By Thomas M. Burton and Mike Esterl
The Food and Drug Administration proposed Thursday to impose the
first federal regulations on electronic cigarettes, eventually
banning sales of the popular devices to anyone under 18 and
requiring makers to gain FDA approval for their products.
The rules fall short of those governing traditional cigarettes.
They won't, for example, ban ads or Internet sales of the products,
or the use of flavors in them, which some critics say attracts
young users.
But in a victory for consumer groups, makers will be required to
disclose the chemicals used in the devices and be banned from
distributing free samples. New health warnings will note that the
nicotine they contain can be addictive.
The battery-powered devices that turn nicotine-laced water into
vapor are a fast-growing alternative to smoking, with sales
expected to approach $2 billion this year, compared with the
overall U.S. tobacco market of about $100 billion. The gadgets have
drawn huge investor interest while sparking debate over whether
they attract new users or mostly divert cigarette buyers, and
whether they lure children into nicotine addiction.
The proposed rules are less restrictive, at least at the outset,
than many had expected.
In a research note early Thursday, Morgan Stanley tobacco
analyst David Adelman called the regulatory outline "very light,
non-disruptive and unlikely to impact" the growth trajectory of the
e-cigarette industry any time soon. But he added subsequent FDA
actions "at some distant future point" could still curb the
category.
While the initial rules appear to be good news for e-cigarette
makers and their growing number of customers, or "vapers," they are
likely to disappoint industry critics who view e-cigarettes as a
gateway to nicotine addiction and new smokers.
"The FDA's proposal does nothing to [rein] in the wild west
marketing of e-cigarettes to kids," Stanton Glantz, head of the
Center for Tobacco Control Research and Education at the University
of California, San Francisco, wrote early Thursday. Any forceful
FDA action appears "years away," he added.
The FDA published its proposed rules Thursday morning in the
Federal Register.
The new regulations will also cover pipe tobacco, nicotine gels,
water-pipe tobacco and cigars. In the case of cigars, FDA officials
said they await public comment before deciding to regulate all
cigars or merely those critics say are aimed at children, such as
flavored products.
E-cigarettes are taxed less than regular cigarettes and
typically cost less.
Under its new rules, the FDA will require manufacturers to
provide scientific evidence to substantiate any claims they make
that e-cigarettes are safer than standard ones.
The FDA plans a 75-day comment period before the regulations
become final. Some provisions, such as requiring evidence of health
benefits, will go into effect at that point. The agency then will
allow two years for all other provisions to be effective.
One of the biggest new requirements is that e-cigarette makers
will need to apply to the FDA within two years to keep existing
products on the market. The agency then will rule on applications
roughly as it does on other tobacco products.
That gives the FDA future leverage over what can be brought to
market and be allowed to stay on the market--and represents a major
unknown for e-cigarette makers who fear a slow review process could
stifle innovation. E-cigarettes first surfaced in the U.S. around
2007.
"New technology is critical for this category, much more than
for traditional cigarettes," said Miguel Martin, president of Logic
Technology Development LLC, one of the leading e-cigarette
companies.
The rules come as some studies suggest the devices help
traditional smokers kick the habit. A randomized trial of 657
people in New Zealand published last year in the medical journal
Lancet found e-cigarettes were "modestly effective" in smoking
cessation, with a 7.3% abstinence rate after six months.
"We have not seen anything like this in 100 years that could
make the combustible cigarette obsolete," said David Abrams, a
professor at Johns Hopkins School of Public Health and research
director at Legacy, an anti-tobacco group. He believes the devices
could wean people from traditional cigarettes.
Smoking remains the leading cause of preventable death, killing
480,000 Americans annually, government estimates show.
FDA Commissioner Margaret A. Hamburg said the regulations mark a
"historic day for the FDA and for public health." She said the
agency was stepping in to prevent children from smoking and
suffering "a lifetime of nicotine addiction." The new rules, she
said, "will make a real and enduring difference."
FDA officials stressed the new rules are just a first step and
that regulations over added flavors remain a strong
possibility.
But the rules fall short of what some critics have sought.
"I am concerned about e-cigarettes because manufacturers are
targeting children and using promotions with celebrities, as well
as using colors and flavors that are appealing to children," said
Sen. Richard Blumenthal (D., Conn.) E-cigarette makers say they
don't target youth in their marketing.
The Centers for Disease Control and Prevention says the
percentage of high-school students who have tried an e-cigarette
climbed to 10% in 2012 from 4.7% in 2011, with the rate also almost
doubling among middle-school children.
E-cigarette makers say they don't target youth in their
marketing and that they support prohibiting sales to minors, like
with cigarettes. Many also support manufacturing standards,
ingredient labeling and other product safeguards.
But many e-cigarette companies say it would be a mistake to ban
flavors because it could slow the migration of adult smokers to
e-cigarettes. Many also oppose blanket advertising
restrictions--including NJOY Inc., which plans to spend tens of
millions dollars this year advertising its products on TV and
elsewhere.
"We don't think it's in the public interest to prevent an
e-cigarette company from responsibly communicating to adult smokers
that there's an alternative," said Craig Weiss, NJOY's chief
executive, adding NJOY could try to halt the FDA in court if the
agency tries to ban TV ads.
Most researchers believe e-cigarettes are less harmful than
regular ones, which release carbon monoxide and thousands of
chemicals, including known carcinogens, through combustion.
The financial stakes are huge. Tobacco companies are plunging
into e-cigarettes to try to offset sliding sales, rising taxes and
widening bans on traditional smokes.
Altria Group Inc., which has roughly half of the U.S. tobacco
market, began testing its MarkTen e-cigarette brand last year and
earlier this year signed a deal to acquire e-cigarette upstart
Green Smoke Inc. for $110 million.
Reynolds American Inc., maker of Camel cigarettes and the No. 2
tobacco player, plans to roll out its Vuse e-cigarette nationally
by midyear.
Both are racing to catch up to Lorillard Inc., the maker of
Newport cigarettes and the third-largest U.S. tobacco company. It
has a nearly 50% e-cigarette market share in convenience stores
after acquiring Blu in 2012 for $135 million.
They're competing with dozens of other brands such as NJOY,
Logic, Fin, Mistic and 21st Century increasingly available in
stores. Hundreds of brands are available over the Internet, where
more than a quarter of e-cigarette sales occur, according to some
estimates.
Many states and cities aren't waiting around when it comes to
regulating e-cigarettes. More than two dozen states have already
passed legislation to restrict e-cigarette sales to minors. The
three largest U.S. cities--New York, Los Angeles and Chicago--moved
to include e-cigarettes in public smoking bans since December.
Minnesota already levies a special tax on e-cigarettes and other
states are considering a similar move.
FDA officials said the new rule generally won't pre-empt such
legislation.
Write to Thomas M. Burton at tom.burton@wsj.com and Mike Esterl
at mike.esterl@wsj.com
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