GRIPUM LLC v. FDA ( 2022 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 21-2840
GRIPUM, LLC,
Petitioner,
v.
UNITED STATES FOOD AND DRUG ADMINISTRATION,
Respondent.
____________________
On Petition for Review of a Final Marketing Denial Order by the
U.S. Food and Drug Administration.
No. PM0001689
____________________
ARGUED APRIL 20, 2022 — DECIDED AUGUST 29, 2022
____________________
Before WOOD, HAMILTON, and KIRSCH, Circuit Judges.
WOOD, Circuit Judge. Gripum, LLC, manufactures and dis-
tributes hundreds of flavored liquids for use in e-cigarette de-
vices. Seeking to take its products to market, Gripum submit-
ted a “premarket tobacco product application” to the federal
Food and Drug Administration (FDA) in September 2021. But
the agency denied the application, reasoning that Gripum had
failed to demonstrate public-health benefits as required by
the Family Smoking Prevention and Tobacco Control Act (the
2 No. 21-2840
Act), see 21 U.S.C. § 387j. We now deny Gripum’s petition for
review of the FDA’s decision, finding that the agency’s ap-
proach to adjudicating the application was both reasoned and
consistent with the Act.
I
A
Commonly known as “e-cigarettes,” electronic nicotine
delivery systems (called ENDS in bureaucratese) vaporize
nicotine-laden “e-liquid” for users to inhale. Users have a
choice of devices that accomplish that function and thus allow
“vaping.” The delivery systems come in an open form, which
takes refillable cartridges, and a closed form, which requires
single-use cartridges. There is a huge number of flavor op-
tions for the cartridges. Some e-liquids mimic traditional cig-
arette flavors such as tobacco or menthol. Others, like the e-
liquid products at issue in this case, taste like candy, fruit, or
baked goods. All, however, are laced with nicotine.
Under the Act, manufacturers of a “new tobacco prod-
uct”—defined as a product that was not on the market as of
February 15, 2007—must receive authorization from the FDA
prior to marketing that product. As concern grew over the
dangerous health consequences of vaping and e-cigarette use,
the FDA promulgated the “Deeming Rule” in May 2016. See
81 Fed. Reg. 28,974 (May 10, 2016). This brought all “tobacco”
products, including e-cigarettes and their delivery systems,
under the Act’s premarket-authorization requirements.
Most relevant for our purposes is the Act’s command that
the Secretary of Health and Human Services “shall deny an
application” to market a new tobacco product if the manufac-
turer fails to show that the product would be “appropriate for
No. 21-2840 3
the protection of public health.” This is commonly referred to
as the “APPH” standard, but in the interest of using plain
English, we will call it the “appropriateness” standard. 21
U.S.C. § 387j(c)(2). To determine whether a product meets the
appropriateness standard, the Secretary must consider “the
risks and benefits to the population as a whole, including us-
ers and nonusers of the tobacco product.” Id. That assessment,
in turn, must take into account the “increased or decreased
likelihood that”:
(A) “existing users of tobacco products will stop using
such products”; and
(B) “those who do not use tobacco products will start us-
ing such products.”
Id. § 387j(c)(4). In other words, the Secretary must weigh a
product’s risks of hooking new users (typically youth) into
the world of tobacco, broadly defined, against its potential to
help existing users (typically adults) wean themselves from
tobacco’s unhealthier forms (namely, combustible cigarettes).
As a matter of enforcement discretion, the FDA specified
in its 2016 Deeming Rule that manufacturers would be given
two to three years to prepare market applications for the
e-cigarette products already on the market. See 81 Fed. Reg.
at 28,978. Soon thereafter, youth e-cigarette use exploded
across the country. From 2017 to 2018, the number of high
schoolers using e-cigarettes rose by over seventy-five percent.
See FDA, Results From 2018 National Youth Tobacco Survey
Show Dramatic Increase in E-Cigarette Use Among Youth Over
Past Year (Nov. 15, 2018). With the urgency of the situation in
mind, the FDA began around late 2017 to step up its enforce-
ment efforts against products that targeted youth. See Enforce-
ment Priorities for Electronic Nicotine Delivery Systems (ENDS)
4 No. 21-2840
and Other Deemed Products on the Market Without Premarket Au-
thorization (Revised): Guidance for Industry 6–7 (Apr. 2020)
(hereinafter 2020 Guidance).
In 2019, the FDA issued a guidance document to help
manufacturers prepare applications. See Premarket Tobacco
Product Applications for Electronic Nicotine Delivery Systems:
Guidance for Industry (June 2019) (2019 Guidance). In that doc-
ument, the FDA stated that it “understands that limited data
may exist from scientific studies and analyses.” Id. at 12. To
address the paucity of data, it indicated that it “intends to re-
view” “information on other products (e.g., published litera-
ture, marketing information)” provided by an applicant, so
long as the application also included “appropriate bridging
studies” tying extant data to the applicant’s own products. Id.
By 2020, nearly twenty percent of high-school students
were active users of e-cigarettes, making e-cigarettes “the
most widely used tobacco product among youth by far.”
FDA, Technical Project Lead Review of PMTAs (2020). The
agency adjusted its enforcement priorities accordingly and
publicized those changes in a guidance document issued that
year. It announced that it planned to pay particular attention
to flavored, cartridge-based e-cigarettes given their “extraor-
dinary popularity” among youth. See 2020 Guidance at 13
(describing how ninety-three percent of e-cigarette users aged
12–17 reported that their first e-cigarette was a flavored prod-
uct). The guidance document also recounted the many efforts
undertaken by both the agency and manufacturers to reduce
youth access. Regrettably, measures such as age-limited sale
restrictions had failed to stem the tide, even after the FDA had
sent over 6,000 warning letters and 1,000 civil monetary pen-
alty complaints to retailers accused of illegal sales to minors.
No. 21-2840 5
See id. at 7. Because youths often obtain e-cigarettes from
friends rather than by direct purchases, sales restrictions
proved to be largely ineffective. The 2020 Guidance also clar-
ified that the agency would “make enforcement decisions on
a case-by-case basis” and that it “retains discretion to pursue
enforcement action at any time against any deemed new to-
bacco product marketed without premarket authorization.”
Id. at 11.
B
Since 2013, petitioner Gripum has manufactured and dis-
tributed flavored e-liquids for use in open-system devices
(that is, the refillable cartridges). It claims to have had 291 pri-
vate label e-cigarette products under contract as of January
2022. On September 7, 2020, Gripum submitted a premarket
application to the FDA seeking authorization to market hun-
dreds of its flavored e-liquids, which carried colorful and
evocative names such as “Peanut Butter Milk Pie,” “Bad Mon-
key Giovanni,” and “Sunshine Vape Dragon Berry Balls.” In
its application it included a review of the scientific literature
and consumer surveys assessing trends in the use of e-ciga-
rettes, though none of these materials discussed or referred to
Gripum’s own products.
About a year later, on September 8, 2021, the FDA issued
a “marketing denial order” for Gripum’s application, explain-
ing that “the new products … lack sufficient evidence to
demonstrate that the marketing of these products is appropri-
ate for the protection of public health.” The denial order went
on to say that “robust and reliable evidence is needed regard-
ing the magnitude of the potential benefit to adult smokers.”
Reliable evidence, the denial order explained, could have
taken the form of a “randomized controlled trial and/or
6 No. 21-2840
longitudinal cohort study that demonstrated the benefit of
your flavored ENDS products over an appropriate compara-
tor tobacco-flavored ENDS.” Although Gripum’s application
mentioned randomized controlled trials and longitudinal co-
hort studies of other products, Gripum never explained how or
why its products were sufficiently similar to those other prod-
ucts so that the latter were relevant to its application. In other
words, it failed to provide a “bridge” between the data about
other products and its own proposed offering. In addition, the
denial order concluded that the alleged public-health benefits
of Gripum’s products were too speculative to outweigh the
risks of youth initiation. The agency thus concluded that it
was required to deny Gripum’s application in its entirety.
On October 8, 2021, Gripum timely filed its petition for re-
view of the denial order pursuant to 21 U.S.C. § 387l(a)(1)(B).
Seeking emergency relief from this court, Gripum filed a mo-
tion for a stay pending review on October 17, 2021. On No-
vember 4, 2021, we entered an order granting Gripum the re-
quested relief.
Since Gripum lodged its petition, similar challenges to e-
cigarette marketing denial orders have percolated across the
courts of appeals. Not long after we entered our stay, the Sixth
Circuit denied a stay pending review in one such case. See
Breeze Smoke, LLC v. FDA, 18 F.4th 499, 503 (6th Cir. 2021). The
Sixth Circuit petitioners then sought a stay from the Supreme
Court, but that was denied. See Breeze Smoke, LLC v. FDA, 142
S. Ct. 638 (2021) (mem.). We are informed that Breeze Smoke
has now voluntarily withdrawn its petition in the Sixth Cir-
cuit challenging its marketing denial order. In another case,
the Fifth Circuit entered a stay of the marketing denial orders
before it, see Wages & White Lion Invs., LLC v. FDA, 16 F.4th
No. 21-2840 7
1130 (5th Cir. 2021), but later the merits panel sided against
the flavored e-cigarette manufacturers and upheld the
agency’s decisions, see Wages & White Lion Invs., LLC v. FDA,
Nos. 21-60766 & 21-60800 (5th Cir. July 18, 2022). The Eleventh
Circuit issued an opinion that was the mirror image of the
Fifth Circuit’s. In Bidi Vapor LLC v. U.S. Food and Drug Admin.,
No. 21-13340 (11th Cir. Aug. 23, 2022), a panel majority va-
cated denial orders relating to six different companies, be-
cause it concluded that the agency had failed adequately to
consider the companies’ marketing and sale-access-restriction
plans; the dissenting judge thought that the agency had said
enough, and that in any event any error was harmless. Finally,
the D.C. Circuit recently upheld FDA orders denying market
authorization for certain flavored e-cigarette products. See
Prohibition Juice Co. v. FDA, Nos. 21-1201, 21-1203, 21-1205 &
21-1207 (D.C. Cir. July 26, 2022). (There are also some addi-
tional pending challenges. See https://vaping360.com/vape-
news/111563/vape-companies-challenging-fda-marketing-
denials/.)
II
This case arises under section 912(a)(1)(B) of the Federal
Food, Drug, and Cosmetic Act, 21 U.S.C. § 387l(a)(1)(B)),
which provides that any person adversely affected by the
FDA’s issuance of a marketing denial order may file a petition
for review either in the D.C. Circuit or in the circuit in which
the person resides or has its principal place of business.
Gripum’s principal place of business is in Skokie, Illinois, and
so its challenge to the marketing denial order is properly be-
fore us.
Because denial orders are reviewed in accordance with
section 706(2)(A) of the Administrative Procedure Act (APA),
8 No. 21-2840
an order may be held unlawful and set aside only if it is found
to be “arbitrary, capricious, an abuse of discretion, or other-
wise not in accordance with law.” 5 U.S.C. § 706(2)(A); see 21
U.S.C. § 387l(b). To meet the APA’s arbitrary-and-capricious
standard, “the agency must examine the relevant data and ar-
ticulate a satisfactory explanation for its action including a ra-
tional connection between the facts found and the choice
made.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983); see also FCC v. Prometheus
Radio Project, 141 S. Ct. 1150, 1158 (2021) (“The APA’s arbi-
trary-and-capricious standard requires that agency action be
reasonable and reasonably explained.”).
Gripum advances three theories for why the FDA’s adju-
dication of its application was arbitrary: (1) the agency failed
to announce ascertainable standards prior to its adjudication
of the application; (2) the agency quietly shifted the eviden-
tiary standard after inviting reliance on an earlier, easier-to-
meet standard; and (3) it failed to undertake an individual-
ized approach to the application, instead applying general-
ized, and thereby arbitrary, presumptions. 1 We address these
points in that order.
A
Gripum first argues that the FDA’s failure to promulgate
rules governing the premarket application process, or other-
wise to announce ascertainable standards, rendered its
1 We note in this connection that in our case Gripum did not present
the argument that persuaded the Eleventh Circuit in Bidi Vapor, namely,
that the FDA’s analysis was flawed because it did not explain why it
placed no weight on the companies’ marketing and sales-access-re-
strictions. Gripum has thus waived, or at a minimum forfeited, this point.
No. 21-2840 9
adjudication of Gripum’s application arbitrary. But the rele-
vant standard applied by the agency—that benefits to adult
users must outweigh the risk of fomenting youth use—flows
directly from the Act, and the agency reasonably could have
thought that no further elaboration on that point was needed.
As the statute says, the FDA must evaluate “the risks and ben-
efits to the population as a whole, including users and nonus-
ers”; and to carry out that task, it must weigh “the increased
or decreased likelihood that existing users of tobacco prod-
ucts will stop” against “the increased or decreased likelihood
that those who do not use tobacco products will start.” 21
U.S.C. § 387j(c)(4). That language expressly orders the agency
to conduct the described balancing process and to consider
both the risks and benefits attendant to each application that
it adjudicates. The statute does not, contrary to Gripum’s con-
tention, obligate the agency to define threshold levels of like-
lihoods or the minimum number of users who must be aided
for a product to pass muster. Indeed, bright lines of this sort
would be difficult to square with the statute’s comparative
language.
Furthermore, Congress’s intent to allow the FDA to de-
velop its premarket policy through a flexible, case-by-case ad-
judicative approach is apparent in the structure of the Act.
The statute delegates broad authority to the agency to regu-
late the marketing of tobacco products both through rulemak-
ing, see 21 U.S.C. § 387g(a)(3), and through individual adju-
dications, see id. § 387j(c). It also obligates the agency to issue
interpretative rules and regulations in some contexts. See, e.g.,
21 U.S.C. § 387e(j)(3)(B) (specifying that the FDA “shall issue
regulations” with respect to the registration of tobacco manu-
facturers); id. § 387k(l)(1) (specifying that the FDA “shall issue
regulations or guidance” with respect to the review of
10 No. 21-2840
“modified risk tobacco products”). But in the premarket-ad-
judication context of section 387j(c), there is no such obliga-
tion for the FDA to promulgate implementing regulations.
In a related vein, Gripum argues that the agency’s adjudi-
cative approach was inconsistent with the statutory appropri-
ateness standard, and instead amounted to an ersatz “prod-
uct-efficacy assessment” borrowed from the drug-review pro-
vision of 21 U.S.C. § 355(b)(1)(A)(i). Under such an “efficacy”
standard, an applicant needs to show that a product is effec-
tive at meeting some fixed result (say, the killing of a bacte-
rium at a minimum rate). But all the FDA required Gripum to
do here is to show that its flavored e-cigarette products were
relatively better at reducing rates of tobacco use than products
already on the market. The agency properly applied the com-
parative standard mandated by the statute; Gripum simply
failed to meet it.
B
Gripum next claims that the FDA changed course by re-
quiring product-specific clinical studies to meet the appropri-
ateness standard. It contends that in so doing, the agency
failed to respect the reliance interests that manufacturers had
in the administrative guidance they had received, and thus it
acted arbitrarily. See DHS v. Regents of the Univ. of Cal., 140 S.
Ct. 1891, 1913 (2020) (“When an agency changes course, … it
must be cognizant that longstanding polices may have engen-
dered serious reliance interests that must be taken into ac-
count.”); FCC v. Fox Television Stations, Inc., 556 U.S. 502, 514–
16 (2009). But like our sister circuits, we conclude that the
FDA’s e-cigarette guidance materials have consistently re-
flected that product-specific long-term data are required only
No. 21-2840 11
if existing studies are inadequately related to the proposed
product.
In 2019, the FDA issued a nonbinding guidance document
stating that “in general, FDA does not expect that applicants
will need to conduct long-term studies to support an applica-
tion.” 2019 Guidance at 13. Gripum makes much hay of that
sentence. But the broader document tells a more complicated
story. It begins by describing how “[n]onclinical studies alone
are generally not sufficient to support” the statutory showing.
Id. at 12. It then describes how “in some cases, it may be pos-
sible to support a marketing order for an [e-cigarette] product
without conducting new nonclinical or clinical studies,”
though that depends on whether “an established body of ev-
idence … can be adequately bridged to [the] product, such as
data from the published literature or government-sponsored
databases.” Id. at 46. This explanation underscores the case-
by-case and open-ended nature of FDA review. Nowhere
does it confer blanket permission to forego product-specific
testing.
As the Sixth Circuit concluded, the agency indicated only
that “it might accept evidence other than long-term studies, if
that evidence had sufficient scientific underpinnings.” Breeze
Smoke, 18 F.4th at 506–07. So too the D.C. Circuit read the 2019
Guidance as “nowhere guarantee[ing] that unspecified other
forms of evidence would necessarily be sufficient—only that
they might be.” Prohibition Juice Co., Nos. 21-1201 etc. at 23.
We conclude the same.
C
Gripum also argues that the agency failed to conduct a
careful, individualized review of its evidence and instead
12 No. 21-2840
relied on a general presumption that e-liquids increase youth
tobacco use. But according to Gripum, the belief that young
people will be attracted to its e-liquids rests on a more tenu-
ous base than the agency thinks, in part because evidence
demonstrates that young users prefer closed-system devices
to open-system ones.
Gripum’s arguments rest on a questionable reading of
both the agency’s marketing denial order and the statutory
burden. The Act requires the denial of an application unless
the manufacturer can affirmatively demonstrate that it meets
the appropriateness standard through the section 387j(c) com-
parative assessment. Even if Gripum is right when it asserts
that young people are much less interested in e-liquids in
open-system devices than they are in closed-system ones, the
FDA reasoned that the marketing and sale of open-system de-
vices still are responsible for some portion of youth initiation.
To succeed under the appropriateness standard—a compara-
tive one, as we have stressed—Gripum had the burden of
demonstrating that its flavored e-liquids would “switch”
some users of combustible cigarettes over to e-cigarettes. But
as we already have noted, Gripum failed to provide evidence
specific to its products. And though it did include studies of
other products, those studies did not even compare tobacco-
flavored e-cigarette products (which we will assume do have
a “switching” effect) to flavored products resembling those
Gripum wants to offer.
Before concluding, we have one unusual new item of busi-
ness that requires our attention. Almost four months after the
oral argument in this case, Gripum filed something it called
an “Opposed Motion To Correct Administrative Record.” In
that motion, it asked us to re-open the underlying
No. 21-2840 13
administrative record and add a memorandum dated August
19, 2020, entitled “Bundling and Bracketing Approach for Review
of ENDS Open E-Liquid PMTAs.” This document, it contended,
had just come to its attention when it was released by the FDA
in response to a third party’s freedom-of-information request.
We invited the FDA to respond, which it has now done. Aside
from remarking that, despite calling the motion “opposed,”
Gripum had not communicated with the agency before filing
its motion, the FDA noted that Gripum has not identified an-
ything that would undermine the presumption of regularity
that attaches to an agency’s certification of its record, see Cit-
izens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415
(1971). On the merits, the FDA pointed out that Gripum’s pe-
tition founders on the utter lack of evidence showing that the
benefits of its products outweigh the harms. The further sci-
entific review process described in the memorandum is trig-
gered only for cases that pass that first threshold.
We agree with the FDA that the time has long passed for
amendments or changes to the administrative record in the
present case, and that the 2020 memorandum is in any event
of dubious relevance. We therefore deny Gripum’s motion.
* * *
In adjudicating Gripum’s application, the FDA hewed to
the statutory standard and issued a reasoned marketing de-
nial order. Its determination that Gripum’s products lack a
clear benefit to current tobacco users was not arbitrary or un-
reasonable. We therefore DENY Gripum’s petition for review.