Posted on 24th, August , 2013
See Corrections & Amplifications item below.
The Food and Drug Administration has been in discussions with the e-cigarette industry about a possible online-sales ban of the product, as it prepares a package of proposed regulations for the increasingly popular devices, people familiar with the matter said.
The FDA, which warned in 2009 that e-cigarettes could pose health risks, has been meeting with e-cigarette makers in recent weeks to hear their views on regulations for the industry. The agency is expected to formally unveil its proposals in October, after several delays.
The “listening sessions” at FDA headquarters in Silver Spring, Md., north of Washington, are part of a series of meetings, including conference calls, that have been organized at the industry’s request. At least 20 FDA staffers have attended the gatherings at the FDA headquarters, the people familiar with the matter said, as the agency prepares its proposals for public comment.
The Journal Gazette/Associated PressIndustry watchers expect sales of e-cigarettes, like the one shown at right, to soar as smokers switch from tobacco to nicotine-vaporizing technology.
As part of that effort, company executives have discussed with the FDA an online-sales ban to keep e-cigarettes out of the hands of minors and whether the minimum legal age for buying them should be 18 or 19, the people said. They said the agency is also reviewing television, radio and print advertising standards for the products. Overseeing the project is Mitch Zeller, who became director of the FDA’s Center for Tobacco Products in March.
Mr. Zeller said in an interview Thursday that he was working toward publishing proposed regulations in October. “It is true that more research is needed on the health effects of e-cigarettes. However, we do not need more research on whether e-cigarettes should or should not be included in proposed FDA regulations,” he said.
Mr. Zeller said the FDA didn’t release any nonpublic information in the listening sessions and didn’t weigh in “on potential regulatory options—including any potential restrictions on e-cigarettes or any other particular product category.” He said that any proposed rules will be issued to all interested parties at the same time.
Analysts estimate e-cigarette sales in the U.S. will reach $1 billion this year. Bonnie Herzog, with Wells Fargo Securities, predicts sales could hit $10 billion in five years as smokers switch from tobacco to battery-operated nicotine-vaporizing technology.
An estimated 45 million Americans smoke. In 2011 they bought a total of 293 billion cigarettes, according to the U.S. Centers for Disease Control and Prevention.
E-cigarettes pose a competitive threat to traditional tobacco companies—so much so that some of those companies are buying into the industry. In April 2012, Lorillard Inc.,LO +2.19% the third-largest tobacco manufacturer in the U.S., paid $135 million for Blu Ecigs, based in Charlotte, N.C. In June, Silicon Valley entrepreneur Sean Parkerwas part of a $75 million investment in NJOY, a leading brand based in Scottsdale, Ariz.
The investments carry plenty of regulatory risk. New York’s city council is considering three bills backed by the city’s Health Department that would ban flavored tobacco. The ban would cover many e-cigarettes. The bills also would raise the city’s legal age for buying tobacco and e-cigarettes to 21 from 18.
Elliot Maisel, chairman, chief executive and major shareholder of e-cigarette maker Fin Branding Group, said he isn’t afraid of regulation. The Atlanta-based company started up in 2011 and released its popular Fin brand in 2012.
“If they shut me down tomorrow, would I lose money? Yes. But, do I think that’s going to happen? No, because of the demand for these products,” Mr. Maisel said.
Fin Branding, whose products are sold in more than 40,000 outlets nationwide, expects sales to hit $60 million this year.
Corrections & Amplifications
This article has been changed from its original version to reflect that the Food and Drug Administration did not initiate the idea of a proposed ban on online sales of e-cigarettes. It also clarifies that the FDA did not make nonpublic information available in its discussions with e-cigarette makers.
A version of this article appeared August 22, 2013, on page B4 in the U.S. edition of The Wall Street Journal, with the headline: FDA Discusses Online E-Cig Sales Ban.