On March 10, 2023, the FDA published the "Tobacco Product Manufacturing Practice" (TPMP) on its official website. We interviewed industry expert Zheng Zhi, who has been fully responsible for FDA PMTA certification projects. Zheng Zhi provided a detailed analysis of the reasons behind the FDA's introduction of TPMP, the future development trend of flavored e-cigarettes, and how Chinese e-cigarette manufacturers should respond to the new standards.
On March 10, 2023, the FDA published the draft of "Tobacco Product Manufacturing Practice" (TPMP) on its official website, which will have a profound impact on the global tobacco industry. We interviewed PMTA expert Zheng Zhi, who explained the basic content of the TPMP draft and analyzed the future market development trends for e-cigarettes. Zheng Zhi was once in charge of the FDA's PMTA certification project at Shenzhen McWell and later founded Ziyuan Technology, focusing on PMTA regulatory research and working in the pharmaceutical and e-cigarette inspection fields for many years.
CTP's "Three Fires"
The FDA's decision to launch TPMP in March may not be a coincidence. The recent criticism of the CTP (FDA's Center for Tobacco Products) may have led to its proactive actions in the tobacco industry. As reported earlier, in December 2022, the Reagan-Udall evaluation group criticized the CTP for being "slow to respond and overwhelmed," with low staff morale, making it difficult to regulate traditional tobacco products and the freely growing e-cigarette market.
Regarding the CTP's slow response, Zheng Zhi recalled his experience with an inspection team at a factory in January 2020. The CTP's chief auditor at the time said they had no basis for inspecting factories, but mentioned that the FDA was developing standards. However, they were unsure about the specific release date.
Zheng Zhi reminisced, "They were still trying to collect and learn as much as they could. The CTP really didn't understand e-cigarettes. After all, most e-cigarettes are produced in China, but we knew that the FDA would introduce this regulation; it was just a matter of time."
Initially, the FDA wanted to cover all tobacco product categories with one document. However, the scope of tobacco includes, but is not limited to, smokeless tobacco, cigarettes, cigars, hookahs, e-cigarettes, and heat-not-burn products. The FDA faced the dilemma of dealing with different standards for each sub-category.
Zheng Zhi mentioned, "We heard that in the preparation process of smokeless tobacco, there's a step that involves using feet to mix and ferment the tobacco. If that's true, how should the standard process be described and what are the acceptable limits? Therefore, the FDA really needs a lot of people and a great deal of time and effort to research the details."
The CTP, which is responsible for the FDA's tobacco division, should have been a leader but has played the role of a tobacco industry watchdog in recent years. In July 2022, newly-appointed director Brian King had previously worked at the CDC's Office on Smoking and Health (OSH).
It's worth mentioning that King had collaborated with the anti-smoking organization Bloomberg Philanthropies. However, in an interview with the Associated Press, he stated that the idea of e-cigarettes being as dangerous as smoking is "inconsistent with known science" and that e-cigarettes have "clearly lower risks."
Zheng Zhi speculated that King, after taking office, obviously wanted to change the public's negative perception of the CTP and planned to "burn three fires."
The "first fire" involved reorganizing PMTA-related personnel and processes and appointing a new head for the scientific review office, Farrelly. The "second fire" was the introduction of TPMP, which completed the regulatory requirements for PMTA. The "third fire" is likely related to the approval of flavored e-liquids.
With these new measures in place, the possibility of flavored e-cigarette products gaining FDA approval in the future is quite high. Chinese e-cigarette manufacturers should pay close attention to these new standards and adjust their strategies accordingly to seize market opportunities and maintain their competitive edge in the global e-cigarette industry.
"There is a high possibility of approval for multi-flavored e-cigarette products"
Since 2019, various states and regions in the United States have successively issued "flavor bans", which have had a significant economic impact on e-liquid manufacturers and disposable e-cigarette companies. Many manufacturers are pinning their hopes on the FDA's PMTA. According to two interviews at TPE, many e-cigarette manufacturers have invested tens of millions or even hundreds of millions of dollars in PMTA.
However, CTP has only approved products from a few companies such as Vuse, Reynolds, NJOY, Logic, and Smokeless. Once a top-selling e-cigarette company in the United States, JUUL has struggled since being taken off the shelves by the FDA. With millions of applications, the approval of multi-flavored e-liquids is crucial to the interests of major manufacturers.
The PMTA qualification led Altria to abandon JUUL despite the loss and instead spend $27.5 billion on the acquisition of NJOY, one of the very few e-cigarette manufacturers to eventually obtain PMTA.
However, the FDA has always been cautious about multi-flavored e-liquids. For closed-system e-cigarettes, the FDA's stance is clear: except for tobacco flavors, all other unauthorized closed-system e-cigarette flavors are not allowed to be sold in the US market. The FDA is unlikely to change its original position in the short term.
The breakthrough for multiple flavors may lie in open-system e-cigarettes. According to Zheng Zhi, the US may impose restrictions on the management of separately packaged e-liquids and open-system e-cigarettes.
He observed that "multi-flavored e-liquids are limited to bottled ones, and bottled e-liquids are only sold in specialized stores." By isolating online purchasing channels, the pure offline supervision model may be the future development direction.
This approach takes into account both the mainstream US public opinion's criticism of multi-flavored e-cigarettes and the costs already invested by US e-liquid manufacturers. When e-liquid manufacturers prove through clinical and non-clinical trials that the health impact of multi-flavored e-cigarettes is no different from that of tobacco-flavored ones, the FDA may lift the flavor restrictions on open-system e-cigarette products.
Zheng Zhi believes in the FDA's adherence to science. "The FDA is an institution that is 70% biased towards science and technology and 30% biased towards politics. It still focuses more on science in its work. If it were purely politically driven, e-cigarettes could be banned altogether."
Challenges and opportunities coexist
At present, China is the world's largest e-cigarette producer. In January 2020, the FDA inspection team visited SMOK and Hang Yuan Technology affiliated factories. This inspection allowed the FDA to understand the process and rules of e-cigarette product factories.
"The draft rule also refers to the experience gained from the SMOK and Hang Yuan Technology inspections," Zheng Zhi summarized.
As some experiences of Chinese e-cigarette manufacturers have already been accepted by the FDA, it is inevitable that the FDA will refer to the existing experiences of Chinese e-cigarette manufacturers in the process of formulating rules. These large-scale industry-leading companies are invisibly influencing the industry's rules. The landscape of the e-cigarette industry will change after TPMP comes into effect.
On April 12, CTP will hold a hearing, followed by a 180-day comment period. After integrating the comments received during the public review period, the revised TPMP will take effect at a later date.
There is no doubt that the FDA is the rule-maker in this game. After TPMP is formulated, there will be clear rules for the qualification of PTMA, which will not only speed up the approval process but also alleviate the criticism of the industry towards CTP. However, it still controls the rules of the game, and it doesn't mean that following the rules will guarantee approval. Due to the influence of American politics and public opinion, the FDA's public nature prevents it from ignoring its own political value.
Zheng Zhi believes, "From a political perspective, the standard is here, but the implementation of the standard has a scale." The United States' foreign economic strategy is to reduce reliance on a single market. Zheng Zhi mentioned the US approach to Indian pharmaceutical companies. Initially, India was just an ordinary supplier to the US pharmaceutical market, but in subsequent development, Indian generic drugs almost dominated the US market. According to the "India Economic Survey 2021-2022" released by the Indian Ministry of Finance, during the period from 2020 to 2021, the total value of drug exports was 24.4 billion US dollars, with the largest export destination being the United States, supplying 40% of its generic drug demand. The United States realized that it was too dependent on India and began to look for Chinese pharmaceutical companies as suppliers to balance India.
"The United States sees a country as a supplier, and the e-cigarette field should be the same," Zheng Zhi believes. The solution for such risks is for manufacturers to obtain PMTA as soon as possible, first pass the data review with scientific reports, and then pass the TPMP inspection. Applying earlier gives an advantage, which can not only avoid short-term political risks but also gain a head start in obtaining US listing qualifications. This may be the direction for industry manufacturers to move forward.
This is not unfamiliar to domestic manufacturers.
In October 2022, the State Administration for Market Regulation issued the "Mandatory National Standard for E-cigarettes," marking the beginning of a reshuffle in the domestic e-cigarette industry. With the subsequent complete implementation of TPMP, the "Matthew Effect" will be verified among the remaining e-cigarette manufacturers. However, for domestic e-cigarette companies that have grown wildly, the improvement of factory standards is actually a protection for their own technology-based e-cigarette companies.
He explained, "Everyone knows that the pharmaceutical industry is very profitable, but it is impossible to do it without a foundation. The same is true for e-cigarettes. The threshold will gradually improve and slowly rise, and there will be no need for small workshops to exist."
Currently, e-cigarette manufacturers still have time to catch up. The focus of catching up is not on the investment in equipment hardware. When the management standard system is gradually established, companies need to study and learn the TPMP guidelines, invest in corresponding management personnel, set up corresponding management positions, train employees to operate correctly, and also include the cost of making mistakes.
"It's hardest to put thoughts into someone else's head, and this can't be achieved in the short term," Zheng Zhi said.