E-Cig Makers Breathe Easier After FDA Proposes Rules

(by Mike Esterl, The Wall Street Journal) – Makers of electronic cigarettes breathed a big sigh of relief Thursday as the Food and Drug Administration (FDA) avoided a heavy-handed approach to regulating the fast-growing alternative to traditional smokes, likely paving the way for stepped-up investment and even more varieties.

The agency proposed federal rules Thursday that would prohibit sales of the battery-powered devices to anyone under 18 and require manufacturers to submit their products for FDA approval, in addition to disclosing ingredients and warning consumers that nicotine is addictive. But in contrast to the heavy regulation of cigarettes, the FDA stopped short of trying to ban advertising, Internet sales or candy or fruit flavors of the popular devices, which create a vapor by heating nicotine-laced liquid.

“I’m very pleased the FDA has created a structure to treat these products differently than traditional combustible cigarettes,” said Miguel Martin, president of Logic Technology Development LLC, a leading e-cigarette maker.

The financial stakes are high as U.S. e-cigarette sales approach $2 billion and  big tobacco companies plunge into the fledgling category to compete with hundreds of upstart brands. Altria Group Inc., maker of top-selling Marlboro cigarettes, said Thursday it plans to begin rolling out its MarkTen e-cigarette nationally in June.

Most researchers believe e-cigarettes are less harmful than regular cigarettes, which release deadly toxins through combustion. Advocates also say e-cigarettes are a powerful tool to help more than 40 million Americans quit smoking, the leading preventable cause of death, according to the government.

But critics fear looser rules on e-cigarettes could addict teenagers to nicotine and create a new path to smoking. The Centers for Disease Control and Prevention said last year that the percentage of high-school students who have tried an e-cigarette climbed to 10% in 2012 from 4.7% in 2011. …

The FDA said it is continuing to study the impact of e-cigarettes, and that it could move later is continuing to study the impact of e-cigarettes, and that itto toughen restrictions if necessary. “It’s sort of like, walk before you run,” Mitch Zeller, director of the FDA’s Center for Tobacco Products, told reporters on a conference call Thursday.

There is a 75-day comment period before the regulations could become final, but implementation could take years as the FDA expands its oversight of tobacco products beyond cigarettes, roll-your-own tobacco and smokeless products, such as moist snuff.

The FDA also is proposing to regulate pipe tobacco, nicotine gels, water-pipe tobacco and cigars. In the case of cigars, FDA officials said they would await public comment before deciding to regulate all cigars or merely those that critics say are aimed at children, such as flavored products.

For now, at least, the FDA isn’t requiring that e-cigarette liquid be sold in sealed cartridges, despite a recent rise in calls to poison centers. That benefits a growing cottage industry of “vape shops” and online retailers that allow users to mix liquids, swiping sales from companies that sell sealed e-cigarettes at higher prices in convenience and grocery stores.

Lorillard Inc., whose blu e-cigarette has nearly a 50% market share at convenience stores, said Thursday that its e-cigarette sales dipped to $51 million in the first quarter from $57 million a year earlier amid mounting competition that is pushing prices lower.

Wells Fargo tobacco analyst Bonnie Herzog estimates that more than half of e-cigarette sales occur over the Internet and at specialty vape shops.

But tobacco-industry giants like Lorillard, maker of Newport cigarettes and the third-largest U.S. tobacco company, still enjoy a major advantage in being able to tap into their huge retail distribution networks.

Reynolds American Inc., maker of Camel cigarettes and the nation’s second-largest tobacco company, says it has built up roughly an 80% e-cigarette market share at retail stores in Colorado and Utah after recently launching its Vuse e-cigarette in both states. Reynolds confirmed plans Wednesday to begin a national rollout of Vuse in June.

“I think the FDA rule is a big win for Big Tobacco,”‘ said Stanton Glantz, head of the Center for Tobacco Control Research and Education at the University of California, San Francisco. He says e-cigarettes should be regulated like regular cigarettes.

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