UNITED STATES INTERNATIONAL TRADE COMMISSION
`WASHINGTON, DC
`
`In the Matter of
`CERTAIN TOBACCO HEATING
`ARTICLES AND COMPONENTS THEREOF
`
` Investigation No. 337-TA-3447
`
`PHILIP MORRIS PRODUCTS SA’S COMMENTS TO
`COMPLAINANTS’ PUBLIC INTEREST STATEMENT
`
`Philip Morris Products, S.A.
`Exhibit 1040
`PMP v. RAI
`IPR2020-00919
`
`Ex. 1040-001
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`

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`Philip Morris Products SA (“PMP”) respectfully submits that implementation of the remedy
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`requested by Complainants would have impermissible, deleterious effects on the public interest. In a major
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`health initiative, FDA introduced a Plan that includes as a key component the availability of a wide range
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`of less harmful alternatives to cigarettes.1 PMP asserts that one such alternative should be its IQOS heat
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`not burn (“HNB”) system, for which, after more than 2 years of rigorous science-based review, FDA cleared
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`for domestic sale through the Premarket Tobacco Application (“PMTA”) process. FDA has stated that a
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`PMTA applicant “must demonstrate to the agency, among other things, that marketing of the new tobacco
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`product would be appropriate for the protection of the public health. That standard requires the FDA to
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`consider the risks and benefits to the population as a whole, including users and non-users of tobacco
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`products.”2 Crucially, no other HNB or e-vapor device has been PMTA-authorized in more than 10 years
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`since the controlling statute was enacted.3 Given the diverse number of devices needed to fulfill FDA’s
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`Plan, and the utter absence of effective, authorized substitutes within the category, denying 34.2 million
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`American smokers access to IQOS would not serve the public interest.4 Further, denying continued IQOS
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`access to those who already have switched could send people back to combustible cigarettes (the most
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`deadly form of tobacco use), which also would not serve the public interest. To avoid this entirely
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`preventable public health injury, the ITC should decline institution (or delegate public interest to the ALJ).5
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`IQOS HELPS TO ACHIEVE FDA GOALS AND PROTECT THE PUBLIC INTEREST
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`FDA’s Plan “is founded on the principle” that nicotine is not directly responsible for smoking-
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`1 Strategic Policy Roadmap, FDA (Jan. 2018), https://www.fda.gov/media/110587/download (“Plan”).
`2 FDA permits sale of IQOS Tobacco Heating System through premarket tobacco product application
`pathway, FDA (Apr. 30, 2019), https://www.fda.gov/news-events/press-announcements/fda-permits-sale-
`iqos-tobacco-heating-system-through-premarket-tobacco-product-application-pathway (“FDA Apr. PA”);
`see Why FDA authorized the marketing of the IQOS heated tobacco product as “appropriate for the
`protection of the public health,” FDA (Oct. 10, 2019), https://www.fda.gov/science-research/fda-grand-
`rounds/why-fda-authorized-marketing-iqos-heated-tobacco-product-appropriate-protection-public-health.
`3 FDA finalizes enforcement policy on unauthorized flavored cartridge-based e-cigarettes that appeal to
`children, including fruit and mint, FDA (Jan. 2, 2020), https://www.fda.gov/news-events/press-
`announcements/fda-finalizes-enforcement-policy-unauthorized-flavored-cartridge-based-e-cigarettes-
`appeal-children (“FDA Jan. PA”).
`4 Cigarette Smoking Among U.S. Adults Hits All-Time Low, CDC (Nov. 14, 2019), https://www/cdc.gov/
`media/releases/2019/p1114-smoking-low.html; contra Complainants’ Pub. Interest Statement at 5.
`5 19 C.F.R. § 210.50(b)(l).
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`1
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`Ex. 1040-002
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`related diseases.6 “It is the other chemical compounds in tobacco, and in the smoke created by setting
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`tobacco on fire, that directly and primarily cause” the negative effects of smoking.7 The UK’s Royal
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`College of Physicians agrees that if nicotine could be delivered without smoke, “most if not all of the harm
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`of smoking” could be avoided.8 Accordingly, FDA began to “take a fresh look at products that can deliver
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`satisfying levels of nicotine to adults who want access to it without burning tobacco.”9 As Professor David
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`Abrams and others concluded, IQOS is among the types of products FDA’s Plan needs to succeed.10 While
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`cigarettes burn above 600°C and produces smoke with harmful chemicals, IQOS heats tobacco to much
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`lower temperatures with no combustion or smoke, reducing such chemical levels by up to 95%.11
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`“No new product of this kind, including any e-cigarette [aka e-vapor product], has gone through as
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`much scientific analysis as IQOS.”12 PMP invested over $7.2 billion in R&D, conducted 8 IQOS clinical
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`studies, and published over 340 peer-reviewed materials on smoke-free products.13 IQOS is in 53 markets,
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`with nearly 60 billion IQOS Heatsticks sold in 2019.14 In granting the IQOS PMTA, FDA observed:
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`[T]hrough the FDA’s scientific evaluation of the company’s applications, peer-reviewed
`published literature and other sources, the agency found that the aerosol produced by the
`IQOS Tobacco Heating System contains fewer toxic chemicals than cigarette smoke, and
`many of the toxins identified are present at lower levels than in cigarette smoke. For
`example, the carbon monoxide exposure from IQOS aerosol is comparable to
`environmental exposure, and levels of acrolein and formaldehyde are 89% to 95% and 66%
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`6 Scott Gottlieb, Public Hr’g on Eliminating Youth Use of Elec. Cigarette & Other Tobacco Prod. Use,
`FDA, at 11 (Jan. 18, 2019), https://www.fda.gov/media/120342/download.
`7 Plan at 3.
`8 Ministry of Health v. Philip Morris, CRI-2017-085-1107, Op. ¶ 33 (Dist. Ct. Wellington NZ Mar. 12,
`2018), https://www.pmiscience.com/resources/docs/default-source/NCDC-vs-Morris/new-zealand_moh-_
`v-pm-new-zealand-limited_march-2018.pdf (“NZ Case”).
`9 Plan at 3.
`10 See, e.g., Med./Ed. Ltr., FDA, at 5 (Dec. 14, 2017), https://www.fda.gov/media/110535/download.
`11 NZ Case, Gilchrist Br. ¶ 40, https://www.pmiscience.com/resources/docs/default-source/NCDC-vs-
`Morris/nz_brief-of-evidence-of-moira-gilchrist_february-2018.pdf; see FDA Apr. PA.
`12 NZ Case, Gilchrist Br. ¶ 64.
`13 Our Science, PMI (last visited Apr. 14, 2020), https://www.pmi.com/our-science; Designing a Smoke-
`Free Future, PMI, at 42-43 (July 2019), https://www.pmiscience.com/resources/docs/default-source/
`default-document-library/pmi-science-booklet---2019.pdf?sfvrsn=cbacdd06_4; PMTA Tech. Project Lead
`Review, FDA, at 65, 93, (Apr. 29, 2019), https://www.fda.gov/media/124247/download (“PMTA Rep.”).
`14 2020 First Quarter Highlights, PMI, at 18 (Apr. 21, 2020), https://philipmorrisinternational.gcs-
`web.com/static-files/aee8cf52-5beb-4c30-928a-949ce7631959 (“PMI PA”); Consumer Analyst Group of
`New York Conference, PMI, at 12, 45 (Feb. 19 2020), https://philipmorrisinternational.gcsweb.com/static-
`files/147f7fd1-3302-42dd-b305-8b786c1eeef5 (“PMI Rep.”).
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`2
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`Ex. 1040-003
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`to 91% lower than from combustible cigarettes, respectively.15
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`FDA concluded that reduced exposure to such chemicals as compared to combustible cigarettes “will likely
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`result in reduced health risks for CC smokers who switch completely to IQOS,” and “is beneficial for those
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`who would be secondarily exposed to the aerosol as compared to environmental tobacco smoke.”16
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`In its review of IQOS, FDA also evaluated “the ability to migrate currently addicted adult smokers
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`onto less harmful products, and the ability to prevent youth initiation.”17 FDA found that “IQOS delivers
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`nicotine in levels close to combustible cigarettes, suggesting a likelihood that IQOS users may be able to
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`completely transition away from combustible cigarettes and use IQOS exclusively.”18 It further found that
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`available data “indicate that few non-tobacco users would be likely to choose to start using IQOS, including
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`youth.”19 (Per the premarket order, FDA also will monitor IQOS marketing to prevent youth access.)
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`IQOS data from outside the United States support FDA’s findings. As of Q1 2020, the company
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`had over 14 million IQOS users worldwide, with conversion rates of approximately 73%.20 In Japan, for
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`example, a recent study by the American Cancer Society found that “[c]igarette sales beg[a]n to
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`substantially decline at the time of the introduction of IQOS.”21 Youth uptake in non-U.S. markets also has
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`proven to be low. One study cited by FDA reported that only 0.9% of youth had ever tried IQOS.22
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`THERE ARE NO ADEQUATE SUBSTITUTES FOR IQOS
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`
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`There are no adequate replacements for the effective and popular IQOS. As for e-vapor products,
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`none has received PMTA authorization.23 Controversies over such products also present real barriers to
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`their receiving PMTA authorization and serving as viable IQOS alternatives. For example, there is ongoing
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`15 FDA Apr. PA.
`16 PMTA Rep. at 92.
`17 FDA's Gottlieb Reaffirms Efforts to Stave Off New Youth Smokers, BLOOMBERG (Nov. 26, 2018),
`https://www.bloomberg.com/news/articles/2018-11-26/fda-s-gottlieb-reaffirms-efforts-to-stave-off-new-
`youth-smokers; see FDA Apr. PA.
`18 FDA Apr. PA.
`19 Id; PMTA Rep. at 97.
`20 PMI PA at 1.
`21 Michal Stoklosa et. al, Effect of IQOS introduction on cigarette sales, BMJ, at 1 (Apr. 29, 2019), available
`at https://tobaccocontrol.bmj.com/content/early/2019/06/11/tobaccocontrol-2019-054998.
`22 PMTA Rep. at 97; see id. at 12, 83.
`23 FDA Jan. PA.
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`3
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`Ex. 1040-004
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`scrutiny of youth uptake of e-vaping. HHS Secretary Alex Azar declared that “[t]he United States has never
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`seen an epidemic of substance use arise as quickly as our current epidemic of youth use of e-cigarettes.”24
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`Thus, HHS “is taking a comprehensive, aggressive approach” to the situation.25 Even Reynolds American,
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`Inc.’s CEO testified in a February House Committee hearing about the perils of youth vaping.26 Further,
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`there is a September 2020 deadline by which companies must submit PMTAs for any e-vapor devices they
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`want to keep on the U.S. market. This deadline presents legal and logistical challenges, as it is uncertain
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`whether it will stand and, if so, which companies will comply.27 Further still, Complainants tout e-vapor
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`products as substitutes, but FDA has warned that such products “are considered illegally marketed and are
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`subject to enforcement.”28 Although Complainants submitted three PMTAs for certain Vuse e-vapor
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`products (Solo, Vibe, and Ciro), these applications were filed recently (October 2019 and April 2020), and
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`may take years to vet, with no guarantee of authorization.29 Moreover, Solo is the oldest, most basic Vuse
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`design that is in no way interchangeable with the more sophisticated IQOS.30 In any event, all e-vapor
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`products are inadequate IQOS replacements from a public health perspective; they have lower switch rates
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`(≈25% v. 73%), and “many smokers do not appear to regard them as a satisfactory substitute for smoking.”31
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`As for other HNBs, no other such device besides IQOS has been PMTA-authorized.32 Without
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`successful completion of this lengthy process, a new HNB cannot be an IQOS alternative. Although
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`Complainants’ older Eclipse HNB can be sold domestically, that product was authorized for sale via a
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`24 Id.
`25 Id.
`26 Vaping in America, HOUSE COMMITTEE ON ENERGY AND COMMERCE, Hr’g Tr. (Feb. 5, 2020),
`https://docs.house.gov/meetings/IF/IF02/20200205/110462/HHRG-116-IF02-Transcript-20200205.pdf.
`27 Emily Field, E-Cigarette Deadline Extended Amid COVID-19 Pandemic, LAW360 Art. (Apr. 6, 2020)
`https://www.law360.com/articles/1260730/e-cigarette-deadline-extended-amid-covid-19-pandemic;
`Jim
`McDonald, First Vape PMTA Has Been Submitted to the FDA, VAPING 360, https://vaping360.com/vape
`-news/85364/the-first-vape-pmta-has-been-submitted-to-the-fda/ (Oct. 14, 2019) (“Vaping 360 Art.”).
`28 FDA Jan. PA.
`29 Id.; Reynolds Submits Second And Third Complete Premarket Tobacco Product Applications, PR
`NEWSWIRE (Apr. 15, 2020), https://www.prnewswire.com/news-releases/reynolds-submits-second-and-
`third-complete-premarket-tobacco-product-applications-301041151.html; Vaping 360 Art.
`30 Vaping 360 Art.
`31 See PMI PA at 1; PMI Rep. at 11; NZ Case, Gilchrist Br. ¶¶ 26.
`32 See PMI Rep. at 46.
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`4
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`Ex. 1040-005
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`Substantial Equivalence (“SE”) application, which has a lower public health standard than PMTA.33
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`Because Eclipse has not been cleared for sale as “appropriate for the protection of the public health” as
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`IQOS has, it is a de facto inadequate replacement, as would be any other HNB that might be given SE
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`authorization by FDA. Moreover, Eclipse cannot fulfill IQOS demand because it is simply unpopular with
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`adult smokers. In 24 years, Eclipse has never gotten past test marketing.34
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`As for nicotine replacement and oral tobacco products Complainants claim as adequate substitutes,
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`they do not offer the ritual of smoking that IQOS approximates. Moreover, oral tobacco products are
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`incredibly unpopular with many groups of smokers.35 In sum, Complainants cannot meet IQOS demand
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`with the unauthorized Vuse, the failed Eclipse, or any other product within a commercially reasonable time.
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`Thus, banning IQOS would harm the public interest.36
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`THE ITC CAN, AND SHOULD, DENY INSTITUTION
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`Public interest must be “the overriding consideration[]” in the administration” of Section 337,37 and
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`here, it would be ill-served by instituting an investigation. The ITC need not do so. An agency has
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`“absolute discretion” regarding whether to pursue prosecution/enforcement within its purview.38 The ITC
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`itself maintains that Section 337 does not contain “a directive to institute an investigation based on every
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`complaint.”39 Rather, it must determine “whether an investigation should be instituted,” and Congress
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`expects it “to give attention to other preliminary matters” during this review.40 The ITC has declined
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`institutions previously, which the Federal Circuit has affirmed. Such action is warranted in this matter.41
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`33See Richard Craver, FDA approves sale of Philip Morris heat-not-burn traditional cigarettes, WINSTON-
`SALEM J. (Apr. 30, 2019), https://www.journalnow.com/news/local/fda-approves-sale-of-philip-morris-
`heat-not-burn-traditional/article57572839-d6c6-5f4b-aff1-66634def777f.html (reporting SE requires only
`that product be at least as safe/effective as its predicate).
`34 Id.; HNB and Other Prods., EVOLVING CIGARETTE (last visited Apr. 14, 2020), http://www.evolving
`cigarette.com/cigarette-automation-2/heat-not-burn-and-other-products-2/.
`35 “Smokeless Tobacco Use in the United States, CDC (Aug. 29, 2018), https://www.cdc.gov/tobacco/data
`_statistics/fact_sheets/smokeless/use_us/index.htm.
`36 Certain Automatic Crankpin Grinders, Inv. No. 337-TA-60, Comm’n Op., at 18 (Dec. 1979).
`37 See S. Rep. No. 93-1298, at 7330 (1974).
`38 Heckler v. Chaney, 470 U.S. 821, 831 (1985) (upholding FDA decision to decline enforcement action).
`39 Amarin Pharma Inc. v. ITC, Nos. 2018-1247 & 2018-114, Appellee Br., at 40-42 (Mar. 19, 2018).
`40 Id. at 41 (quoting S. Rep. No. 93-1298, at 7327 (1974)); see 19 C.F.R. § 210.10(a)(1).
`41 Amarin, 923 F.3d at 965 (Fed. Cir. 2019); Syntex Agribus, v. ITC, 659 F.2d 1038, 1044-45 (CCPA 1981).
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`5
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`Ex. 1040-006
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` Dated: April 23, 2020
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`Respectfully submitted,
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`
`
`/s/ Jamie D. Underwood
`
`Maximilian A. Grant
`Bert. C. Reiser
`Matthew J. Moore
`Jamie D. Underwood
`LATHAM & WATKINS LLP
`Suite 1000
`555 Eleventh Street NW
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
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`
`
`
`
`Counsel for Proposed Respondents
`Philip Morris Products SA
`Philip Morris International Inc.
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`6
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`Ex. 1040-007
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`

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`
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`CERTIFICATE OF SERVICE
`
`337-TA-3447
`
`It is hereby certified that copies of PHILIP MORRIS PRODUCTS SA’S COMMENTS
`TO COMPLAINANTS’ PUBLIC INTEREST STATEMENT were served on April 23, 2020
`as follows:
`
`
`By EDIS
`
`The Honorable Lisa R. Barton
`Secretary to the Commission
`U.S. International Trade Commission
`500 E Street, SW, Room 112
`Washington, DC 20436
`
`David M. Maiorana
`Ryan B. McCrum
`JONES DAY
`901 Lakeside Avenue
`Cleveland, OH 44114
`
`Stephanie E. Parker
`JONES DAY
`1420 Peachtree Street, N.E.
`Suite 800
`Atlanta, GA 30309
`
`Anthony M. Insogna
`JONES DAY
`4655 Executive Drive
`Suite 1500
`San Diego, CA 92121
`
`John J. Normile
`JONES DAY
`250 Vesey Street
`New York, NY 10281
`Tel: (212) 326-3939
`
`On Behalf of Complainants RAI Strategic
`Holdings, Inc., R.J. Reynolds Vapor Company, and
`R.J. Reynolds Tobacco Company
`
`
`
`
`By Email
`dmaiorana@jonesday.com
`rbmccrum@jonesday.com
`separker@jonesday.com
`aminsogna@jonesday.com
`jjnormile@jonesday.com
`
`
`
`/s/ Erika J. Weinstein
`Erika J. Weinstein
`LATHAM & WATKINS LLP
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`
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`
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`Ex. 1040-008
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`