FDA clears Philip Morris' iQOS, Altria plans to start selling heated tobacco device in the US this summer

Akio Kon | Bloomberg | Getty Images
A man smokes a Philip Morris International Inc. iQOS electronic cigarette.

The Food and Drug Administration has cleared Philip Morris International to sell its heated tobacco product, iQOS.

Philip Morris had submitted two separate applications with the regulatory agency, one simply to sell the device, which heats tobacco rather than burning it, and another to market it as being less harmful than cigarettes. The agency has not yet made a decision on the latter application.

"While the authorization of new tobacco products doesn't mean they are safe, the review process makes certain that the marketing of the products is appropriate for the protection of the public health, taking into account the risks and benefits to the population as a whole," FDA's Center for Tobacco Products Director Mitch Zeller said in a statement.

PMI is now authorized to sell the iQOS device, Marlboro Heatsticks, Marlboro Smooth Menthol Heatsticks and Marlboro Fresh Menthol Heatsticks. PMI operates overseas, so Richmond, Virginia-based Altria will sell the products in the U.S.

Even without the reduced-risk claim, the FDA's decision marks a win for Philip Morris and Altria. iQOS is a key component of both companies' futures as they try to pivot past cigarettes. Smoking rates in the U.S. continue to hit new record lows, causing the tobacco giants to diversify in search of growth.

Shares of PMI gained 2%, closing at $86.56. Altria's stock rose 1.5%, closing at $54.33.

The iQOS tobacco heating system contains three parts: a holder, tobacco stick and a charger. The pen-like device contains a ceramic and gold plate that heats Philip Morris-branded tobacco sticks up to 350 degrees Celsius. Tobacco in cigarettes burns at temperatures at or greater than 600 degrees Celsius.

When reviewing PMI's application, the FDA found the aerosol iQOS products emit "contains fewer toxic chemicals than cigarette smoke, and many of the toxins identified are present at lower levels than in cigarette smoke." The agency also found iQOS delivered similar nicotine levels as conventional cigarettes, "suggesting a likelihood that IQOS users may be able to completely transition away from combustible cigarettes" and use only iQOS.

Data also suggest non-smokers and kids won't be attracted to iQOS, the FDA said. Still, the agency is placing "stringent restrictions" on how iQOS is marketed, particularly online and on social media.

The company must notify FDA on its labeling, advertising, marketing plans and how it plans to restrict youth access, advertising and promotions. It won't be able to advertise iQOS on television and radio since the FDA said the product meets its definition of a cigarette and therefore must adhere to existing cigarette restrictions.

E-cigarettes are not subject to these rules.

"We fully support this objective," PMI CEO Andre Calantzopoulos said in a statement. "FDA has set a high standard and we look forward to working with them to implement the order so that iQOS is reaching the right audience — current adult smokers."

Altria will start selling iQOS in Atlanta this summer. Altria plans to open an iQOS store and numerous mobile stores. Heatsticks, Marlboro-branded tobacco sticks that are used with the iQOS device, will be available in about 500 retail stores, including Circle K, Murphy USA, QuikTrip, RaceTrac, Speedway and other retailers, Altria said.

"PM USA will act on market insights and expects to scale IQOS quickly and efficiently," Altria CEO Howard Willard said in a statement.

Last year, reduced-risk products generated $4.1 billion in sales, or about 14% of PMI's total $29.63 billion in revenue. The company wants to boost that statistic to between 38% and 42% by 2025.

Since first launching iQOS in Nagoya, Japan, and Milan, in 2014, Philip Morris has introduced it in more than 40 markets around the world. In some places, growth has surged. In the U.S., iQOS will enter a market where e-cigarette growth is surging, thanks in large part to Juul. Altria in December invested $12.8 billion for a 35% stake in Juul.

The Centers for Disease Control and Prevention estimates 34.3 million adults in the U.S. currently smoke cigarettes. Philip Morris says iQOS will appeal to adult smokers because it's a closer experience to traditional cigarettes yet one that's less harmful.

Anti-tobacco groups disagree. They say heat-not-burn products are just the latest ploy from Big Tobacco to hook people onto its products.

Former FDA Commissioner Scott Gottlieb had embraced the idea that nicotine alternatives can serve as an option for people who want to continue smoking. Under him, the FDA has adopted the belief that nicotine products exist on a continuum of risk where conventional cigarettes are the most deadly and others being possibly not as harmful.

Read the FDA's full statement below:

The U.S. Food and Drug Administration today announced it has authorized the marketing of new tobacco products manufactured by Philip Morris Products S.A. for the IQOS "Tobacco Heating System" – an electronic device that heats tobacco-filled sticks wrapped in paper to generate a nicotine-containing aerosol. The FDA has placed stringent marketing restrictions on the products in an effort to prevent youth access and exposure.

Following a rigorous science-based review through the premarket tobacco product application (PMTA) pathway, the agency determined that authorizing these products for the U.S. market is appropriate for the protection of the public health because, among several key considerations, the products produce fewer or lower levels of some toxins than combustible cigarettes.

The products authorized for sale include the IQOS device, Marlboro Heatsticks, Marlboro Smooth Menthol Heatsticks and Marlboro Fresh Menthol Heatsticks.

While today's action permits the tobacco products to be sold in the U.S., it does not mean these products are safe or "FDA approved."

All tobacco products are potentially harmful and addictive and those who do not use tobacco products should continue not to. Additionally, today's action is not a decision on the separate modified risk tobacco product (MRTP) applications that the company also submitted for these products to market them with claims of reduced exposure or reduced risk.

"Ensuring new tobacco products undergo a robust premarket evaluation by the FDA is a critical part of our mission to protect the public, particularly youth, and to reduce tobacco-related disease and death. While the authorization of new tobacco products doesn't mean they are safe, the review process makes certain that the marketing of the products is appropriate for the protection of the public health, taking into account the risks and benefits to the population as a whole. This includes how the products may impact youth use of nicotine and tobacco, and the potential for the products to completely move adult smokers away from use of combustible cigarettes," said Mitch Zeller, J.D., director of the FDA's Center for Tobacco Products.

"Importantly, the FDA is putting in place postmarket requirements aimed at, among other things, monitoring market dynamics such as potential youth uptake.

We'll be keeping a close watch on the marketplace, including how the company is marketing these products, and will take action as necessary to ensure the continued sale of these products in the U.S. remains appropriate and make certain that the company complies with the agency's marketing restrictions to prevent youth access and exposure. As other manufacturers seek to market new tobacco products, the FDA remains committed to upholding the vital public health standards under the law and using all the tools at our disposal to ensure the efficient and appropriate oversight of tobacco products."

Under the PMTA pathway, manufacturers must demonstrate to the agency, among other things, that marketing of the new tobacco product would be appropriate for the protection of the public health. That standard requires the FDA to consider the risks and benefits to the population as a whole, including users and non-users of tobacco products. Importantly this includes youth. The agency's evaluation includes reviewing a tobacco product's components, ingredients, additives and health risks, as well as how the product is manufactured, packaged and labeled. The review for the IQOS products took into account the increased or decreased likelihood that existing tobacco product users will stop using tobacco products, and the increased or decreased likelihood that those who do not use tobacco products will start using them.

In particular, through the FDA's scientific evaluation of the company's applications, peer-reviewed published literature and other sources, the agency found that the aerosol produced by the IQOS Tobacco Heating System contains fewer toxic chemicals than cigarette smoke, and many of the toxins identified are present at lower levels than in cigarette smoke. For example, the carbon monoxide exposure from IQOS aerosol is comparable to environmental exposure, and levels of acrolein and formaldehyde are 89% to 95% and 66% to 91% lower than from combustible cigarettes, respectively.

Additionally, IQOS delivers nicotine in levels close to combustible cigarettes suggesting a likelihood that IQOS users may be able to completely transition away from combustible cigarettes and use IQOS exclusively. Available data, while limited, also indicate that few non-tobacco users would be likely to choose to start using IQOS, including youth.

While these non-combusted cigarettes may be referred to as "heat-not-burn" or "heated" tobacco products, they meet the definition of a cigarette in the Federal Food, Drug and Cosmetic Act. Therefore, these products must adhere to existing restrictions for cigarettes under FDA regulations, as well as other federal laws that, among other things, prohibit television and radio advertising. In addition, to further limit youth access to the products and exposure to their advertising and promotion, the FDA is placing stringent restrictions on how the products are marketed – particularly via websites and through social media platforms – by including requirements that advertising be targeted to adults. The company must also give notification to the FDA of, among other things, its labeling, advertising, marketing plans, including information about specific adult target audiences, and how it plans to restrict youth access and limit youth exposure to the products' labeling, advertising, marketing and promotion. The agency has issued a document providing its rationale for these postmarket requirements, which highlight important considerations for reviewing the company's applications as well any potential future PMTAs for other products.

The FDA also is requiring all package labels and advertisements for these products to include a warning about the addictiveness of nicotine, in addition to other warnings required for cigarettes, to prevent consumer misperceptions about the relative addiction risk of using IQOS compared to combusted cigarettes.

With the authorization of these products, the FDA will evaluate new available data regarding the products through postmarketing records and reports required in the marketing order. The company is required to report regularly to the FDA with information regarding the products on the market, including, but not limited to, ongoing and completed consumer research studies, advertising, marketing plans, sales data, information on current and new users, manufacturing changes and adverse experiences. The FDA may withdraw a marketing order if it, among other reasons, determines that the continued marketing of a product is no longer appropriate for the protection of the public health, such as if there is an uptake of the product by youth.

The FDA is continuing its substantive scientific review of the company's MRTP applications. The company would need to receive an MRTP order from the FDA before they could market a tobacco product with any implicit or explicit claims that, among other things, a product reduces exposure to certain chemicals or that use of the product is less harmful than another tobacco product or would reduce the risk of disease. If a company markets a tobacco product as an MRTP without authorization, the company would be in violation of the law and may face FDA advisory or enforcement actions.

Click to show more