Wages and White Lion Invst v. FDA ( 2022 )

Case: 21-60766 Document: 00516397516 Page: 1 Date Filed: 07/18/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
July 18, 2022
No. 21-60766 Lyle W. Cayce
Clerk
Wages and White Lion Investments, L.L.C., doing business as
Triton Distribution,
Petitioner,
versus
Food and Drug Administration,
Respondent,
consolidated with
_____________
No. 21-60800
_____________
Wages and White Lion Investments, L.L.C., doing business as
Triton Distribution; Vapetasia, L.L.C.,
Petitioners,
versus
Food and Drug Administration,
Respondent.
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Petitions for Review of an Order of the
Food and Drug Administration
Before Jones, Haynes, and Costa, Circuit Judges.
Haynes, Circuit Judge:
Petitioners Wages and White Lion Investments, LLC, d/b/a Triton
Distribution (“Triton”) and Vapetasia, LLC (“Vapetasia”) sought to
market flavored nicotine-containing e-liquids for use in open-system e-
cigarette devices. To do so, Petitioners needed to submit premarket tobacco
product applications as required by 21 U.S.C. § 387j—which the Food and
Drug Administration (“FDA”) deemed applicable to e-cigarette tobacco
products in 2016. FDA denied the requested marketing authorizations,
finding that Petitioners failed to offer reliable and robust evidence (such as
randomized controlled trials or longitudinal studies) to overcome the risks of
youth addiction and show a benefit to adult smokers.
Petitioners seek review of those marketing denial orders (“MDOs”),
and prior to the consolidation of the two cases, Triton requested a stay
pending that review. Without (of course) the benefit of full merits briefing,
a prior panel of this court granted the stay, determining (as any court granting
a stay application must determine) that there was “a strong likelihood of
success on the merits.” Wages & White Lion Invs., L.L.C. v. FDA, 16 F.4th
1130, 1136, 1144 (5th Cir. 2021). But having now had the opportunity to
review the merits briefing followed by oral argument, we DENY the
petitions for review.
I. Statutory & Regulatory Landscape
To fully appreciate the events that gave rise to the petitions before us,
we begin with a careful review of the statutory and regulatory background.
Nearly a century ago, Congress passed the Food, Drug, and Cosmetics Act
(“FDCA”), Pub. L. No. 75-717, 52 Stat. 1040 (1938) (codified at 21 U.S.C.
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§ 301, et seq.), which established broad regulatory authority—such as a
premarket “new drug” authorization requirement—to protect the public
against the dangers of “adulterated and misbranded food, drugs, devices, and
cosmetics.” 52 Stat. at 1040, 1052; see generally id. at 1040–59.
The FDCA developed substantially over the next fifty-eight years, but
tobacco remained unregulated through the Act and its accompanying
regulations. That is, until 1996, when FDA determined that it could regulate
tobacco given its existing authority to regulate drugs and devices. Nicotine
in Cigarettes and Smokeless Tobacco Is a Drug, 61 Fed. Reg. 44,619 (Aug.
28, 1996). “Like the products that FDA traditionally regulates,” tobacco
products are “placed within the human body; like many of these products,
they deliver a pharmacologically active substance to the bloodstream; and
like these products, they have potentially dangerous effects. Indeed, no
products cause more death and disease . . . .” Id. at 44,628. On that basis,
FDA determined that it had jurisdiction to regulate tobacco products. Id.
The Supreme Court disagreed. In a landmark decision, the Court held
that “Congress . . . precluded the FDA’s jurisdiction to regulate tobacco
products.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133
(2000). The Court’s reasoning centered on Congress’s failure to amend the
FDCA to give FDA that authority, Congress’s enactment of several tobacco
statutes, and FDA’s prior assertion that it lacked jurisdiction. Id. at 155–57.
Following Brown & Williamson Tobacco Corp., if Congress wanted FDA to
regulate tobacco, it would have to grant the agency that authority expressly.
So Congress did precisely that. In 2009, it passed the Family Smoking
Prevention and Tobacco Control Act (“TCA”), Pub. L. No. 111-31, 123 Stat.
1776 (2009) (codified at 21 U.S.C. § 387, et seq.), which amended the FDCA
to include the regulation of tobacco. Section 2 of the Act laid out myriad
congressional findings, which pointed to the dangerous effects of tobacco on
3
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both adults and children. See, e.g., TCA § 2(34), 123 Stat. at 1779 (“Because
the only known safe alternative to smoking is cessation, interventions should
target all smokers to help them quit completely.”); id. § 2(1), 123 Stat. at 1777
(“The use of tobacco products by the Nation’s children is a pediatric disease
of considerable proportions that results in new generations of tobacco-
dependent children and adults.”). “Obviously,” given the extensive
congressional record, “the TCA’s purpose sounds in (1) protecting public
health and (2) preventing young people from accessing (and becoming
addicted to) tobacco products.” Big Time Vapes, Inc. v. FDA, 963 F.3d 436,
444 (5th Cir. 2020), cert. denied, 141 S. Ct. 2746 (2021) (mem.).
Congress also found that FDA had the relevant “scientific expertise
to . . . evaluate scientific studies supporting claims about the safety of
products[] and to evaluate the impact of labels, labeling, and advertising on
consumer behavior in order to reduce the risk of harm and promote
understanding of the impact of the product on health.” TCA § 2(44), 123
Stat. at 1780. To that end, Congress gave FDA broad authority to regulate
tobacco products, requiring that most “new tobacco product” receive
authorization from the FDA prior to marketing. 21 U.S.C. § 387j(a)(2)(A).
The TCA defines “new tobacco product” (in relevant part) as “any
tobacco product . . . that was not commercially marketed in the United States
as of February 15, 2007.” Id. § 387j(a)(1)(A). The Act lists specific
categories of tobacco products subject to regulation—“all cigarettes,
cigarette tobacco, roll-your-own tobacco, and smokeless tobacco”—but it
also provides that the Act will apply “to any other tobacco products that the
Secretary by regulation deems to be subject to this subchapter.” Id.
§ 387a(b). 1 In 2016, FDA used that authority to deem e-cigarettes and their
1
We recently rejected the argument that this provision constitutes an unlawful
delegation of congressional power. Big Time Vapes, 963 F.3d at 447. In reaching that
4
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component parts (including e-liquids) as tobacco products subject to the
requirements of the TCA. Deeming Tobacco Products To Be Subject to the
Federal Food, Drug, and Cosmetic Act, 81 Fed. Reg. 28,974 (May 10, 2016)
(“Deeming Rule”). 2
Relevant here, the Deeming Rule subjected e-cigarette manufacturers
to the TCA’s prior authorization requirement—manufacturers of “new
tobacco product[s]” must submit premarket tobacco product applications
(“PMTAs”). See 21 U.S.C. § 387j(a)(2). FDA reviews the PMTAs and is
statutorily required to decline them if “there is a lack of a showing that
permitting such tobacco product to be marketed would be appropriate for the
protection of the public health.” Id. § 387j(c)(2)(A). In determining whether
a product is appropriate for the protection of the public health (referred to as
the “APPH” standard), FDA must consider “the risks and benefits to the
decision, this court extensively examined the TCA’s purpose and relevant background. Id.
at 444.
2
As Petitioners showcased at oral argument, e-cigarettes can come in various
forms. FDA provided a helpful explanation in its briefing:
Some devices have “pods” or “cartridges” that hold nicotine-containing
liquid known as “e-liquid.” Some pods or cartridges (known as closed
systems) come pre-filled with e-liquid and are replaced after the e-liquid is
used up, while others (known as open systems) can be refilled by the user.
Tank or “mod” (short for “modifiable”) devices can also be refilled by
users and are also usually customizable. Disposable e-cigarettes come
prefilled with the e-liquid, and the entire device is designed to be discarded
after the e-liquid runs out.
Collectively, these devices are referred to as electronic nicotine delivery systems
(“ENDS”), but the term “ENDS” is sometimes used interchangeably with e-cigarettes.
We mimic one of our sister courts in simply using the term “e-cigarettes” for ease of
reference. See Nicopure Labs, LLC v. FDA, 944 F.3d 267, 273 n.1 (D.C. Cir. 2019) (“We
use the term ‘e-cigarettes’ to refer to the full range of products that the Industry calls
‘vapor products’ and the FDA calls Electronic Nicotine Delivery Systems, or ENDS.
They go by many other names as well . . . .”).
5
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population as a whole.” Id. § 387j(c)(4). This includes considering “the
increased or decreased likelihood that existing users of tobacco products will
stop using such products,” id. § 387j(c)(4)(A), as well as “the increased or
decreased likelihood that those who do not use tobacco products will start
using such products,” id. § 387j(c)(4)(B).
The Deeming Rule was set to go into effect on August 8, 2016, but
FDA delayed enforcement of the regulation as to existing e-cigarette
manufacturers. 81 Fed. Reg. at 28,977. Instead, manufacturers would have
a two- to three-year period to come into compliance. Id. at 28,977–78. In
2017, the FDA pushed that deadline to 2022. 3 But shortly after extending
the deadline, the American Academy of Pediatrics sued the FDA for granting
the extension. See Am. Acad. of Pediatrics v. FDA, 399 F. Supp. 3d 479 (D.
Md. 2019). A federal court vacated FDA’s 2017 guidance and required FDA
to set a new deadline at ten months after the issuance of its order. Id. at 480–
81, 487. The deadline shifted once again due to the COVID-19 pandemic,
making the final deadline September 9, 2020.
II. The Petitions
Waiting to file until the deadline date, on September 9, 2020,
Petitioners submitted PMTAs in an effort to manufacture and sell various
flavored e-cigarette products. 4 Specifically, they sought approval for
products that came in flavors like sour grape, pink lemonade, crème brulee,
3
FDA, Enforcement Priorities for Electronic Nicotine Delivery Systems (ENDS)
and Other Deemed Products on the Market Without Premarket Authorization (Revised):
Guidance for Industry 5 (2020) (“2020 Guidance”),
https://www.fda.gov/media/133880/download.
4
Triton and Vapetasia submitted nearly identical PMTAs because Triton operates
as a contract manufacturer for Vapetasia and the two worked together extensively (as they
continue to do in this litigation). Triton prepared Vapetasia’s PMTAs, and the two jointly
filed Vapetasia’s petition for review.
6
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peachy strawberry, milk & cookies, and pound cake and with names such as
“Jimmy The Juice Man Strawberry Astronaut” and “Suicide Bunny Bunny
Season.”
On September 14 and 16, 2021, FDA issued marketing denial orders
to Petitioners. FDA listed the following as the “key basis” for Triton’s
MDO (with emphasis on the language Petitioners take issue with):
All of your PMTAs lack sufficient evidence demonstrating that
your flavored ends will provide a benefit to adult users that
would be adequate to outweigh the risks to youth. In light of
the known risks to youth of marketing flavored ends, robust
and reliable evidence is needed regarding the magnitude of the
potential benefit to adult smokers. This evidence could have been
provided using a randomized controlled trial and/or longitudinal
cohort study that demonstrated the benefit of your flavored ends
products over an appropriate comparator tobacco-flavored ends.
Alternatively, FDA would consider other evidence but only if
it reliably and robustly evaluated the impact of the new flavored
vs. Tobacco-flavored products on adult smokers’ switching or
cigarette reduction over time. We did not find such evidence
in your PMTA[s]. Without this information, FDA concludes
that your application is insufficient to demonstrate that these
products would provide an added benefit that is adequate to
outweigh the risks to youth and, therefore, cannot find that
permitting the marketing of your new tobacco products would
be appropriate for the protection of the public health.
Vapetasia received a very similar basis for denial, but for Vapetasia, FDA
added:
Although your PMTAs contained a cross-sectional survey
“Vapetasia PMTA Survey and Testimonial”, this evidence is
not sufficient to show a benefit to adult smokers of using these
flavored ENDS because it does not evaluate the specific
products in the application(s) or evaluate product switching or
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cigarette reduction resulting from use of these products over
time.
Along with each MDO, FDA provided a Technical Project Lead report that
described their reasoning in much greater detail.
Petitioners timely sought review of the MDOs in this court. They
argue, primarily, that FDA lacks the authority to impose a comparative
efficacy requirement and that FDA acted arbitrarily and capriciously by
“requiring” scientific studies. Triton moved for a stay. After the stay was
granted, the two cases were consolidated for appeal.
III. Jurisdiction & Standard of Review
We have jurisdiction under 21 U.S.C. § 387l(a)(1)(B), which
authorizes federal court review of the denial of premarket tobacco product
applications in a U.S. Court of Appeals “for the circuit in which” the
individual or entity that received such a denial “resides or has their principal
place of business.” Triton’s principal place of business is Richardson, Texas,
giving us jurisdiction over its petition and the petition it jointly filed with
Vapetasia.
The FDA’s denial of Petitioners’ premarket authorizations is
reviewed under the standards set by the Administrative Procedure Act
(“APA”). See 21 U.S.C. § 387l(b). The APA allows a reviewing court to set
aside an agency determination if that determination was “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.”
5 U.S.C. § 706(2)(A). “The scope of review under the ‘arbitrary and
capricious’ standard is narrow[,] and a court is not to substitute its judgment
for that of the agency.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm
Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).
8
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IV. Discussion
Petitioners advance two primary arguments: (1) FDA acted arbitrarily
and capriciously by pulling a “surprise switcheroo” on Petitioners and failing
to consider important aspects of the PMTAs; and (2) FDA lacks statutory
authority to impose a comparative efficacy requirement. 5 We are
unpersuaded by either argument.
A. FDA Authority
We begin with the simpler matter. Petitioners argue that FDA “lacks
authority . . . to impose a requirement that Triton demonstrate its flavored
ENDS products are more effective at promoting smoking cessation than its
tobacco flavored ENDS products.” Petitioners are blatantly wrong—the
TCA authorizes FDA to consider comparative cessation evidence, if not
expressly then impliedly.
Beginning with the express authority. 21 U.S.C. § 387j is the relevant
provision: subsection (b) sets out the requirements for a premarket tobacco
application, and subsection (c) outlines the actions FDA may take with
regards to the application. Id. § 387j(b), (c). Under subsection (b),
applicants are required to include in their applications “full
reports . . . concerning investigations which have been made to show the
health risks of such tobacco product and whether such tobacco product presents
less risk than other tobacco products.” Id. § 387j(b)(1)(A) (emphasis added).
Under subsection (c), FDA is then required to consider “the information
5
Upon success on the first argument (that FDA acted arbitrarily and capriciously)
but failure on the second (that FDA lacks statutory authority), Petitioners request that the
court grant them an eighteen-month-long injunction against the agency so that they could
conduct randomized controlled trials and longitudinal studies. FDA rejects this request as
incongruent with the APA, arguing that remand is the only appropriate remedy. Because
we deny the petitions for review, we need not address the propriety of the requested relief.
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submitted to the Secretary as part of the application,” which necessarily
includes the comparative efficacy reports that applicants must provide. Id.
§ 387j(c)(2).
Petitioners ask us to ignore these provisions, arguing that the word
“risk” in § 387j(b)(1)(A) “refers to physiological health risks, not some
broader concept of risk that encompasses initiation and cessation behaviors.”
This argument is unpersuasive. Initiation and cessation behaviors are
physiological health risks. In fact, as Petitioners themselves note, cessation
is one of the reasons Congress enacted the TCA in the first place. TCA
§ 3(9), 123 Stat. at 1782; see also TCA § 2(34), 123 Stat. at 1779 (“Because
the only known safe alternative to smoking is cessation, interventions should
target all smokers to help them quit completely.”).
Moreover, subsection (c) provides further express authority for FDA
to consider comparative efficacy. The statute provides that to determine
compliance with the APPH standard, FDA must consider “the increased or
decreased likelihood that existing users of tobacco products will stop using
such products.” 21 U.S.C. § 387j(c)(4)(A). The phrase “increased or
decreased likelihood” necessarily implies a comparative analysis. Nothing
can “increase” or “decrease” in a vacuum. 6 Petitioners surely understood
as much because, as FDA points out, Petitioners actually included evidence
of comparative cessation in their PMTAs.
But even if Petitioners are right that FDA lacks the express authority
to consider such evidence, FDA certainly has implied authority to do so. In
addition to the provisions cited above, FDA may consider “any other
6
If someone smoked 10 cigarettes today, you could not say that she “increased”
or “decreased” her smoking ritual without having evidence of her prior smoking habits—
that is, evidence that would allow you to compare her smoking today to her smoking
yesterday and before.
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information before the Secretary with respect to [the] tobacco product,” 21
U.S.C. § 387j(c)(2), may commission an investigation to determine whether
a product meets the APPH standard, id. § 387j(c)(5)(A), and may consider
other “valid scientific evidence,” id. § 387j(c)(5)(B). Therefore, FDA’s
consideration of the lack of cessation as a risk and comparing that risk
between new tobacco products and old tobacco products “fall[s] squarely
within the ambit of the FDA’s expertise and merit[s] deference.” Cf.
Schering Corp. v. FDA, 51 F.3d 390, 399 (3d Cir. 1995).
B. Arbitrary and Capricious
We now turn to the core issue upon which our motions panel relied to
grant a stay. Petitioners argue that they relied on FDA’s statements that
scientific studies were not necessary, but that FDA seemed to consider the
lack of studies the only relevant factor in its decision, ignoring all the reasons
it should have authorized their products. The motions panel largely agreed.
It determined that FDA pulled a “surprise switcheroo” and either
inadequately considered or failed to consider altogether several relevant
aspects of Petitioners’ applications, including: “(1) Triton’s marketing plan;
(2) Triton’s reliance interests; (3) less disruptive alternatives; (4) device-
type preferences; and (5) evidence on the potential benefits of flavored e-
cigarettes.” Wages & White Lion, 16 F.4th at 1136.
Notably, after our court entered that decision, the Sixth Circuit
denied a stay application of a similar MDO. Breeze Smoke, LLC v. FDA, 18
F.4th 499, 506 (6th Cir. 2021) (“Considering all of Breeze Smoke’s
evidence, we disagree with Breeze Smoke, and with our colleagues on the
Fifth Circuit, who say that the FDA orchestrated a ‘surprise switcheroo.’”). 7
7
Other circuits have granted stays but provide little in the way of explanation that
addresses the considerations herein. See Gripum LLC v. FDA, No. 21-2840 (7th Cir. Nov.
4, 2021) (order granting stay pending review); Bidi Vapor LLC v. FDA, No. 21-13340 (11th
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Examining largely the same factors our court pointed out, our sister court
determined that FDA appropriately considered this evidence and reached a
contrary conclusion. Id. at 506–08.
Before diving into these specific issues, we should note that our job
here is quite limited. We are not tasked with determining whether we agree
with FDA’s decision (that is, whether we would have granted authorization
if the PMTAs were submitted to us in the first instance). Instead, we review
the MDOs for whether they were arbitrary and capricious. There are only
narrow circumstances under which we would consider an agency action
arbitrary and capricious:
if the agency has relied on factors which Congress has not
intended it to consider, entirely failed to consider an important
aspect of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in view
or the product of agency expertise.
Motor Vehicle Mfrs., 463 U.S. at 43.
Moreover, where the parties disagree on the science, we owe the FDA
deference. After all, Congress deemed only the FDA as the scientific expert
here—not the federal courts. See TCA § 2(44), 123 Stat. at 1780 (“The Food
and Drug Administration is a regulatory agency with the scientific expertise
to . . . evaluate scientific studies supporting claims about the safety of
products[] . . . .”). With those general caveats in place, we now address the
relevant specifics.
Cir. Feb. 1, 2022) (same); Johnny Copper, L.L.C. v. FDA, No. 21-13438 (11th Cir. Feb. 1,
2022) (same); Vapor Unlimited LLC v. FDA, No. 21-13454 (11th Cir. Feb. 1, 2022) (same).
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(1) Evidence on Potential Benefits
Petitioners argue that FDA dismissed their evidence regarding
benefits to adults because the evidence did not consist of the specific studies
FDA recommended. We are unpersuaded by Petitioners. As FDA aptly
summarized in its briefing before this court: “FDA denied petitioners’
applications not because they failed to include a randomized controlled trial
or longitudinal cohort study but because they failed to include any evidence
robust enough to carry petitioners’ burden under the statute.” The key piece
of evidence that Petitioners focus on in their briefing is a cross-sectional
survey conducted by Vapetasia. Petitioners emphasize that according to this
study, 82.99% of survey respondents indicated that e-cigarettes helped them
quit smoking combustible tobacco. But that survey suffered from several
methodological flaws: (1) only 294 people were surveyed; (2) the survey
respondents are all Vapetasia customers; and (3) it’s not clear how these
individuals were selected to take the survey. 8 In other words, there were
strong reasons to doubt the survey’s results. The FDA therefore did not act
arbitrarily in concluding that Vapetasia’s survey “is not sufficient to show a
benefit to adult smokers.” 9
8
As the Sixth Circuit explained given a similar customer survey:
On this record, Breeze Smoke’s survey presents methodological
issues. The FDA’s 2019 guidance suggested that applicants include
studies “with robust rationale, acute toxicological endpoints or other
clinical endpoints that may relate to long-term health impacts.” Breeze
Smoke’s study, submitted via Google Form, contained responses from
customers “solicited . . . by request in the retail stores.”
Breeze Smoke, 18 F.4th at 506 (citations omitted).
9
The motions panel discussed a study cited by Triton (and conducted by the
Consumer Advocates for Smoke-Free Alternatives Association) as key evidence that the
FDA ought to have considered. The panel noted:
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(2) Device-Type Preferences
Petitioners argue that FDA failed to consider device-type preferences
amongst youth. E-cigarettes can come in various forms: “closed systems,”
which are e-cigarettes designed to have cartridges inserted into the device;
“open systems,” which are e-cigarettes with built-in tanks that are filled by
the user; and disposables, which are e-cigarettes where the entire device is
thrown out when the e-liquid runs out (as opposed to just the empty cartridge
being thrown out in a closed-system device). 10 In 2019, FDA witnessed the
highest level ever recorded of youth e-cigarette use. See Enforcement
Priorities for Electronic Nicotine Delivery Systems and Other Deemed
Products on the Market Without Premarket Authorization, 85 Fed. Reg. 720,
722 (Jan. 7, 2020) (“Data from the 2019 NYTS also show that 2019 was the
Triton urged the FDA to consider a 2015 survey of 20,000 e-cigarette
users showing that nearly a third of the respondents “started out using
tobacco or menthol flavors” and then began using other flavored e-
cigarettes. Similarly, Triton asserted that flavored e-cigarettes “could
serve an important role in transitioning existing adult users away from
more harmful, combustible cigarette products.” But in the Order, the
FDA ignored the first point altogether and gave the second short shrift.
Wages & White Lion, 16 F.4th at 1140 (citations omitted).
Petitioners do not actively discuss this study in their briefing, only referring to it a
couple of times in passing. Regardless, the Technical Project Lead reports explain that
FDA “reviewed the application for any acceptably strong evidence.” It found none. At
most, Petitioners fault FDA for not mentioning the study in the MDO (unlike how it handled
the Vapetasia study). But unlike the Vapetasia study, Triton did not conduct or commission
this survey, and in any event, FDA not mentioning the study is not the same as “entirely
fail[ing] to consider an important aspect of the problem.” State Farm, 436 U.S. at 43.
10
The motions panel inadvertently confused closed-system devices with
disposable devices. See Wages & White Lion, 16 F.4th at 1130. To clarify, the distinction is
whether the device as a whole is thrown out (disposable) as opposed to a component part
being thrown out (closed system).
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second consecutive year in which current (past 30-day) e-cigarette use among
youth reached unprecedented levels.”).
FDA’s 2020 Guidance explained that, based on 2019 data, youth were
particularly attracted to closed-system devices. 2020 Guidance at 19.
(“[D]ata from the 2019 NYTS indicate that youth overwhelmingly prefer
cartridge-based ENDS products. These products are easy to conceal, can be
used discreetly, may have a high nicotine content, and are manufactured on
a large scale.” (footnote omitted)). Given this data, FDA began to ramp up
its enforcement efforts against closed-system devices. Former FDA
Commissioner Scott Gottlieb even made a speech after he no longer served
as Commissioner in which Gottlieb called for a complete ban on closed-
system devices and noted that open-system devices are not as popular with
youth. Nicholas Florko, Former FDA Commissioner Calls for A Full Ban on
Pod-Based E-Cigarettes, STAT (Nov. 12, 2019),
https://www.statnews.com/2019/11/12/gottlieb-ban-pod-based-e-cigarettes/.
Petitioners rely heavily on the Gottlieb statement and FDA’s
enforcement efforts against closed-system devices. They argue that FDA
acted arbitrarily and capriciously because it failed to consider that their e-
cigarettes are open-system devices. But in reality, Petitioners fault FDA for
refusing to turn a blind eye to all the evidence that has emerged since 2019.
Particularly, after FDA increased enforcement actions against closed-system
devices, the youth-smoking epidemic did not end; instead, youth smokers
migrated to other device types with flavored e-liquids: “[W]hen FDA
changed its enforcement policy to prioritize pod-based flavored ENDS,
which were most appealing to youth at the time, we subsequently observed a
substantial rise in use of disposable flavored ENDS—a ten-fold increase
(from 2.4% to 26.5%) among high school current e-cigarette users.” See
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Triton TPL Report at 8; Vapetasia TPL Report at 8. 11 To the extent
Petitioners rely on the Gottlieb statement and the 2020 Guidance, their
reliance is misplaced. Both were based on data from 2019—that is, data from
before the FDA’s subsequent enforcement actions and the observed youth
migration. 12 As well, Gottlieb was no longer the FDA Commissioner, so his
comments have no greater weight than anyone else’s thoughts. In contrast
to the evidence on device-type preference, FDA concluded that “across
these different device types, the role of flavor is consistent.” In other words,
FDA did consider Petitioners’ device type, and it concluded (reasonably)
that what truly impacts youth smokers is flavor preference, not device
preference.
(3) Reliance Interests
Petitioners argue, and the motions panel concluded, that FDA
“pulled a surprise switcheroo” in “requir[ing] the very studies it originally
expected it didn’t need.” Wages & White Lion, 16 F.4th at 1138 (internal
quotation marks, brackets, and citation omitted). But the FDA does not
now—and has not ever—required studies of smoking cessation. Contrary to
the motion panel’s determination that FDA made a “radical” change, id. at
1138–39, FDA has always suggested and continues to suggest that such
studies might be useful, in particular where, as here, the evidence presented
in an application is otherwise weak. See Nicopure Labs, LLC v. FDA, 944 F.3d
267, 282 (D.C. Cir. 2019) (“The FDA has expressed willingness to accept
11
The notion in the dissenting opinion that Petitioners only received the TPLs via
FOIA was not an argument raised adequately by Petitioners in their briefing.
12
While Petitioners cite two studies that purport to include data from 2020 and
2021, these studies do not show (or at least, Petitioners fail to explain how they show) what
the percentage breakdown across devices is, what effect the FDA enforcement actions had
on this usage, or how these statistics map on to statistics regarding flavor. The evidence
provided on device-type preferences is, therefore, unpersuasive.
16
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scientific literature reviews instead of commissioned studies in support of e-
cigarette applications in appropriate circumstances.” (emphasis added)).
One needs to look no further than the FDA’s own conditional
language over the last several years to reach that conclusion. The record is
replete. See, e.g., Premarket Tobacco Product Applications and
Recordkeeping Requirements (Final Rule), 86 Fed. Reg. 55,300, 55,387 (Oct.
5, 2021) (“FDA does not expect that long-term clinical studies will need to
be conducted for each PMTA; instead, it expects that it should be able to rely
on other valid scientific evidence to evaluate some PMTAs.” (emphasis
added)); Premarket Tobacco Product Applications and Recordkeeping
Requirements (Proposed Rule), 84 Fed. Reg. 50,566, 50,619 (Sept. 25, 2019)
(“FDA will determine . . . whether the available evidence, when taken as a
whole, is adequate to support a determination that permitting the new tobacco
product to be marketed would be APPH.” (emphasis added)); FDA,
Premarket Tobacco Product Applications for Electronic Nicotine Delivery
Systems (ENDS): Guidance for Industry 13 (2019),
https://www.fda.gov/media/127853/download (“[I]nstead of conducting
clinical studies that span months or years to evaluate potential clinical
impact, applicants could demonstrate possible long-term health impact by
including existing longer duration studies in the public literature with the
appropriate bridging information . . . .” (emphasis added)); id. at 46
(“[T]hese data may be sufficient to support a PMTA . . . .” (emphasis
added)); 81 Fed. Reg. at 28,997 (“[I]n some cases, it may be possible for an
applicant to obtain a PMTA marketing authorization order without
conducting any new nonclinical or clinical studies where there is an
established body of evidence regarding the public health impact of the
product.” (emphasis added)).
The evidence cited by the dissenting opinion to the contrary ignores
the FDA’s continuous use of conditional language. For example, quoting the
17
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TPLs, the dissenting opinion frames FDA as stating that longitudinal
“studies are ‘most likely’ to provide reliable and robust evidence to satisfy
the APPH standard.” But the dissenting opinion ignores the next line in the
TPL: “other types of evidence could be adequate[] and will be evaluated on
a case-by-case basis.” Similarly, per the dissenting opinion, “FDA
announced that it would authorize the flavored ENDS products only if the
PMTAs included previously purely optional studies.” Dissenting Op. at 3–
4. For this argument, the dissenting opinion relies on an FDA press release,
while ignoring the line in that press release that says, “the agency does not
foreclose the possibility that other types of evidence could be adequate if
sufficiently robust and reliable.” See FDA, Press Release, FDA Denies
Marketing Applications for About 55,000 Flavored E-Cigarette Products for
Failing to Provide Evidence They Appropriately Protect Public Health (Aug.
26, 2021), https://bit.ly/2YsYmzd. Finally, the dissenting opinion’s
reliance on a subsequently retracted internal FDA memo does not alter any
of the conditional language that FDA continued to provide.
Having reviewed this record, we agree with the Sixth Circuit’s con-
clusion regarding the lack of any scientific study “requirement.” See Breeze
Smoke, 18 F.4th at 506–07. Breeze Smoke was decided after Wages & White
Lion, and following the Breeze Smoke decision, Petitioners presented an ap-
plication for a stay (i.e., a stay of the FDA’s denial) to Justice Kavanaugh,
who referred the application to the Court. See Breeze Smoke, LLC v. FDA,
142 S. Ct. 638 (2021) (mem.). The application was denied, without any rec-
orded dissent from the Supreme Court. Id. Having had the benefit of these
subsequent developments as well as full briefing and oral argument, we take
a different view from the stay panel. 13
13
It should go without saying, but the dissenting opinion wrongly implies that four
judges of this court have “found” the merits lacking. Dissenting Op. at 1. Our precedent
18
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The fact that Petitioners presented other scientific evidence does not
make that scientific evidence valid, and it is entirely consistent with FDA’s
prior statements to reject that evidence. Moreover, Petitioners’ attempts to
distinguish Breeze Smoke are unavailing. Petitioners make two arguments:
(1) “the Sixth Circuit’s motions panel considered only one excerpt from
FDA’s 2019 Guidance, and not the representations made by FDA at the two
public meetings with applicants or the Final PMTA Rule”; and (2) “Breeze
Smoke . . . dealt exclusively with disposable ENDS products, not bottled e-
liquids.” As to the first argument, as noted above, all the representations
made by the FDA consistently said that other evidence might be accepted. As
to the second argument, the device-type distinction is unpersuasive for the
reasons set out earlier, and that distinction has no impact on the FDA’s prior
statements regarding scientific studies. Therefore, we (like our sister court)
conclude that FDA has not pulled an impermissible “surprise switcheroo.”
See Breeze Smoke, 18 F.4th at 506–07. 14
(4) Marketing Plan
Finally, Petitioners argue that FDA did not appropriately consider
their marketing scheme. Instead, FDA stated that “for the sake of efficiency,
the evaluation of the marketing plans in applications will not occur at this
stage of review, and we have not evaluated any marketing plans submitted
makes clear that a stay panel’s determination regarding the likelihood of success on the
merits is not itself a determination on the merits. That determination is for this panel to
make alone.
14
For these same reasons, we disagree with the dissenting opinion’s attempt to
distinguish Breeze Smoke and specifically disagree with the dissenting opinion’s accusation
that the Sixth Circuit “fail[ed] to acknowledge the abundant administrative record
concerning FDA’s public engagement with ENDS product suppliers, FDA’s Sept. 2019
proposed rule, and the Final Rule, all of which are inconsistent with its perfunctory denial
orders.” Dissenting Op. at 5 n.4. The Sixth Circuit considered each extensively. See
Breeze Smoke, 18 F.4th at 505–08.
19
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with these applications.” The motions panel rebuked this statement, noting
that “‘efficiency’ is no substitute for ‘reasoned decisionmaking.’” Wages &
White Lion, 16 F.4th at 1137 (quoting Michigan v. EPA, 576 U.S. 743, 750
(2015)). After careful consideration, we have determined that the FDA did
not act arbitrarily and capriciously in not reviewing the marketing plans, and
if they did, such error was harmless.
As an initial matter, FDA did not consider the marketing plan because
although “[i]t is theoretically possible that significant mitigation efforts could
adequately reduce youth access and appeal,” FDA had not once evaluated a
marketing plan that actually did so. This was not a novel observation on the
FDA’s part. In fact, part of the reason Congress passed the TCA is because
marketing restrictions simply were not working: “Because past efforts to
restrict advertising and marketing of tobacco products have failed adequately
to curb tobacco use by adolescents, comprehensive restrictions on the sale,
promotion, and distribution of such products are needed.” TCA § 2(6), 123
Stat. at 1777.
Moreover, Petitioners should have known that marketing plans on
their own are not particularly useful. 15 FDA explained as much in its 2020
Guidance, in which it noted that youth usage continued to rise despite FDA’s
2018 efforts to curb predatory marketing, such as its issuance of “warning
letters to manufacturers, distributors, and retailers for selling e-liquids with
labeling and/or advertising that resemble kid-friendly food products, such as
juice boxes, candy, or cookies.” 2020 Guidance at 6–9. This finding by FDA
15
To be clear, in saying this we do not “blame” Petitioners for not knowing that
their marketing plans would not be useful. See Dissenting Op. at 8. Instead, the record
shows that it would have been unreasonable for Petitioners to believe that marketing plans
in and of themselves would suffice for FDA to grant their PMTAs. An unreasonable belief
on the part of an applicant is not the same as arbitrary and capricious action on the part of
an agency.
20
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directly refutes the dissenting opinion’s claim that, until the MDOs, “[e]very
single statement by the agency . . . reasonably led petitioners to believe that
if they devised marketing arrangements that would prevent underage persons
from purchasing their flavored e-liquids . . . they would have surmounted a
significant requirement for marketing approval.” Dissenting Op. at 8. The
record not only undermines this statement, it contravenes it entirely—FDA
stating that marketing plans would “help FDA determine” whether the new
tobacco product meets the APPH standard is not the same as FDA stating
that if marketing plans exist then market authorization was a step away. 16
16
The dissenting opinion does not address the substance of FDA’s finding that
youth usage continued despite FDA’s 2018 efforts to curb predatory marketing, focusing
instead on the source in which FDA issued that finding: the 2020 Guidance. Dissenting Op.
at 7-8. Instead, it provides four reasons the 2020 Guidance should not be considered. We
address each in turn.
First, the dissenting opinion takes issue with the 2020 Guidance not “amending”
the earlier Guidance. But both the 2020 Guidance and the earlier 2019 Guidance (which
the dissenting opinion calls the “definitive” and “final” guidance) contained nonbinding
recommendations. Lest anyone get confused, each document had a header that said, in bold
print, “Contains Nonbinding Recommendations.” Nothing in the record suggests that it
is necessary or even common for FDA to amend a document no one was ever bound by.
Second, the dissenting opinion notes that “there is no evidence at all that these
petitioners marketed or sold to youth.” Dissenting Op. at 7. But there is no statutory
requirement that for FDA to deny authorization, it must (or even should) have evidence
that a particular applicant marketed or sold to youth.
Third, the dissenting opinion states that the 2020 Guidance is not referenced in
the MDOs. This statement is technically true, but misleading. After all, the MDOs also
didn’t mention the 2019 Guidance. Nor is that the purpose of an MDO. An MDO is
merely a short letter stating FDA’s conclusion. Its reasoning is described more fully in the
TPLs, which, of course, discuss the 2020 Guidance at length.
Fourth, the dissent’s final concern—“the high level of youth vaping that spawned
the 2020 Guidance had been underway since 2018, yet FDA did not adjust its PMTA
Guidance materials significantly during this period”—asks FDA to do the impossible and
analyze something that did not yet exist. Although vaping was a large issue amongst youth
in 2018, the primary study FDA relied on for that data was not released until November
2018. FDA then quickly implemented new enforcement priorities. It then studied the
21
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Instead, based on its expertise, FDA determined that traditional
marketing schemes do not work and that absent a “novel or materially
different” scheme, youth appeal would continue. Of course, one could argue
that without having actually reviewed the marketing plans, FDA could not
have known that Petitioners’ plans would not have been unique. But at oral
argument, FDA clarified that what it did review included a summary of the
marketing plans. 17 We, therefore, do not believe that the agency acted
arbitrarily and capriciously—Petitioners’ plans were not unique; FDA did
not need to go any further.
Quoting the stay panel, the dissenting opinion objects to this line of
reasoning, analogizing FDA’s actions to a judge that “stopped reading briefs
because she previously found them unhelpful” and arguing that FDA only
did so because it was inundated with a backlog of PMTAs. Dissenting Op. at
7. With this framing in mind, it’s no wonder that the dissenting opinion calls
the FDA’s conduct “obviously illogical and unreasonable.” Dissenting Op.
at 7. But that framing does not appropriately capture what happened here.
We offer a different analogy. Consider a district court, inundated with
a backlog of motions. Of course the court will not consider a summary
judgment motion on the merits if it concludes that it must grant a motion to
dismiss for lack of jurisdiction because it doesn’t matter how good of a merits
argument a plaintiff has, such an argument cannot cure a jurisdictional defect.
effect of its new enforcement priorities in 2019 and developed updated guidance based on
that data in 2020. Asking FDA to have provided data earlier would be asking FDA to
release guidance with potentially no actual data. That would be an arbitrary and capricious
agency action.
17
Parties clarify factual matters before appellate courts all the time—it’s one of the
benefits of oral argument. Clarifying what happened factually is not, by any stretch of the
imagination, “judicial post hoc reasoning about a post hoc justification.” See Dissenting
Op. at 8.
22
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We recognize that, for efficiency, a district court need not review every single
motion before it when a motion will have no effect on the outcome of the
litigation, and we understand that not addressing every issue is not the same
as a failure of reasoned decision making.
We cannot hold a federal agency, operated by a co-equal branch of
government, to a higher standard than we hold the federal courts. FDA, per
its expertise, understood that whatever the specific details of Petitioners’
marketing plans were, those details could not cure the other defects in
Petitioners PMTAs. It did not need to assess the details of the marketing
plan, and its failure to do so is not a failure of reasoned decision making.
In any event, nothing in Petitioners’ briefing to this court indicates
that their marketing plan was in fact unique. Instead, “Triton and
Vapetasia’s PMTA marketing plans called for their products to be only sold
in age-gated vape and specialty tobacco shops and through age-gated online
sales.” But FDA had already explained that such attempts do not work:
FDA has been focusing enforcement efforts on age verification
as a strategy to address youth use of tobacco products, and
FDA continues to enforce age restrictions. However, FDA
believes that age verification alone is not sufficient to address
this issue, given the most recent data that youth use of ENDS
products continues to increase. FDA determined that focusing
on how the product was sold would not be sufficient to address
youth use of these products given the many sources of products
available for youth access. The reality is that youth have
continued access to ENDS products in the face of legal
prohibitions and even after voluntary actions by some
manufacturers.
2020 Guidance at 44.
The burden falls on Petitioners to show that they would have received
authorization had FDA considered these plans. See, e.g., Shinseki v. Sanders,
23
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556 U.S. 396, 409 (2009); Am. Airlines, Inc. v. Dep’t of Transp., 202 F.3d 788,
797 (5th Cir. 2000). They have not done so. Given that the TCA
incorporates the APA’s harmless error rule—see 21 U.S.C. § 387l(b); 5
U.S.C. § 706—Petitioners’ failure to show harm necessitates the denial of
relief.
* * *
Congress passed the TCA in an active effort to protect public health.
In serving that purpose, we cannot say that FDA acted arbitrarily and
capriciously by disagreeing with Petitioners as to the significance of the
evidence they presented. Of course, nothing prevents Petitioners from
reapplying with further evidence (and then seeking judicial review after
further agency action). But as to the present state, we conclude that the
petitions are DENIED.
24
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Edith H. Jones, Circuit Judge, dissenting:
Six judges of this court have reviewed the FDA’s “reasons” for
removing from the market and destroying the business for these petitioners’
electronic nicotine delivery system (“ENDS”) products. Four of us have
found the agency’s decisions seriously inadequate, but at least the debate
with my colleagues is founded on known standards. Not so FDA’s actions.
In a mockery of “reasoned” administrative decision-making, FDA
(1) changed the rules for private entities in the middle of their marketing
application process, (2) failed to notify the public of the changes in time for
compliance, and then (3) rubber-stamped the denial of their marketing
applications because of the hitherto unknown requirements. See DHS v.
Regents of the Univ. of Cal., 140 S. Ct. 1891, 1909 (2020). Kafka would have
understood the FDA all too well. The agency’s decisions are arbitrary and
capricious. I dissent.
I. Background
Petitioners’ flavored nicotine-flavored liquids are among a host of
“tobacco products” (although they contain no tobacco) that have fallen
within the regulatory purview of the FDA since 2016. See 81 Fed. Reg. 28974(May 10, 2016) (“the deeming rule”). 1 To continue selling their flavored
liquids, Petitioners had to submit a premarket tobacco product application
(“PMTA”) to the FDA by September 9, 2020. See 21 U.S.C. § 387j; Vapor
Tech. Ass’n v. FDA, 97 F.3d 496, 498-501 (6th Cir. 2020). If the FDA issues
a marketing denial order (“MDO”) in response to a PMTA, sales of the
products become unlawful. Given that ENDS product companies’ very
1
Petitioners’ products are used in “open system” e-cigarettes, which are distinct
from “closed system” cartridge-type and disposable e-cigarettes. According to FDA’s
studies, disposable or cartridge-based products are overwhelmingly more attractive to
youthful users because they are discreet, easy to operate and conceal.
25
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existence depended on securing marketing approval, petitioners had
significant incentives to get the applications right. Recognizing this, the FDA
put an extensive amount of information out to the public about what was
relevant to a successful application, and what was not.
Toward that end, in October 2018 the FDA held a two-day public
meeting to “improve public understanding . . . on the process for the
submission and review of [PMTAs].” Tobacco Product Application Review
– A Public Meeting (October 22, 2018), https://bit.ly/3FhPxJi. In relaying
the types of studies that could support a PMTA, an FDA representative
stated: “No specific studies are required for a PMTA; it may be possible to
support a marketing order for an ENDS product without conducting new
nonclinical or clinical studies given other data sources can support the
PMTA.” Premarket Tobacco Product Application Content Overview: Iilun
Murphy – OS/Division of Individual Health Science (October 23, 2018)
(emphasis added).
In June 2019, the FDA issued final guidance on PMTAs for ENDS
products, the purpose of which was to “assist persons submitting [PMTAs]
for [ENDS]” products and to “enable ENDS manufacturers to consider and
strengthen their applications.” FDA, Guidance for Industry, Premarket
Tobacco Applications for Electronic Nicotine Delivery Systems (June 2019);
Triton-FDA2-004408, 004411. The FDA’s guidance made four salient
points. First, “in general, FDA does not expect that applicants will need to
conduct long-term studies to support an application.” Triton FDA2-004423
(emphasis added). Second, although randomized clinical studies “could
address cessation behavior of users of tobacco products, FDA believes this
would also be true for observational studies (perception, actual use, or both)
examining cessation behaviors.” Triton-FDA2-004448 (emphasis added).
Third, FDA intended to review each PMTA and weigh all the benefits and
26
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risks from the product. Fourth, FDA would specifically pay attention to
marketing restrictions that could restrict distribution to underage users.
In September 2019, FDA’s proposed rule governing PMTAs
reinforced all of these points. In particular, the agency stated once again that
long-term studies were not expected. In addition, the FDA re-emphasized
that marketing plans were critical:
“[t]he applicant’s marketing plans will help FDA determine
whether permitting the marketing of the new tobacco product
would be [appropriate for the protection of the public health]
because they will provide input that is critical to FDA’s
determination of the likelihood of changes in tobacco product
use behavior, especially when considered in conjunction with
other information contained in the application. FDA will review
the marketing plan to evaluate potential youth access to, and
youth exposure to the labeling, advertising, marketing, or
promotion of, a new tobacco product.”
84 Fed. Reg. 50566, 50581 (Sept. 25, 2019) (emphasis added).
Petitioners assumed that these guidelines governed their applications,
and accordingly prepared applications that emphasized their restrictive
marketing but did not include long-term studies on smoking cessation
behavior. The PMTAs were timely filed on September 9, 2020.
1. The New Rules.
Ten months later, when FDA was inundated by literally millions of
PMTAs, the agency circulated an internal memorandum providing a new
“standard of evidence” for some PMTAs for flavored ENDS products. See
Triton-FDA2-005144-005155 (July 9, 2021). This memo was not publicly
released, though its intent was to facilitate “final action on as many
applications as possible by September 10, 2021.” See Triton-FDA2-005144.
Given the “large number of applications that remain[ed] to be reviewed by
September 9, 2021,” the memo explained that in lieu of reviewing
applications on an individualized basis, the FDA would “conduct a Fatal
27
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Flaw review . . . a simple review in which the reviewer examines the
submission to identify whether or not it contains the necessary type of
studies[].” Triton-FDA2-005145 (emphasis added). The “fatal flaw” would
be the absence of studies—that is to say, long-term studies that the agency
previously stated were neither necessary nor expected. Triton-FDA2-
005144 - 45. Put bluntly, the memo ensured that even if an applicant followed
FDA’s pre-deadline public statements and proposed rule, the FDA would
nonetheless deny a PMTA because it failed to satisfy the internal non-public
requirement for “the necessary type of studies” crafted in July 2021. FDA
asserts that the Fatal Flaw memo was rescinded, but its approach appears to
have been followed in a check-box “scientific review” form that indicated
only whether a PMTA included a randomized controlled trial or longitudinal
cohort study. Triton FDA1-000247-000260.
Similarly, FDA changed its mind about reviewing marketing plans and
decided not to do so “for the sake of efficiency.” Significant sections of that
internal memo, though also claimed by FDA to be rescinded, 2 are copied
word-for-word in the TPLs for petitioners’ products.
2. The Late Notice.
The FDA revealed its new modus operandi concerning long-term
studies on August 26, 2021 in a press release when it denied 55,000 ENDS
products PMTAs in one day. Thus, nearly a year after the PMTA deadline,
FDA announced that it would authorize the flavored ENDS products only if
the PMTAs included previously purely optional studies, i.e., long-term
studies showing that the applicant’s flavored ENDS products effectively
promoted cessation from cigarette smoking in a manner that outweighs the
potential risk to youth. FDA, Press Release, FDA Denies Marketing
2
PMTA Review: Evidence to Demonstrate Benefit of Flavored ENDS to Adult
Smokers. FDA, Aug. 25, 2021.
28
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Applications for About 55,000 Flavored E-Cigarette Products for Failing to
Provide Evidence They Appropriately Protect Public Health (Aug. 26,
2021), https://bit.ly/2YsYmzd.
Petitioners’ PMTAs were not among the first batch of denials. Id. In
an attempt to adjust to the new requirement, petitioners submitted a letter to
the FDA on September 1, 2021, stating that they intended to conduct
additional behavioral studies on adult smoking cessation and long-term
studies of their products to supplement their PMTAs.
3. Rubber-stamped denials.
Their prompt reaction was in vain. On September 14, FDA issued
MDOs denying them the right to sell their flavored liquids in the United
States. The MDOs refused to consider, much less evaluate the petitioners’
marketing plans “for the sake of efficiency.” 3 TRITON-FDA 1–000279.
Petitioners were denied any attempt to comply with the new rule, FDA
informed them, because the September 1, 2021 letter was “received near the
completion of scientific review.” Triton-FDA1-000123. The MDOs
perfunctorily concluded that their evidence failed to demonstrate “robustly”
and “reliably” the magnitude of their flavored products’ potential benefit to
adult smokers. Such evidence, however, “could have been provided using a
randomized controlled trial and/or longitudinal study that demonstrated the
benefit of your flavored ends products over an appropriate tobacco-flavored
ends.” Triton-FDA1-000124.
3
This MDO also states that “none of the ENDS PMTAs that FDA has evaluated
have proposed advertising and promotion restrictions that would decrease appeal to youth
to a degree significant enough to address and counter-balance the substantial concerns, and
supporting evidence, discussed above regarding youth use.” Because FDA had not seen a
successful marketing plan on past applications, it generalized, all future applications must
lack worthwhile marketing plans. So much for individualized consideration of marketing
plans.
29
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The TPLs furnished to petitioners as alleged backup for the MDOs is
more egregiously out of step with all of FDA’s pre-deadline policies, as it
states that, “[b]ased on existing scientific evidence and our experiences in
conducting premarket review employing the APPH standard over the last
several years, FDA has determined….most likely product specific evidence
from a randomized controlled trial (RCT) or longitudinal controlled study”
will be adequate. Triton-FDA1-000271. Later, the TPL recounts, contrary
to the agency’s previous representations, that the types of studies it earlier
promoted must also be conducted “over time.”
4. The Post Mortem Rule
FDA published its final PMTA Rule on October 4, 2021, a rule
consistent with its prior pre-August 2021 policies but inconsistent with the
process described in petitioners’ MDOs. FDA, Premarket Tobacco Product
Applications and Recordkeeping Requirements, Final Rule, 86 Fed. Reg.
55300. The Final Rule, yet again, states that the FDA does “not expect that
applicants will need to conduct long-term clinical studies to support an
application.” 86 Fed. Reg. 55300, 55387. Contrary to the fatal flaw
approach, the final rule states that the “FDA declines to create a series of
criteria that either all products or a specific subset of products must meet in
order for marketing of such products to be considered as part of this rule.”
Id. at 55386. Instead, FDA assured that it would “consider[] many factors,”
id. at 55314, would not rely on “one static set of requirements” id. at 55385,
does not assign weight to different types of evidence, id. at 55335, and
carefully “balances” risks and benefits, id. at 55384.
Concerning marketing plans, the FDA’s Final Rule repeatedly
contradicts the MDOs’ flat refusal to consider them, as it explains that
“FDA has rationally concluded that the required descriptions of marketing
plans will directly inform its assessment of who may be exposed to the
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[marketing processes] and, as a result, its consideration of the potential
impact on youth initiation and use. Id. at 55324. 4
II. Discussion
As noted, the majority and I agree that according to the
Administrative Procedure Act, we must decide whether the FDA’s decisions
are “arbitrary and capricious…or not in accordance with law.” 5 U.S.C.
§ 706(2)(A). The Supreme Court has succinctly explained that “[t]he
APA’s arbitrary and capricious standard requires that agency action be
reasonable and reasonably explained.” FCC v. Prometheus Radio Project,
141 S. Ct. 1150, 1158 (2021); see also Motor Vehicle Mfs. Ass’n of U.S., Inc. v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50, 103 S. Ct. 2856, 2870 (1983).
We know our rules; I disagree that FDA followed those rules.
Although courts may not substitute our policy view for that of the
agency, we must ensure the agency turns square corners 5 in dealing with the
public to whom it is subservient. Consequently, agency action may not be
justified to a court based on post hoc rationalization; the agency must “defend
4
Several other courts have ruled on motions to stay FDAs MDOs concerning other
ENDS products. Two courts granted stays, like the motions panel here, and one denied a
stay. See Gripum LLC v. FDA, No. 21-2840, ECF No. 18 (7th Cir. Nov. 4, 2021); Bidi
Vapor LLC v. FDA, et al., No. 21-13340, Per Curiam Order (11th Cir. Feb 1, 2022); Breeze
Smoke, LLC v. United States Food & Drug Admin., 18 F.4th 499 (6th Cir. 2021) (denying
motion to stay similar MDOs). In particular, I would distinguish the Sixth Circuit’s ruling,
touted by the panel, because it fails to acknowledge the abundant administrative record
concerning FDA’s public engagement with ENDS product suppliers, FDA’s Sept. 2019
proposed rule, and the Final Rule, all of which are inconsistent with its perfunctory denial
orders.
5
Square corners is a turn of phrase used by Justice Robert Jackson. See Fed. Crop
Ins. Corp. v. Merrill, 332 U.S. 380, 387–88, 68 S. Ct. 1, 5 (1947) (J. Jackson dissenting)
(observing that regulatory law is a two-way street and that agencies when dealing with the
regulated, just as much as citizens subject to their regulations, must turn square corners).
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its actions based on the reasons it gave when it acted.” DHS v. Regents of the
Univ. of Cal., 140 S. Ct. 1891, 1909 (2020). Nor may an agency wholly fail to
consider “relevant factors” and “important aspect[s] of the problem.”
Michigan v. EPA, 576 U.S. 743, 752, 135 S. Ct. 2699, 2707 (2015). Nor may
an agency thwart legitimate reliance interests by pulling a “surprise
switcheroo” by changing its requirements too late for the petitioners to
respond. See Env’t Integrity Project v. EPA, 425 F.3d 992, 996 (D.C. Cir.
2005) (Sentelle, J.); accord Azar v. Allina Health Servs., 139 S. Ct. 1804, 1810
(2019) (citing the “surprise switcheroo” doctrine).
The majority’s analysis of these MDOs looks almost exclusively at the
bottom-line result of FDA’s decisions and finds nothing to criticize. But the
facts recited above speak for themselves. FDA refused to review petitioners’
marketing restrictions, which it had repeatedly stated were key to
discouraging youthful use of the products and were thus critical components
of the PMTAs. FDA repeatedly counselled applicants that long term studies
were likely unnecessary and it said nothing about comparative efficacy
studies—until the PMTA deadline was long gone; and then it refused
petitioners the opportunity to conduct such studies. Finally, FDA’s defense
against petitioners on the merits of their applications is loaded with post hoc
rationalizations. Any of these errors is a “fatal flaw.” Taken together, they
are mortal wounds.
The MDOs should be vacated, and the case remanded to FDA with
instructions to allow these petitioners to develop and offer further evidence
in support of the PMTAs.
A. Marketing Plans
The majority holds that the FDA’s decision to ignore and not review
the petitioners’ plans was not arbitrary and capricious. To do this, the
majority must themselves ignore the MDOs’ only stated reason for ignoring
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the plans: “for the sake of efficiency.” The majority does not deny that
“‘efficiency’ is no substitute for ‘reasoned decisionmaking.’” Wages &
White Lion Invs., L.L.C. v. FDA, 16 F.4th 1130, 1137 (5th Cir. 2021) (quoting
Michigan v. EPA, 576 U.S. 743, 750, 135 S. Ct. at 2706). Instead, the majority
relies on FDA’s post hoc justifications for ignoring the marketing plans.
First, the majority accepts FDA’s assertion that it had not in the past
evaluated a marketing plan that discouraged youth from using ENDS
products. This is not a “reason” for refusing to even look at these
petitioners’ MDOs. As the stay panel noted, this excuse is akin to a judge’s
saying, “she stopped reading briefs because she previously found them
unhelpful.” Wages & White Lion, 16 F.4th at 1137. It is obviously illogical and
unreasonable to infer from the general to the particular, especially when FDA
acknowledged its duty to consider each PMTA individually and holistically.
Nor is the mere invocation of agency “expertise” a non-arbitrary substitute
for an explanation how such expertise was brought to bear on the particular
PMTA. “The requirement of explanation presumes the expertise and
experience of the agency and still demands an adequate explanation in the
particular matter.” CS Wind Viet. Co., Ltd. v. United States, 832 F.3d 1367,
1377 (Fed. Cir. 2016)(citations omitted). The agency’s failure to
meaningfully consider an aspect of the petitioners’ PMTAs that it had
previously deemed essential is quintessentially arbitrary and capricious.
Univ. of Texas M.D. Anderson Cancer Ctr. v HHS, 985 F.3d 472, 475 (5th Cir.
2021).
Second, the majority makes much of an FDA 2020 Guidance that
decried increasing adolescent use of tobacco products starting in 2018 even
after the agency cracked down on vape companies that marketed and sold
ENDS products in packaging that looked like juice boxes and candy cartons.
The 2020 Guidance, however, has nothing to do with this case because (a) it
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discussed enforcement priorities, and it did not purport in any way to amend
the definitive PMTA Guidance documents that emphasized the importance
of marketing plans; (b) there is no evidence at all that these petitioners
marketed or sold to youth directly or indirectly, knowingly or objectionably;
(c) the 2020 Guidance was not referenced at all in the MDOs and is therefore
an inadmissible post hoc explanation; and (d) the high level of youth vaping
that spawned the 2020 Guidance had been underway since 2018, yet FDA
did not adjust its PMTA Guidance materials significantly during this period. 6
Moreover, recourse to the 2020 Guidance as a basis for FDA’s having
disregarded the marketing plans is flatly contradicted by the Final PMTA
Rule, which continued to stress the importance of such plans as a “critical
factor” in FDA’s approval decisions.
Third, the majority admits that since FDA never reviewed the
marketing plans, “one could argue” it had no basis to find them neither
“novel or materially different” from others. But wait—the majority relies
on FDA’s statement—in oral argument to this court—that its review actually
included a summary of the marketing plan. This is judicial post hoc reasoning
about a post hoc justification.
Fourth, and most objectionably, the majority blames petitioners for not
knowing that “marketing plans on their own are not particularly useful.”
6
The 2020 Guidance also focuses almost exclusively on the continuing
attractiveness to youth of closed-system ENDS products, and very little if at all on bottled
e-liquids for use in open systems. These petitioners produce bottled e-liquids. To the
extent FDA means to say that youth will migrate to any flavored ENDS products if other
avenues are closed off, it provided no evidence of that migration toward petitioners’
products during the periods in question. In fact, the 2020 Guidance stated that it “should
have minimal impact on those vape shops that primarily sell non-cartridge ENDS products
and ensure that purchasers are of the requisite age and are not purchasing for resale[.]”
Triton FDA-2-000321-000322.
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That statement stands the requirement of reasoned agency decisionmaking on
its head. Every single statement by the agency, until it issued its MDOs to
these petitioners, reasonably led petitioners to believe that if they devised
marketing arrangements that would prevent underage persons from
purchasing their flavored e-liquids for open systems, they would have
surmounted a significant requirement for marketing approval.
Finally, to assert that the agency’s deliberate lapse amounted to
“harmless error” is simply incorrect. Prejudice in the administrative law
context does not involve a “complex system of ‘burden shifting’ rules or a
particularly onerous requirement.” Shinseki v. Sanders, 556 U.S. 396, 410,
129 S. Ct. 1696, 1706 (2009). An “APA deficiency is not prejudicial only
when it is one that clearly had no bearing on the procedure used or the
substance of decision reached.” United States v. Johnson, 632 F.3d 912, 930
(5th Cir. 2011). Taken in conjunction with the agency’s violation of other
administrative norms through its failures of notice and ignoring petitioners’
reliance interests, the majority has no basis for claiming harmless error.
For all these reasons, the agency cannot run away from individually
reviewing petitioners’ marketing plans when, for two years, it assured the
public that properly tailored marketing of flavored ENDS products could
protect youth from exposure and abuse while the products also helped those
who need to stop smoking. It is the epitome of agency hubris to pull the rug
out from entities whose very existence depends on the agency’s careful
balancing of all factors relevant to this public health issue.
B. Notice and Reliance Interests
The majority puts down petitioners’ claimed “reliance interests” and
denies that FDA pulled a “surprise switcheroo” by rejecting their PMTAs
for lack of “randomized controlled trials” or “longitudinal cohort studies”
showing the benefits of their products in enabling smoking cessation. The
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majority reads FDA’s pronouncements to have consistently conditioned its
criteria for APPH studies or evidence and never to have required comparative
efficacy studies of smoking cessation.
This is surprising, because petitioners were only advised in the TPLs
underlying their MDOs 7—when it was too late—that such studies are “most
likely” to provide reliable and robust evidence to satisfy the APPH standard. 8
And only then were they advised that studies “over time” should have been
included. From October 2018 through the September 2020 PMTA deadline,
and until August 2021, the FDA continually repeated that such studies were
neither necessary nor expected. 9 Instead, FDA stated that other forms of
evidence, including observational and consumer-perception studies, as well
as scientific literature reviews, could be acceptable. In August 2021, contrary
to those pronouncements, FDA announced that it had denied 55,000
PMTAs precisely because they lacked “the evidence of benefits to adult
smokers for such products [that] would likely be in the form of a randomized
controlled trial or longitudinal cohort study….”
If this meandering administrative course is not an “administrative
switcheroo,” it is hard to know what is. For one thing, from FDA’s denials
7
Petitioners did not receive TPLs automatically; they obtained them only through
FOIA requests.
8
Whether a product is “appropriate for the protection of the public health” is
“determined with respect to the risks and benefits to the population as a whole, including
users and nonusers of the tobacco product” and takes into account the likelihood that
existing users of tobacco products will stop using such products; and the likelihood that
those who do not use tobacco products will start using such products.
21 U.S.C. § 387j(c)(4).
9
As has been explained, FDA also steadfastly represented the critical importance
of marketing plans that would prevent underage youth from obtaining petitioners’
products—until it backtracked on that requirement in the TPLs.
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of 55,000 PMTAs one might reasonably infer that other manufacturers
besides these petitioners were fooled by FDA’s previous instructions. And
that legitimate reliance interests were built into the previous FDA
announcements is attested by an affidavit of petitioners’ executive in charge
of filing their PMTAs. Moreover, petitioners’ business was generating $15
to 20 million annual revenues. Petitioners invested a half million dollars to
complete their PMTAs and filed 9 gigabytes of information, including
hundreds of files, with FDA in seeking marketing approval. They had every
reason to file PMTAs most conscientiously and comprehensively because the
existence of the company depended on agency approval of their products.
In light of all the circumstances, there are two ways to look at the
MDOs in this case. Under one scenario, FDA changed its policies: from
individualized consideration of PMTAs and flexibility as to the type of
scientific evidence it would hold acceptable, 10 to perfunctory disapproval of
PMTAs lacking longitudinal studies. 11 The majority nowhere acknowledges
that during the entire pre-deadline process, FDA kept stating that it did not
“expect” long-term studies to be necessary.
Viewed as a policy change, FDA acted arbitrarily and capriciously by
failing to inform petitioners and by failing to consider their legitimate reliance
interests. After all, “[t]hose regulated by an administrative agency are
entitled to know the rules by which the game will be played.” Alaska Prof’l
10
See Nicopure Labs, LLC v. FDA, 944 F.3d 267, 282 (D.C. Cir. 2019)(“[t]he FDA
has expressed willingness to accept scientific literature reviews instead of commissioned
studies in support of e-cigarette applications in appropriate circumstances”).
11
The Triton MDO indicates that to be acceptable, the petitioner’s “other
evidence” had to “evaluat[e] the impact of the new flavored vs. tobacco-flavored products
on adult smokers’ switching or cigarette reduction over time.” (emphasis added). Triton-
FDA1-000115. This looks like a requirement of a commissioned, longitudinal study of
some kind.
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Hunters Ass’n. v. FAA, 177 F.3d 1030, 1035 (D.C. Cir. 1999) (abrogated on
other grounds by Perez v. Mortg. Bankers Ass'n, 575 U.S. 92, 135 S. Ct. 1199(2015)). Agencies must provide fair warning of conduct the agency
“prohibits or requires” and cannot “unfair[ly] surprise” a party by
penalizing it for “good-faith reliance” on the agency’s prior positions.
Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 156-57, 132 S. Ct.
2156, 2167-68 (2012). The fair notice requirement applies as much to
agencies’ other public pronouncements as to its regulations. See Gen. Elec.
Co. v. EPA, 53 F.3d 1324, 1329 (D.C. Cir. 1995) (“in many cases the agency's
pre-enforcement efforts to bring about compliance will provide adequate
notice,” such as notifying regulated entities of process requirements).
Serious reliance interests, moreover, must be taken into account when an
agency changes longstanding policies. See DHS v. Regents of the Univ. of Cal.,
140 S. Ct. 1891, 1913 (2020). FDA’s disregard for the principles of fair notice
and consideration of reliance interests is exacerbated here by its refusal to
allow petitioners to supplement their applications according to the new
requirements.
This is not to say that FDA could not have formally changed its APPH
requirement from the earlier Guidance documents and declared that only
long-term, specific product studies would be acceptable, but it did not do
that. See Regents, id. at 1914 (“[m]aking that difficult decision was the
agency’s job, but the agency failed to do it”).
The second scenario posits that FDA’s carefully crafted Guidance
language authorized maximum agency discretion to approve or disapprove
PMTAs as circumstances evolved. The “circumstances” entailed the
increasing underage use of ENDS products, which resulted in the 2020
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Guidance on which the majority rests much of its analysis. 12 Relying on
snippets of Guidance language, FDA does not admit that it changed its
evaluation policy, and the majority agrees. But this scenario is of no use in
defending the MDOs. To begin, it is counterfactual. The MDOs rested on
rejecting the types of evidence the agency had previously found likely
sufficient, while requiring product-specific studies conducted “over time”
that it had previously found unnecessary. But laying that aside, the Supreme
Court holds that “[w]hen an agency changes its existing position, it…must
at least display awareness that it is changing position and show that there are
good reasons for the new policy.” Encino Motorcars, LLC v. Navarro, 579
U.S. 211, 136 S. Ct. 2117, 2125-26 (2016) (quotation omitted). It follows that
“unexplained inconsistency in agency policy is a reason for holding an
[action] to be an arbitrary and capricious change from agency practice.” Id.at
2126 (quotation omitted). FDA’s migration from stating that “in general,
FDA does not expect that applicants will need to conduct long-term studies
to support an application” to denying petitioners’ MDOs because they
lacked long-term studies of comparative efficacy is “unexplained” and
“inconsistent” and therefore arbitrary and capricious.
FDA, in sum, sealed the petitioners’ doom by changing its evaluation
rules without giving them notice and by ignoring individualized consideration
of their plan for marketing restrictions to prevent underage youth access.
Even with the noblest of motives in mind, a federal agency does not have
license to run companies out of business without adhering to fixed rules of
fair procedure. I respectfully dissent.
12
To repeat, however, the 2020 Guidance made no mention of and did not consider
the elements necessary for petitioners to file successful PMTAs, nor did it alter agency
policy regarding PMTAs; and it presumed “minimal impact” on shops selling products
like those of petitioners.
39