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UPDATE: US FDA restricts sale of cartridge-based flavored e-cigarettes

The U.S. Food and Drug Administration on Jan. 2 issued a new policy banning unauthorized flavored e-cigarette products except for those flavored to taste like tobacco or menthol.

Under the policy, companies that do not stop manufacturing, distributing and selling unauthorized flavored cartridge-based e-cigarettes risk FDA enforcement actions. Unauthorized flavored open-tank vaping devices that do not use cartridges or pods are not being targeted by the new enforcement policy.

"The kids simply are not using at any material level the open tank vaping systems," Secretary of Health and Human Services Alex Azar said on a Jan. 2 call with reporters.

The FDA is expected to begin enforcing the new policy in February or 30 days after the new rule publishes in the Federal Register.

The crackdown on most flavors comes months after the Trump Administration in September said it planned to clear the market of all unauthorized flavored e-cigarette products except those made to taste like tobacco. The September announcement was met with push back from e-cigarette companies big and small that felt such a policy was unfair to the fast-growing e-cigarette industry. Meanwhile, lawmakers and parents have ramped up scrutiny of the tobacco and vaping industry.

"I said throughout, after we made the initial announcement on Sept. 11, that our final conclusions here would be dictated by the science and the evidence, and that we follow that wherever it took us," Azar said.

Azar said surveys show a rising number of young people who use e-cigarettes prefer cartridge-based products flavored like mint and mango, rather than products flavored like tobacco and menthol. Azar said public health officials are trying to balance concerns about youth vaping with making sure products remain available to adults using them to quit smoking, which causes more than 480,000 deaths in the U.S. each year, according to the Centers for Disease Control and Prevention.

Currently, all e-cigarette and vaping products are on the market illegally but have been allowed by the FDA to remain on the market through what the agency calls enforcement discretion, Mitch Zeller, FDA director of the Center for Tobacco Products, said on the call with reporters. After May 12, the FDA plans to prioritize enforcement against e-cigarette and vaping products that have not been submitted for a premarket application with the FDA.

The new guidance benefits big tobacco and JUUL Labs Inc., according to Jefferies analyst Owen Bennett.

"While immediate actions may provide a near-term share boost for Juul as it has already removed flavours, the financial impact on big tobacco is likely to be minimal, while also supporting their vapour share trends in the longer term," Bennett said in a Jan. 2 note. "Furthermore, we think big tobacco is in a good position to get certain flavours back on the market quickly via a PMTA while Juul may struggle due to teenage usage."

Reynolds American Inc. spokesperson Kaelan Hollon said in an email the British American Tobacco PLC subsidiary will continue to work with the FDA throughout the implementation of the new regulatory framework.

"Reynolds American welcomes the U.S. FDA’s acknowledgment that a properly regulated vapor category continues to provide a credible alternative to smoking," Hollon said.

The American Cancer Society and American Cancer Society Cancer Action Network CEO Gary Reedy said in a press release the FDA's new approach was a "hollowed-out policy that will allow the tobacco industry to continue to attract kids to a lifetime of nicotine addiction."