The FDA’s ability to require premium cigar companies to seek product approval for its cigars has been delayed indefinitely by a federal court.
Judge Amit P. Mehta of the U.S. District Court for the District of Columbia has ruled in the cigar industry’s favor in an ongoing lawsuit against the U.S. Food & Drug Administration. He has granted the cigar industry’s request for relief and delayed FDA’s ability to enforce its premarket approval process for premium cigars until after the agency completes a thorough review and considers a “streamlined” process specifically for premium cigars.
As such, premium cigar companies will not have to file for product approval on the Sept. 9, 2020 deadline.
The ruling will apply to almost all cigars found in humidors across the country with the notable exception of flavored and infused cigars, which are not considered premium by FDA.
Companies will not need to file paperwork with the agency to prove that their products are premium, rather, any company selling a cigar that does not meet the definition of “premium cigar” will be subject to the Sept. 9 premarket approval deadline and will need to file for substantial equivalence or another approval pathway.
Mehta’s ruling does not require FDA to enact a “streamlined substantial equivalence” process for premium cigars, only that the agency must study the issue and cannot require premium cigars to go through substantial equivalence or another process until after that study is complete. Given the nature of FDA, it is likely—though not guaranteed—that this process will take multiple years.
HOW WE GOT HERE
This is the latest development in the Washington, D.C.-based lawsuit filed by three cigar trade groups—Cigar Association of America, Cigar Rights of America and the Premium Cigar Association—against FDA, known as, Cigar Association of America et al. v. United States Food and Drug Administration et al.
Judge Mehta has overseen the case which has dealt with a wide range of issues regarding the 2016 deeming regulations, the first set of FDA regulations for cigars, pipe tobacco, hookah tobacco, e-cigarettes/vaping products and other tobacco products. Cigarettes and smokeless tobacco were already regulated.
One of the largest burdens of the regulations was the requirement for product approval in order for cigars to be sold. As part of the deeming regulations, products were categorized in one of three ways depending on when they were first marketed in the United States.
- Grandfathered — Any product marketed prior to Feb. 15, 2007 is considered “grandfathered” and as such approved so long as manufacturers submit basic paperwork to FDA. These products are still regulated, but FDA’s ability to remove them from the market is substantially reduced.
- Current Products — Any product introduced after Feb. 15, 2007 but before Aug. 8, 2016 (when the regulations went into effect) needs to go through the product approval process. For cigars, FDA has indicated that the process is likely to be substantial equivalence, a regulatory scheme used by FDA for a variety of other products like medical devices. These products could stay on the market while FDA reviews their applications—though potentially for only one year from the time of product approval submission—or until FDA rejects an application.
- New Products — Any product marketed after Aug. 8, 2016 is considered new and would not be able to be marketed until after FDA gave the manufacturer approval for that specific product.
Due to the complex nature of the regulations, FDA’s ability to regulate products introduced after Aug. 8, 2016 has been rather limited. The agency has also indicated that premium cigars are its “lowest priority” when it comes to regulation.
To date, there has been no evidence that FDA has ordered a premium cigar company to remove a product from the market.
WHAT IS SUBSTANTIAL EQUIVALENCE?
Substantial equivalence is expected to be the main approval process for cigars once FDA’s regulations are fully in effect. In short, a manufacturer would argue that its product is substantially equivalent to an already approved or grandfathered product, and as such poses no additional health risks and does not market towards children.
Cigar manufacturers were to be required to either file for substantial equivalence or grandfather status by the deadline—Sept. 9, 2020—in order for their cigars to stay on the market. If they failed to do so, that product must be removed from sale in the U.S. and will not be able to be sold until FDA approves the report.
WHAT ABOUT TESTING?
Today’s decision did not directly deal with whether or how premium cigars will need to be tested. In March 2019, FDA announced that it was indefinitely delaying HPHC testing for cigars until after the agency introduced new rules. It has not done so.
WHAT IS A PREMIUM CIGAR?
Mehta ultimately agreed to go forward with FDA’s definition of “premium cigar” as outlined earlier this month.
It defines “premium cigars” as those that meet all of the following criteria:
- is wrapped in whole tobacco leaf;
- contains a 100 percent leaf tobacco binder;
- contains at least 50 percent (of the filler by weight) long filler tobacco (i.e., whole tobacco leaves that run the length of the cigar);
- is handmade or hand rolled (i.e., no machinery was used apart from simple tools, such as scissors to cut the tobacco prior to rolling);
- has no filter, nontobacco tip, or nontobacco mouthpiece;
- does not have a characterizing flavor other than tobacco;
- contains only tobacco, water, and vegetable gum with no other ingredients or additives;
- and weighs more than 6 pounds per 1,000 units.
TREATING PREMIUM CIGARS DIFFERENTLY
Today’s ruling—at least the parts that affect regulations going forward—deal mostly with the question of whether the agency had studied whether it should treat premium cigars differently.
This is an issue that has been part of the deeming regulations since their inception.
In 2014, FDA announced the then proposed deeming regulations and asked for comments as to whether it should regulate premium cigars the same as the other tobacco products, or exempt them.
Ultimately, it chose to regulate them the same.
In July 2017—less than a year after the regulations went into effect—the agency announced that it would be updating the process for substantial equivalence, which would include cigars. This process has still not been finalized.
A month later, FDA announced that it would delay the premarket approval process—at that point the deadline was August 2018—until August 2021 as it developed a better process and gave companies more time to prepare the reports. It then lost a court case in a different federal court, which moved up the deadline to May 2020, which was then delayed to Sept. 9 due to the coronavirus COVID-19 pandemic.
In 2018, FDA announced a formal process to solicit feedback as to whether it should regulate premium cigars differently. It also did the same for flavored tobacco.
THE LEGAL BATTLE
Earlier this month, FDA told a different court that it was considering a plan to suspend the product approval requirements for premium cigars until after it reviewed whether it should create a different process for premium cigars.
It outlined a process where premium cigar companies would apply for deferment on a case-by-case basis—likely a cigar-by-cigar basis—which would exempt the companies from the substantial equivalence process until after it further studied the issue. The agency said it wanted to study the issue regarding premium cigars and the regulation of premium cigars further, specifically seeking new evidence about premium cigars.
This development came as the premium cigar industry continued to lobby the Trump Administration for broader relief, i.e. a full exemption from FDA regulation; as the Sept. 9 deadline approached; and as Judge Mehta was close to ruling on whether the agency acted properly when developing the regulations, specifically whether it had enough evidence to support premium cigars going through the planned product approval process.
By all accounts, FDA’s plans to delay enforcement for premium cigars came out of the blue. Many people close to the premium cigar industry found it to be a highly strategic move designed to avoid Mehta or the Trump Administration from throwing out the regulations, or the product approval requirements, in its entirety.
It’s unclear whether or not the end result would have been any different.
Over the years, Mehta has chastized FDA for its inability to provide clear regulations for the premium cigars and to whether the agency has the science-based evidence to back up those decisions.
The specifics of the relief in today’s order center around whether FDA properly considered the comments made in regards to whether FDA should create a more streamlined process for product approval for premium cigars.
Mehta concludes FDA did not. In his ruling, he specifically mentioned one “cursory” reply:
At least one comment stated that FDA should eliminate the premarket and [substantial equivalence] application requirements for cigars and instead implement a system by which cigar manufacturers could introduce new products to the market after providing 90 days’ notice to FDA of their intentions to do so.
(Response) FDA disagrees. Sections [387e] and [387j] of the [TCA] establish specific requirements that apply to new tobacco products before they may be marketed.
Mehta’s issues are as follows:
Though commenters did propose eliminating premarket review altogether, they also proposed options in which premium cigars would still be subject to the substantial review requirements, albeit in a streamlined form. E.g., Cmt. of Cigar Ass’n of Am., JA Vol. III at AR129920 (“[I]f the agency will not exempt cigars from the premarket review requirement, [the commenter] proposes that the agency consider an alternative premarket approach under [the substantial equivalence provisions]” of the TCA.). Two, the FDA incorrectly implies that it has no authority to adjust the substantial equivalence requirements for premium cigars. While it may be true that the agency could not issue a rule converting a substantial equivalence application into a substantial equivalence “order” after 60 or 90 days of inaction, see 21 U.S.C. § 387j(a)(2)(A)(i), the agency has broad discretion to “prescribe” the “form and manner” that the substantial equivalence reports must take, see id. § 387e(j)(1). Commenters outlined various factors that “the substantial equivalence report [for premium cigars] should be limited to,” e.g., Cmt. of Cigar Ass’n of Am., JA Vol. III at AR129920, and the FDA’s refusal to meaningfully consider these options based on its incorrect and conclusory assertion that its hands were tied was arbitrary.
He disagreed with the agency’s assertion that FDA wasn’t obligated to reply to comments regarding a streamlined process; he disagreed with the agency’s assertion that a streamlined process was outside the scope of the question of whether it should regulate premium cigars differently; and he also disagreed with the Department of Justice’s argument that because the agency was proposing to delay the process for premium cigars that the legal arguments were no longer relevant.
Mehta’s ruling is as follows:
The court therefore remands the Final Deeming Rule to the FDA to consider developing a streamlined substantial equivalence process for premium cigars. The court further enjoins the FDA from enforcing the premarket review requirements against premium cigars, as those products are defined in the August 2020 Notice, until the agency has completed its review.
In plain English, the agency must actually consider a streamlined process for premium cigars before it begins to require premium cigar companies to submit for approval.
It does not require the agency to actually enact a new process, only that it must study the issue, which likely entails a years’ long formal process where the FDA will ask the public, industry and other concerned parties to comment and provide evidence on what it should do. The agency will then have to respond to those comments and determine whether it believes it has the evidence to support the original system of substantial equivalence or come up with a new system.
Mehta did not rule entirely in the cigar industry’s favor.
Specifically, he rejected claims:
- To modify the grandfather date of Feb. 15, 2007 — This is an ongoing issue that has been a complaint since 2014. Ultimately, Mehta concludes that this issue is one for Congress, which created the Feb. 15, 2007 date, writing, “while the court is sympathetic to Plaintiffs’ policy concerns that the 2007 grandfather date is illogical and burdensome for their recently deemed products, the proper place to raise that issue is before Congress.”
- To modify the Aug. 8, 2016 effective date — This is a rather complex legal debate that is complicated by the fact there have been multiple cases specifically dealing with the case.
- To throw out the premarket approval process entirely.
- That FDA’s cost-benefit analysis was not done properly.
- To modify FDA’s proposed definition of what a “premium cigar” is.
It’s unclear whether FDA would appeal this ruling as an appeal would likely need to be based on the legal standards and not the actual effects, which are more or less what FDA said it was going to do in its early August announcement.
An appeal is almost certainly coming from companies that make cigars that fall outside of the definition of “premium cigar,” specifically, companies that make smaller machine-made cigars.
Earlier this year, Mehta ruled that FDA’s requirements for warning labels for “premium cigars” and pipe tobacco were illegal. At that time, the definition for “premium cigars” had not been established, but companies that were unlikely to be included in the definition appealed anyways.
Five months later, the U.S. Court of Appeals for the District of Columbia Circuit overturned Mehta’s decision and ruled that the warning labels for all cigars, not just “premium cigars,” were illegal.
Given the much higher stakes and recent success, it seems almost certain that those companies will at least attempt an appeal. The Cigar Association of America, whose members include a variety of machine-made cigar manufacturers, has previously opposed a similar definition of “premium cigars.”
WHAT’S LEFT OF THE REGULATIONS?
Various courts have either thrown out or delayed most of the large parts of the deeming regulations, specifically:
- FDA’s ability to restrict companies from making major changes to the packaging of its products.
- FDA’s ability to require warning labels for cigars and pipe tobacco products and advertising.
- Indefinitely delayed product approval for “premium cigars.”
FDA is still regulating premium cigars, though in less burdensome ways.
Specifically, cigar companies are still required to pay user fees—roughly 5 cents per cigar—and cigar retailers are still subject to compliance checks to ensure that they are not selling tobacco products to underage individuals.