FDA Allows Unapproved E-Cigarettes & Skechers Lawsuit

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1:18At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience. Learn more at the Hartford.com slash risk mitigation. Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. This is Bloomberg Law with June Grosso from Bloomberg Radio. A new FDA rule will allow companies to sell unapproved electronic cigarettes and nicotine patches, and that includes fruit-flavored vapes, which are especially appealing to kids.

2:07All the companies have to do is submit an application that the agency has agreed to review. That goes against the way the FDA has traditionally worked, where the approval process is normally rigorous and involves multiple steps. According to the Associated Press, senior officials in the agency's tobacco center were blindsided by the new guidelines. Earlier this month, the FDA authorized fruit-flavored vapes for the first time. Of the more than 1.6 million middle and high school students who currently vape, nearly 90 percent use flavored e-cigarettes, with fruit flavors being the most popular, followed by candy, desserts or other sweets.

2:53My guest is health care attorney Harry Nelson, a partner at Leach Tishman, Nelson Hardiman. Harry, tell us about these new rules. So we have this law, the Tobacco Control Act, which requires that new tobacco products can't be legally marketed without pre-market authorization. And the law gives the FDA the power to deny this pre-market authorization unless there's a showing that the product would appropriately protect the public health. And so what's happened now is that the administration has said the FDA put out a guidance statement that it's not going to prioritize enforcement against certain unauthorized e-cigarette products and nicotine, oral nicotine pouch products.

3:37So meaning the government basically said even though these products are not legally on the market, the government is not going to go after them. That's basically what happened in the last couple of days here. And this breaks with the FDA policy of requiring scientific verification? Yeah, this is definitely a relaxation of the federal policy of being tough on tobacco products and being concerned about public health. And it's basically the FDA saying this is a low priority. And even though what you're doing is not legal, let's call it at best gray market, these products can stay on the shelves of stores, even though they're still in scientific review, even though the FDA has not ruled on them.

4:21And this is really a flip from where we were, you know, just a year and a half ago, where the FDA, you know, rejected the idea that having an application on file was sufficient to create a safe harbor to allow these products to be out there. So previously, the FDA would not allow these products to be on shelves. And now it sounds like the enforcement climate has really completely gone 180 degrees. And the FDA is going to basically soften its position and allow a new lane kind of for gray market tobacco products. I mean, is this odd timing because it was posted just days before the former FDA commissioner resigned?

5:00Was it pushed through? It just sounds like the timing is weird. Yeah, it's interesting. It definitely seems like this was this kind of reflects a little bit of the chaos that is going on in the FDA. A lot of the reporting around the story has emphasized that the senior leadership within the and the staff within the FDA tobacco center were basically blindsided and that this appeared just before Commissioner Macari resigned. So there seems to be a lot of upheaval and a little bit of chaos at the FDA. And certainly nobody who's in the tobacco regulation group at the FDA saw this coming or seems to be supportive of this new relaxed action.

5:46So the FDA spokesperson said this approach strengthens protections against youth nicotine addiction while supporting evidence-based alternatives for adult smokers seeking to move away from combustible tobacco products. Yeah, it's interesting. Right. Certainly, even the folks in the administration who are supporting the relaxation of tobacco are trying to emphasize that this is for adult products and that they are not loosening standards on tobacco products that are being used by minors. So they're trying to, you know, still reserve the right to be more aggressive in enforcement against products that appeal to teens and to focus on just letting adults have more leeway and just not investing enforcement dollars into this product market.

6:33Hasn't the FDA resisted approving flavor vapes for kids, but yet the mango and blueberry flavored vapes were okayed during the FDA commissioners last week? Right. By the way, there's something like over 40 e-cigarette products and already 20 of these flavored pouch varieties out there. I think the FDA has been trying to walk a line, and I think the line shifted a little bit this week. But I think even now, you know, the administration's position is that protecting teen smokers from products that are clearly appealing to kids is still a problem and still something they're going to pursue. But the real message that they're trying to emphasize, I think, was loosening the rules on adult tobacco products.

7:20The number of underage vapors has gone down. I don't know if that plays any part in this. To be honest with you, I'm not totally up to speed on where underage vaping is. I know that a lot of the, you know, the efforts of the last couple of years have definitely reduced use, particularly in and around schools. There was a lot of attention, obviously, to, you know, the nicotine addiction risk, the potential effect on brain development of like anxiety and ADD, ADHD, mood issues coming up from these and just the kind of significant marketing. And we saw we saw a lot of schools crack down on on this.

7:56We saw like social media, you know, sort of really tamping down. So it would not surprise me if there has been a reduction, although I still think there still is clearly a significant use of flavored disposable vapes among teens and still a problem of, you know, social networks being used to get kids who are too young getting them vapes. there still is a problem of, you know, illegal retail sales happening. And I think, honestly, I think one of the big pieces of the story is that we're going to see, we're likely to see states particularly filling the void. You know, as we've seen in other areas of federal enforcement, when the federal government sort of steps back a little bit, we're going to see many states kind of step up and crack down much more on this.

8:41Right now, California, Massachusetts, New Jersey, New York, and Rhode Island in four statewide bans on most or all flavored vaping products, and other states have more limited bans. And you're right that about 1.63 million middle and high school students currently vape. That's a decrease from 2.13 million in 2023, but still A huge number, almost 6 % of kids. Harry, I'm wondering if these new rules have anything to do with Trump, who when he came to office promised that he would save the vaping industry. And big tobacco companies have made contributions to Trump and his causes. Yeah, it's definitely, there's no question that this is a case where the federal government is sort of throwing a bone to the tobacco industry.

9:36that they're really giving them a little bit of room here to ramp up sales and signaling a kind of a more permissive environment. So I do think this is clearly a big win for big tobacco and a setback for everybody invested in, you know, public health, sort of anti-tobacco efforts. So the companies that are, you know, particularly companies that have applications or pending are going to benefit by being able to promote those products more. They don't have to be as nervous about the unapproved status of their applications. So those are going to be the biggest winners within the tobacco industry.

10:17Because I can't think of any reason to do this as far as public health is concerned. You know, I think this is a little bit of a signal that the federal government is kind of moving out of, I don't know what you want to call it, the nanny state, you know, sort of the, it depends, you know, the, a lot of the public health protections that we see where we've seen federal step, you know, stepping back have been about individual choice, even where it's not consistent with public health, right? We've seen that with like federal rollbacks on environmental and climate regulation, right? I think, I think we've seen, you know, we've seen it, we see, we see, we see that the states are getting more aggressive and in a lot of directions, the federal government's moving in the opposite direction.

11:09And I think it partly is by some skepticism about broad federal administrative power and ways in which when people, particularly on the right, are talking about smaller government, part of what that means is less activist laws limiting commerce, right? I think this is one of those examples. Okay, stay with me, Harry. Coming up next on the Bloomberg Law Show, we'll take a look at the legal fight over the abortion pill. I'm June Grosso, and you're listening to Bloomberg. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work.

12:01Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.

12:37Yes, again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market.

13:07at public.com slash disclosures. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments with expertise, personal attention, and independent agents who focus on relationships, not transactions. The Cincinnati insurance companies. Let them make your bad day better. Find an agent at CINFIN.com. A divided Supreme Court allowed a widely used abortion pill to continue to be dispensed by mail about two weeks ago, putting on hold a federal appeals court decision that had briefly required patients to make an in-person visit to a provider.

14:04In a one-paragraph order that gave no explanation, the justices granted requests from the drug's manufacturers to keep it fully available while the legal fight goes forward. Louisiana is seeking to upend the FDA's decision during Joe Biden's presidency to permit remote prescriptions for mifepristone, a drug the FDA first approved in 2000. The case could have upended abortion access nationwide. But the reprieve may only be temporary. The FDA, under President Donald Trump, says it's conducting a safety review of mifepristone and it could try to impose new restrictions down the road. I've been talking to health care attorney Harry Nelson.

14:49Harry, this fight over mifepristone is going to come back to the court again, isn't it? I mean, my read on the Supreme Court decision is that, you know, clearly the Supreme Court does not want to get in the way, you know, very clear that the Supreme Court really doesn't want to revisit this. But clearly, you know, the states remain very, you know, actively involved in it. And so this is definitely not going to be the last case where the Supreme Court is dealing with Mifepristone. The states are still going to keep arguing that the FDA is exceeding its authority under the Food, Drug, and Cosmetic Act.

15:27The same exact claim that was made in this case, that the FDA improperly loosened the risk evaluation and mitigation studies, REMS, restrictions. And we're going to see, you know, continued fights, right, about how much deference the court should give the FDA on its scientific judgment. And we're still going to see activist states, you know, abortion restrictive states arguing that they have the right to second guess the FDA and that they can override kind of a national drug approval based on their state policy. So we're still in this environment where the states are increasingly trying to compete in their different, you know, regulatory frameworks for this.

16:09And we're going to continue to see a number of states trying to be more restrictive, blocking mailing, blocking telehealth access. And this issue is not going anywhere. And, you know, So I think for people on the, you know, on the reproductive rights protection side of this fight, I think it is good news that the Supreme Court is at least holding true to what it said when it repealed Roe v. Wade, which was that it really wanted to send this issue back to the states and wasn't going to, you know, to intervene to support broader restrictions. So this is at least one way in which the Supreme Court has lived up to that signal that it gave.

16:45And so for all the frustration that so many people have about the decision to get rid of Roe v. Wade, I do think it's a positive sign that the Supreme Court is not wanting to get in the way of the FDA, not wanting to get in the way of pharmacies. And by the way, one of the biggest things we haven't spoken about is, you know, the question of whether the FDA takeover will ultimately lead to restriction internally. That's really an incredible tell on where the Trump administration sits within this whole question. How many studies were done to show that mifepristone was safe? And now the FDA is doing a new study.

17:23And Bloomberg News reported in December that the FDA was slow walking its safety study until after the midterm elections, although Health and Human Services denied the report. Yeah, it's very interesting. This is clearly a place where the administration is not in a hurry to create political upheaval. Obviously, this issue has been such a galvanizing one in past election cycles. So the FDA has actually, you know, I think a lot of people are surprised. A lot of people thought that this administration would reverse on the safety and effectiveness of mifepristone. It's been, by the way, 26 years since clinical review, and really there is no record of serious adverse events.

18:08So the people who are saying that it's unsafe have to point to its actual intended effect to claim that it's unsafe, that it's unsafe essentially because it terminates pregnancies, right? So it's interesting. The FDA is clearly under competing political pressures. And it's clearly a much more complicated landscape than a lot of people anticipated. And what about RFK's position? Is he solidly in place at the head of HHS or is it wobbly? It's super interesting that he has not been like, it's a really good question why clearly as one of the most visible and controversial members of this cabinet, he is not seemed to be in jeopardy.

18:52I do think that he has some, there's several advantages he has. He has, because of the Maha, you know, make America healthy again political base that remains very loyal to him. He's got, there is, I think, some concern about what his removal would mean to part of the Trump, you know, voting base. And he's remained aligned with President Trump on a number of very populist themes about, you know, underinvestment in chronic disease, you know, the food and chemical regulation, skepticism towards big pharma. So he's got his anti-establishment messaging is actually something that I think, you know, resonates with President Trump.

19:32But I do think he is less stable today than he was a year ago. And clearly, some of his most controversial official appointees have already been, you know, forced to resign or withdrawn. And we've seen the courts blocking some of his vaccine related actions. So he's he definitely seems to be in a weaker position, even though he remains the public face of the, you know, here. And so I think he's he's navigating some some tricky waters in terms of, you know, the Maha populist base that wants to see radical FDA reform on vaccines, on confronting big pharma. He's got to navigate the traditional stakeholders within health care who are very wary of him.

20:15And of course, all of the, you know, Trump political operatives. So I think in the near term, it doesn't look like he's going anywhere, but I wouldn't bet that, you know, he's going to make it through the entire Trump second term. Thanks so much for joining me tonight, Harry. That's health care attorney Harry Nelson of Leech Tishman Nelson Hardiman. Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds, and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets.

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23:50Skechers is facing a class action lawsuit seeking millions of dollars in damages. A judge has refused to dismiss the lawsuit that accuses the footwear and apparel company of repeatedly sending deceptive promotional emails with phrases like the clock is ticking or today only to pressure consumers into making purchases in a hurry. For example, one email on May 26th of last year said long weekend savings end tonight in the heading. But an email the next day said, surprise, long weekend savings extended for today. And Skechers is not the only retailer facing lawsuits over deadline-focused subject lines under Washington State's Commercial Electronic Mail Act.

24:41Joining me is Sean Collins, a partner at Stradling and an expert in consumer litigation and enforcement. Sean, tell us about this lawsuit. So it's a Washington law that Washington has been enforcing a lot lately. Effectively, what catches a lot of people off guard about this particular law, so Washington passed this law. It's predicated on the federal law, which is the Can-Spam Act. So I don't know if you're familiar with the Can-Spam Act, but it's something that people haven't really talked about a lot lately. The Can-Spam Act was passed back when we were still using fax machines. And so it was created because people were abusing fax machines similar to how they abuse emails nowadays, where people's fax machines.

25:33I remember when I first started practicing law back in like 99, 2000 timeframe, it was my job as a young clerk to go over to the fax machine and pull off all the faxes and then take them to the respective partners. And I would fall victim to it, you go over there and there would be like this headline that would come off on the fax, like, oh, would you be interested in going to an Astros game today? I was clerking in Houston at the time. And I remember it would catch my attention. I'm like, I would love to go to an Astros game. So then you pull it off, you start reading it. And it has nothing to do with an Astros game.

26:05It's them trying to sell you some type of bubble gum or soda or something like that. And so they created the canned spam act because people were tired of their fax machines getting clogged up with unwanted solicitations and advertisements. So the Can-Spam Act was a federal law that was passed that said, hey, stop clogging up people's fax machines with unimportant stuff, and you have an obligation to tell them what you want. All right, so Washington passed this law to basically kind of update it, bring it into the modern era whereby they don't want people kind of duping people with emails. Okay.

26:41And so Washington has started to enforce this law. So you'll see this lawsuit is very focused on what's being presented to people in the form of emails. Like is the headline of your email, you know, creating a false impression or a misleading lead to the person that's the recipient of that email. So obviously here, they're focused on the fact that the headline of these emails was creating a false time clock in people's head. Today only. The clock is ticking and, you know, long weekend savings end tonight, creating a false sense of urgency. Tell us what Skechers argued to try to get the case thrown out.

27:27One of the arguments that the Skechers attorneys tried to make was the preemption argument, meaning that the federal canned spam law preempts the Washington law, meaning that if I as a company, Skechers, if I'm complying with the federal law, I shouldn't have to create a separate mechanism to comply with the Washington law as well. So the first argument there was that the federal canned spam act displaces the state level claims. So the court rejected that argument. Now, there was one other argument, which I think was actually a very clever argument that was made by the Skechers team was, well, hey, you know, that law, similar to the Can-Spam Act, was effectively saying that the information had to be false, meaning it was a lie what you put in the heading.