Canaries in the coal mine

| August 1, 2017

The largest e-liquid companies have the most to lose. They’re also the first to enter the minefield of impending FDA regulations.

By Maria Verven

Looking down the road at the rigorous requirements handed down by the U.S. Food and Drug Administration (FDA), vapor businesses are gearing up for a rough ride.

There’s little doubt that the FDA will be regulating the e-cigarette industry in some way, shape or form. What is in doubt is whether pro-vaping legislation will mitigate some of the more rigorous requirements in the FDA’s 2016 regulations that are slated to go into full effect in August 2018.

Many are hedging their bets, praying that the Cole-Bishop amendment (H.R. 1136)—if included in the fiscal 2018 federal budget—or the Duncan Hunter bill (H.R. 2194) will challenge the FDA’s draconian regulations and the predicate date. If successful, products on the market after that date could be “grandfathered,” removing the onerous requirement that vapor businesses submit a premarket tobacco product application (PMTA) for every product introduced after Feb. 15, 2007.

Gregory Conley, president of the American Vaping Association (AVA), says the glass looks more half full than half empty. “The most important priority is modernizing the 2007 predicate date via a policy rider in an appropriations bill. There’s also hope that an alternative regulatory framework could be developed by Congress.”

By the FDA’s own estimates, building and submitting a PMTA will take an average of 1,713 hours to compile and could cost several million dollars per product. Only products that go through this process will be allowed to remain on the market.

Tobacco Reporter spoke with representatives of two companies about their attitudes and levels of preparedness with the FDA: Schell Hammel, president and owner of The Vapor Bar, Forbidden Premium E-Liquids and Forever E-Liquids, and Allen Querido, CEO of Ruthless E-Juice.

Allen Querido

What is your strategy for complying with the FDA regulations? Have you been in contact with the agency?

Hammel: We have met with the FDA. We try to be ahead of the curve and work with a legal team and staff of toxicologists, physicians and scientists on every step in our e-liquid purity and testing. However, based on the current regulations, there’s no way we would be able to put through a PMTA on our products.

Querido: The FDA first contacted us, and we’ve had informal discussions with them. Our PMTA strategy will address everything from our SOPs to our manufacturing facilities/certifications, toxicology reports and clinical trials. In addition to bolstering our quality-assurance measures and good manufacturing practices, we built an ISO 7 state-of-the-art clean room. We are preparing our pre-PMTA package based on the current FDA guidelines and will be ready for our formal meeting with them.

How does the proposed Cole-Bishop bill affect your strategy and/or timeline? Are you actively advocating for reasonable regulation?

Hammel: If the predicate date or the FDA’s regulations aren’t changed, we will all fail, unless you have very deep pockets. However, I am more optimistic than I have ever been about the potential success of one of our legal or legislative strategies. It is vitally important for other business owners and consumers to reach out to their representatives and ask them to support the Cole-Bishop amendment and the Hunter bill.

Since the beginning, The Vapor Bar has been part of the Right to be Smoke-Free Coalition, a nonprofit, industry-led trade association of e-vapor businesses dedicated to advocating for reasonable and responsible laws and regulations. I have served on the national and state boards of SFATA [the Smoke-Free Alternatives Trade Association] and am currently director of state chapter relations for SFATA, as well as the chairperson of AEMSA’s (American E-Liquid Manufacturing Standards Association) legislative committee.

Querido: Our goal is to provide the best and safest products for our clientele. We are continuously improving our facilities, and our operating procedures and guidelines either match or exceed pharmacopeia standards as well as the FDA’s requirements.

How many different flavors and different levels of nicotine do you currently offer? How many do you plan to submit a PMTA for?

Hammel: The Vapor Bar submitted well over 2,000 SKUs to the FDA, including 146 flavors in three or four nicotine levels. Our most popular flavors are Shaded, a smooth tobacco; Hell Frozen Over, a cinnamon-mint combination; and Hummingbird, a watermelon combination.

To prepare for a PMTA, we would have to invest over a million dollars in just one flavor. Smart business sense prevents me from doing that. In the event we would have the money to put one through the process, it is a huge gamble. The FDA already said they don’t have to answer; if they don’t, we would have to pull the product from the market. Based on my research and data, they have not been timely in approving new tobacco products. So, it’s not a gamble I’m willing to make on my business or my family’s future.

Querido:  We’ve already registered thousands of SKUs with the long-term goal of completing the PMTA process for most, if not all of them. However, the guidelines and proposed regulations are still in flux. Only time will tell what the final guidelines will look like and how the FDA will respond to our PMTA strategy, as well as those proposed by the other industry leaders.

What steps have you taken so far in preparation for submitting PMTAs?

Hammel: The Vapor Bar has already changed its labels to comply with the new FDA regulations. We also registered with the FDA and established a testing structure to comply with the regulations. We believe testing is inevitable and will have no problems complying with reasonable testing and regulations.

Querido: We’ve been preparing for years, as we sensed a change in the environment and foresaw the need to build a strong infrastructure that can handle anything. In addition to hiring experts who have worked with the FDA, we’ve also built relationships with other industry leaders in various fields. We’ve built an expert, forward-thinking team and are confident of our course of action.

Shell Hammel

Do you believe your company will be a “survivor” if the FDA regulations remain unchanged?

Hammel: There’s no way we could survive the FDA regulations in their current form. We would have to restructure our company completely, and I am uncertain what that would look like at this point.

Querido: Benjamin Franklin said, “By failing to prepare, you are preparing to fail.” This has been our mantra with everything from hiring to choosing vendors and building our facilities. We’ve analyzed, built and adapted our infrastructure over a long period and are confident we will pass and/or exceed the FDA’s standards.

Unfortunately, lack of time and potentially exorbitant costs could cause other companies to fail. Already, many companies of varying sizes are simply liquidating and making what they can in the next year and a half or so.

Do you think the FDA will be able to enforce its regulations?

Hammel: It is uncertain if or how the FDA will effectively enforce regulations. I anticipate they will enforce it in ways that will fall under the radar, aside from engaging small government agencies. I assume that wholesale nicotine would be harder to obtain, and online sales could become illegal. There are many ways they can enforce the regulations without walking into a shop, which will make it very difficult to continue to operate.

A black market is a sure bet because anyone can obtain all the ingredients they need to make e-liquids.

Querido: Staffing [at the FDA] is another unknown, but we want to ensure that we’re prepared regardless. At the end of the day, we’ll be offering a better, safer and arguably healthier product than those who choose to take shortcuts.

We’re fully aware that some will try to operate under the FDA’s radar and attempt to start a black market, but we’re confident that the FDA will enforce its regulations as it does with other industries. After all, any fines it imposes will generate revenue.

Please describe your long-term vision for your company as it relates to the regulatory environment and the competitive landscape. 

Hammel: Our company vision is ever changing, as I imagine it is with many. Competitively, The Vapor Bar has always focused on helping smokers and educating our customers on quality, safety and legislative advancements. We maintained that focus throughout; that will be our constant until something changes, either legally or legislatively.

Querido: We foresee continuing to be an industry leader and one of the few companies that is left standing. In our quest to give our clients the best and safest products, we will continue to improve upon the solid infrastructure that we’ve built.

 

The original “Vaping Vamp,” Maria Verven is a 35-year PR veteran and owner of Verve Communications, a marketing firm focused on the vapor industry.

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