By Timothy S. Donahue

Top Takeaways:

• New certainty: FDA’s forthcoming enforcement discretion list could provide long-awaited clarity for nicotine manufacturers
• State pressure: Attorneys general are becoming some of the industry’s most aggressive regulators
• Compliance challenge: State directory laws may soon conflict with FDA’s new enforcement framework

When these two appear together on a panel, it’s always both fun and informative. According to attorneys Bryan Haynes and Agustin Rodriguez of Troutman Pepper Locke, the U.S. Food and Drug Administration’s forthcoming list of products eligible for enforcement discretion could become one of the most important regulatory developments for the nicotine industry in years.

Speaking at the Next Generation Nicotine Delivery conference in Miami during a panel moderated by Angela Ho-Chen, Regulatory Managing Counsel at Reynolds American, the two Troutman Pepper regulatory attorneys said the agency’s recently issued enforcement priorities guidance may finally provide clarity for a marketplace that has operated in what they described as a regulatory gray area for years.

“FDA recently published enforcement guidance relating to nicotine pouches and ENDS products with a pending PMTA,” said Haynes. “It’s been an interesting situation for the last four years because a very large percentage of products that are sold in the U.S. have lived in a sort of regulatory no-man’s land.

“FDA, on one hand, said that it wasn’t exercising any enforcement discretion, but you could tell they were, and this now formalizes it to a very large degree and provides a lot more certainty than existed under the sort of guesswork that existed in the last four years.”

A central theme of the discussion was the significance of the FDA’s planned publication of a list identifying products eligible for lower enforcement priority. “FDA has formalized this enforcement discretion that seemed to exist over the last four years, but with specifics,” Haynes said. “Importantly, they’re going to publish a list of products that are eligible for this enforcement discretion, which is somewhat unprecedented.”

According to Haynes, that list could serve as a critical compliance tool for manufacturers, distributors, and retailers seeking certainty in a rapidly evolving market. “When this list is published, I think it’ll add an important element of certainty to stakeholders in the industry about what types of products they can likely sell without enforcement action,” he said.

However, both attorneys cautioned that federal enforcement is only one part of the regulatory picture. Rodriguez argued that many companies continue to underestimate the role of state attorneys general.

“I think companies underestimate the state attorneys general,” he said. “They are a very active force in the United States.

“They’ve taken a wide variety of steps to try to clear the shelves in the market of illicit products or products that lack FDA marketing authorization, whether that’s through new directory laws or flavor bans or country-of-origin restrictions or just use of their general consumer protection statutes to bring enforcement actions.”

The discussion highlighted growing tension between the FDA’s new enforcement approach and state directory laws that have proliferated nationwide. “As some folks in this audience know, states in the last few years have taken it upon themselves to enforce FDA premarket authorization requirements,” Haynes said.

What’s particularly noteworthy, he said, is that most of those state laws were enacted before the FDA’s latest guidance. “These laws were written based on earlier guidance that talked about submissions that were filed by September 2020 and that remain pending,” Haynes said. “Obviously, laws that were written a few years ago couldn’t talk about guidance that was issued last month.”

As a result, manufacturers could soon encounter conflicting regulatory standards. “It will be interesting to see how those laws dovetail with products that are compliant with the new guidance when the law does not necessarily speak to that guidance,” Haynes said.

Rodriguez also highlighted a newer enforcement trend that has received less attention in the industry: state efforts targeting financial institutions that serve nicotine businesses. He noted that coalitions of state attorneys general have recently sent letters to major payment processors and credit card companies, urging action against merchants selling allegedly unauthorized vaping products.

“This is reminiscent of a 2013 initiative that actually the Department of Justice led called Operation Choke Point,” Rodriguez said.

According to Rodriguez, concerns about anti-money-laundering compliance and suspicious activity reporting could eventually affect whether banks and payment processors continue to serve certain nicotine businesses.

Looking ahead, Haynes said manufacturers should focus on ensuring their products qualify for the FDA’s forthcoming enforcement-discretion list. “It’ll be important for folks to get their ducks in a row, get their products on this wait list, or whatever you want to call it, if they’re eligible,” he said.

Rodriguez urged distributors and retailers to strengthen supply-chain oversight, verify regulatory compliance across their distribution networks, and closely monitor state directory laws and FDA developments.