FDA Regulation of Tobacco Washington, DC October 21, 2015 Substantial Equivalence – Where do we Stand? Stacy Ehrlich, Partner, Kleinfeld Kaplan & Becker LLP Ben Haas, Partner, Latham & Watkins LLP Moderated by Dean R. Cirotta, MBA, President & COO, EAS Consulting Group

Substantial Equivalence Stacy L. Ehrlich Partner Kleinfeld Kaplan & Becker LLP October 21,

Results to date (as of 10/15) 355 SE orders 126 NSE orders (37 provisional) 32 Refusals to Accept 898 Withdrawals 3

Review Process Compliance review of grandfather status Scientific reviews are conducted by several discipline teams: –Chemistry (product composition and HPHC yields) –Engineering (product design, specifications) –Toxicology (toxicant exposure) –Social Science/Addiction (health information summary, consumer perception/behavior) –Environmental (EA) (no longer required for provisional reports as of 10/26/15) 4

Review Timeline On October 1, 2014, FDA began implementing performance goals  By FY18, complete scientific review and issue action letter for 80% of regular SE reports within 90 days Administrative Advice/Information (A/I): days to respond Preliminary Finding (PFind) letters: issue NSE order if no adequate response within 30 days 5

Review Timeline For regular SE reports, FDA will not issue extensions FDA may issue extensions for provisional reports, but may not respond to extension request until after deadline has passed FDA issues SE or NSE order plus Technical Project Lead (TPL) Memorandum 6

Recent NSE Orders RJR received NSE orders for Camel Crush Bold, Vantage Tech 13, Pall Mall Deep Set Recessed Filter (non-menthol and menthol) Also issued stop sale orders (30-day enforcement period for retailers) Requested plan to ensure that product is not further distributed, imported, sold, marketed, or promoted in the US by others 7

Cited Deficiencies Addition of new flavor system Differences in sweeteners, menthol levels, other flavor ingredients  May increase product’s palatability, which influences abuse liability and may influence initiation, dependence, progression to regular use, and likelihood of cessation success 8

Cited Deficiencies (Cont.) Failed to provide target specs and upper/lower range limits for certain “design parameters” and test data to confirm target specs were met (e.g., COA) Quantitative Risk Assessment was not sufficient to explain significantly higher HPHCs Did not fully “characterize” tobacco blends 9

Key Take-Aways No changes to cited predicate once scientific review has commenced There are no GMPs for tobacco products, but FDA still requires detailed specs and confirmation that the new and predicate products meet specs Modifications to flavor ingredients may be virtually impossible via the SE process It is not sufficient to assert that a new ingredient is GRAS for food use HPHCs differences must not be significant 10

Questions? Stacy L. Ehrlich 11

Substantial Equivalence Where Do We Stand? Key Policy Issues Ben Haas Latham & Watkins LLP October 21, 2015

Background on Substantial Equivalence Provenance and history of “substantial equivalence” –Intent –Notes on medical device implementation –Differences in application to medical devices and tobacco products Review of FDA implementation (guidance) –Jan guidance –Sept “FAQ” guidance –March 2015 final “FAQ” guidance –September 2015 revised final “FAQ” Guidance 13

Key Policy Issues Purpose of the “substantial equivalence” pathway –Innovation or hurdle –Application to tobacco “Safety and efficacy” v. “different questions of public health” Scope of “new tobacco product” –Labels –Quantities Data requirements 14

Tools for Compliance Applying FDA guidance in practice Understanding enforcement risk Impact of litigation 15