Philip Morris IQOS Electric Tobacco Heating System

2021

Discontinuation of U.S. device deliveries

At the end of September 2021, the International Commission to trade USA (ITC) banned the import and sale of tobacco heating devices. As a result Altria Group Philip Morris , they will have to remove IQOS products from the market, since it, according to the regulator, violates the patent rights of the American tobacco company R.J. Reynolds, the manufacturer of Newport cigarettes.

Encroachment on our intellectual property undermines our ability to invest and create innovation, "said Reynolds, which previously sued Altria and Philipp Morris.

A similar lawsuit against Philip Morris in several international markets was filed by British American Tobacco. However, the courts of Great Britain and Greece in those proceedings sided with Philip Morris.

In the United States banned the sale of IQOS

Altria sells IQOS in the United States under license from Philip Morris, while the company has been developing a device for heating tobacco by October 2021 for about ten years. Due to the ITC decision, shares of Philip Morris, Altria and British American Tobacco fell about 1% on September 30.

Altria said it is working with Philip Morris to develop a further action plan and still considers the Reynolds patents invalid.

Viktor Zykov, a member of the coordinating council for tobacco control under Ministry of Health Russia Viktor Zykov, in a conversation with the Talking radio station, Moscow suggested that due to a dispute between American tobacco manufacturers and each other about protecting the intellectual rights of the IQOS tobacco heating system, they could disappear from the Russian market.

This is a dispute in the field of intellectual property, the decision is aimed at protecting a patent that belongs to another company. If such lawsuits are filed in other countries where Philip Morris heating systems are represented on the market, including in Russia, there may probably be the same solutions, he said.[1]

Stopping the supply of devices to Belarus

In early August 2021, it became known about the cessation of deliveries of Iqos tobacco heating systems to Belarus. The decision of the manufacturer - Philip Morris - is related to sanctions.

I note that in connection with the latest international sanctions, Iqos is no longer available for sale in Belarus, where we reached a stake in Minsk of almost 7% in the second quarter, "said Philip Morris Finance Director Emmanuel Babeau during a conference on the publication of reports on the results of the company in the second quarter of 2021.

At the same time, according to him, there is a wide increase in sales of devices throughout the region of Eastern Europe, including a significant contribution from Ukraine, Kazakhstan and Southeast Europe.

In Belarus, banned from selling tobacco heating systems Iqos

Iqos products ceased to be delivered to Belarus in July 2021. This was due to the fact that entrepreneur Alexei Oleksin was included in the fourth package of EU sanctions. His company Energo-OIL is a monopolist on the import of Heets heated tobacco and Iqos tobacco heating systems into Belarus.

At the end of June 2021, the Council of the European Union decided to impose sectoral sanctions against Belarus. Sanctions include a ban on the supply of materials and goods for the production of tobacco products to the republic, a ban on the trade and transit of certain types of potash fertilizers, petroleum products, and a ban on the access of the Belarusian government and state banks to the financial market in Europe.

The EU imposes restrictions from October 2020 in response to the "falsification of presidential elections." In response, the Belarusian Foreign Ministry recalled its representative to the European Union and refused to participate in the Eastern Partnership.

According to the Yellow Plums Telegram channel, Philip Morris competitors continue to sell tobacco heating systems in Belarus. Among them are Glo, Jouz, Lil, Ploom and Pulze.^[2]

Launch of lil SOLID 2.0

On July 1, 2021, Filip Morris International Ink., announced the launch of sales of the lil SOLID 2.0 device, a smokeless nicotine-containing product of KT&G, introduced in Russia by the IQOS brand. The announcement was preceded by the signing in January 2020 of an agreement between FMI and KT&G, one of the leading South Korean companies - the manufacturer of tobacco and nicotine-containing products.

lil SOLID 2.0 is a latest generation all-in-one tobacco heating device represented by IQOS. In this apparatus, tobacco is heated internally without combustion by an improved technique using a rod-shaped heating element, thereby forming a nicotine-containing aerosol without smoke and ash. The lil SOLID device will be represented by the IQOS brand. It will complement the existing portfolio of smokeless alternative products of FMI in Russia, which includes the IQOS tobacco heating system.

Our goal is for those adult smokers who would otherwise continue to smoke cigarettes to switch to more acceptable alternatives as soon as possible and abandon cigarettes in the interests of their health, public health and society as a whole, "said Ashok Ram Mohan, president of affiliated companies Philip Morris International in Russia and Belarus. - Expanding the geography of sales of KT&G products outside South Korea will complement our already strong portfolio of smokeless products, providing adult smokers with an even greater range of such products, at a price and technology.

The original term of the contract between FMI and KT&G is three years from the date of signing. During this period, FMI will be able to exclusively distribute existing smokeless products and further developments of KT & G. At the same time, the signed document does not limit FMI in the distribution of its own products or products of third parties. KT&G's smokeless product portfolio includes tobacco heating systems (e.g., lil MINI and lil PLUS), hybrid technologies combining tobacco heating systems and e-cigarettes (e.g., lil HYBRID), and e-cigarettes (e.g., lil VAPOR). All KT&G products that FMI will distribute outside South Korea (for example, lil SOLID 2.0 and sticks with heated Fiit tobacco) underwent a thorough pre-sale assessment to confirm their compliance with the current regulatory requirements of the markets in which they will be implemented, as well as high FMI standards in terms of scientific justification and confirmation of the absence of combustion processes and a significant decrease in the levels of harmful substances released compared to cigarettes.

This is an important step in the evolution of FMI's smokeless product portfolio towards a cigarette-free future. As of March 31, 2021, there were approximately 19.1 million adult IQOS users in the world, of which approximately 73% (about 14 million) had already completely stopped smoking cigarettes and switched to IQOS. As of March 31, 2021, the number of adult IQOS users in Russia was estimated at about 4 million, while the share of adult users who completely stopped smoking cigarettes and switched to IQOS corresponded to the world average. In addition, on July 7, 2020, the U.S. Food and Drug Administration (FDA) authorized the sale of the IQOS tobacco heating system as a reduced-exposure tobacco product. The Office concluded that issuing a reduced exposure permit to IQOS was in line with the goals of improving public health.

2020: Permit to sell the electronic tobacco heating system IQOS

On July 7, 2020, the United States Food and Drug Administration (the Office) authorized the sale of the IQOS electronic tobacco heating system to Philip Morris Products S. A. in the status of low-risk tobacco products. It is a tobacco product that has received a resolution on "exposure modification orders," which makes it possible to commercially promote a product containing a reduced level of harmful substances that provides reduced exposure to the body or does not contain harmful substances, and it is expected that the issuance of such a permit is consistent with public health goals. The authorization of these products obliges the company to conduct after-sales supervision and research to determine whether the paragraphs of the resolution remain applicable, including an assessment of the likelihood of an increase in the use of the product by youth.

IQOS Philip Morris Electronic Tobacco Heating System

"Through a reduced-risk tobacco claims process, the Office aims to ensure that consumer-targeted information about reducing the risk or adverse effects of tobacco products on the body is validated scientific data and understandable. Data provided by the company show that selling these products with authorized information can help adult smokers get rid of smoking ordinary cigarettes and reduce exposure to harmful chemicals, but only if they completely switch to this system. The office will closely monitor how consumers use IQOS to determine whether the products meet the specified assumptions and whether its sale leads to an increase in youth consumption. It is important to note that these products are unsafe, so people, especially young people who do not use tobacco products, should not start using them or any other tobacco products, " noted Mitch Zeller, J.D., Director of the Office's Tobacco Products Center

The IQOS tobacco heating system includes an IQOS electronic device that generates a nicotine-containing aerosol by heating tobacco sticks wrapped in paper, namely, Marlboro tobacco sticks, Marlboro Smooth Menthol tobacco sticks, and Marlboro Fresh Menthol sticks. Earlier, in April 2019, the Office authorized the sale of these products without using risk-reduced information through a pre-release tobacco registration procedure (Premarket tobacco application, PMTA).

The solution stated relates to the individual MRTP provisions for these products and further authorizes the manufacturer to sell this product using the following information: "available evidence:

• In the IQOS system, tobacco is heated, not burned.
• This reduces the formation of harmful and potentially harmful substances.
• Scientific research has shown that a complete transition from conventional cigarettes to the use of the IQOS system reduces the exposure of your body to harmful or potentially dangerous chemicals "

Even with such a solution, these products are not safe or "approved by the Office." The authorisation also prevents the company from making any other statements about reduced risk or from using statements in explicit or hidden form that might mislead consumers that the products are approved or approved by the Office, or that the Office considers the products to be safe for consumer use.

There are two types of MRTP permits that the FDA can issue: a "reduced risk" permit and a "reduced exposure" permit. The company requested both types of permits for the IQOS tobacco heating system. After examining the available scientific evidence, public comments and recommendations of the Scientific Advisory Committee on Tobacco Products, the Office concluded that the evidence presented did not allow for the issuance of a "reduced risk" permit, but a "reduced impact" permit was issued for the designated products. The decision was based on the expectation that the issuance of this permit would be favorable from the point of view of public health.

In particular, the Office determined that the company proved the fact that the IQOS tobacco heating system produces tobacco heating rather than burning it, which reduces the levels of harmful and potentially harmful chemicals generated compared to cigarette smoke. In addition, studies have demonstrated that switching from conventional cigarettes to the IQOS tobacco heating system reduces exposure to 15 harmful and potentially harmful substances. The toxicological assessment also showed that compared to cigarette smoke, the IQOS aerosol contains lower levels of potential carcinogens and toxic chemicals that can harm the respiratory or reproductive systems. Among other things, the Office confirmed that the applications also supported the conclusions required for consumer understanding.

The permit provides for after-sales supervision and research by Philip Morris Products S.A. to determine the impact of these decisions on consumer perception, behavior and health, and also allows the Office to review the accuracy of the definitions on which the procedure was based. Post-sales surveillance requirements include rigorous toxicity research using computer models to predict potential adverse effects on consumer health. The rules of procedure require the company to control awareness among young people, and marketing campaigns of products with a reduced risk do not inadvertently affect their use of these products. The company should also support FDA initiatives to prevent access and impact of these products on young people.

The Company shall request and obtain permission from the Authority to continue to market its own products as reduced risk products after the expiration of the four-year period of the original permit. The Office is also entitled to revoke the original or any subsequent permits if the Office decides that the products no longer have a beneficial impact on public health, for example, as a result of increased use of the products among young people or former smokers, or a decrease in the number of smokers who have completely switched to the products.

The Reduced Risk Tobacco Product Approval Procedure set out in the Family Smoking Prevention and Tobacco Control Act of 2009 allows companies to apply to the Office to assess whether the relevant tobacco products can be sold or distributed to reduce public harm or risk of developing tobacco-related diseases.

By law, the FDA must also ensure that advertising and labeling of reduced-risk products contributes to public understanding of the idea of ​ ​ reducing risks when using these products, as well as its significance in the context of public health.

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