US 10/22 E-cigarette seizures: FDA targets big brands in 'deterrent' move, inter-agency enforcement may become the norm

The US Food and Drug Administration (FDA) and US Customs and Border Protection (CBP) recently conducted a joint operation that resulted in the seizure of approximately 3 million unauthorised e-cigarette products with an estimated retail value of up to $76 million. This is the largest amount ever seized by the FDA. In response to this operation, 2Firsts spoke to several lawyers and compliance professionals who have long monitored the e-cigarette industry.

Tang Shunliang, partner at Tianyuan Law Firm and a legal expert in new tobacco areas such as e-cigarettes, and Zheng Zhi, PMTA certification consultant, also discussed their observations and assessments of the event.

In the face of a larger scale joint official action and intensified crackdown, they expressed that companies must not only apply for an STN number in the short term as a reaction measure, but also plan for the long term. By gradually improving compliance capabilities and establishing compliance departments for regulatory research, companies can avoid potential legal risks and market losses in the future.

Industry lawyer warns of 'crackdown as a deterrent' to enforcement in the sector

Tang Shunliang, a partner at Tianyuan Law Firm and a legal expert on new tobacco products such as e-cigarettes, emphasised that the recent joint enforcement action by the FDA and US Customs sends a strong deterrent signal in addition to its regulatory significance.

Tang noted that this enforcement action was not without "warning signs". The FDA has issued numerous warning letters in recent years as part of its Premarket Tobacco Product Application (PMTA) process, signalling a steady increase in regulatory scrutiny of the e-cigarette industry.

While the FDA does not have a nationwide enforcement team, it has targeted popular brands in key markets. Tang described this approach as "enforcement as a deterrent", noting that non-compliance by major brands has a broader impact on the market and consumers.

"The announcement specifically naming 'GEEKBAR' reflects the FDA's strategy to focus on high-impact brands to regulate the entire industry through such targeted actions," Tang explained.

According to Tang, the FDA-Customs joint enforcement was not a random selection, but a calculated move. The compliance of big brands has a lot of influence, which makes them prime targets. Unlike China's nationwide tobacco control network, the FDA's enforcement prioritises large companies as a form of warning.

Tang also provided legal context, explaining that the US lacks a comprehensive enforcement network for e-cigarette regulation. Therefore, cooperation between the FDA and Customs is filling this gap. He expects such inter-agency actions to become routine, especially targeting e-cigarette companies that evade duties by misclassifying goods and values.

PMTA compliance experts: PMTA enters critical phase, companies should respond proactively

Zheng Zhi, a PMTA compliance consultant with expertise in FDA tobacco regulations, also provided an in-depth analysis of this latest enforcement action.

Zheng highlighted that while the FDA began its compliance review of e-cigarette products in 2019, the process has been relatively slow due to the wide range of products involved. Despite the proximity of the 2024 enforcement action to the US presidential election, Zheng noted that these actions are the result of the natural progression of compliance measures rather than purely political motivations.

"The FDA's inaction or slow PMTA process has long drawn criticism from multiple fronts. Now, with improved regulations, streamlined procedures and key roles filled, the FDA is ready to accelerate compliance efforts. This action is both a reflection of regulatory pressure and a milestone before the election," commented Zheng.

He specifically mentioned that many companies are currently relying on Submission Tracking Numbers (STNs) as a temporary safeguard. However, this approach won't ensure market compliance in the long run. Over time, FDA requirements will increase and companies will need to obtain more advanced compliance certifications, such as Acceptance Letters or File Letters, which will present new challenges.

"In my opinion, STNs are only a short-term measure. In the future, more companies will need to meet higher compliance standards, such as obtaining PMTA Acceptance Letters or File Letters. This will raise the bar in terms of resources and skills, making it manageable only for top-tier companies, while smaller companies may struggle to survive or will need to incrementally improve compliance to remain competitive," he explained.

Future outlook: Enforcement likely to evolve into coordinated inter-agency effort

Both Tang Shunliang and Zheng Zhi addressed potential enforcement trends regarding misclassification of e-cigarette products and customs evasion.

Zheng noted that the recent cooperation between US Customs and the FDA may be just the beginning. As more federal agencies get involved, the regulatory landscape for the e-cigarette industry is expected to become more comprehensive and stringent.

"Customs' role may extend beyond simply seizing illegal products; it may increasingly work with the Department of Justice and other federal agencies to create a multi-layered regulatory network. For companies trying to enter the market through illegal means, this could mean no escape," Zheng said.

He believes that future US regulation of e-cigarettes will be tightened, with seizures only the first step. Actions involving "grey customs" could even lead to criminal charges. To mitigate such risks, Zheng emphasised the need for companies to accelerate compliance efforts by establishing dedicated compliance teams to ensure their products meet US and international regulatory standards.

"For e-cigarette companies with global ambitions - whether brand owners or manufacturers - setting up compliance departments and conducting regulatory research will be essential steps. Compliance is a systematic process, similar to the medical or pharmaceutical industries, and ignoring it could have disastrous consequences," Zheng stressed.

Both Tang and Zheng advised that companies need not only short-term solutions but also long-term strategies to gradually improve compliance and avoid potential legal risks and market setbacks.

"With US regulatory pressure increasing towards the end of the year, market entry now requires strict adherence to regulatory requirements. Only by raising compliance standards can companies hope to 'survive' in this highly competitive landscape," added Tang.