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June 24, 2021

House Dems Reject Proposed FDA User Fees for Vape Companies

For the third year in a row, the Democratic-led U.S. House of Representatives will not approve a White House/FDA budget request to collect tobacco company user fees from vape manufacturers.

The Trump administration included requests for $100 million in vape company user fees in its FDA budgets for fiscal years 2020 and 2021, and the Biden White House made an identical request for FY2022. (Federal government fiscal years begin in October and end in September.)

Tobacco company fees completely fund the FDA Center for Tobacco Products (CTP) and all of its initiatives. The CTP receives no funding from taxes or other sources. Congress approved $681.5 million in user fees for FY2021. The Biden administration requested $780.8 million for FY2022, including $100 million in vape company fees.

According to a tweet from Paul Blair of Turning Point Brands, the House appropriators’ spending bill draft leaves the vape company user fees out of the proposed budget. Blair didn’t speculate why the fee request was rejected.

Democrats have held the House majority since January 2019. As the party generally opposed to vaping and tobacco, it’s odd that Democrats have three times passed up a chance to punish vaping manufacturers. One possible explanation is that Congress thinks assessing fees could legitimize an industry they see as illegitimate.

But that doesn’t explain why user fees were included in two previous Democratic vaping bills, including one that passed the House in February 2020. (That bill, which also would have also banned flavors and online sales, and added a crushing federal tax to nicotine, never received a Senate vote.)

For the last three years, the FDA budget requests have contained the same requests for user fees, and a virtually identical explanation of the need to assess fees on vape manufacturers.

“Currently, the Tobacco Control Act does not provide a means for FDA calculation of user fees for e-cigarettes and other ENDS products, and certain other deemed products,” notes the agency. “These products represent an increasing share of the tobacco marketplace as well as FDA’s tobacco regulatory activities. FDA requests an additional $100 million and requests authority to include manufacturers and importers of all deemed products among the tobacco product classes for which FDA assesses tobacco user fees.”

Tobacco company user fees are calculated with a complex formula that includes a multiple of the federal tobacco excise tax rate for each type of tobacco product. Currently the FDA collects user fees from manufacturers and importers of cigarettes, snuff, chewing tobacco, cigars, roll-your-own tobacco, and pipe tobacco. Cigarette sales account for a large majority of the fees.

There is no federal tax on e-cigarettes or other vaping products, so assessing user fees on vape manufacturers would require a new system of calculating the fees. If it were based on sales volume, Juul Labs, RJ Reynolds/BAT and other mass-market manufacturers would probably pay the bulk of the fees.

The FDA also receives user fees from drug and medical device manufacturers. Those fees go to the Center for Drug Evaluation and Research and other FDA offices in charge of market authorization for pharmaceutical products and devices.

Smokers created vaping without any help from the tobacco industry or anti-smoking crusaders, and vapers have the right to keep innovating to help themselves. My goal is to provide clear, honest information about the challenges vaping faces from lawmakers, regulators, and brokers of disinformation. I recently joined the CASAA board, but my opinions aren’t necessarily CASAA’s, and vice versa. You can find me on Twitter @whycherrywhy
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