First, the common reasons why Chinese e-cigarette enterprises are included in the import alert list

As of July 12, 2023, the FDA has issued a total of three import alerts (#98-06, #98-07, #98-08) for Chinese e-cigarette companies, which involve more than 160 kinds of products from more than 10 e-cigarette companies.

The reasons for the three batches of Chinese e-cigarette companies to be listed in the FDA Red list of import alerts include: (1) Adulteration [#98-06, #98-07], which mainly targeted flavoring products without marketing approval. Misbranded (#98-08).

Under Section 801(a)(3) of the Federal Food, Drug, and Cosmetic Act (FD&C), for goods such as food, drugs, equipment, tobacco products, and cosmetics that are being imported or intended to be imported into the United States, If such goods are found to be adulterated or mislabeled by inspection or other means, such goods may be refused entry.

Second, the key interpretation of electronic cigarette import alarm

(1) Adulteration

As defined in the FD&C Act, any Tobacco product that is not commercially available in the U.S. commercial market (including test markets) as of February 15, 2007 is classified under Section 910(a)(1) of New Tobacco Products.

The FD&C Act, as amended by the TCA(Family Smoking Prevention and Tobacco Control Act), requires that any new tobacco product be reviewed by the FDA before it can be marketed. Section 910(a)(2) of the FD&C Act provides that new tobacco products require A marketing authorization issued under Section 910(c)(1)(a)(i) of the FD&C Act.

At present, the main way for new tobacco products to obtain valid marketing authorization in the United States is to submit a premarket application (PMTAs). the PMTAs apply to all categories of new tobacco products, and applicants are required to provide FDA with scientific data, manufacturing standards, and other information to demonstrate that the new tobacco product is Appropriate for the Protection of Public Health (APPH).

a tobacco product that is subject to premarket review under Section 910(a) and does not have A valid marketing authorization under Section 910(c)(1)(a) (i) shall be deemed adulterated under Section 902(6)(A).

In import alerts #98-06 and #98-07, tobacco products from a total of 14 Chinese e-cigarette companies were deemed adulterated. The reason is that the Center for Tobacco Products (CTP) believes that these products may violate Section 902(6)(A) of the FD&C Act, which is a new tobacco product without a marketing license.

According to data published by the FDA, PMTAs have been referred to more than 26 million new tobacco products since 2020. As of July 12, 2023, only 23 e-cigarette products and devices have been effectively authorized by the FDA under the PMTAs pathway. The term "no marketing authorization" should be taken literally to include the absence of a PMTA and the absence of a PMTA that has not been audited. In fact, products that have been filed for PMTAs but the FDA has not yet made a decision on them are still allowed to appear on the market.

Given the limited nature of the information, we surmised that the cases referred to as "no marketing authorization" in import Alerts #98-06 and #98-07 were mainly cases of non-submission of PMTA. It is worth mentioning that "no marketing license" is also the main reason why e-cigarette companies have been issued Warning letters by the FDA.

In import alerts #98-06 and #98-07, most of the subjects restricted due to adulteration are flavored e-cigarette products. The FDA commissioner has said that protecting youth from tobacco products is a top priority for the FDA. the FDA's Guidance on Enforcement Priorities for Electronic Nicotine Delivery Systems (ENDS) and Other Deemed Products on the market Market Without Premarket Authorization (Market Without Premarket Authorization) even identified flavored e-cigarettes as the first order of enforcement, because the FDA believes that flavored e-cigarettes (such as watermelon flavor, strawberry flavor, etc.) have a high appeal to young people. Therefore, flavored e-cigarette products, which have not yet obtained effective marketing permission and are very popular with teenagers, have become the focus of FDA law enforcement.

(2) The label is incorrect

In Import Alert #98-08, two Chinese e-cigarette companies were placed on the Red List for alleged violations of labeling requirements. Section 903(A) (2) of the FD&C Act provides that tobacco products in the form of packaging will be deemed mislabeled unless the label contains the following four pieces of information: (A) the name and place of business of the manufacturer, packer, or distributor of the tobacco product; (B) an accurate representation of the quantity of the contents in the form of weight, size or count; (C) The percentage of domestically grown tobacco and the percentage of foreign-grown tobacco in the tobacco used in the product; (D) A statement that "sales are permitted in the United States only".

In contrast, a violation due to mislabeling is easier to correct than a lack of marketing clearance. In the case of no marketing license, especially flavored e-cigarettes, it can only be removed after rectification and compliance, and it is difficult to remove the import alert list.

(3) Removal of the import alert list

FDA's decision to remove a product or business from the Import Alert Red List is based on proof that the situation that led to the violation has been resolved and that this evidence convinces FDA that the company's future product entry will comply with the FD&C Act. Depending on the type of violation alleged in an import alert, the amount of evidence that restricted companies are required to submit varies. For products subjected to DWPE under Section 801(a)(3) [Adulteration, Mislabeling], the applicant is required to provide a record of at least five consecutive non-offending commercial shipments. The purpose of this action is to demonstrate that the corrective actions taken by the company are effective and ongoing, thereby convincing the FDA that the violation has been corrected and is appropriate for removal from the import alert list. (For specific removal conditions, see the US FDA Import Alert and Removal Application Guidelines for e-cigarette companies (1).)

In addition to the evidence mentioned above, the applicant should also describe in detail the measures taken to prevent the recurrence of the violation, including an analysis of the root cause of the violation and an explanation of how the company resolved the violation, which is actually a requirement to establish a compliance system.

For flavored electronic cigarettes, they are currently the main products of some enterprises. On the one hand, it requires the courage to recognize compliance trends. On the other hand, through structural arrangements, without affecting the subject's compliance, maintaining business income may also be a plan that needs to be demonstrated by lawyers, accountants and tax accountants in the future.

Third, the principles of response after being included in the import alert list

(1) Actively communicate and understand the specific reasons

The most obvious negative effect of being placed on the red List of import alerts is that the FDA will apply DWPE to restricted products and businesses under Section 801(a) of the FD&C Act. Unable to enter the United States, the world's largest electronic cigarette market, electronic cigarette companies lose a significant sales market. Therefore, e-cigarette companies that are included in the import alert list should fully understand the relevant requirements for tobacco products under the supervision of the FDA and target violations. It is also necessary to maintain good communication with the FDA to ensure communication and information sharing throughout the removal process. In addition, you should regularly check FDA's official website for FDA announcements, guidelines, seminars, and related policy documents to avoid missing important updates.

(2) seeking truth from facts and taking the opportunity to start compliance

Being placed on the Red List means that the FDA has concerns about the safety and compliance of the imported product or enterprise, requiring further control and oversight. This will seriously damage the reputation of the company, because the public will largely assume that the restricted product does not meet the quality standards. It is believed that in the subsequent PMTAs audit, companies that have been non-compliant for a long time or have been listed in the red list of import alerts for several times will encounter relatively big difficulties. In general, sooner or later must face, rectify.

Full compliance is a solid foundation for long-term business and an important requirement for enterprises under Anglo-American law. In the context of economic globalization, the compliance work of enterprises is not only conducive to the compliance of domestic and foreign laws and regulations, but also helps to maintain the reputation of enterprises. Starting comprehensive compliance can greatly reduce the risk of trade control and sanctions. In addition, reality also requires e-cigarette companies to comply. On the one hand, most e-cigarette enterprises are waiting in line for the PMTAs audit, and it is also expected that enterprises in the import alert red list are required to correct their previous non-compliance and apply stricter inspection conditions; On the other hand, the penalty in the United States may be concerned by the Chinese tobacco authorities, which will affect the extension and issuance of electronic cigarette licenses, etc., which has happened many times in the United States, such as Luckin Coffee.

(3) Set up a professional team to respond

Removal requests must be submitted to the FDA's Division of Import Operations (DIO). DIO will make a decision on whether to grant removal based on a review of the application information. Once the decision is made, whether yes or no, it means that the removal application is closed.

Therefore, it is recommended to seek help from a professional such as a lawyer in preparation for the removal of the import alert list. An attorney can help by assessing compliance risks, determining appropriate removal strategies and guiding the completion of application documentation, following up on the progress of removal applications, and ensuring that all issues raised by the FDA are adequately and promptly responded to. Companies can respond to being placed on the red list by forming a team of Chinese and American lawyers. Chinese lawyers have a better understanding of the specific operation and management situation and development goals of enterprises in China, and it is easy to establish a trust relationship with enterprises. They coordinate American legal resources on behalf of enterprises, and direct professionals to be more efficient and powerful. This is currently the practice of some central enterprises and large enterprises.

Conclusion:

To sum up, after being listed in the red list of import alerts, enterprises not only have to bear the negative impact of public opinion, but also bear additional inspection, detention and other costs. It is also expected that these enterprises will encounter difficulties in the PMTAs audit, be treated differently, and apply strict audit conditions. The removal of an alert list is a complex and cumbersome process, with companies often required to provide hundreds of pages of supporting documents to the FDA. The most difficult part of the removal of the import alert list to prove is the guarantee that it will not be repeated, which is essentially the construction of a compliance system for enterprises under common law. In the next article, we will focus on the common law perspective of e-cigarette companies to deal with the United States FDA import alert red list compliance points.