While the major tobacco companies pursue modified risk tobacco applications with the Food and Drug Administration, a number of bills are pending in state legislatures that would lower or eliminate tobacco product excise taxes for products that receive an FDA modified risk order.

Both Philip Morris Products and R.J. Reynolds Tobacco Company currently have MRTP applications pending before the FDA.  Philip Morris’ application is for the IQOS system with Marlboro Heatsticks, which is essentially a hybrid between a cigarette and an e-cigarette that heats the tobacco instead of burning it.  R.J. Reynolds’ application is for six flavored smokeless tobacco snus products that have been on the market for some time.  These applications are estimated to cost more than ten million dollars to pursue.  If these applications are successful, the companies would be permitted to make specified claims on their packaging, labeling or advertising that the products present a lower risk of tobacco-related disease and/or a lower exposure to certain substances.

Meanwhile, bills are pending that would affect the taxes for products that receive a modified risk order.  An example is Georgia’s H.877.  Introduced on February 8, it would decrease the tobacco product excise tax rate by 50% for any product that receives an FDA risk modification order, which applies to products that (1) significantly reduce the harm and the risk of tobacco-related disease to individual consumers; and (2) benefit the health of the population as a whole taking into account both current tobacco consumers and persons who do not currently use tobacco products.  The bill would decrease the state excise tax rate by 25% for any product that receives an FDA exposure modification order, which applies to products that reduce or eliminate exposure to a substance and for which the available scientific evidence suggests that a measurable and substantial reduction in morbidity and mortality is reasonably likely to be demonstrated in future studies.

Similar language is pending in other state legislatures.  For example, pending language in Virginia would completely exempt from the tobacco products excise tax any product that receives an FDA MRTP order.  These bills represent an effort to align state tax policy with tobacco products’ risk, as determined by the FDA.  Stay tuned for further developments.