Altria's Companies Prepare for Deeming Rule Compliance
RICHMOND, Va. — Nearly three months since the Food and Drug Administration (FDA) released its final deeming rule, Altria Group Inc. is joining other tobacco companies in figuring out how to navigate the new regulatory normal.
In early May, FDA published its final deeming rule, extending its regulatory authority to all tobacco products, including cigars and electronic cigarettes. The new provisions under the rule will mostly affect two of Altria's operating companies, Nu Mark LLC (e-vapor) and John Middleton Co. (cigars).
"We believe we are well-prepared for these regulations, and Nu Mark and John Middleton are working now to comply with them," Marty Barrington, chairman, president and CEO of Altria Group, reported during the company's second-quarter earnings call Wednesday morning.
At the same time, though, Altria and its operating companies also continue to engage with the FDA and other stakeholders to advocate for changes to the regulations, where appropriate.
"We think innovation in this category is very important. We are working very hard on our innovation system and innovative products for the adult tobacco consumer, and we believe it would be good public policy for the FDA to encourage that," Barrington said.
According to the chief executive, Altria's comments to the FDA about the final deeming rule and its provisions have pointed out that "some of what is in the deeming regulations does not seem particularly friendly to that concept."
"We are both complying with the regulations and we are trying to influence and advocate where we think [they] can be improved," he explained.
One provision of the deeming rule that Altria is questioning is the Feb. 15, 2007 grandfather date, also known as the predicate date.
"We have argued to the FDA and advocated to the FDA, as did many others, that it made little sense to go back and use a cigarette predicate date of 2007 for products that basically came into the market after 2007," Barrington stated. Using that predicate date does not seem to encourage innovation, he continued.
A "Mild" Resolution
One of Altria's immediate issues with the deeming rule was the provision prohibiting use of the term "mild" in tobacco products. Altria filed a lawsuit challenging this provision because John Middleton Co.'s product lineup includes the Black & Mild cigar brand.
Richmond-based Altria argued that the FDA's rule violates the First Amendment that protects trademarks and brand names, in addition to the Fifth Amendment that prohibits taking private property for public use without compensation, as CSNews Online previously reported.
However, Barrington revealed during Wednesday's earnings call that Altria and the FDA have resolved the matter.
"FDA has informed us that they do not, at this time, intend to enforce that [provision] against Black & Mild. In consideration of that, we have withdrawn our lawsuit," he said. "The parties have reserved their rights, but we will continue to use Black & Mild unless something changes."
Despite the deeming rule's hurdles, Altria continues to make moves to bring Philip Morris International's (PMI) iQos heat-not-burn product to the United States.
"On the heated tobacco platform, our work with [PMI] in its FDA applications for pre-market approval authorization and a modified risk tobacco product designation remains on plan," Barrington said. "We are making excellent progress on commercialization plans for the U.S. market."
While not providing further details, Barrington did remark that an investment in innovative tobacco products — particularly those with the potential to reduce harm — are "high" on Altria's list for investment.
Richmond-based Altria Group is the parent company for Philip Morris USA, John Middleton, U.S. Smokeless Tobacco Co., Nu Mark and Ste. Michele Wine Estates. Altria also holds a continuing economic and voting interest in SABMiller. The brand portfolios of Altria's tobacco operating companies include Marlboro, Black & Mild, Copenhagen, Skoal, MarkTen and Green Smoke.