fda regulation of tobacco washington, dc october 21, 2015 litigation update micah berman, assistant...

FDA Regulation of Tobacco

Washington, DC

October 21, 2015

Litigation Update

Micah Berman, Assistant Professor, Ohio State University College of Public Health and Moritz College of Law

Kathleen Hoke, Law School Professor and Director, Legal Resource Center for Public Health Policy, University of Maryland Francis King Carey School of Law

Duane Layton, Partner, Mayer Brown

Moderated by Jonathan A. Havens, Associate, Venable LLP

Litigation Update:Tobacco Industry

Challenges to State and Local Laws

Kathleen HokeDirector,

Legal Resource Center for Public Health Policy

On behalf of:

Tobacco Control Legal Consortium

Tobacco Control Legal Consortium

The Tobacco Control Legal Consortium (TCLC), a program of the Public Health Law Center, supports tobacco control policy change and the tobacco control movement throughout the United States. 

Presentation Overview

• Flavored Products:– Focus on Chicago, flavored by NYC and Providence

• Pricing Controls:– Dollars and cents from New York City to Providence

• Electronic Cigarettes and E-Liquid:– Indiana e-liquid regulation and expansion of smokefree air laws

Chicago’s Flavored Tobacco Restrictionsa.k.a. “The Menthol Ban”

The Ordinance—Chi., Ill., Code §4-64-098• Enacted in December 2013• Prohibits the sale of flavored tobacco product within 500

feet of any school• Flavored product is defined as imparting a “characterizing

flavor”• Characterizing flavor is defined as a “distinguishable taste

or aroma . . . including . . . menthol”

Legal Challenge

Independents Gas and Service Stations Ass’n v. Chicago, 2015WL4088743 (June 29, 2015)

Plaintiffs alleged:• Preempted by FSPTCA• Unconstitutionally vague (14th Amend.)• Violation of vested rights/retroactive (state due process)

Federal District Court for the Northern District of Illinois Decision

City’s Motion to Dismiss Granted• Meaning no trial; decided on paper

No appeal filed

Most important claim for future regulation was FSPTCA preemption

No Preemption by FSPTCA

The FSPTCA “provides that states and their political subdivisions retain broad authority to regulate tobacco products” but “preempts local laws that regulate tobacco product standards” with the “exception . . . . for local laws that are related to sales, distribution, possession, access, advertising, or use of tobacco products.”

Heavy Reliance on NYC Flavored Case (2nd Circuit 2013)

U.S. Smokeless Tobacco Mfg. Co. LLC v. City of New York, 708 F.3d 428, 434 (2d Cir.2013): The FSPTCA “distinguishes between manufacturing and the retail sale of finished products.”

Quoted extensively in the Chicago decision

Take Away?Courts have been consistent in finding no

FSPTCA preemption of restrictions on the sale of flavored tobacco products, finding these laws based on distribution and sales and not manufacturing.

• Chicago (2015)• New York City (2013)• Providence (National Ass’n of Tobacco

Outlets v. City of Providence, 731 F.3d 71 (1st Cir. 2013)

New York City Pricing Controls

The Ordinance—NYC Admin. Code §17-176.1 (relevant portions)

Prohibits a retailer from:• Accepting a “price reduction instrument” (coupon) for

tobacco products;• Providing multi-pack discounts;• Giving promotional items with purchase;• Selling for less than advertized price.

Legal Challenge

National Ass’n of Tobacco Outlets v. City of New York, 27 F.Supp.3d 415 (2014)

Plaintiffs alleged:• Violation of First Amendment;• Preempted by FCLAA;• Preempted by NY state law.

Federal District Court for the Southern District of New York

City’s Motion for Summary Judgment Granted• Meaning no trial; decided on paper

No appeal filed

Most important claim was First Amendment challenge

No First Amendment Violation

“[P]rice regulations designed to discourage consumption of a potentially harmful product do not violate the First Amendment so long as they do not preclude the effected retailers' ability to provide truthful, nonmisleading information about the regulated product to consumers.”

Heavy Reliance on Providence Pricing Case (1st Circuit 2013)

• “In National Association of Tobacco Outlets [Providence case], the First Circuit applied this general principle to tobacco regulation and found that the prohibition of discounting practices, such as coupon redemption and multi-pack discounts, did not violate the First Amendment.”

• “This court agrees.”

Take Away on 1st Amendment

An ordinance perceived by the court as regulating an economic transaction and not restricting communications about price on packaging, shelving, advertisements, or otherwise will survive scrutiny.

FCLAA Preemption Claim

Court explained that FCLAA preemption pertains only to health warnings on cigarette packages.

States and localities are not preempted from time, place and manner restrictions.

Take Away on FCLAA Preemption: Pricing restrictions do not invoke FCLAA preemption.

Electronic Cigarettes

Several state and local jurisdictions have included the use of electronic cigarettes in their clean indoor air laws.

Challenges have failed.

For example:

NYC C.L.A.S.H. v. City of New York, 14 N.Y.S.3d 616 (N.Y. Sup. Ct. 2015)(did not violate single subject rule)

E-Liquid

Indiana Enrolled Act 1432 (2015), which becomes effective in 2016:

• Requires e-liquid manufacturers to obtain permit ($1,000 for 5 yrs; $500 renewal);

• Mandates 24-hour monitoring of storage rooms;• Exempts first generation electronic cigarettes (self-

contained).

Legal Challenge

Legato Vapors LLC v. Indiana, Case No. 1:15-cv-761 in the U.S. District Court for the Southern District of Indiana (filed May 12, 2015)

Plaintiffs are liquid nicotine manufacturers with plants outside of Indiana and an Indiana vape shop

Legal Challenge

Plaintiffs allege:• Equal Protection Clause (14th Amend.) violation for

treating them differently than closed system manufacturers/sellers;

• Commerce Clause violation because impacts out-of-state manufacturers;

Legal Challenge

Plaintiffs allege:• Due Process Clause violation (14th Amend.):

Because no rational basis for including e-liquid in definition of tobacco product;

Because no rational basis for treating “open” e-liquid differently than contained system e-liquid

Legal Challenge

Status of Case:

Preliminary stage

Discovery will proceed

Anticipate dispositive motions

Contact Us us

Kathleen Hokekhoke@law.umaryland.edu410-706-1294

Maggie Mahoney

Maggie.Mahoney@wmitchell.edu

(651) 290-7514

www.publichealthlawcenter.org

Federal Tobacco Litigation Update

Micah Berman, J.D.Ohio State University

College of Public Health & Moritz College of Law

FDLI FDA Regulation of TobaccoOctober 21, 2015

GLOBAL SIGNIFICANCE, LOCAL IMPACT

• Lorillard v. FDA– TPSAC Challenge

• Philip Morris v. FDA– Substantial Equivalence (SE) Guidance Challenge

GLOBAL SIGNIFICANCE, LOCAL IMPACT

Lawsuit #1:

Lorillard v. FDA: TPSAC Challenge• Tobacco Products Scientific Advisory Committee• 9 voting members • 3 non-voting members (tobacco manufacturers, tobacco

growers, small manufacturers)

GLOBAL SIGNIFICANCE, LOCAL IMPACT

Lorillard v. FDA: TPSAC Challenge

GLOBAL SIGNIFICANCE, LOCAL IMPACT

• Filed Feb. 25, 2011 (DDC) by Lorillard and RJ Reynolds• Claimed that 3 members of TPSAC had conflicts of interest in

violation of FACA, APA, FDCA– Drs. Samet (chair), Benowitz & Henningfield

• Any TPSAC report “must be disregarded and not relied upon for any purpose”

GLOBAL SIGNIFICANCE, LOCAL IMPACT

“Manufacturers of nicotine-replacement-therapy products and other smoking- cessation products . . . are in direct competition with tobacco-product manufacturers for the purchasing choices of adult smokers.”

GLOBAL SIGNIFICANCE, LOCAL IMPACT

District Court Opinion: July 21, 2014 (Leon, J.)• “[I]n the agency’s view, TPSAC members who performed

consulting work for such drug companies had no financial conflict of interest. Please! This conclusions defies common sense.”

• Past expert witness testimony does not create conflict, but future testimony does.

GLOBAL SIGNIFICANCE, LOCAL IMPACT

Appeal to D.C. Circuit• Dr. Samet & 3 other members resigned• Oral argument held on Oct. 7 (Millett, J.; Pillard, J.; Williams, S.J.)• Court requested supplemental briefing on ripeness and standing

GLOBAL SIGNIFICANCE, LOCAL IMPACT

Lawsuit #2:

Substantial Equivalence (SE) Guidance LitigationChallenged “Guidance for Industry: Demonstrating the Substantial Equivalence of a New Tobacco Product: Responses to Frequently Asked Questions” (March 4, 2015)

GLOBAL SIGNIFICANCE, LOCAL IMPACT

Tobacco Control Act, Sec. 910

Substantially Equivalent = Same characteristics or different characteristics and applicant demonstrates that “product does not raise different questions of public health.”

Characteristics = “materials, ingredients, design, composition, heating source, or other features of a tobacco product.”

GLOBAL SIGNIFICANCE, LOCAL IMPACT

GLOBAL SIGNIFICANCE, LOCAL IMPACT

Current Status:

- June 2: Suit voluntarily dismissed by plaintiffs- September 8: FDA issues new guidance document

- Clarifies when SE submission is required, but does not change basic position

- September 30: Suit refiled (Mehta, J.)

GLOBAL SIGNIFICANCE, LOCAL IMPACT

Micah Berman, J.D.•Berman.31@osu.edu

•614-688-1438

•@MicahLBerman

Tobacco “Plain Packaging”:A Legal Perspective

The Food and Drug Law Institute

Washington, D.C.Duane W. LaytonPartner and Chair, Government & Global Trade GroupMayer Brown LLP202-263-3811dlayton@mayerbrown.com

21 October 2015

Australia Plain Packaging - Tobacco

• Australia first country to adopt plain (or standardized) packaging for a legal product

• Cigarettes, cigars, and other tobacco products– Tobacco retail packaging

• Ban design and figurative elements of trademarks and Gis• Uniform brown color• Other requirements (e.g., size, location, font)

– Tobacco products• Cigarettes: no markings at all• Cigars: brand name, variant name, and country of origin in uniform style

on a uniform band

• Entry into force 1 December 2012

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Australia Plain Packaging - Tobacco

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Australia Plain Packaging - Tobacco

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Australia Plain Packaging - Tobacco

• Australia’s objective is to reduce tobacco consumption– By 2018

• Cut overall prevalence to 10 percent• Cut prevalence among aboriginal and Torres Strait population in half

• Australia asserts that PP will achieve this objective by: – Reducing the appeal of tobacco products– Increasing the effectiveness of graphic health warnings– Reducing the ability of packaging to deceive consumers about the harmful effects of

smoking

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Reaction Within The WTO – Discussions In WTO Committees

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Reaction Within The WTO – Discussions In WTO Committees

• TBT Committee Meeting 10-11 November 2011

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Reaction Within The WTO – Dispute Settlement Proceedings

• Ukraine, Honduras, the Dominican Republic, Cuba, and Indonesia initially challenged Australia’s plain packaging requirements. Ukraine subsequently suspended.

• One panel for all five challenges• One-quarter of WTO membership is involved as complainants, respondent, or third

parties• Final decision expected next year• Pressure mounting in some countries to adopt plain packaging before WTO panel

rules (e.g., U.K., Ireland)– What impact, if any, will this have on panel and the DS system?

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Reaction Within The WTO – Dispute Settlement Proceedings

• Two sets of claims against plain packaging– Art. 20 TRIPS and Art. 2.2 TBT

• Does plain packaging “unjustifiably” encumber TMs? • Is plain packaging “more trade restrictive than

necessary”?– Panel will likely focus on, inter alia, efficacy of plain packaging

and reasonably available alternatives– To what extent will panel weigh and consider expert opinions?

– Art. 2.1, 15, 16, 22.2, and 24.3 TRIPS

• Apart from its efficacy and necessity, is plain packaging consistent with Australia’s treaty obligations under TRIPS?

– Panel will likely focus on, inter alia, right to use TMs and impact of plain packaging on right to exclude confusing uses

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Reaction Within The WTO – Dispute Settlement Proceedings

• WTO vs. WHO– Australia claims its PP law implements “certain obligations [it] has

as a party to the Convention on Tobacco Control” (the FCTC). See § 3(1)(b) of PP Act

– Yet in public statements Australia acknowledges that nothing in the FCTC or the official “Guidelines” to the FCTC mandates plain packaging – at least in the form embraced by Australia

– Rather, these instruments recommend that Parties “should consider adopting measures” that restrict or prohibit the use of logos, brand images, etc. (emphasis added)

– And even if this language was mandatory and not horatory, Article 11 of the FCTC actually provides that packaging and labeling is permitted, and in fact may be used to “promote” a tobacco product, as long as it is not “false, misleading, deceptive or likely to create an erroneous impression”

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Reaction Within the WTO – Dispute Settlement Proceedings

• WTO vs. WHO– The WTO agreements can and should be interpreted in a manner supportive of a Members’

right to protect public health (see, e.g., TBT 2.2 and TRIPS 8.1)– However, Members must do so in a manner consistent with their WTO and other treaty

obligations– Indeed, that is precisely what TRIPS 8.1 says– The WTO panel and ultimately (I suspect) the Appellate Body will have to decide whether the

version of plain packaging adopted by Australia is consistent with the WTO agreements

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Relevance Of WTO Dispute To Other Countries And Products

• Australia WTO case is not just about Australia– Other countries are introducing or contemplating the adoption of plain

packaging

• Australia WTO case is not just about tobacco– Case could have broad impact on IP protections for other products

considered harmful

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Is Tobacco Plain Packaging The “Slippery Slope”? What Next?

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Is Tobacco Plain Packaging The “Slippery Slope”? What Next?

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Is Tobacco Plain Packaging The “Slippery Slope”? What Next?

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Is Tobacco Plain Packaging The “Slippery Slope”? What Next?

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Questions?

Duane W. LaytonPartner and Chair, Government & Global Trade Group

Mayer Brown LLP

(202) 263-3811

dlayton@mayerbrown.com

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