British American Tobacco (NYSE:BTI) is just the second electronic cigarette manufacturer to submit a premarket tobacco application (PMTA) to the Food and Drug Administration. However, because the regulatory agency mandated that manufacturers not only detail how their devices are made, but also that they include scientific backing proving they improve public health, British American's application for its Vuse e-cig included more than 150,000 pages of documentation to support it.

That underscores the monumental task other e-cig makers face as they approach the May 2020 deadline the FDA set for all manufacturers to meet if they want their product to remain on the market. The hurdle may have been set so high that only the largest tobacco companies with the deepest pockets will be able to comply.

Vuse Alto e-liquid pods

Image source: Vuse Vapor.

The FDA moves at a glacial pace

Philip Morris International (NYSE:PM) was the first e-cig manufacturer to submit its PMTA back in March 2017, and it took the FDA almost two years -- to just this past April -- to give its IQOS heated tobacco device the green light to be sold. The global tobacco giant is still awaiting a decision from the agency on whether it can market the IQOS as a reduced-risk product, meaning users would suffer less than by switching completely over from cigarettes to the device. 

Meanwhile, come December, it will have been three years that Philip Morris has been waiting for the FDA to approve its modified-risk tobacco application (MRTA) for the IQOS. Since the agency began accepting such applications in 2011, nearly three dozen have been submitted, but not a single one has been deemed safer than cigarettes.

The only products that have come close to getting approved are snuff and snus, two similar products that are essentially finely ground tobacco powder and are sold either loose or in pouches. 

Swedish Match has filed numerous applications to have its General brand of snus approved, and though the agency denied the applications, it gave the company the right to resubmit them with modifications. British American Tobacco has also submitted an MRTA for its Camel brand of snus while Altria submitted one for its Copenhagen snuff. The FDA's advisory panel has recommended the snuff product be approved, but the agency has taken no action.

E-cig's difficult path

Electronic cigarettes have been cast in a harsh spotlight lately due to thousands of cases of lung illness and injury caused by vaping, as well as dozens of deaths. Because of that, the Vuse e-cig application may face a daunting task of getting approved, along with applications from any other manufacturer that is able to afford the costs associated with cobbling together the documentation necessary to submit a PMTA.

While the Vuse application ran 150,000 pages long, the IQOS PMTA was said to run some 2 million pages long and cost millions of dollars to produce.

Those manufacturers mostly likely able to meet the May deadline include Juul Labs, not least because Altria has a 35% stake in the e-cig maker and recently installed one of its executives in the CEO position, and NJOY Holdings, one of the first e-cig manufacturers. Juul is confronted with the added difficulty of overcoming the FDA's animus against it due to its device's popularity with teens. The former commissioner of the agency, Scott Gottlieb, has previously suggested he doesn't see a path forward for it.

A much smaller market is coming

The FDA has said that any company that submits a PMTA by the deadline will be allowed to keep its e-cigs on the market for a year while it investigates the application. That means not only will companies that can't meet the deadline see their products removed from store shelves, but that even those that do submit on time may find their products at risk of being removed if the agency dawdles in reviewing the applications as it did with the IQOS.

Philip Morris International is just starting to market the heated tobacco device with plans to roll it out nationally. At the very least, it will have competition from British American's Vuse e-cig. Whether any other company has the wherewithal to make it to the end remains to be seen.