The Food and Drug Administration (“FDA”) has published and sought comments on a draft paper entitled Illicit Trade in Tobacco Products after Implementation of an FDA Product
Standard. The document addresses the potential for development of an illicit market as a result of a number of different potential product standards, including but not limited to, those that
would (1) impose a maximum level of nicotine in cigarettes and other combusted tobacco products at levels that would be insufficient to sustain nicotine addiction; and (2) prohibit the use
of menthol in cigarettes and prohibit the use of characterizing flavors in other tobacco products.

The purpose of such product standards would be to reduce the use of tobacco products that cause death and disease by making them less attractive to consumers. Illicit markets could limit the effectiveness of such public health measures if they provide consumers with access to prohibited products that cause death and disease but which some consumers might nevertheless continue to
use if they continued to be marketed.

These comments will first describe existing illicit markets in the United States and then discuss illicit markets that might arise from efforts by tobacco product sellers to circumvent the
product standards. It will discuss the ways in which product standards might influence consumer behavior (“demand effects”) and ways in which they might influence supply (“supply effects”)
and discuss how these demand and supply effects differ from or resemble those that have given rise to existing illicit markets in the United States. Finally, it will discuss ways in which FDA
and other government agencies can and should develop and strengthen enforcement efforts to minimize the effects of illicit markets.

The undersigned organizations agree with the conclusion reached by the National Research Council and the Institute of Medicine in their 2015 report that “the limited evidence now available suggests that if conventional cigarettes are modified by regulations, the demand for illicit versions of them is likely to be modest.”

Moreover, as the NRC-IOM report found, “a market in banned product would necessarily involve large-scale smuggling from outside the country or illegal domestic manufacturing.”

Neither condition has prevailed in the United States and neither is likely to occur as a consequence of the promulgation and enforcement of product standards. Rather, the most significant consequence of the product standards currently under consideration by FDA is likely to be to a substantial reduction in the most important illicit market in the United States: the illicit sale of combusted tobacco products to customers too young to buy them legally.

Read Full Comments on Illicit Trade Draft Concept Paper 7.16.18