiny. But it is important to recognize that the FDA is creating harm not merely by wasting time and resources, but by framing the issue of cigarette toxicity in the opposite way that we in tobacco control have been trying to frame it for decades."

Similar doubts about the FDA's suitability as a regulator of tobacco were raised during debate over the Tobacco Control Act by none other than the agency's commissioner at the time, Andrew C. von Eschenbach. "Associating the Agency with the approval of these inherently dangerous products would undermine the Agency's mission," he wrote in his 2007 statement to Congress. Eschenbach also predicted that the law would not allow enough time for the agency to develop science-based rules and would "unduly and unfairly raise the public's expectations about what the Agency could accomplish." Eschenbach's testimony now appears prescient.

If the FDA's previous opposition to taking on tobacco is surprising, even more unexpected is who supported the law. Forming an unlikely coalition, tobacco giant Philip Morris joined the Campaign for Tobacco Free Kids to negotiate a bill that would win the support of both sides. Smaller competitors objected that the law would freeze existing market share, giving Philip Morris and its Marlboro brand an unfair advantage. Three years into FDA regulation, Philip Morris claims nearly fifty percent of American cigarette sales.

That market share won't be under threat from Hestia Tobacco. In Sley's most recent phone conversation with FDA officials, he says they informed him that a decision on his case could take years.

Fortunately for Sley, there remains one route to market that doesn't require fighting through the FDA's bureaucracy. In the near future Hestia Tobacco will launch as a filtered cigar rather than a cigarette, the cedar-aged tobacco wrapped in paper made from at least two-thirds tobacco leaf. This, along with meeting a minimum weight requirement, will allow the brand to meet the statutory definition of cigars, which are regulated by the Tax and Trade Bureau. Sley says that dealing with the TTB has been a comparative pleasure. "I made a list of a dozen questions I needed answered, was put on hold for twenty minutes or so, and then a helpful agent answered all but one question, stating that she needed to confirm her answer with her supervisor. Her supervisor then called me the following morning."

It's a narrow escape for Hestia Tobacco. The FDA has indicated that it will deem cigars to be tobacco products falling under its purview later this year, a prospect of considerable concern to makers of premium cigars. If the agency's record on cigarettes is any indication of its future performance, they are right to be alarmed. Interminable delays introducing new products would be devastating to an industry in which hundreds of new blends are introduced each year. The agency's inability to comment on the legality of cedar ageing presents new cause for worry.

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Unlike cigarettes, cigars have artisanal cachet that may yet work in their favor. The market for high-end cigars is akin to that of craft beer, wine, or coffee, driven by expert blenders, origin of product, and skilled production. It's a model that is incompatible with expensive, time-consuming prior review for each new release or change in blend. A bill introduced into the House of Representatives would exempt traditional large cigars from FDA regulation.

This month the Center for Tobacco Products will come under the leadership of new appointee Mitch Zeller. Zeller departs his post with Pinney Associates, a pharmaceutical consulting firm that works with GlaxoSmithKline, a top producer of nicotine replacement products. Given that the agency regulates modified risk tobacco products and may soon take on e-cigarettes, this apparent conflict of interest has raised new concerns that FDA regulation will continue to have anti-competitive effects.

In an interview, David Ashley says that the FDA is working to expedite its review process. That would be a welcome development. In the meantime, given the agency's failure to rule on a single one of the 3,500 applications it has received so far, the case is weak for expanding its authority to even more dynamic sectors of the market.