By Ben Goad and Julian Hattem - 10/15/13 11:57 PM EDT
Leading U.S. cigarette manufacturers are making significant investments, both domestically and abroad, even as the Food and Drug Administration prepares new rules bringing the battery-powered nicotine delivery devices under federal supervision.
No company has been more aggressive than Newport maker Lorillard Inc., which has poured more than $180 million into the acquisition of e-cigarette makers in North Carolina and the United Kingdom.
“We firmly believe that e-cigarettes may present the most significant harm reduction option ever made available to smokers in the U.S. and abroad, and we look forward to working with regulators around the world to confirm this conclusion,” Lorillard president Murray Kessler said.
Days after Kessler’s remarks, the European Parliament rejected a proposal to subject e-cigarettes to the same regulatory standards as medicines. That was seen as a major win for the e-cigarette industry, which is expected to eclipse $1.75 billion in global sales this year.
Suggestions that e-cigarettes are a healthier alternative to conventional cigarettes — because they produce nicotine vapor instead of smoke and tar — roil public health advocates and some lawmakers, who are calling for strict U.S. regulation of the devices.
They warn e-cigarettes could lead to more youths taking up smoking, and say the products could serve as a gateway to conventional cigarettes. They point to research issued this fall by the Centers for Disease Control and Prevention that found an estimated 1.78 million middle and high schools students have used e-cigarettes.
The CDC report found that roughly 76 percent of the students who were using e-cigarettes said they also smoked conventional cigarettes.
Critics say unregulated e-cigarette firms are marketing their wares to youths. They point to cotton candy and pancake-flavored brands as evidence that the industry is glamorizing the products.
Blu-eCigs, a Charlotte-based firm acquired by Lorillard last year for $135 million, is running ads featuring television personality Jenny McCarthy and the tagline, “freedom to have a cigarette without the guilt.”
“They’re using the same tactics and the same playbook that Big Tobacco did for decades,” said Erika Sward, vice president of national advocacy for the American Lung Association.
While the firms are forbidden from marketing e-cigarettes as healthier than regular cigarettes, the “implied, indirect health claims are incredibly troubling,” Sward said.
The FDA has set an Oct. 31 deadline to issue a proposed rule that would expand its oversight to e-cigarettes under the authority of the 2009 Tobacco Control Act. The law gave the FDA authority over cigarettes, smokeless tobacco and roll-your-own tobacco, but also contained language allowing the agency to expand its oversight to additional products.
Some major players in the cigarette industry are embracing FDA regulation of e-cigarettes. Among the supporters is Altria, the parent company to Phillip Morris USA and the largest American tobacco company.
The company is also parent to Nu Mark LLC, which has launched its own e-cigarette brand, MarkTen.
In a letter sent last week to FDA commissioner Margaret Hamburg, Altria’s senior vice president for regulatory affairs expressed support for regulation. However, Altria said it opposes subjecting e-cigarettes to the same regulations as conventional cigarettes.
“Importantly, we believe FDA should adopt a regulatory framework, grounded in science and evidence, that recognizes the differences in tobacco products and fosters innovation in tobacco products that may have the potential to benefit public health,” James E. Dillard III wrote to Hamburg.
As the FDA develops its proposal, several states are weighing whether to regulate e-cigarettes — in some cases as heavily as ordinary cigarettes.
A federal standard would help bring clarity, Altria spokesman David Sylvia said.
“Businesses like predictability, as best as we can get it,” he said.
Reynolds American Inc., the second-largest tobacco company, has also launched its own brand, VUSE Digital Vapor Cigarette, through its subsidiary, R.J. Reynolds Vapor Company.
“R.J. Reynolds Vapor Company’s affiliates currently compete in a highly-regulated environment and we have no reason to believe that it cannot do the same,” R.J. Reynolds Vapor Company spokesman Richard J. Smith said.
That the three top cigarette makers in the U.S. are pushing forward shows they expect the industry to remain profitable, even after the FDA imposes regulations.
The electronic category of cigarette brands has been doubling annually, a rate of growth that the industry shows increasing demand.
“We recognize consumers are interested in this category,” Sylvia said.
Both industry representatives and critics said they didn’t expect the European Union decision to have any bearing on the FDA’s proposal.
And it remained unclear whether the government shutdown would affect the FDA’s timetable. While nearly half the agency has been furloughed, FDA programs funded by user fees, including programs at the Center for Tobacco Products, have continued uninterrupted.
However, the White House Office of Information and Regulatory Affairs, which reviews many agency reviews, has been shuttered by the budget impasse, potentially creating more delays.
The FDA’s e-cigarette rule has been in the works for more than two years. Once proposed, it would still be subject to a public review period before it could be finalized.
Critics of e-cigarettes say bringing the products under FDA authority could pave the way for stronger protections down the road.
“We’ve been waiting for this for two and a half years,” Sward said. “We need FDA to assert that jurisdiction and move forward with their work.“