Food and Drug Administration v. Wages and White Lion Investments, L.L.C.
LII note: The U.S Supreme Court has now decided Food and Drug Administration v. Wages and White Lion Investments, L.L.C.
Issues
Was the Food and Drug Administration’s denial of White Lion’s application to market flavored e-cigarette products arbitrary and capricious?
This case asks the Supreme Court to decide whether the Food and Drug Administration’s (“FDA”) denial of Wages and White Lion Investments, L.L.C.’s (“White Lion”) application to market flavored e-cigarette products was arbitrary and capricious. White Lion submitted an application to the FDA to sell their flavored nicotine liquid, used in e-cigarettes, on the market. The FDA denied their application, claiming that White Lion did not include sufficient scientific study support in their application for the FDA to conclude that the benefits of the flavored nicotine liquid outweighed the risk of use by youth. White Lion claims that the FDA erroneously rejected their application for approval of their flavored nicotine liquid because they lacked a longitudinal comparative study, a requirement that White Lion claims was not communicated to the public. The FDA counters by claiming that longitudinal studies are not required and that White Lion’s application was rejected because they could not show that e-cigarette use reduced smoking. The outcome of this case has significant implications for youth e-cigarette use, public health, state budget stability, and product investment and innovation in the e-cigarette industry.
Questions as Framed for the Court by the Parties
Whether the court of appeals erred in setting aside the Food and Drug Administration’s orders denying respondents’ applications for authorization to market new e-cigarette products as arbitrary and capricious.
Facts
In 2009, the federal government passed the Family Smoking Prevention and Tobacco Control Act (“Tobacco Control Act”) which required manufacturers of tobacco products, including nicotine liquid for e-cigarettes, to receive Food and Drug Administration (“FDA”) authorization before selling such products. FDA authorization came in the form of a Premarket Tobacco Application (“PMTA”). The FDA held information sessions and released guidelines on five different occasions to clarify how e-cigarette product manufacturers could ensure that their PMTAs were accepted. The FDA repeatedly stated that it expected PMTAs to address youth vaping in marketing plans. Several guidelines also stated that scientific studies addressing flavored products were not required, and that observational studies such as surveys would be accepted.
Respondent, Wages and White Lion Investments, LLC, doing business as Triton Distribution and Vapetasia, LLC (“White Lion”), manufactures flavored nicotine liquids for use in vape products. Nicotine liquids are different from other products on the market in that, in order for the liquid to be consumed it must be poured into the tank of a larger vaping mechanism. Other products involve cartridges that are pre-filled with nicotine liquid and are ready for use upon purchase. The products that White Lion seeks approval for require larger equipment and more user input to be consumed.
On September 9, 2020, White Lion filed PMTAs for their flavored nicotine liquids. Their PMTAs included marketing plans designed to restrict underage access to their products, such as an age-restricted website and its practice of screening retailers before entering distribution agreements. They also included peer-reviewed studies showing smokers switched to vaping which came with health benefits as well as observational studies in the form of surveys concerning smokers switching to vaping. White Lion did not conduct studies on their flavored products to support their PMTAs.
The most recent guidance released by the FDA before White Lion filed its PMTAs was published in January of 2020 and stated that PMTA consideration after September 2020 would prioritize enforcement against cartridge-based products that are flavored.
On August 26, 2021, the FDA announced that it would deny about 55,000 applications for flavored e-cigarette products and that applications for flavored products would require a robust study, such as a randomized control trial , without addressing this policy’s conflict with previous guidance. After this announcement, White Lion requested time to conduct the required studies and amend their PMTAs. The FDA denied that request and denied White Lion’s PMTAs, focusing on White Lion’s lack of studies, including a randomized control trial, and discussing the impact of flavored products on youth.
White Lion moved to stay the denial for review by the Fifth Circuit Court of Appeals, which was granted. White Lion’s petition for review was denied by a divided merits panel on the Fifth Circuit Court of Appeals. After the merits panel rejected White Lion’s petition for review, the Fifth Circuit Court of Appeals granted rehearing and vacated the panel opinion. The Fifth Circuit sided with White Lion, finding that the FDA’s denial of White Lion’s PMTA was arbitrary and capricious .
The United States Supreme Court granted the FDA’s petition for certiorari on July 2, 2024.
Analysis
FDA’S EVIDENTIARY STANDARD OF REVIEW
The FDA argues that it evaluated White Lion’s application for a PMTA according to the proper evidentiary standard of review . . The FDA maintains that its approach to White Lion’s application was consistent with the guidelines it previously issued titled “2019 Guidance.” Additionally, the FDA claims it does not require randomized control trials or longitudinal studies and that it accepts other forms of evidence as sufficient for applications. The FDA contends that it did not reject White Lion’s proposal because it lacked scientific studies; rather, it rejected the application because the literature reviews did not support White Lion’s claims that fewer people smoke due to the use of flavored e-cigarettes. Furthermore, the FDA asserts that they warned against relying solely on literature reviews in their 2019 Guidance.
Moreover, the FDA insists that it is not obligated to issue specific guidance that provides applicants with fair notice of how it will evaluate flavored products, as this requirement would impose additional procedures beyond those specified in the statutory text of the Tobacco Control Act. The FDA further argues that agencies can choose to develop their regulatory standards through case-by-case evaluations and are not required to announce a general standard that they will follow. The FDA explains that regulated parties’ misinterpretations of its guidance do not entitle those parties to further review. Additionally, the FDA contends that it did not alter its evidentiary procedures and therefore was not required to provide a reasoned explanation for any changes.
White Lion counters that the FDA secretly and improperly imposed a new requirement for marketing applications, altering the FDA’s standard for reviewing these applications. White Lion maintains that the FDA changed its 2019 Guidance by circulating an internal memorandum stating that longitudinal comparative studies were a required piece of evidence for the applications. While White Lion acknowledges that the memorandum also stated that “other” evidence could be sufficient, it argues that the FDA provided no indication of what could constitute sufficient “other” evidence; therefore, longitudinal comparative studies were essentially required. According to White Lion, the FDA then engaged in an improper analysis by rejecting all applications without longitudinal comparative efficacy studies. White Lion asserts that this substantive change in policy requires notice to applicants, and the FDA did not give any notice to those seeking to market their products under the Tobacco Control Act. According to White Lion, the Fifth Amendment compels the FDA to give this notice.
Additionally, White Lion argues that the agency’s new evidentiary requirements were not applied on a case-by-case basis but rather imposed through the internal memorandum, which constitutes a substantive rule since it did not pertain to any specific application. White Lion claims that according to the Supreme Court’s decision in Encino Motorcars, LLC v. Navarro , for the FDA to lawfully change its evidentiary requirements, it must offer a reasoned explanation for disregarding the facts and circumstances that the previous policy was based on. Here, White Lion contends that the FDA failed to provide a reasoned explanation for implementing a new requirement that applications must have long-term clinical studies. Furthermore, White Lion argues that the FDA did not give applicants a reasonable opportunity to conduct the newly required studies and update their applications. In addition, White Lion maintains that when an agency changes its policies, it must consider the reliance interests the previous policy created. White Lion contends that the FDA violated this principle by changing the application requirements after White Lion had already submitted its marketing application and not giving it a chance to add to its application.
HARMLESS OR PREJUDICIAL ERROR
The FDA argues that it did not err by failing to individually evaluate White Lion’s marketing plan, and that any error it may have made was harmless. In addition, the FDA contends that administrative agencies commit harmless error when the mistake has no substantial effect on the ultimate rights of the parties. The FDA cites six courts of appeal, which have held that failing to individually evaluate a company’s marketing plan was harmless where the application did not demonstrate significant differences between the measures in its plan and others that the FDA had already reviewed and rejected. Here, the FDA asserts that it determined that marketing plans like White Lion’s were ineffective because they failed to properly address youth use of these products, and none of their marketing plans was unique as compared to other plans the FDA had already rejected.
Furthermore, the FDA argues that it has consistently found that no marketing measures for e-cigarettes effectively curb youths’ use of dangerous smoking products. The FDA claims that the proper analysis for harmless error is determining whether the judgment would have been the same without the error. According to the FDA, even if it had fully examined the marketing plan, it would not have changed its decision because White Lion did not present any novel marketing plans. Finally, the FDA contends that remand is improper because the agency would not have reached a different result even if the error did not occur.
White Lion counters that the FDA’s error was not harmless because the agency failed to individually evaluate the company’s marketing plans for its flavored product. Furthermore, White Lion cites Calcutt v. FDIC , which states that if an agency makes a discretionary decision without considering all relevant information, the court should remand the case to the agency for further investigation or explanation . Here, White Lion contends that the FDA did not individually review applications beyond determining whether they contained randomized controlled trials, longitudinal cohort studies, or unspecified “other evidence,” despite previously communicating that such scientific measures were not strictly required.
Moreover, while the FDA claims that White Lion’s products are similar to other products whose marketing proposals it has previously rejected, White Lion argues that the FDA has not specified which applications were similar to its product. White Lion further asserts that its marketing plans differ from those previously rejected by the FDA, as those plans concerned cartridge-based products, whereas White Lion's product involves bottled e-liquids. According to White Lion, the FDA’s rejection of marketing proposals fails to clearly identify which previously rejected plans were similar, making it impossible to determine whether the plans at issue are materially different. White Lion argues that this lack of clarity allows agencies to avoid fully explaining their decisions, insulating those decisions from thorough judicial review .
Discussion
IMPACT OF THE DECISION ON PUBLIC HEALTH
In support of the FDA, Public Health, Medical and Community Groups (the “Groups”) argue that ruling for White Lion would worsen the “pediatric disease” of youth e-cigarette use. The Groups point out that over 2.1 million youth, including 10% of high schoolers, reported e-cigarette use in 2023, with 90% preferring flavored products. The Groups contend that a broad range of flavors drives e-cigarette popularity among minors, leading to nicotine addiction and health risks such as lung and heart issues, cognitive impairment, and a greater chance of smoking combustible cigarettes. Massachusetts and several other states (“States”), writing in support of the FDA, echo the worries about health concerns for minors, noting effects of e-cigarette use including depression and impulse control problems. States also emphasize that young e-cigarette users prefer sweet flavors, while adults favor non-sweet ones, making it unlikely that ruling for the FDA would drive adults back to combustible cigarettes. Both the Groups and States argue that the availability of flavored e-cigarettes undermines the years of progress in reducing youth smoking and stress the importance of federal intervention to protect youth as a public health policy priority.
In support of White Lion, Vaping Industry Stakeholders counter that flavored e-cigarettes serve as an effective tool for adults quitting combustible cigarettes. While still acknowledging the risks to minors that flavored e-cigarettes pose, Global Action to End Smoking, in support of neither party, highlights the FDA’s failure to sufficiently weigh the harm to adult smokers from banning flavors. Global Action notes that e-cigarettes, though not risk-free, are significantly less harmful than traditional cigarettes due to the absence of combustion-related toxins. Global Action contends that e-cigarettes help smokers quit combustible cigarettes more effectively than any other nicotine-replacement options, and adults using sweet flavors are 2.5 times more likely to quit than those using tobacco-flavored. Global Action emphasizes studies that suggest around 50% of e-cigarette users would face increased cravings for combustible cigarettes if flavors were banned, which would potentially worsen public health outcomes. Global Action warns that ruling for the FDA would effectively ban flavors that could harm public health by removing products that help adult smokers transition to less harmful, life-saving nicotine sources.
ECONOMIC LOSSES AND INEFFICIENCIES
In support of the FDA, States argue that inadequate federal regulation of nicotine products imposes billion-dollar costs on state budgets for smoking-related health care and productivity losses. States cite specific annual costs to state budgets, including $10.29 billion in health care and $24.4 billion in lost productivity in Texas, $15.44 billion in health care and $28.1 billion in lost productivity in California, and $3.09 billion in health care and $5.6 billion in lost productivity in Wisconsin. Additionally, sixteen members of Congress (“Representatives”), in support of the FDA, warn that judicial challenges to FDA decisions slow the review process, forcing the FDA to spend time on meritless litigation rather than focus on reviewing applications. These Representatives also contend that hindering the review process leads to wasted investments in products that may ultimately be denied.
In support of White Lion, Washington Legal Foundation (“WLF”) responds that ruling for the FDA would allow agencies to shift regulatory requirements without notice, complicating market approval. WLF cites drug and vaccine companies that invest millions over years in research and testing, only to face potential FDA rule changes that could render those investments wasted. This unpredictability, WLF contends, would hinder product development as companies would have to anticipate possible unannounced regulatory changes, risking billions in lost costs. The Coalition of Manufacturers of Smoking Alternatives, in support of White Lion, echoes these concerns, warning that unannounced FDA changes in their approval process create uncertainty that deters investment and innovation in new products across all companies regulated by a federal agency.
Conclusion
Written by:
Edited by:
Additional Resources
- Greg Stohr & Tiffany Kary, FDA Efforts to Curb Flavored Vapes Draw Supreme Court Review , Bloomberg Law (July 2, 2024).
- Alison Durkee, Supreme Court Will Take On FDA’s Tough Flavored Vape Restrictions , Forbes (July 2, 2024).