Philip Morris International meets with FDA to make its case for Iqos in patent dispute

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  • CNBC has learned that Philip Morris International met with the FDA on Friday afternoon to argue about why the tobacco giant and Altria should be allowed to import and sell Echos devices.
  • This is the latest development in a patent dispute with RJ Reynolds.
  • The Biden administration is conducting an administrative review to decide whether Altria and Philip Morris can continue to sell and import cigarette substitutes.

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CNBC has learned that Philip Morris International met with the Food and Drug Administration Friday afternoon to argue why the tobacco giant and Altria should be allowed to import and sell Iqos devices in the US.

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A person familiar with the company meeting said Philip Morris told the FDA that Iqos is unique in both its design and ability to replace smokers. Additionally, the company is arguing that the US International Trade Commission has exceeded its limit, noting that the FDA is in charge of regulating which tobacco products and substitutes may be sold, this person said. 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 on two of Reynolds’ patents. The Biden administration is conducting a 60-day administrative review until November 29 to decide whether the sale and import of cigarette substitutes will be banned.

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Altria launched the Iqos device in the United States two years ago, but development of the product began more than a decade before Philip Morris International split from the company. The device heats the tobacco without burning it, aiming to give users the same rush of nicotine without the same toxins as smoking cigarettes.

Philip Morris sells the device in dozens of international markets and has licensed Altria to sell it in the US, while the Echos does not represent a substantial portion of Altria’s US business, part of the company’s shift away from traditional tobacco products. , which saw falling demand.

The US Trade Representative will make the recommendation to President Joe Biden after hearing input from several agencies, including the FDA that regulates tobacco products.

“The presidential review process may in some cases negate the ITC’s final determination, and we believe that for There’s a very strong case.”

The company’s reasoning for continuing to sell Iqos includes the public health benefit of the device. Altria said it counts 20,000 US consumers as users of the device, and says they may revert to cigarettes if the Echos disappears from shelves.

“We are confident that a large number of people will go back to smoking cigarettes,” Mishra said. “…it really comes close to the taste and ritual of a cigarette, which is why we have a very strong conversion of smokers who switch to Iqos.”

Misra said this was an argument the company was planning to make as it urges the Biden administration to reverse the ITC’s decision.

The next step in the administrative review is a business policy staff committee meeting, which is likely to take place this week, said a person familiar with the meeting. The group includes several federal agencies, including the FDA, the US Department of Agriculture, and the Department of Commerce.

If the administration is in dispute with RJ Reynolds, Iqos could be off US shelves for months, according to Misra, as it awaits a decision on a separate claim with Reynolds’ US Patent and Trademark Office. The process is expected to take another six to 12 months, but Mishra said the company is more optimistic about the outcome given its success in similar cases outside the United States. British American Tobacco has already taken similar legal action against Philip Morris in 11 international markets and the European Patent Office.

In a worst-case scenario for Altria and Philip Morris, both companies will have to go back to the drawing board, move production to the US, or change the design enough to avoid patent infringement claims.

“The infringement of our intellectual property undermines our ability to invest and innovate and thereby reduce the health impact of our business,” Reynolds’ US spokesman, Kellan Holden, said in a statement. “That’s why we will firmly protect our IP around the world.”

Shares of Philip Morris have climbed 12% this year, giving it a market value of $145 billion. Altria’s stock is up 9% in the same time frame, raising its market cap to $83.1 billion.

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