The U.S. Food and Drug Administration’s (FDA) Center for Tobacco Products has released a proposed guidance document explaining how manufacturers, distributors, and retailers can comply with the agency’s prohibition against distributing free samples of tobacco products. Specifically, the guidance outlines the situations in which the sale of tobacco products – including e-cigarettes – to consumers at less than their full price (e.g., coupons, discounts, rewards programs, etc.) would not violate the ban.
As a general matter, the Guidance document is permissive, permitting most discounts and rewards programs provided that retailers only distribute less-than-full-price tobacco products within the context of a transaction where the customer provides some money to the retailer for a tobacco product. It appears to target for prohibition scenarios where customers acquire tobacco products from retailers without any monetary transaction for tobacco products taking place.
The guidance comes following the publication of the Agency’s “deeming rule” which brought all tobacco products, including e-cigarettes, under the agency’s jurisdiction. The agency is reviewing the comments on the draft guidance, and will publish a final version once its review is complete.
Since the deeming rule went into effect, FDA regulations prohibit manufacturers, distributors, and retailers from giving away free samples of all tobacco products (even if they are not made or derived from tobacco, like atomizers, clearomisers, and e-liquids). In other words, tobacco products may be distributed only through product sales that require monetary payment and are subject to minimum age and ID requirements.
Any NATSO member that wishes to provide comments on the FDA guidance document should contact NATSO’s regulatory counsel David Fialkov at firstname.lastname@example.org.
The guidance document addresses the following scenarios
1. Coupons and Discounts. Coupons that take dollars or cents off of the purchase price of a tobacco product are not prohibited. “Two for one” and “buy one get one free” promotions are also not prohibited. However, promotions that provide a coupon for a free tobacco product at a later date are prohibited, unless the manufacturer, distributor, or retailer has devised a way to adequately verify that the person redeeming the coupon is the original purchaser who earned the coupon for the free product.
2. Membership and Rewards Programs. Discounts on tobacco product purchases to individuals in a particular membership or loyalty program are not prohibited. Rewards programs that offer a tobacco product as a “reward,” such as punch card programs (i.e., “buy seven get the eighth free”), are also not prohibited, so long as the “reward” is distributed as part of a tobacco sales transaction that requires monetary payment. For example, if a customer receives a free vial of e-liquid after purchasing seven vials, then the manufacturer, distributor, or retailer must distribute that “free” vial during the seventh or ninth e-liquid purchase. It cannot distribute the free vial outside of a tobacco product sales transaction that requires monetary payment, unless the manufacturer, distributor, or retailer has devised a way to adequately verify that the person redeeming the free vial is the original purchaser who earned the free product in the first place.
3. Contests and Games of Chance. Tobacco products are permitted to be given away as prizes in contests and games of chance only when the product is redeemed during a subsequent tobacco product sales transaction that requires monetary payment and is subject to minimum age and ID requirements. Manufacturers, distributors, and retailers should also be aware of state and Federal laws that further restrict how these promotions may be held.
4. Business-to-Business Exchanges. FDA does not intend to enforce the free sample prohibition in a transaction between businesses, so long as the free samples are distributed in limited quantities, or no more than necessary to achieve a business or marketing goal, such as awareness of and exposure to the product for the purpose of encouraging the purchase of the product.
Ultimately, the guidance, when finalized, will simply represent the current thinking of the FDA on the topic. Industry members will still be permitted to use alternative approaches than those listed above to comply with the prohibition against distributing free samples of tobacco products.
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