Tobacco Product Retailers and Marketers Take Note: FDA Announces the Availability of More Guidance Documents

By Jennifer D. Newberger –

On April 25, 2011, FDA announced the availability of two guidance documents issued by the Center for Tobacco Products ("CTP").  The first, a final guidance document issued in March 2011, is titled “Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers.”  The second, a draft guidance document issued April 22, 2011, is titled “Establishing that a Tobacco Product was Commercially Marketed in the United States as of February 15, 2007.”  They are discussed in turn below.

I.    Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers

The Federal Food, Drug, and Cosmetic Act ("FDCA") provides for civil money penalties and no-tobacco-sale orders for violations of FDCA requirements relating to restrictions on the sale and distribution of tobacco products, including the sale or distribution of tobacco products to minors.  This guidance document describes FDA’s policies with respect to these penalties, including how FDA will identify FDCA violations, when reliance on a false identification constitutes good-faith, when FDA may seek civil money penalties and/or no-tobacco-sale orders, and the procedures that apply if it chooses to do so.   With the finalization of this guidance document, the provisions of section 103(q) of the Tobacco Control Act are effective. 

A.    FDCA Violations

To determine whether retailers are violating the applicable FDCA provisions, FDA intends to conduct compliance check inspections.  These inspections may be conducted by officers or employees of FDA or other federal departments or agencies, or certain state officers or employees commissioned by FDA.

B.    Good-faith Reliance

The FDCA provides that good-faith reliance on a photographic government-issued identification will not constitute a violation of the prohibition against sale of tobacco products to minors.  The statute provides examples of steps retailers should take to prevent violating restrictions against sales to minors, and FDA has adopted these without modification:

• adopting and enforcing a written policy against sales to minors;
• informing its employees of all applicable laws;
• establishing disciplinary sanctions for employee noncompliance; and
• requiring its employees to verify age by way of photographic identification or electronic scanning device.

C.    When FDA May Seek Civil Money Penalties and/or No-Tobacco-Sale Orders

Upon first identifying a violation at a retail outlet, FDA will generally issue a warning letter before taking further regulatory action.  FDA then intends to conduct a follow-up compliance check without providing notice to the retailer.  If FDA identifies violations of the FDCA during a follow-up compliance check or during a subsequent inspection of that retailer, FDA intends to seek civil money penalties.  If FDA finds repeat violations, it may also seek a no-tobacco-sale order.

D.    Applicable Procedures if FDA Seeks Civil Money Penalties and/or No-Tobacco-Sale Orders

FDA will file a Complaint with the Division of Dockets Management and will serve the Complaint upon the retailer found to be in violation of the FDCA.  The retailer may then either (1) pay the penalty or comply with the terms of the no-tobacco-sale order, or (2) file an Answer with the Division of Dockets Management contesting some or all of FDA’s allegations within 30 days of the date of service of the Complaint.  Timely filing of an Answer entitles the retailer to a hearing.

FDA and the retailer may engage in settlement discussions.  However, even if the parties agree to a settlement, “any violations that occurred will be counted in determining the total number of violations for purposes of subsequent enforcement actions.” 

E.    Amount of Civil Money Penalties FDA May Assess

The statute provides two schedules of penalties—one for retailers with an approved training program, and one for retailers without such a program.  FDA has not yet established standards for an approved retailer training program, and so, at this time, will seek penalties within the range for retailers with an approved program. 

If a retailer violated a restriction on the sale and distribution of tobacco products (section 906(d) of the FDCA), and paid penalties to the State for such violation, the amount of that penalty will be considered for purposes of mitigating the civil penalty assessed by FDA.

F.    Factors FDA Will Consider When Seeking a No-Tobacco-Sale Order

In determining whether a no-tobacco-sale order may be imposed, FDA will consider whether a retailer has taken effective steps to prevent violations of the minimum age requirements for the sale of tobacco products, as discussed above in section B.

FDA will consider the same factors in deciding whether to compromise, modify, or terminate the order.

II.    Establishing that a Tobacco Product was Commercially Marketed in the United States as of February 15, 2007

This draft guidance document provides information on how manufacturers may demonstrate that a tobacco product was commercially marketed in the United States as of February 15, 2007, i.e., that the product was commercially marketed in the United States on February 15, 2007.  This is significant because tobacco products marketed on February 15, 2007 are not subject to the premarket requirements of the FDCA and may serve as predicate tobacco products against which future tobacco products may demonstrate substantial equivalence.  Note that if the tobacco product “had been commercially marketed in the United States before February 15, 2007, but was not commercially marketed on that date, it is not a grandfathered product and may not be commercially marketed” unless the manufacturer complies with the premarket requirements described in section 910 of the FDCA.  

FDA suggests the manufacturer submit as much evidence as possible to demonstrate that the product was commercially marketed (not in test markets) as of February 15, 2007.  Such evidence could include the following:

• dated copies of advertisements;
• dated catalog pages;
• dated promotional material;
• dated trade publications;
• dated manufacturing documents;
• dated bills of lading;
• dated freight bills;
• dated waybills; and/or
• complete copies of any supporting information that demonstrate (individually or collectively) that the tobacco product was commercially marketed in the United States on February 15, 2007.

FDA will notify the manufacturer once it has reviewed the information and determined whether the product is a grandfathered product.  If FDA cannot make this determination from the information provided, it may request additional information.