Key takeaway: This article was finalized on July 19, 2023 and published on July 21. Introduction: As mentioned in the previous article, the import alert mechanism is how the FDA (U.S. Food and Drug Administration) ensures...
FLOW-wrap: break-word !important;"> This article will be published on July 19, 2023 Final draft, Published on July 21.
As mentioned in the previous article, the import alert mechanism is an important means for the FDA (U.S. Food and Drug Administration) to ensure that imported products meet its regulatory requirements. For products included on the red list of import warnings, customs will forcibly detain these products at the port of entry for further inspection. This is the "Detain Without Physical Examination" DWPE system. As of July 12, 2023, there are three batches in totale-cigarette enterprisesBeing included in the FDA's import alert red list, which gives Chinae-cigarettesGoing to sea brings certain challenges and is expected to follow PMTAs (Premarket Tobacco Product Applications) Companies on the red list will encounter greater difficulties during the review. At the same time, it does not rule out that China's tobacco authorities will tighten the issuance and extension of corporate licenses due to the impact of the Red List.# p#pagination title #e# In this context, Zheng Mingwei's lawyer team organized professionals from China and Anglo-American law to jointly sort out the reasons why China e-cigarette companies were included in the FDA's import alert list and the principles for responding to it, aiming to help restricted companies more accurately understand the conditions and ways to remove the import alert list, and also provide help for more companies to deeply understand the FDA's regulatory framework. 1. Common reasons why China e-cigarette companies are included in the import alert list As of July 12, 2023, the FDA has issued a total of three import alerts to China e-cigarette companies (#98-06,#98-07,#98-08), involving more than 160 products from more than ten e-cigarette companies. The reasons why three batches of China e-cigarette companies are on the FDA's red list for import alerts include: (1)"""""""""" Adulteration [#98-06,#98-07], mainly for condiments products that do not have marketing licenses. (2)#p#Pagination Title #e# Misbranded [#98-08]. According to Section 801(a)(3) of the Federal Food, Drug, and Cosmetic Act (FDC), goods such as food, drugs, equipment, tobacco products and cosmetics that are being imported or intended to be imported into the United States, if adulteration or erroneous labeling is discovered through inspection of such goods or other means, such goods may be refused entry. 2. Key interpretation of e-cigarette import warnings As defined in the FD C Act, any tobacco product that was not commercially sold on the U.S. commercial market (including the test market) on February 15, 2007 falls under the #p#paginated title #e#new tobaccoNew Tobacco Products "Section 910(a)(1)". TCA(Family Smoking Prevention and Tobacco CoThe FDC Act, as amended by the ntrol Act, requires any new tobacco product to be reviewed by the FDA before being marketed. Section 910(a)(2) of the FDC Act stipulates that new tobacco products require a marketing license issued under section 910(c)(1)(A)(i) of the FDC Act. Currently, the main way for new tobacco products to obtain valid marketing licenses in the United States is to submit premarket applications (PMTAs). PMTAs are applicable to all categories of new tobacco products. Applicants must provide the FDA with scientific data, manufacturing standards and other information to prove that the new tobacco products meet the requirements for protecting public health（Appropriate for the Protection of Public Health, APPH）。 Tobacco products that are subject to pre-market review under section 910(a) and have not obtained a valid marketing authorization under section 910(c)(1)(A)(i) shall be deemed adulterated" Section 902(6)(A)". In Import Alerts #98-06 and #98-07, the tobacco products of a total of 14 China e-cigarette companies were considered adulterated. The reason is that the Center for Tobacco Products (CTP) believes that these products may violate section 902(6)(A) of the FDC Act, which means they are new tobacco products without marketing licenses. According to data released by the FDA, since 2020, more than 26 million new tobacco products have filed PMTAs. As of July 12, 2023, there are only 23 modelse-cigarette productsand equipment are effectively authorized by the FDA under the PMTAs channel. Literally,"no marketing license" should include cases where PMTA is not filed and PMTA is filed but fails to pass the review. In fact, products on which PMTAs have been raised but the FDA has not yet made a decision on them are still allowed to appear on the market. Given the limited nature of the information, we speculate that the situation referred to by" no marketing license "in import alerts #98-06 and #98-07 is mainly the situation where PMTA has not been submitted. It is worth mentioning that "no marketing license" is also the main reason why e-cigarette companies have been issued warning letters by the FDA.# p#pagination title #e# In Import Alerts #98-06 and #98-07, most of the objects restricted due to adulteration are flavored e-cigarette products. The FDA commissioner has said protecting young people from tobacco products is the FDA's top priority. FDA's Enforcement Priorities for Electronic Nicotine Delivery Systems (ENDS) and Other Deemed Products on the Market Without Premarket Authorization even identified flavored e-cigarettes as the first priority in the law enforcement order because the FDA believes that flavored e-cigarettes (such as watermelon flavor, strawberry flavor, etc.) are highly attractive to young people. Therefore, flavored e-cigarette products that have not yet obtained valid marketing licenses and are very popular among teenagers have become the focus of FDA enforcement. In Import Alert #98-08, two China e-cigarette companies were charged with violating labeling requirements and were placed on the Red List. Section& 903(a)(2) of the FDC Act stipulates that tobacco products in packaged form will be considered mislabeled unless the label contains the following four items of information: (A) the name and place of business of the manufacturer, packer, or distributor of the tobacco product;(B) an accurate statement of the amount of content in terms of weight, size, or count;(C) the percentage of domestically grown tobacco and the percentage of foreign-grown tobacco among the tobacco used in the product;(D) Statement that "Sales are only allowed in the United States". In contrast, violations due to incorrect labeling are easier to correct than lack of marketing licenses. In the absence of marketing licenses, especially flavored e-cigarettes, they can only be applied for removal after rectification and compliance. It is more difficult to remove the import alert list.(3) Removal of import alert list The basis for the FDA's decision to remove a product or company from the import alert red list is to prove that the circumstances that led to the violation have been resolved, and this evidence can convince the FDA that the company's future product entry will comply with the FDC Act. Depending on the violations alleged in the import alert, the content of evidence that restricted companies should submit varies. If it is a product subject to DWPE under Section 801(a)(3)[Adulteration, Mislabeling], the applicant is required to provide at least five consecutive non-violating commercial shipment records. The move is to prove that the corrective measures taken by the company are effective and ongoing, thereby convincing the FDA that the violations have been corrected and appropriate for removal from the import alert list. (For specific removal conditions, please refer to the U.S. FDA Import Alerts and Removal Application Guidelines (1) for e-cigarette companies) In addition to the above-mentioned evidence, the applicant should also describe in detail the measures it has taken to prevent the recurrence of violations, including an analysis of the root causes of the violations and a description of how the company solves the violations, which is actually a requirement to establish a compliance system. For flavored electronic cigarettes, it is currently the main product of some enterprises. On the one hand, it takes the courage of a strong man to break his wrist to recognize compliance trends. On the other hand, through structural arrangements, maintaining operating income without affecting the compliance of the subject may also be a scheme that needs to be demonstrated by lawyers, accountants and tax accountants.#p#Pagination Title #e# 3. Principles for responding after being included in the import alert list(1) Actively communicate and understand the specific reasons The most intuitive negative impact on companies from being included in the red list of import alerts is that the FDA will implement DWPE on restricted products and companies in accordance with Section 801(a) of the FDC Act. Unable to enter the United States, the world's largeste-cigarette marketFor e-cigarette companies, what is lost is a major sales market. Therefore, e-cigarette companies included in the import alert list should fully understand the relevant requirements for tobacco products under FDA supervision and lock out violations. Good communication with the FDA also needs to be maintained to ensure communication and information sharing throughout the removal process. In addition, you should regularly check the FDA's official website to pay attention to the announcements, guidelines, seminars and related policy documents issued by the FDA to avoid missing important information updates.(2) Seeking truth from facts and taking the opportunity to initiate compliance Being included in the red list means that the FDA has doubts about the safety and compliance of the imported product or enterprise and requires further control and supervision. This can seriously damage a company's reputation, because the public will largely directly determine that restricted products do not meet quality standards. It is believed that in the follow-up PMTAs review, companies that have been non-compliant for a long time or have been included in the red list of import warnings for many times will encounter greater difficulties. In general, sooner or later, you have to face it and rectify it.# p#pagination title #e# Comprehensive compliance is a solid foundation for long-term operations and an important requirement for companies under Anglo-American law. In the context of economic globalization, corporate compliance work is not only conducive to compliance with domestic and foreign laws and regulations, but also helps maintain corporate reputation. Initiating comprehensive compliance can greatly reduce the risk of trade controls and sanctions. In addition, reality also requires e-cigarette companies to comply. On the one hand, most e-cigarette companies are queuing up for PMTAs review, and it is also foreseeable that companies on the red list of import alerts will be required to correct previous non-compliance and apply stricter review conditions; on the other hand, penalties imposed in the United States may be paid attention to by China's tobacco authorities, which will affect the extension and issuance of e-cigarette licenses. This situation has occurred many times in U.S. stocks, such as Ruixing Coffee.(3) Establish a professional team to deal with Company removal applications must be submitted to the FDA's Import Business Department (Division of imPort Operations (DIO). The DIO will make a decision on whether to agree to the removal based on a review of the application materials. Once the decision is made, whether it is agreed or disagreed, it means that the removal application is closed. Therefore, it is recommended to seek help from lawyers and other professionals in preparing for the removal of import alert lists."""""""""" Assistance that lawyers can provide includes assessing corporate compliance risks, determining appropriate removal strategies and guiding the completion of application documents, following up on the progress of removal applications, and ensuring that all questions issued by the FDA are fully responded to in a timely manner. Companies can deal with being included in the red list of import alerts by forming a team of Chinese and American lawyers. China lawyers have a better understanding of the specific operation and development goals of enterprises in China. They can easily establish trust relationships with enterprises, coordinate U.S. legal resources on behalf of enterprises, and use professionals to command professionals to be more efficient and effective. This is the current practice of some central enterprises and large enterprises.#p#Pagination Title #e# Conclusion: In summary, after being included in the red list of import warnings, companies not only have to bear the negative impact of public opinion, but also bear additional inspection, detention and other expenses. It is also expected that these companies will also encounter difficulties during the review of PMTAs, be treated differently, and apply strict review conditions. The content involved in removing the alert list is complex and the procedures are cumbersome, and companies usually need to provide hundreds of pages of supporting documents to the FDA. The most difficult point to prove in removing the import alert list is the guarantee that there will be no recurrence. This point is essentially the construction of a compliance system for enterprises under common law. In the next article, we will focus on the compliance points of e-cigarette companies in responding to the U.S. FDA's import alert red list from the perspective of common law.
Author of this article: #p#Page Title #e#
Zheng Mingwei, Master of International Law from Shenzhen University, Director of the Corporate Comprehensive Business Committee and Equity Partner of BOC Beijing (Shenzhen) Law Firm. Email:zheng_mingwei@163.com；
Lin Hongping, Huazhong University of Science and Technology, Civil and Commercial Law Master, Hong Kong University of Chinese Master of Advanced Accounting;
Jiang Yubin, LL.M., University of Birmingham, UK;
Yang Aoyu, Bachelor of Laws from the University of Hong Kong, Doctor of Laws from the University of California, Irvine, passed the California Bar Examination.
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