U.S. regulators ban e-cigarette, cigar sales to minors

The Food and Drug Administration’s action brought regulation of e-cigarettes, cigars, pipe tobacco and hookah tobacco in line with existing rules for cigarettes, smokeless tobacco and roll-your-own tobacco. The new rules take effect in 90 days.

Health advocacy groups hailed the move, while industry officials said it could cripple many of the smaller companies that make e-cigarette devices they say can help traditional smokers quit. Wall Street analysts expect the regulation to herald a new wave of consolidation led by big tobacco companies.

The FDA said it will require companies to submit e-cigarettes and other newer tobacco products for regulatory review, provide it with a list of their ingredients and place health warnings on packages and in advertisements.

The FDA’s regulation had been highly anticipated after the agency issued a proposed rule two years ago on how to oversee the $3 billion e-cigarette industry and these other products.

U.S. Secretary of Health and Human Services Sylvia Burwell said health officials still do not have the scientific evidence showing e-cigarettes can help smokers quit and avoid the known ills of tobacco. In the interim, the quick uptake of e-cigarettes by young people has added urgency to instituting consumer protections, Burwell said.

“Nicotine does not belong in the hands of kids,” Burwell told reporters.

E-cigarettes are handheld electronic devices that vaporize a fluid typically including nicotine and a flavor component. Using them is called “vaping.”

Three million U.S. middle and high school students reported using e-cigarettes in 2015, compared with 2.46 million in 2014, making them the most commonly used tobacco products for youngsters, according to the most recent federal data.

“This is a real epidemic and banning the sales of these products to minors, much like cigarettes, is a critical step to protecting their health now and into the future,” said Democratic U.S. Representative Lois Capps of California.

Other groups including American Academy of Pediatrics also lauded the FDA move. However, public health advocates have also urged the agency to ban the use of flavored nicotine liquid in e-cigarette and personal vaporizers.

They say the flavors, which can range from bacon to bubble gum, are a major draw for youngsters to take up vaping. FDA officials said they would consider future regulation on flavors based on further study of the potential risks and benefits of vaping.

A COSTLY PROCESS

In 2009, Congress allowed the FDA to extend its oversight to all tobacco products. The agency began focusing on e-cigarettes, which were quickly gaining traction in the U.S. market.

Cigars had previously not been regulated by the FDA. Their makers had lobbied for their more expensive, typically hand-rolled products to be excluded from such oversight. The agency’s new rules ban flavors in cigars, in another effort to prevent youth use.

Erika Sward, Assistant Vice President for National Advocacy at the American Lung Association, described the regulations as “a win for public health.” She said that the association was disappointed that while the FDA relied on anecdotal information to ban flavors on cigars, it did not use the same metrics regarding e-cigarettes.

The FDA will review products introduced after Feb. 15, 2007, but will give e-cigarette manufacturers up to two years to submit their applications. E-cigarette makers can continue to sell those products while the review is pending.

Agency officials expect that most products on the market will require its review, a costly prospect for the many smaller manufacturers of vaping devices.

“The winners are the large tobacco manufacturers, primarily Altria (MO.N) and Reynolds (American) (RAI.N), which have the experience and financial wherewithal” to deal with FDA processes, said Adam Fleck, an equity analyst at Morningstar. “The net result is a very fragmented e-cigarette market is likely to be consolidated.”

Shares in Altria and Reynolds were little changed on Thursday.