Philip Morris International meets with FDA to claim Iqos in patent dispute

Philip Morris International shows iQOS e-cigarettes that heat cigarette sticks but do not burn them.

Fabrico Flini | AFP | Getty Images

CNBC learned that Philip Morris International met with the Food and Drug Administration on Friday afternoon to discuss why tobacco giants and Altria should be allowed to import and sell Iqos devices in the United States.

A person familiar with the company’s conference told the FDA that Philip Morris was unique in both its design and its ability to change smokers. In addition, the company claims that the U.S. International Trade Commission has exceeded that limit given the FDA’s responsibility to regulate which tobacco products and alternatives it can sell, the person said. ..

The meeting with regulators is the latest development in a patent dispute with rival RJ Reynolds, a subsidiary of British American Tobacco. In late September, the ITC ruled that the Iqos device infringed two Reynolds patents. The Biden administration will conduct a 60-day administrative review until November 29 to decide whether to ban the sale and import of alternative tobacco.

Altria launched the Iqos device in the United States two years ago, but began developing the product more than a decade ago, before Philip Morris International spun off from the company. This device heats cigarettes without burning them. It aims to give the user the same nicotine rush without using as much toxins as smoking.

Philip Morris has sold the device in dozens of international markets and has licensed Altria to sell in the United States. Iqos does not make up the majority of Altria’s US operations, but it is part of a shift away from traditional tobacco products. There was a decline in demand.

The US Trade Representative will make recommendations to President Joe Biden after hearing from many agencies, including the FDA, which regulates tobacco products.

In an interview with CNBC on Thursday, Philip Morris International’s head of the United States, Deepak Mishra, said, “The president’s review process could disapprove the ITC’s final decision in some respects, which is quite significant. I believe there are strong cases. “

The company’s claim to continue selling Iqos includes the public health benefits of the device. Altria has counted 20,000 US consumers as device users and said they could return to cigarettes if Iqos disappeared from the shelves.

“We are pretty confident that the majority will return to smoking cigarettes,” Mishra said. “… it’s actually getting closer to the taste and ritual of tobacco, which is why we have a very strong shift in smokers to switch to Iqos.”

Mr Mishra said this was a discussion the company would hold to urge the Biden administration to overturn the ITC’s decision.

The next step in the administrative review is likely to be a trade policy staff meeting this week, said a person familiar with the meeting. This group includes a number of federal agencies, including the FDA, USDA, and Commerce.

If the executives take part in the RJ Reynolds dispute, Mishra said Icos could be off the US shelf for months to wait with the US Patent and Trademark Office for a decision on another claim with Reynolds. The process is expected to take another 6-12 months, but Mishra said the company is more optimistic about the results given its success in similar cases outside the United States. British American Tobacco has already filed similar proceedings against Philip Morris in 11 international markets and the European Patent Office.

In the worst-case scenario of Altria and Philip Morris, both companies need to go back to the blueprints and move production to the United States or change the design enough to avoid patent infringement claims.

Reynolds American spokesman Kelan Holon said when the ITC ruled in favor, “Our intellectual property infringement undermines our ability to invest and innovate, thereby resulting in the health of our business. Reduce the impact on. ” “Therefore, we firmly protect IP around the world.”

Philip Morris shares rose 12% this year to a market value of $ 145 billion. Altria’s share price has risen 9% at the same time, with a market value of $ 83.1 billion.

Philip Morris International meets with FDA to claim Iqos in patent dispute

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