A long process

In December 2016 PMI submitted an application to the FDA to have iQOS certified as a modified risk product. This status would allow the company to modify the statutory health warnings on packaging, and advertise iQOS as a safer alternative to cigarettes. To support the application they assembled more than a million pages of data and analysis based on tests of the product. Yesterday, following more than a year of bureaucracy and debate, nine members of an FDA advisory panel finally voted on the evidence.

Unfortunately for PMI, the panel voted 8-0, with one abstention, not to accept the claim that switching to iQOS reduces the risk of tobacco-related disease. They also threw out PMI’s assertion that switching presents less risk of harm than continuing to smoke, although iQOS lost this vote by a much narrower margin of 5-4. Finally they supported the claim that iQOS significantly reduces exposure to harmful chemicals, by 8-1.

Damaging, but not fatal

Yesterday’s vote wasn’t the final act in the iQOS modified risk application; that will come sometime in the next few months, when the FDA makes a formal decision on the product. The agency isn’t obliged to follow the panel’s recommendations, but it usually does. Yesterday’s decision will be ringing warning bells at PMI’s headquarters, as it lengthens the odds of iQOS gaining the coveted modified risk status – and markets anticipated that by slicing 6.8% off PMI shares when the news emerged. By the end of the day’s trading the share price had recovered much of the lost ground, but the company’s finances – and millions of lives