Tobacco companies get partial win in U.S. FDA labeling fight

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By Jessica Dye

NEW YORK, Aug 17 (Reuters) - Tobacco companies notched a partial victory in a lawsuit challenging the U.S (Other OTC: UBGXF - news) . Food and Drug Administration's authority to require pre-clearance for tobacco products with changed labels or quantities.

U.S. District Judge Amit Mehta in Washington, D.C., on Tuesday vacated part of an FDA directive stating tobacco companies may need the agency's clearance to market products with significant labeling modifications, such as a change in color or logo.

However, Mehta said that the agency could require clearance for marketing a tobacco product with a different quantity - for instance, an increase in the number of cigarettes per pack.

The ruling comes in a lawsuit filed last year by subsidiaries of Imperial Brands (LSE: IMB.L - news) , Reynolds American Inc (NYSE: RAI - news) and Altria Group (NYSE: MO - news) over FDA guidelines clarifying what changes to a tobacco product require regulatory approval under the 2009 Tobacco Control Act, which gave the FDA authority to regulate tobacco products.

The guidance is not binding, but does indicate the agency's thinking about what constitutes a "new tobacco product" requiring companies to seek approval or face potential enforcement action.

Among other things, the FDA directive said significant modifications to a product's label that make it distinct from the original version, or changes to the quantity sold in each package, could require authorization.

Tobacco companies argued in part that the FDA's interpretation was not what Congress intended in the Tobacco Control Act. The FDA said its guidance was supported by federal law.

Ruling on motions from both sides, Mehta said Congress could have explicitly stated that a labeling modification triggered a regulatory approval requirement, but did not. "The court must presume that that omission was purposeful," he wrote.

On the other hand, changing the quantity of tobacco product "necessarily entails a change in the amount of constituent ingredients and additives," and does represent a modification to the product, the judge wrote.

Altria spokesman Brian May said the company was pleased with the decision on labeling changes, calling it the "principle focus of our lawsuit." He said the company was still considering whether to appeal the quantity-change decision.

Representatives for Reynolds and the FDA declined to comment, while Imperial Tobacco Group did not immediately return a request for comment.

The case is Philip Morris USA v. U.S. FDA, U.S. District Court for the District of Columbia, No. 15-1590. (Reporting by Jessica Dye; Editing by Anthony Lin and Alan Crosby)