Philip Morris Allowed to Say IQOS Reduces Harmful Exposure

Philip Morris International Inc. can market its IQOS products as reducing consumers’ exposure to harmful chemicals found in cigarettes, the U.S. Food and Drug Administration said Tuesday.

IQOS heats tobacco rather than burning it, a process seen as less harmful than smoking conventional cigarettes. The FDA last year allowed IQOS, which is an electronic device that uses a tobacco plug, to be sold in the U.S. while it reviewed Philip Morris’s modified-risk product application.

Philip Morris Allowed to Say IQOS Reduces Harmful Exposure

The FDA on Tuesday said that available evidence shows IQOS’s production of harmful and potentially harmful chemicals is lower that that of regular cigarettes. The agency cited scientific studies showing that switching completely to the IQOS system from cigarettes significantly reduces exposure to such chemicals.

“Data submitted by the company shows that marketing these particular products with the authorized information could help addicted adult smokers transition away from combusted cigarettes and reduce their exposure to harmful chemicals, but only if they completely switch,” Mitch Zeller, director of the FDA’s Center for Tobacco Products, said in a statement.

The agency stopped short of allowing IQOS to be marketed as reducing health risks associated with cigarette smoking, saying evidence did not support the claims Philip Morris proposed. Still, the decision gives IQOS an advantage in trying to lure customers away from cigarettes over other alternatives like e-cigarettes, which cannot make such claims without the FDA’s permission.

The FDA stressed the decision does not mean IQOS products are safe, rather they can be a less harmful alternative for people who completely switch from cigarettes.

‘Fundamentally Different’

In a statement, Philip Morris Chief Executive Officer Andre Calantzopoulos hailed the FDA’s decision and said it shows “that IQOS is a fundamentally different tobacco product and a better choice for adults who would otherwise continue smoking.”

Altria CEO Billy Gifford called the decision an “important step” for adult smokers, saying the authorization lets the company communicate the additional benefits of switching to IQOS.

Altria Group Inc., which sells Marlboro products in the U.S., is marketing IQOS in the country through an agreement with PMI, which sells Marlboro products in other countries. Sales of IQOS began in Atlanta last fall and it has since been introduced elsewhere.

Philip Morris shares rose 3.3% to $72.94 on Tuesday. Altria shares rose 0.9% to $39.94.

The decision is a positive development because the inability to make such claims is a constraint to broader IQOS adoption in the U.S., Morgan Stanley analyst Pamela Kaufman said in a note to clients.

The decision concludes a nearly four-year long process for Philip Morris. The company submitted its modified-risk application to the FDA in December 2016 before making its case in 2018 to an FDA advisory panel, which suggested allowing the reduced exposure claim but not reduced-risk claims.

Philip Morris is required to study how the label influences consumers and to monitor youth awareness and use of IQOS products. The marketing order lasts for four years, after which Philip Morris will need to request renewal from the FDA.

Congress gave the FDA authority to regulate tobacco products in 2009, creating a process for new products to apply to enter the market and be labeled as less harmful than cigarettes. As of Oct. 22, 2019, the agency had issued eight modified risk orders.

©2020 Bloomberg L.P.

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