US: FDA Discusses Banning Online Sales of E-Cigarettes

Source from:  The Wall Street Journal  08/23/2013

The Food and Drug Administration is considering a ban on online sales of electronic cigarettes, as part of a package of regulations the agency is readying for the increasingly popular devices, people familiar with the matter said.

The FDA, which warned in 2009 that e-cigarettes could pose health risks, has been meeting with e-cigarette makers this week to hear their views on its proposed regulations for the industry. The agency is expected to formally unveil its proposals in October, after several delays.

The "listening sessions" at FDA headquarters in Silver Spring, Md., north of Washington, are part of a series of meetings. At least 20 FDA staffers have attended the gatherings, the people familiar with the matter said, as the agency prepares its proposals for public comment.

As part of that effort, the FDA has discussed an online-sales ban to keep e-cigarettes out of the hands of minors and is looking at whether the minimum legal age for buying them should be 18 or 19, the people said. They said the agency is also reviewing television, radio and print advertising standards for the products. Overseeing the project is Mitch Zeller, who became director of the FDA's Center for Tobacco Products in March.

Mr. Zeller said in an interview Thursday that he was working toward publishing proposed regulations in October. "It is true that more research is needed on the health effects of e-cigarettes. However, we do not need more research on whether e-cigarettes should or should not be included in proposed FDA regulations," he said. He declined to comment on the scope of the regulations.

Mr. Zeller added that the listening sessions were conducted at the request of the e-cigarette industry.

Analysts estimate e-cigarette sales in the U.S. will reach $1 billion this year. Bonnie Herzog, with Wells Fargo Securities, predicts sales could hit $10 billion in five years as smokers switch from tobacco to battery-operated nicotine-vaporizing technology.

An estimated 45 million Americans smoke. In 2011 they bought a total of 293 billion cigarettes, according to the U.S. Centers for Disease Control and Prevention.

E-cigarettes pose a competitive threat to traditional tobacco companies—so much so that some of those companies are buying into the industry. In April 2012, Lorillard Inc., the third-largest tobacco manufacturer in the U.S., paid $135 million for Blu Ecigs, based in Charlotte, N.C. In June, Silicon Valley entrepreneur Sean Parker was part of a $75 million investment in NJOY, a leading brand based in Scottsdale, Ariz.

The investments carry plenty of regulatory risk. New York's city council is considering three bills backed by the city's Health Department that would ban flavored tobacco. The ban would cover many e-cigarettes. The bills also would raise the city's legal age for buying tobacco and e-cigarettes to 21 from 18.

Elliot Maisel, chairman, chief executive and major shareholder of e-cigarette maker Fin Branding Group, said he isn't afraid of regulation. The Atlanta-based company started up in 2011 and released its popular Fin brand in 2012.

"If they shut me down tomorrow, would I lose money? Yes. But, do I think that's going to happen? No, because of the demand for these products," Mr. Maisel said.

Fin Branding, whose products are sold in more than 40,000 outlets nationwide, expects sales to hit $60 million this year. Enditem