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United States Government Accountability Office: 
GAO: 

Tobacco Product Regulation: 

Most FDA Spending Funded Public Education, Regulatory Science, and 
Compliance and Enforcement Activities: 

FDA Tobacco Product Regulation: 

Report to Congressional Committees: 

June 2014: 

GAO-14-561: 

GAO Highlights: 

Highlights of GAO-14-561, a report to congressional committees. 

Why GAO Did This Study: 

Tobacco use is the leading cause of preventable death and disease in 
the United States. In 2009, the Family Smoking Prevention and Tobacco 
Control Act (Tobacco Control Act) granted FDA, an agency within the 
Department of Health and Human Services (HHS), authority to regulate 
tobacco products, including marketing and distribution to youth. The 
act established CTP, which implements the act by educating the public 
on the dangers of tobacco use; developing the science needed for 
tobacco regulation; and developing and enforcing regulations on the 
manufacture, marketing, and distribution of tobacco products. The act 
authorized FDA to assess and collect user fees from tobacco 
manufacturers and importers. 

The Tobacco Control Act mandated that GAO review the authority and 
resources provided to FDA for regulating the manufacture, marketing, 
and distribution of tobacco products. This report examines (1) how FDA 
spent tobacco user fees for key activities using its authorities 
granted in the act, and (2) any challenges FDA encountered in using 
its authorities. GAO analyzed data on tobacco user fees collected and 
spent on key activities by FDA as of March 31, 2014; reviewed 
documents related to FDA's key activities, as well as relevant laws, 
regulations, and guidance; and interviewed CTP, public health, and 
tobacco industry officials. 

HHS reviewed a draft of this report and agreed with GAO's reiteration 
of its previous recommendation that performance measures for all 
tobacco product reviews are needed. 

What GAO Found: 

As of March 31, 2014, the Food and Drug Administration (FDA) spent 
about $1.48 billion (79 percent) of the $1.88 billion in total tobacco 
user fees it collected since fiscal year 2009. FDA spent the majority 
of tobacco user fees on key activities led by the agency's Center for 
Tobacco Products (CTP), which is funded solely by tobacco user fees. 
These included activities related to public education (including 
public education campaigns and communicating CTP activities); 
regulatory science (including research, product review, and developing 
the science to support regulations and guidance); and compliance and 
enforcement (including tobacco retailer inspections; manufacturer and 
import inspections and enforcement; promotion, advertising, and 
labeling surveillance; and outreach and small business assistance). 

Figure: Proportion of FDA Tobacco User Fee Spending by Activity as of 
March 31, 2014: 

[Refer to PDF for image: pie-chart] 

Public Education: 34% ($508 million); 
Regulatory Science: 32% ($478 million); 
Compliance and Enforcement: 12% ($181 million); 
Additional CTP Activities: 7% ($109 million); 
Other: 13% ($198 million). 

CTP: Center for Tobacco Products. 

Source: GAO analysis of FDA data. GAO-14-561. 

[End of figure] 

While FDA has taken steps to address some of the challenges it has 
faced, including challenges related to starting up a new center, it 
continues to face challenges, including setting and monitoring review 
time frames. Until recently, CTP has not had performance measures for 
making final decisions on new tobacco product submissions by which to 
assess its progress, as GAO previously recommended. FDA has announced 
performance measures for two of its new tobacco product review 
processes (to take effect in October 2014), but not for the type of 
new tobacco product submission that comprises the bulk of FDA's review 
backlog. The agency has indicated that it intends to establish such 
performance measures, but until it does so, the agency's ability to 
assess its efforts will be limited. This will be particularly pressing 
as FDA moves forward with plans to deem additional types of tobacco 
products to be subject to its regulatory authority. 

View [hyperlink, http://www.gao.gov/products/GAO-14-561]. For more 
information, contact Marcia Crosse at (202) 512-7114 or 
crossem@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

FDA Spent Nearly 80 Percent of User Fees Collected, Mostly for Public 
Education, Regulatory Science, and Compliance and Enforcement: 

FDA Encountered Challenges As It Established CTP, Including Setting 
Review Time Frames: 

Concluding Observations: 

Agency Comments: 

Appendix I: Summary of Center for Tobacco Products Offices and Key 
Activities: 

Appendix II: Examples of Tobacco-Related Research Projects Supported 
by Food and Drug Administration Spending: 

Appendix III: Positions at the Center for Tobacco Products (CTP) at 
the End of Each Fiscal Year as of March 31, 2014: 

Appendix IV: Comments from the Department of Health and Human Services: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: FDA Center for Tobacco Products (CTP) Offices: 

Table 2: Total Tobacco User Fee Amounts Authorized by the Tobacco 
Control Act, Fiscal Years 2009 through 2019: 

Table 3: FDA Spending on Tobacco-Related Research Projects as of March 
31, 2014: 

Table 4: Status of FDA Review of Submissions Made Under Pathways to 
Market New Tobacco Products and Submissions for Modified Risk Tobacco 
Products (MRTP) as of March 31, 2014: 

Table 5: State and Territorial Retail Inspection Contracts Awarded, 
Inspections Conducted, and Advisory and Enforcement Actions Taken by 
FDA as of March 31, 2014: 

Table 6: Summary of Center for Tobacco Products (CTP) Offices, 
Spending, and Key Activities as of March 31, 2014: 

Table 7: Examples of Tobacco-Related Research Projects Supported by 
FDA Spending and the Entity Conducting or Overseeing the Project as of 
March 31, 2014: 

Figures: 

Figure 1: Total Tobacco User Fees Spent and Not Spent by FDA as of 
March 31, 2014: 

Figure 2: FDA Spending by Center for Tobacco Products (CTP) Office as 
of March 31, 2014: 

Figure 3: Proportion of FDA Tobacco User Fee Spending by Activity as 
of March 31, 2014: 

Figure 4: Proportion of FDA Tobacco User Fee Spending on Public 
Education Activities as of March 31, 2014: 

Figure 5: Proportion of FDA Tobacco User Fee Spending on Regulatory 
Science Activities as of March 31, 2014: 

Figure 6: Proportion of FDA Tobacco User Fee Spending on Compliance 
and Enforcement Activities as of March 31, 2014: 

Figure 7: Center for Tobacco Products (CTP) Office of Science (OS) 
Positions as of March 31, 2014: 

Abbreviations: 

CDC: Centers for Disease Control and Prevention: 

CTP: Center for Tobacco Products: 

FDA: Food and Drug Administration: 

HHS: Department of Health and Human Services: 

HPHC: harmful and potentially harmful constituent: 

MRTP: modified risk tobacco product: 

NIH: National Institutes of Health: 

OCE: Office of Compliance and Enforcement: 

OHCE: Office of Health Communication and Education: 

ORA: Office of Regulatory Affairs: 

OS: Office of Science: 

PMTA: Premarket Tobacco Product Application: 

SE: Substantial Equivalence: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

June 20, 2014: 

The Honorable Tom Harkin: 
Chairman: 
The Honorable Lamar Alexander: 
Ranking Member: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable Fred Upton: 
Chairman: 
The Honorable Henry Waxman: 
Ranking Member: 
Committee on Energy and Commerce: 
House of Representatives: 

Tobacco use is the leading cause of preventable death, disease, and 
disability and is a significant contributor to health care costs in 
the United States. Smoking was responsible for more than 480,000 
premature deaths annually between 2005 and 2009 among Americans 35 and 
older, according to the U.S. Surgeon General.[Footnote 1] The Surgeon 
General also reported that among adults who had ever smoked cigarettes 
daily, 87 percent had tried their first cigarette by the time they 
were 18 years of age. In 2009, the Family Smoking Prevention and 
Tobacco Control Act (Tobacco Control Act) granted the Food and Drug 
Administration (FDA), an agency within the Department of Health and 
Human Services (HHS), authority to address concerns about tobacco use 
by young people and to regulate the manufacturing, marketing, and 
distribution of tobacco products using a public health 
standard.[Footnote 2] The act provides FDA with a range of 
authorities, such as restricting tobacco sales to minors and setting 
tobacco product standards. The Tobacco Control Act represents the 
first time that FDA has had the authority to regulate tobacco products. 

The Tobacco Control Act established the Center for Tobacco Products 
(CTP) within FDA as the entity responsible for implementing the act. 
[Footnote 3] CTP was formed in 2009--the first new center within FDA 
in 21 years--and it implements the act by educating the public on the 
dangers of tobacco use; developing the science needed for tobacco 
regulation; developing and enforcing regulations on the manufacture, 
marketing, and distribution of tobacco products; and performing other 
activities. To support FDA's tobacco regulation activities, the 
Tobacco Control Act authorized FDA to assess and collect user fees--
the sole source of funding for CTP's activities--from each tobacco 
manufacturer and importer subject to FDA's regulation.[Footnote 4] 

The Tobacco Control Act mandated that GAO review FDA's authority and 
resources to regulate the manufacture, marketing, and distribution of 
tobacco products.[Footnote 5] This report examines (1) how FDA spent 
tobacco user fees for key activities using its authorities granted in 
the Tobacco Control Act and (2) any challenges FDA encountered in 
using its authorities granted in the Tobacco Control Act. 

To examine how FDA spent tobacco user fees for its key activities 
using its authorities granted in the Tobacco Control Act, we analyzed 
data on tobacco user fees collected through March 31, 2014, such as 
the amounts collected by FDA and the amounts spent by CTP's offices. 
We also interviewed agency officials and reviewed agency documents, 
including budget justifications, reports to Congress, performance 
reports, and agency documentation of CTP's activities to identify the 
key activities the agency carried out. We analyzed spending data 
provided by FDA for these activities for fiscal years 2010 through the 
first half of fiscal year 2014 (March 31, 2014) and planned spending 
for fiscal year 2014.[Footnote 6] Spending for key activities included 
actual spending and an estimated distribution, generated by FDA, of 
personnel costs across activities within each individual CTP office. 
For our analysis, we included spending for the tobacco-related work of 
FDA's Office of Regulatory Affairs (ORA) with CTP's compliance and 
enforcement activities, since ORA assists CTP by conducting select 
activities. Other tobacco-related spending by CTP and FDA, including 
spending on information technology infrastructure and centralized 
funding for, among other things, furniture, office equipment, and 
center-wide training; spending for rent and rent-related activities; 
and the tobacco-related spending of FDA headquarters, including the 
Office of the Commissioner was not included in our analysis of 
spending by key activity. We assessed the reliability of FDA data we 
received by reviewing related documentation, performing data 
reliability checks (such as examining the data for missing values and 
checking values against other documentation), and interviewing CTP 
officials. After taking these steps, we determined that the data we 
used were sufficiently reliable for our purposes. 

To examine any challenges FDA encountered in using its authorities 
granted in the Tobacco Control Act, including whether FDA faced 
limitations in its authority to regulate tobacco products, we reviewed 
relevant laws, tobacco-related regulations and guidance, and the key 
activities undertaken by FDA to carry out the Tobacco Control Act. We 
reviewed documents and interviewed agency officials, public health 
stakeholders, an association representing state and territorial health 
officials, and tobacco industry stakeholders--including 
representatives of tobacco manufacturers and tobacco retailers--to 
obtain information on any challenges FDA encountered, including any 
challenges associated with limitations in its authorities or resources. 

We conducted this performance audit from September 2013 to June 2014 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

FDA's Authority to Regulate Tobacco Products: 

The Tobacco Control Act provides FDA with the authority to regulate 
cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless 
tobacco products, as well as the authority to deem other tobacco 
products to be subject to FDA's regulatory authority.[Footnote 7] 
Under the act, FDA has the authority to issue regulations controlling 
the manufacture, marketing, and distribution of tobacco products. The 
act also places limitations on FDA's regulatory authority over tobacco 
products. For example, the Tobacco Control Act prohibits FDA from 
banning all tobacco products in certain categories, lowering nicotine 
yields to zero, or raising the minimum age to purchase tobacco. 
[Footnote 8] The Tobacco Control Act includes provisions requiring FDA 
to regulate tobacco products using a public health standard, which 
takes into account the risks and benefits of tobacco products on both 
users and non-users of tobacco products. This standard is unique to 
FDA's regulation of tobacco products, as other products regulated by 
FDA, such as drugs and medical devices, use a "safe and effective" 
standard. 

FDA executes its regulatory authority under the Tobacco Control Act 
through CTP. CTP's Office of Health Communication and Education 
(OHCE), Office of Science (OS), and Office of Compliance and 
Enforcement (OCE) have primary responsibility for developing the 
public education, regulatory science, and compliance and enforcement 
infrastructure for the tobacco program and carrying out the associated 
activities. CTP has additional offices that support the activities of 
these offices (see table 1). 

Table 1: FDA Center for Tobacco Products (CTP) Offices: 

Office: Office of the Center Director; 
Description: 
* Provides scientific, policy, and managerial leadership and direction 
to the other offices that constitute the center; 
* Communicates agency initiatives and guidance to consumers and 
industry in support of public health. 

Office: Office of Compliance and Enforcement; 
Description: 
* Advises center officials on compliance and enforcement issues, 
policies, and procedures relating to regulated tobacco products and 
industry; 
* Ensures that regulated tobacco products and the manufacturers, 
distributors, retailers, and importers of those products are in 
compliance with the law. 

Office: Office of Health Communication and Education; 
Description: 
* Leads CTP's public education and communication activities. 

Office: Office of Management; 
Description: 
* Provides administrative services to support CTP's business 
operations in the following areas: financial management, information 
technology, human resources, acquisitions, management analysis, and 
logistics. 

Office: Office of Policy[A]; 
Description: 
* Develops and analyzes policy to implement the Tobacco Control Act. 

Office: Office of Regulations; 
Description: 
* Leads and coordinates the development and issuance of regulatory and 
policy documents. 

Office: Office of Science; 
Description: 
* Develops and implements CTP's regulatory science framework and 
policies in tobacco regulatory development and tobacco product review; 
* Implements a research agenda to meet regulatory science needs and to 
evaluate population and public health impact of tobacco products. 

Source: GAO summary of FDA information. GAO-14-561. 

[A] According to CTP officials, as a result of an organizational 
review, entities within the Office of Policy were reassigned as of 
April 1, 2014, to the Office of the Center Director, the Office of 
Management, and the Office of Science. 

[End of table] 

In addition to establishing CTP, the Tobacco Control Act required FDA 
to reissue regulations originally published in 1996 that, among other 
things, banned cigarette sales to minors.[Footnote 9] The act also 
banned all flavors except tobacco and menthol in cigarettes and 
directed FDA to issue regulations requiring the display of graphic 
warning labels depicting the negative health consequences of smoking 
on cigarette packages and advertisements.[Footnote 10] 

The Tobacco Control Act also requires that manufacturers of new 
tobacco products submit information--for example, a statement of the 
product's ingredients--to FDA and receive marketing authorization 
before introducing those new tobacco products into the U.S. market. 
The act established three pathways for FDA's review of new tobacco 
product submissions: (1) the Substantial Equivalence (SE) pathway, 
which is for new tobacco products that have the same characteristics 
as a predicate tobacco product that is already legally marketed or has 
different characteristics that do not raise different questions of 
public health;[Footnote 11] (2) the Exemption from SE pathway, which 
is for new tobacco products with minor modification of another product 
marketed by the same manufacturer;[Footnote 12] and (3) the Premarket 
Tobacco Product Application (PMTA) pathway, which is for new tobacco 
products that do not meet the criteria for the other two pathways. 
[Footnote 13] The act also required manufacturers to submit 
applications to FDA to market modified risk tobacco products (MRTP), 
which are products that are sold or distributed for use to reduce harm 
or the risk of tobacco-related disease associated with commercially 
marketed tobacco products.[Footnote 14] CTP is responsible for 
reviewing new tobacco product submissions and MRTP submissions and 
determining whether manufacturers may introduce the products in those 
submissions to the U.S. market. 

The Tobacco Control Act established several deadlines for FDA 
activities. For example, the act required FDA to establish, and 
periodically revise, a list of harmful and potentially harmful 
constituents (HPHC) by April 1, 2012, and required manufactures to 
report HPHC data for each regulated tobacco product by April 1, 2013. 
[Footnote 15] In addition, FDA was required to publish HPHC 
information to the public in a format that is understandable and not 
misleading by April 1, 2013.[Footnote 16] The Tobacco Control Act also 
required the Tobacco Products Scientific Advisory Committee--which 
includes individuals knowledgeable in scientific fields involved in 
the manufacture, evaluation, or use of tobacco products--to release a 
report and recommendations about the impact of menthol cigarette use 
on the public health not later than one year after its establishment. 
[Footnote 17] 

Tobacco User Fees: 

The Tobacco Control Act requires FDA to assess user fees on 
manufacturers and importers of tobacco products that are subject to 
FDA regulation based on their market share and specifies that tobacco 
user fees can only be applied toward FDA activities related to the 
regulation of tobacco products.[Footnote 18] The total amount of user 
fees authorized to be collected is specified in the act for each 
fiscal year, beginning in fiscal year 2009 (see table 2), and the 
total amount does not vary based on the number of tobacco products 
under regulation. 

Table 2: Total Tobacco User Fee Amounts Authorized by the Tobacco 
Control Act, Fiscal Years 2009 through 2019: 

Fiscal year: 2009; 
User fee amount: $85 million. 

Fiscal year: 2010; 
User fee amount: $235 million. 

Fiscal year: 2011; 
User fee amount: $450 million. 

Fiscal year: 2012; 
User fee amount: $477 million. 

Fiscal year: 2013; 
User fee amount: $505 million. 

Fiscal year: 2014; 
User fee amount: $534 million. 

Fiscal year: 2015; 
User fee amount: $566 million. 

Fiscal year: 2016; 
User fee amount: $599 million. 

Fiscal year: 2017; 
User fee amount: $635 million. 

Fiscal year: 2018; 
User fee amount: $672 million. 

Fiscal year: 2019 and each subsequent year; 
User fee amount: $712 million. 

Source: GAO analysis of the Tobacco Control Act. GAO-14-561. 

Notes: The amounts shown are the total user fee amounts authorized to 
be collected by FDA for its regulation of tobacco products. Fees are 
collected and available for obligation only to the extent and in the 
amount provided in advance in appropriations acts, with the exception 
of user fees assessed for fiscal year 2009, which were appropriated by 
the Tobacco Control Act. All of the Center for Tobacco Products' 
activities, tobacco-related work of FDA's Office of Regulatory 
Affairs, other FDA activities related to tobacco regulation (such as 
work of FDA headquarters and Office of the Commissioner), and other 
activities such as rent are funded only through tobacco user fees. 
Because the Tobacco Control Act was enacted during fiscal year 2009, 
the $85 million authorization for fiscal year 2009 was reduced by a 
pro-rata amount. 

[End of table] 

All of CTP's activities--as well as other FDA tobacco-related 
activities, such as the tobacco-related work of FDA's ORA, which 
assists CTP with compliance and enforcement activities--are funded 
through tobacco user fees.[Footnote 19] User fees are made available 
to FDA until expended (which means that FDA may carry over user fees 
to subsequent fiscal years if they are not obligated by the end of the 
fiscal year in which they were collected). As of March 31, 2014, FDA 
had collected about $1.88 billion in tobacco user fees. 

FDA Spent Nearly 80 Percent of User Fees Collected, Mostly for Public 
Education, Regulatory Science, and Compliance and Enforcement: 

FDA spent nearly 80 percent of the tobacco user fees collected as of 
March 31, 2014, with more than half of its spending occurring in 
fiscal year 2013. The majority of FDA's spending was for activities 
related to public education, regulatory science, and compliance and 
enforcement, with spending for public education and regulatory science 
activities exceeding spending for compliance and enforcement 
activities. 

FDA Spent 79 Percent of User Fees Collected, Mostly in Fiscal Year 
2013: 

As of March 31, 2014, FDA spent about $1.48 billion (79 percent) of 
the $1.88 billion in tobacco user fees collected (see figure 1). 
[Footnote 20] More than half of FDA's spending--$868 million--occurred 
in fiscal year 2013. 

Figure 1: Total Tobacco User Fees Spent and Not Spent by FDA as of 
March 31, 2014: 

[Refer to PDF for image: pie-chart] 

Total spent: 79%; $1.478 billion; 
Total not spent: 21%; $401 million. 

Source: GAO analysis of FDA data. GAO-14-561. 

Notes: This figure shows the tobacco user fees collected from fiscal 
year 2009 through the first half of fiscal year 2014 (which totaled 
about $1.88 billion), the percentage and amount of these fees spent 
during this period, and the percentage and amount of these fees 
remaining unspent at the end of this period. Of the $1.48 billion 
spent by FDA, the Center for Tobacco Products and Office of Regulatory 
Affairs spent about $1.42 billion. The remaining funds were spent by 
other FDA entities (including headquarters and the Office of the 
Commissioner) and spent on U.S. General Services Administration rent, 
other rent, and rent-related activities. 

[End of figure] 

FDA spending for tobacco-related activities increased over time, from 
about $67 million in fiscal year 2010 to about $868 million in fiscal 
year 2013 (see figure 2).[Footnote 21] Between fiscal years 2012 and 
2013, FDA spending nearly tripled. In fiscal year 2014, FDA spent $98 
million as of March 31, 2014, out of the $608 million the agency plans 
to spend for the fiscal year.[Footnote 22] 

Figure 2: FDA Spending by Center for Tobacco Products (CTP) Office as 
of March 31, 2014: 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal year: 2010; 
Office of Health Communication and Education: $0; 
Office of Science: $15 million; 
Office of Compliance and Enforcement: $13 million; 
Additional CTP offices: $12 million; 
Other: $27 million. 

Fiscal year: 2011; 
Office of Health Communication and Education: $19 million; 
Office of Science: $35 million; 
Office of Compliance and Enforcement: $32 million; 
Additional CTP offices: $23 million; 
Other: $37 million. 

Fiscal year: 2012; 
Office of Health Communication and Education: $34 million; 
Office of Science: $137 million; 
Office of Compliance and Enforcement: $51 million; 
Additional CTP offices: $29 million; 
Other: $45 million. 

Fiscal year: 2013; 
Office of Health Communication and Education: $452 million; 
Office of Science: $242 million; 
Office of Compliance and Enforcement: $70 million; 
Additional CTP offices: $34 million; 
Other: $69 million. 

Fiscal year: 2014; 
Office of Health Communication and Education: $3 million; 
Office of Science: $49 million; 
Office of Compliance and Enforcement: $17 million; 
Additional CTP offices: $11 million; 
Other: $17 million; 
Planned spending: Approximately $500 million. 

Source: GAO analysis of FDA data. GAO-14-561. 

Notes: Figure excludes $4.9 million spent by CTP for startup 
activities in fiscal year 2009. 

Other includes CTP overhead (information technology infrastructure and 
centralized funding for, among other things, furniture, office 
equipment, and center-wide training); the tobacco-related spending of 
FDA headquarters and the Office of the Commissioner; and U.S. General 
Services Administration rent, other rent, and rent-related activities. 

Additional CTP offices include CTP's Office of the Center Director, 
Office of Management, Office of Policy, and Office of Regulations. 

Office of Compliance and Enforcement includes spending for FDA's 
Office of Regulatory Affairs' tobacco-related activities. 

[End of figure] 

We previously reported that, as of fiscal year 2012, more than half of 
tobacco user fees collected were unspent and remained available for 
obligation as FDA, particularly OHCE, did not spend as planned in 
fiscal years 2011 and 2012.[Footnote 23] For example, in fiscal year 
2012, OHCE planned to spend over $264 million, but it spent less than 
$34 million that year. According to FDA, issues related to contracting 
accounted for most of the difference between the amounts actually 
spent and planned spending. As these issues were addressed, FDA 
carried out a number of activities in fiscal year 2013 that were 
originally planned for fiscal years 2011 and 2012. (For more 
information on the activities carried out by each of CTP's offices, 
and the spending on those activities, see appendix I.) 

Most Spending Was for Public Education, Regulatory Science, and 
Compliance and Enforcement Activities: 

About 79 percent ($1.17 billion) of user fees spent as of March 31, 
2014, on tobacco-related activities was for activities related to 
public education, regulatory science--which includes product research, 
product review, and regulation and guidance support--and compliance 
and enforcement. These activities were carried out by OHCE, OS, and 
OCE, respectively. Most of the spending was for public education and 
regulatory science activities, with nearly all of the public education 
spending occurring in fiscal year 2013. (See figure 3.) 

Figure 3: Proportion of FDA Tobacco User Fee Spending by Activity as 
of March 31, 2014: 

[Refer to PDF for image: pie-chart] 

Public Education: 34% ($508 million); 
Regulatory Science: 32% ($478 million); 
Compliance and Enforcement: 12% ($181 million); 
Additional CTP Activities: 7% ($109 million); 
Other: 13% ($198 million). 

CTP: Center for Tobacco Products. 

Source: GAO analysis of FDA data. GAO-14-561. 

Notes: Figure excludes $4.9 million spent by CTP for startup 
activities in fiscal year 2009. 

Other includes CTP overhead (information technology infrastructure and 
centralized funding for, among other things, furniture, office 
equipment, and center-wide training); the tobacco-related spending of 
FDA headquarters and the Office of the Commissioner; and U.S. General 
Services Administration rent, other rent, and rent-related activities. 

Additional CTP activities include those carried out by CTP's Office of 
the Center Director, Office of Management, Office of Policy, and 
Office of Regulations. 

Regulatory science includes tobacco product research, product review, 
and regulation and guidance support activities. 

Spending for compliance and enforcement activities includes tobacco-
related spending of FDA's Office of Regulatory Affairs. 

Percentages do not add to 100 percent due to rounding. 

[End of figure] 

Public Education Activities: 

Spending for FDA's public education activities has focused on (1) 
developing and launching public education campaigns to educate 
consumers, particularly youth, on the dangers of tobacco use and (2) 
communicating information on CTP activities to the public. As of March 
31, 2014, 89 percent ($450 million) of the $508 million FDA spent on 
tobacco public education activities went to develop and launch public 
education campaigns (see figure 4). Almost all of this spending ($430 
million) occurred in fiscal year 2013, when FDA awarded task orders 
for its public education campaigns. 

Figure 4: Proportion of FDA Tobacco User Fee Spending on Public 
Education Activities as of March 31, 2014: 

[Refer to PDF for image: pie-chart and subchart] 

Public Education: 34%; $508 million; 
Regulatory Science: 32%; $478 million; 
Compliance and Enforcement: 12%; $181 million; 
Other: 13%; $198 million; 
Additional CTP Activities: 7%; $109 million. 

Of the Public Education proportion: 
Public Education Campaigns: 89%; $450 million; 
Communicating CTP Activities: 11%; $58 million. 

Source: GAO analysis of FDA data. GAO-14-561. 

Notes: Figure excludes $4.9 million spent by CTP for startup 
activities in fiscal year 2009. 

Other includes CTP overhead (information technology infrastructure and 
centralized funding for, among other things, furniture, office 
equipment, and center-wide training); the tobacco-related spending of 
FDA headquarters and the Office of the Commissioner; and U.S. General 
Services Administration rent, other rent, and rent-related activities. 

Additional CTP activities include those carried out by CTP's Office of 
the Center Director, Office of Management, Office of Policy, and 
Office of Regulations. 

Regulatory science includes tobacco product research, product review, 
and regulation and guidance support activities. 

Spending for compliance and enforcement activities includes tobacco-
related spending of FDA's Office of Regulatory Affairs. 

Percentages do not add to 100 percent due to rounding. 

[End of figure] 

Public Education Campaigns: 

In February 2014, FDA launched its first youth tobacco prevention 
public education campaign, targeting at-risk youth. FDA plans to 
launch four additional campaigns targeted at rural; multicultural; 
lesbian, gay, bisexual, and transgender; and American Indian/Alaska 
Native youth in fiscal years 2015 and 2016. According to CTP 
officials, CTP has been working with contractors to develop research 
plans and create campaign materials for its media campaigns. The task 
orders for the 5 youth public education campaigns--which were awarded 
in fiscal year 2013 after the agency spent about 2 years developing an 
acquisitions infrastructure--account for nearly $314 million of the 
$450 million spent on public education campaign efforts since fiscal 
year 2010. According to FDA, the agency focused its public education 
campaigns on youth prevention because tobacco use is almost always 
initiated and established during adolescence. The goal of the public 
education campaigns is to reduce the number of youth who experiment 
with tobacco use to ultimately reduce the number of future tobacco 
users.[Footnote 24] 

FDA's first public education campaign, "The Real Cost" campaign, 
targets youth from ages 12 to 17 who are open to smoking or already 
experimenting with cigarettes. The campaign launched nationally in a 
variety of media outlets, including online, and is expected to run for 
at least 1 year. Campaign messages are intended to make the target 
audience aware of the risks of smoking by highlighting consequences 
that, according to FDA, concern youth, such as loss of control due to 
addiction and health effects like tooth loss and skin damage.[Footnote 
25] Additionally, the campaign will include messages that specifically 
address the health consequences of menthol cigarettes. 

FDA also awarded an evaluation contract in an effort to determine the 
impact of its youth public education campaigns. Baseline evaluation 
began in fiscal year 2014, prior to the launch of the first campaign. 
According to CTP officials, additional evaluations will be conducted 
at various intervals appropriate for each of the campaigns and 
evaluation results will be used to assess changes in key tobacco-
related knowledge, attitudes, beliefs, and behaviors over several 
years to determine if exposure to the campaigns is associated with a 
decrease in cigarette smoking among youth.[Footnote 26] 

In addition to its youth-targeted public education campaigns, FDA has 
funded two additional public education campaigns, one targeting 
consumers at the point-of-sale and one for retailer education. Point-
of-sale campaign materials target adults who are social smokers and 
adult smokers who are ready to quit. FDA's "Break the Chain of Tobacco 
Addiction" campaign was developed by CTP in fiscal year 2010 and 
provides retailer education designed to encourage voluntary compliance 
with all FDA regulations. Task orders for these campaigns totaled an 
additional $84 million of the $450 million spent on public education 
media campaigns since fiscal year 2010. Like FDA's youth-targeted 
campaigns, FDA officials stated that the agency plans to evaluate 
these campaigns to determine their impact. 

Communicating CTP Activities: 

According to FDA officials, the agency's other public education 
activities involve communicating CTP's mission and regulatory 
activities to stakeholders--including tobacco manufacturers, 
retailers, public health stakeholders, and lawmakers, among others--
and the public. FDA issues press releases and conducts media outreach, 
such as outreach to publicize tobacco regulations and the results of 
CTP's compliance and enforcement work; develops and maintains CTP's 
website; develops written materials such as frequently-asked questions 
and materials for CTP events; and assists the individual offices with 
written communications. In addition, FDA holds webinars to improve 
education and dissemination of information to stakeholders and 
listening sessions to provide stakeholders with the opportunity to 
make comments and raise concerns. 

Regulatory Science Activities: 

FDA spending related to regulatory science has focused on three 
activities: (1) building a scientific research base, including 
research on tobacco products and use patterns, (2) developing and 
implementing a tobacco product review process, and (3) developing the 
scientific basis to support regulations and guidance. As of March 31, 
2014, about 94 percent of the $478 million FDA had spent on regulatory 
science activities went to building a scientific research base on 
tobacco products and tobacco use, including spending for a 
longitudinal study and centers for tobacco regulatory science (see 
figure 5). The proportion of spending on regulatory science activities 
that has been dedicated to building the scientific research base has 
remained fairly consistent since fiscal year 2010.[Footnote 27] 

Figure 5: Proportion of FDA Tobacco User Fee Spending on Regulatory 
Science Activities as of March 31, 2014: 

[Refer to PDF for image: pie-chart and subchart] 

Public Education: 34%; $508 million; 
Regulatory Science: 32%; $478 million; 
Compliance and Enforcement: 12%; $181 million; 
Other: 13%; $198 million; 
Additional CTP Activities: 7%; $109 million. 

Of the Regulatory Science proportion: 
Building Research Base: 94%; $449 million; 
Product Review: 5%; $25 million; 
Regulation and Guidance Support: 1%; $5 million. 

Source: GAO analysis of FDA data. GAO-14-561. 

Notes: Figure excludes $4.9 million spent by CTP for startup 
activities in fiscal year 2009. 

Other includes CTP overhead (information technology infrastructure and 
centralized funding for, among other things, furniture, office 
equipment, and center-wide training); the tobacco-related spending of 
FDA headquarters and the Office of the Commissioner; and U.S. General 
Services Administration rent, other rent, and rent-related activities. 

Additional CTP activities include those carried out by CTP's Office of 
the Center Director, Office of Management, Office of Policy, and 
Office of Regulations. 

Regulatory science includes tobacco product research, product review, 
and regulation and guidance support activities. 

Spending for compliance and enforcement activities includes tobacco-
related spending of FDA's Office of Regulatory Affairs. 

Percentages do not add to 100 percent due to rounding. 

[End of figure] 

Building a Scientific Research Base: 

Since fiscal year 2010, FDA has funded scientific research to better 
understand tobacco products, their impact on the health of users and 
non-users, use patterns and perceptions of tobacco products, and the 
effectiveness of tobacco marketing, advertising, and graphic warning 
labels.[Footnote 28] These research projects, funded by FDA tobacco 
user fees, have been conducted in collaboration with other federal 
entities, such as the National Institutes of Health (NIH) and Centers 
for Disease Control and Prevention (CDC), as well as with non-federal 
entities (see table 3). 

Table 3: FDA Spending on Tobacco-Related Research Projects as of March 
31, 2014: 

Dollars in thousands: 

Fiscal year: 2010; 
FDA spending on research conducted or overseen by FDA or other 
entities (number of projects): 
FDA[A]: $0 (0); 
National Institutes of Health: $529 (3); 
Centers for Disease Control and Prevention: $5 (3); 
Non-federal entities[B]: $4,135 (4); 
Total: $4,669 (10). 

Fiscal year: 2011; 
FDA spending on research conducted or overseen by FDA or other 
entities (number of projects): 
FDA[A]: $322 (3); 
National Institutes of Health: $10,413 (3); 
Centers for Disease Control and Prevention: $14,551 (10); 
Non-federal entities[B]: $1,947 (5); 
Total: $27,233 (21). 

Fiscal year: 2012; 
FDA spending on research conducted or overseen by FDA or other 
entities (number of projects): 
FDA[A]: $6,874 (7); 
National Institutes of Health: $63,237 (43); 
Centers for Disease Control and Prevention: $32,923 (15); 
Non-federal entities[B]: $3,344 (10); 
Total: $106,378 (75). 

Fiscal year: 2013; 
FDA spending on research conducted or overseen by FDA or other 
entities (number of projects): 
FDA[A]: $10,541 (10); 
National Institutes of Health: $177,104 (94); 
Centers for Disease Control and Prevention: $27,554 (15); 
Non-federal entities[B]: $4,842 (15); 
Total: $220,041 (134). 

Fiscal year: 2014[C]; 
FDA spending on research conducted or overseen by FDA or other 
entities (number of projects): 
FDA[A]: $2,840 (13); 
National Institutes of Health: $9,175 (10); 
Centers for Disease Control and Prevention: $21,237 (9); 
Non-federal entities[B]: $6,123 (8); 
Total: $39,375 (40). 

Fiscal year: Total; 
FDA spending on research conducted or overseen by FDA or other 
entities (number of projects): 
FDA[A]: $20,577 (33); 
National Institutes of Health: $260,458 (153); 
Centers for Disease Control and Prevention: $96,270 (52); 
Non-federal entities[B]: $20,391 (42); 
Total: $397,696 (280). 

Source: GAO analysis of FDA information. GAO-14-561. 

Notes: This table presents the research projects completed or in 
progress (as of March 31, 2014). The agencies and non-federal entities 
listed either conducted or had oversight over the tobacco user-fee 
funded projects. 

[A] FDA's research is conducted by its National Center for 
Toxicological Research. 

[B] Non-federal entities include, for example, the Research Triangle 
Institute International, American Association of Poison Control 
Centers, American College of Cardiology, and Battelle Memorial 
Institute. 

[C] Spending is for the first two quarters of fiscal year 2014. 

[End of table] 

FDA initiated some key long-term projects to help build its scientific 
research base. For example, FDA funded a 5-year contract in fiscal 
year 2011 in collaboration with NIH to conduct the Population 
Assessment of Tobacco and Health study through an NIH contract. The 
study is a national longitudinal study of tobacco use and how it 
affects the population's health.[Footnote 29] The study's objectives 
include examining reasons why some people use tobacco and others do 
not, and how and why people start using different tobacco products. 
According to FDA, study findings will provide a scientific framework 
to inform decisions about tobacco products and future changes in 
tobacco products.[Footnote 30] FDA spent $113 million on the study in 
fiscal year 2011 through March 31, 2014. FDA, in collaboration with 
NIH, also awarded $53 million in grants in fiscal year 2013 to fund 14 
Tobacco Centers of Regulatory Science to generate public health 
research to inform tobacco regulation and to train tobacco regulatory 
scientists.[Footnote 31] The Tobacco Centers of Regulatory Science 
funded research including a project focused on understanding the 
cardiovascular effects of tobacco use to determine the specific 
elements of tobacco products contributing to cardiovascular injury, 
which could ultimately help inform regulatory standards for tobacco 
products. FDA expects to spend more than $273 million in funding for 
these research projects through fiscal year 2018. 

In addition to funding research projects to better understand tobacco 
products already under FDA's regulatory authority, in fiscal year 
2013, FDA also funded scientific research related to tobacco products 
not yet under the agency's authority, including research projects on e-
cigarettes and cigars.[Footnote 32] For example, in order to inform 
CTP's regulatory efforts, the agency funded research examining 
consumer perceptions, attitudes, and beliefs about new and emerging 
products, such as e-cigarettes and little cigars. According to CTP 
officials, this research will help inform decisions on how to regulate 
these other tobacco products. (See appendix II for additional examples 
of research projects supported by FDA spending.) 

Developing and Implementing a Tobacco Product Review Process: 

FDA's regulatory science activities also included establishing and 
implementing processes for reviewing submissions made by manufacturers 
to market new tobacco products and submissions for marketing MRTPs, 
and for receiving and assessing adverse event and product problem 
reports. FDA receives submissions for CTP to review and determine 
whether manufacturers may introduce new tobacco products to the U.S. 
market or market MRTPs. CTP developed and implemented the review 
processes for such submissions, which FDA began receiving in June 2010 
and were mostly submitted through the SE pathway.[Footnote 33] 

FDA made its first decisions on SE submissions in late June 2013--
about 3 years after FDA's receipt of the first SE submission. As of 
March 31, 2014, FDA had made a final decision on a total of 30 regular 
SE submissions,[Footnote 34] finding 17 submissions to be 
substantially equivalent and 13 submissions to be not substantially 
equivalent to a predicate tobacco product.[Footnote 35] FDA had made a 
final decision on a total of four provisional SE submissions,[Footnote 
36] finding all of them to be not substantially equivalent to a 
predicate and requiring the products to be removed from the market. 
(See table 4).[Footnote 37] CTP officials reported that CTP 
prioritized regular SE submissions over provisional SE submissions 
because tobacco products in provisional SE submissions can remain on 
the market legally unless and until FDA issues an order of not 
substantially equivalent whereas products in regular SE submissions 
cannot enter the market until FDA issues an order that it is 
substantially equivalent to a predicate.[Footnote 38] 

Table 4: Status of FDA Review of Submissions Made Under Pathways to 
Market New Tobacco Products and Submissions for Modified Risk Tobacco 
Products (MRTP) as of March 31, 2014: 

Substantial Equivalence (SE) pathway[C]: [Empty]. 

Submission type: Substantial Equivalence (SE) pathway[C]; 

Provisional[D]; 
Submissions received: 3,564; 
Initial review completed[A]: 3,231; 
Closed review without decision (withdrawn by manufacturer): 133; 
Decisions: 
Product meets criteria for marketing: 0; 
Product does not meet criteria for marketing: 4; 
Refuse to accept or refuse to file[B]: 0; 
Review pending: 3,427. 

Regular[E]: 
Submissions received: 981; 
Initial review completed[A]: 739; 
Closed review without decision (withdrawn by manufacturer): 201; 
Decisions: 
Product meets criteria for marketing: 17; 
Product does not meet criteria for marketing: 13; 
Refuse to accept or refuse to file[B]: 0; 
Review pending: 750. 

Total SE: 
Submissions received: 4,545; 
Initial review completed[A]: 3,970; 
Closed review without decision (withdrawn by manufacturer): 334; 
Decisions: 
Product meets criteria for marketing: 17; 
Product does not meet criteria for marketing: 17; 
Refuse to accept or refuse to file[B]: 0; 
Review pending: 4,177. 

Submission type: Exemption from SE pathway[F]; 
Submissions received: 61; 
Initial review completed[A]: 23; 
Closed review without decision (withdrawn by manufacturer): 0; 
Decisions: 
Product meets criteria for marketing: 0; 
Product does not meet criteria for marketing: 0; 
Refuse to accept or refuse to file[B]: 36; 
Review pending: 25. 

Submission type: Premarket Tobacco Product Application (PMTA) 
pathway[G]; 
Submissions received: 4; 
Initial review completed[A]: 0; 
Closed review without decision (withdrawn by manufacturer): 0; 
Decisions: 
Product meets criteria for marketing: 0; 
Product does not meet criteria for marketing: 0; 
Refuse to accept or refuse to file[B]: 4; 
Review pending: 0. 

Submission type: MRTP[H]; 
Submissions received: 7; 
Initial review completed[A]: 0; 
Closed review without decision (withdrawn by manufacturer): 1; 
Decisions: 
Product meets criteria for marketing: 0; 
Product does not meet criteria for marketing: 0; 
Refuse to accept or refuse to file[B]: 6; 
Review pending: 0. 

Source: GAO summary of FDA information. GAO-14-561. 

Notes: The Tobacco Control Act also requires that manufacturers of new 
tobacco products submit information--for example, a statement of the 
product's ingredients--to FDA and receive marketing authorization 
before introducing those new tobacco products into the U.S. market. 

[A] The reviews for submissions represented in this column were 
pending as of March 31, 2014--that is, they were not withdrawn by 
manufacturers and FDA had not reached a final decision. Initial review 
steps include the Center for Tobacco Products' (CTP) determination of 
whether the new product is a type regulated by FDA and whether the 
submission is missing information. 

[B] FDA may refuse to accept or refuse to file a submission if the 
submission is missing certain information, such as a full statement of 
the components, ingredients, additives, and properties of the tobacco 
product that is the subject of the submission. 

[C] Manufacturers use the SE pathway if a new tobacco product has the 
same characteristics as a predicate tobacco product (a product 
commercially marketed in the United States on February 15, 2007, or 
previously found by FDA to be substantially equivalent); or has 
different characteristics, but does not raise different questions of 
public health. 

[D] Provisional SE submissions are for new tobacco products 
commercially marketed after February 15, 2007, but before March 22, 
2011. Provisional SE submissions were received by FDA by March 22, 
2011. The tobacco products represented in these submissions may be 
commercially marketed unless and until CTP issues an order that they 
are not substantially equivalent. 

[E] Regular SE submissions are for new tobacco products not yet 
commercially marketed. Regular SE submissions were received by FDA 
after March 22, 2011. The tobacco products represented in these 
submissions may not be marketed until CTP issues an order that they 
are substantially equivalent. 

[F] Manufacturers use the Exemption from SE pathway for new tobacco 
products if the product is modified by adding, deleting, or changing 
the quantity of an additive and the modification would be a minor 
modification of another product marketed by the same manufacturer. 

[G] Manufacturers use the PMTA pathway for new tobacco products that 
do not meet the criteria for the SE or Exemption from SE pathways. 
Products included in PMTA submissions may only be legally marketed 
after FDA issues an order permitting their marketing. According to CTP 
officials and industry representatives, one reason for the lack of 
submissions under the PMTA pathway may be the challenge in 
demonstrating that a manufacturer has met the public health standard 
(appropriate for the protection of the public health) to obtain 
approval under the PMTA pathway. 

[H] Manufacturers submit applications to FDA to market MRTP products, 
which are products that are sold or distributed for use to reduce harm 
or the risk of tobacco-related disease associated with commercially 
marketed tobacco products. Manufacturers must submit data from studies 
on the health risks associated with the MRTP in comparison to the 
health risks of other products on the market, the MRTP's effect on the 
likelihood that current tobacco users will stop using tobacco 
products, and the likelihood that persons who do not use tobacco 
products will start using the MRTP. 

[End of table] 

In addition to conducting reviews of submissions, FDA designed and 
implemented a system in fiscal year 2013 to receive and assess tobacco 
product adverse event and product problem reports to inform the 
agency's regulation of tobacco products. The reports are submitted by 
tobacco product consumers and healthcare professionals using the FDA/ 
NIH Safety Reporting Portal.[Footnote 39] CTP's OS has been 
systematically assessing the adverse events, product quality problems, 
and product use errors included in the reports to inform FDA 
regulation of tobacco product development, manufacture, and marketing. 
According to CTP officials, the ongoing assessment of the reports is 
critical to identifying and understanding risks, especially as the 
tobacco industry develops novel products in response to market and 
regulatory influences. For example, the assessment of adverse events 
reported by a large and diverse population of consumers may reveal 
problems that were not anticipated while the product was being used in 
research studies. 

Regulation and Guidance Support: 

FDA's regulatory science activities also include developing the 
scientific basis to support regulations and guidance for the tobacco 
industry, including proposed regulations to deem additional tobacco 
products to be subject to FDA's authority and guidance on reporting 
and submission review. According to FDA officials, from fiscal years 
2010 through 2013, much of FDA's initial work to develop tobacco 
regulations and guidance focused on activities related to requirements 
in the Tobacco Control Act, including activities to develop 
regulations on menthol flavoring in cigarettes and guidance for 
industry's reporting of HPHCs in regulated tobacco products. 

FDA has evaluated the science of menthol in cigarettes to determine 
what action, if any, the agency will take to regulate menthol. In 
March 2011, FDA received the Tobacco Products Scientific Advisory 
Committee report on menthol in cigarettes, which found that the 
removal of menthol cigarettes from the marketplace would benefit 
public health in the United States.[Footnote 40] Following the report, 
FDA conducted an additional, independent evaluation on the effects of 
menthol in cigarettes, which resulted in similar conclusions.[Footnote 
41] On July 24, 2013, FDA issued an Advanced Notice of Proposed Rule 
Making to obtain comments or other information that may inform the 
regulatory actions FDA might take with respect to menthol in 
cigarettes.[Footnote 42] According to CTP officials, FDA is reviewing 
the responses to the notice. 

FDA also worked on developing guidance for HPHCs. In August 2011, FDA 
issued a public notice listing 96 HPHCs in tobacco products and 
tobacco smoke that research indicated were harmful or potentially 
harmful to health. Based on public comment and FDA's review of the 
scientific literature, FDA published a list of 93 HPHCs in April 2012. 
[Footnote 43] Also, in March 2012, FDA issued draft guidance for 
industry on reporting on these HPHCs.[Footnote 44] FDA also conducted 
research required by the Tobacco Control Act to ensure it publishes a 
list of HPHCs that will not be misleading to the public.[Footnote 45] 
Based on this research, the Tobacco Products Scientific Advisory 
Committee and FDA's Risk Communication Advisory Committee made 
recommendations on further research and strategies FDA might use to 
effectively communicate the HPHC information to the public. Although 
FDA planned to publish a proposed regulation to implement the Tobacco 
Control Act requirements related to the testing and reporting of HPHCs 
by December 2013, it has not done so.[Footnote 46] 

FDA also issued guidance for industry on other topics, including the 
recommended components of product review submissions and the product 
review process. For example, in January 2011--about 2 months prior to 
the statutory deadline for submitting provisional SE submissions--FDA 
issued a guidance document for tobacco manufacturers to use for making 
SE submissions,[Footnote 47] and in September 2011 FDA issued a draft 
guidance document with responses to frequently asked questions for SE 
submissions.[Footnote 48] According to CTP officials, in fiscal year 
2014, FDA plans to issue final guidance on frequently asked questions 
for SE submissions and draft guidance for investigational tobacco 
products. 

Compliance and Enforcement Activities: 

FDA's tobacco compliance and enforcement activities have been focused 
on (1) tobacco retailer inspections; (2) inspections and enforcement 
of domestic manufacturers and imported tobacco products, and 
determinations of eligible predicate products in SE submissions; (3) 
surveillance and review of tobacco promotions, advertising, and 
labeling; and (4) outreach and small business assistance. As of March 
31, 2014, about 68 percent of the $181 million FDA spent on compliance 
and enforcement activities was for tobacco retailer inspection 
activities (see figure 6), which has accounted for the majority of 
compliance and enforcement spending each year since fiscal year 2010. 

Figure 6: Proportion of FDA Tobacco User Fee Spending on Compliance 
and Enforcement Activities as of March 31, 2014: 

[Refer to PDF for image: pie-chart and subchart] 

Public Education: 34%; $508 million; 
Regulatory Science: 32%; $478 million; 
Compliance and Enforcement: 12%; $181 million; 
Other: 13%; $198 million; 
Additional CTP Activities: 7%; $109 million. 

Of the Compliance and Enforcement proportion: 
Tobacco Retailer Inspections: 68%; $123 million; 
Manufacturer and Import Inspections and Enforcement: 20%; $36 million; 
Promotion, Advertising, and Labeling Surveillance: 11%; $19 million; 
Outreach and Small Business Assistance: 2%; $3 million. 

Source: GAO analysis of FDA data. GAO-14-561. 

Notes: Figure excludes $4.9 million spent by CTP for startup 
activities in fiscal year 2009. 

Other includes CTP overhead (information technology infrastructure and 
centralized funding for, among other things, furniture, office 
equipment, and center-wide training); the tobacco-related spending of 
FDA headquarters and the Office of the Commissioner; and U.S. General 
Services Administration rent, other rent, and rent-related activities. 

Additional CTP activities include those carried out by CTP's Office of 
the Center Director, Office of Management, Office of Policy, and 
Office of Regulations. 

Regulatory science includes tobacco product research, product review, 
and regulation and guidance support activities. 

Spending for compliance and enforcement activities includes tobacco-
related spending of FDA's Office of Regulatory Affairs. 

Percentages do not add to 100 percent due to rounding. 

[End of figure] 

Tobacco Retailer Inspections: 

To help ensure that U.S. retailers are in compliance with tobacco laws 
and regulations, FDA began awarding contracts to states and 
territories in fiscal year 2010 to implement its tobacco retailer 
inspection program.[Footnote 49] As of March 31, 2014, FDA had awarded 
over $91 million in contracts for retail inspections. 

Tobacco retailer inspections, according to FDA officials, include 
undercover purchases to determine if retailers are selling to minors 
or are engaging in other practices prohibited under the Tobacco 
Control Act and its implementing regulations, such as the restriction 
on sales through vending machines and the ban on cigarettes with 
certain characterizing flavors, such as grape, coconut, and chocolate. 
If violations are identified, FDA may issue a warning letter or take 
enforcement action, such as assessing civil monetary penalties or 
imposing no-tobacco-sale orders.[Footnote 50] Warning letters are the 
agency's principal means of notifying retailers of a first time 
violation and are used to encourage prompt voluntary compliance. If 
subsequent violations are found during re-inspection, FDA may initiate 
administrative action that can result in the imposition of a fine, or 
civil monetary penalty, based on the number of violations and period 
of time within which they occurred. For example, at one retailer that 
had already received a warning letter for a violation, inspectors 
found two additional violations less than a year later--for selling 
tobacco products to minors and failing to verify the age of a person 
purchasing tobacco products. As a result, FDA assessed a civil 
monetary penalty against this retailer for three violations within a 
24-month period. 

As of March 31, 2014, 45 states and territories were under contract 
with FDA to conduct retailer compliance inspections--a threefold 
increase over the number at the end of fiscal year 2010 (see table 5). 
[Footnote 51] As of March 31, 2014, over 279,000 retailer compliance 
inspections had been conducted, resulting in issuance of more than 
14,000 warning letters and 1,347 civil monetary penalties. While FDA 
plans to contract with additional states and territories in fiscal 
year 2014, according to FDA officials, the agency is in the process of 
contracting with third parties, including private entities, to 
facilitate inspections in those states and territories not currently 
under contract. According to FDA, it awarded one new contract to a 
private contractor in April 2014 to facilitate retailer inspections in 
Florida and two additional third-party contracts in May 2014 to 
facilitate retailer inspections in North Dakota and South Dakota. CTP 
officials said that in addition to third-parties, CTP has its own 
inspectors on staff to inspect in states not currently under contract 
with FDA. As of March 31, 2014, the office has completed more than 
half of the planned 100,000 retailer inspections for fiscal year 2014. 

Table 5: State and Territorial Retail Inspection Contracts Awarded, 
Inspections Conducted, and Advisory and Enforcement Actions Taken by 
FDA as of March 31, 2014: 

Fiscal year: 2010; 
Cumulative number of states and territories awarded contracts[A]: 15; 
Number of inspections: 0; 
Warning letters issued: 0; 
Civil monetary penalties assessed: 0. 

Fiscal year: 2011; 
Cumulative number of states and territories awarded contracts[A]: 40; 
Number of inspections: 24,404; 
Warning letters issued: 1,022; 
Civil monetary penalties assessed: 1. 

Fiscal year: 2012; 
Cumulative number of states and territories awarded contracts[A]: 44; 
Number of inspections: 87,462; 
Warning letters issued: 4,107; 
Civil monetary penalties assessed: 383. 

Fiscal year: 2013; 
Cumulative number of states and territories awarded contracts[A]: 45; 
Number of inspections: 109,906; 
Warning letters issued: 5,992; 
Civil monetary penalties assessed: 535. 

Fiscal year: 2014[B]; 
Cumulative number of states and territories awarded contracts[A]: 45; 
Number of inspections: 57,474; 
Warning letters issued: 3,107; 
Civil monetary penalties assessed: 428. 

Fiscal year: Total; 
Cumulative number of states and territories awarded contracts[A]: 45; 
Number of inspections: 279,246; 
Warning letters issued: 14,228; 
Civil monetary penalties assessed: 1,347. 

Source: GAO analysis of FDA data. GAO-14-561. 

[A] This count includes the number of states and territories with a 
contract in each fiscal year. 

[B] Data for fiscal year 2014 includes activities for the first two 
quarters (as of March 31, 2014). 

[End of table] 

In addition to awarding contracts, FDA developed training programs for 
state and territorial inspection officials to ensure inspections are 
performed in accordance with FDA requirements. Specifically, according 
to CTP officials, CTP's OCE is responsible for providing technical 
support through periodic conference calls with inspection program 
coordinators, conducting annual in-person training regarding changes 
to the program, and requiring annual refresher training for 
inspectors. As of March 31, 2014, OCE reported training inspectors in 
all states and territories awarded contracts for retailer inspections, 
with more than 1,000 program coordinators and inspectors trained in 
fiscal year 2013. The office also developed a system for collecting 
and tracking information during inspections called the Tobacco 
Inspection Management System. According to OCE officials, inspectors 
use their mobile devices to upload data into the system, which is 
subsequently reviewed by OCE for potential violations. When 
appropriate, OCE issues enforcement actions. 

Manufacturer and Import Inspections and Enforcement: 

FDA conducts inspections of registered domestic manufacturing 
facilities, oversees imported tobacco, and determines the status of 
the predicate product cited in SE submissions.[Footnote 52] Beginning 
in fiscal year 2012, FDA has conducted biennial inspections of tobacco 
manufacturing facilities--FDA's ORA conducts these inspections with 
the support of OCE as subject matter experts. According to FDA, the 
agency inspects manufacturing facilities for compliance with Tobacco 
Control Act requirements, including product and ingredient listing; 
packaging, labeling, and advertising requirements; and marketing 
authorization for new or modified risk tobacco products.[Footnote 53] 
As of March 31, 2014, FDA conducted 116 inspections at 100 registered 
manufacturing facilities.[Footnote 54] According to FDA officials, no 
warning letters have been issued or other enforcement actions taken as 
a result of manufacturer inspections. 

FDA also implemented an import compliance program for tobacco products 
beginning in fiscal year 2012.[Footnote 55] According to FDA 
officials, ORA and U.S. Customs and Border Protection review imported 
tobacco products, conduct field exams, and maintain import bulletins 
and alerts that identify tobacco products in violation of the Tobacco 
Control Act. Any tobacco product found to violate regulatory 
requirements may be refused entry into the United States. For example, 
imported tobacco products that are labeled or advertised as "light," 
"mild," or "low," and cigarettes that are labeled as having certain 
characterizing flavors other than tobacco and menthol, such as 
strawberry, grape, and vanilla, may be detained. As of March 31, 2014, 
FDA published four import alerts, including one for flavored 
cigarettes; one for regulated tobacco products using "light," "mild," 
or "low" in advertising or labeling; one for smokeless tobacco 
products without the required warning label; and one for tobacco 
products found to be not substantially equivalent--and refused the 
entry of two tobacco product imports. 

OCE also assists OS in the tobacco product review process by 
determining if the tobacco product to which the new tobacco product is 
being compared in an SE submission meets the statutory requirements 
for a predicate tobacco product. In fiscal years 2011 through 2013, 
OCE completed over 1,350 predicate eligibility 
determinations.[Footnote 56] In addition, OCE is responsible for 
ensuring that the tobacco products in provisional SE submissions found 
to be not substantially equivalent are no longer sold or distributed 
in the United States as of the date on the FDA-issued not 
substantially equivalent order.[Footnote 57] 

Promotion, Advertising, and Labeling Surveillance: 

FDA also conducts surveillance activities for the promotion, 
advertising, and labeling of tobacco products. CTP's OCE conducts 
routine monitoring and surveillance of websites and social media, 
publications, and tobacco industry promotion and sponsorship of events 
that sell, distribute, promote, or advertise regulated tobacco 
products; and reviews and evaluates regulatory submissions of tobacco 
product labeling, advertising, and consumer information 
materials.[Footnote 58] Additionally, CTP's OCE is responsible for 
ensuring that warning statements on smokeless tobacco product labeling 
and advertising are in compliance with requirements in the Tobacco 
Control Act, such as the packaging and advertising bearing the warning 
statement.[Footnote 59] From fiscal year 2010 through March 31, 2014, 
OCE officials reported monitoring over 3,000 websites and over 68,000 
issues of publications, resulting in 155 warning letters to 
manufacturers, distributors, and online retailers for violations. For 
example, warning letters were issued to (1) a website for selling 
clove cigarettes, a regulated tobacco product containing a 
characterizing flavor which is prohibited under the Tobacco Control 
Act; (2) a tobacco manufacturer for promoting the sale of cigarette 
tobacco (a regulated tobacco product) labeled as pipe tobacco (an 
unregulated tobacco product) on its website; and (3) a manufacturer 
for offering its tobacco products online as "light" and "mild" without 
an FDA order to market a modified risk tobacco product. 

Outreach and Small Business Assistance: 

In addition to the three key compliance and enforcement activities 
mentioned above, CTP also conducts outreach and small business 
assistance activities to help ensure compliance with the Tobacco 
Control Act and regulations. OCE and its Office of Small Business 
Assistance are responsible for outreach and small business assistance. 
According to FDA officials, these activities include responding to 
inquiries from small manufacturers and retailers and providing 
information on relevant tobacco guidance and regulations, primarily 
through webinars that addressed certain topics, such as common issues 
identified during FDA's scientific evaluation of substantial 
equivalence reports and regulations regarding distribution of free 
samples of smokeless tobacco. 

FDA Encountered Challenges As It Established CTP, Including Setting 
Review Time Frames: 

FDA faced challenges related to starting up a new center, which 
affected CTP's efforts to educate the public, build the regulatory 
science base, and enforce the new law and regulations. While FDA 
officials indicated that the agency has taken steps to address some of 
the challenges it faced--such as those related to contracting and 
staffing--challenges related to building the scientific basis for 
regulating a previously unregulated product and setting review time 
frames remain. Despite these challenges, neither FDA officials nor 
public health and tobacco industry stakeholders identified any 
limitations in FDA's authority to carry out its responsibilities under 
the Tobacco Control Act. 

According to CTP officials, one challenge FDA encountered, but which 
they believe the agency has addressed, was a lack of an acquisitions 
infrastructure that would allow it to quickly award contracts for 
public education activities. According to these officials, FDA had to 
develop a contracting mechanism of a sufficient size and scope to 
allow FDA to solicit and award large public education campaign 
contracts, which had never been done by the agency before. This 
process also included determining the type of contracts to award. The 
officials said that it took about 2 years before two pools of 
contractors were established, from which FDA could draw for future 
public education campaigns, delaying public education campaigns that 
were originally slated to launch in fiscal year 2012. CTP officials 
reported it was important to build an FDA contracting infrastructure 
for these campaigns, because public education activities are FDA's 
continuing responsibility. CTP officials stated that to decrease the 
toll of tobacco use on public health, public education activities must 
be managed by FDA, with a sustained fiscal and personnel commitment. 
While doing so delayed efforts to launch its public education 
campaigns, CTP officials told us they do not expect similar delays in 
the future. 

Additionally, according to CTP officials, CTP's OCE faced initial 
challenges in getting up and running--in particular in setting up the 
retailer inspection program, including the contracts for the program. 
According to CTP officials, in a very short period of time and with 
limited staff in place, CTP's OCE had to draft an initial request for 
proposals to award contracts to states and help them navigate through 
the contracting process, commission state and territorial officials to 
conduct retail compliance inspections, develop and implement training 
programs for inspectors, coordinators, and retailers, and develop a 
new information technology system to collect and report retailer 
compliance inspection data. However, these officials reported that 
since the early stages of the tobacco program, the center has built a 
strong FDA tobacco compliance and enforcement infrastructure, and 
noted that if additional tobacco products are deemed to fall under the 
authority of CTP, they should be able to expand and cover them 
relatively easily. 

CTP officials also reported FDA has taken steps to address challenges 
stemming from staffing and information technology that slowed the 
development and implementation of the product review processes needed 
for regulating tobacco products. In 2013, we reported that a shortage 
of experienced staff and challenges finding qualified staff 
contributed to long review times for new tobacco product 
submissions.[Footnote 60] CTP officials reported that the training of 
OS staff for product reviews will always be challenging because much 
of the training must be on-the-job, but they do not expect that this 
challenge will be an impediment to conducting new tobacco product and 
MRTP reviews. To help prepare OS staff for conducting reviews, CTP has 
drafted reviewer's guides, which identify specific procedures staff 
should implement in each step of review. CTP officials also reported 
that OS--the office responsible for new tobacco product reviews--
increased the number of positions over time from 18 in fiscal year 
2010 to 205 in fiscal year 2014, and that they do not expect that 
finding qualified staff will be a challenge for OS moving forward (see 
figure 7).[Footnote 61] (For information on CTP positions by office, 
see appendix III.) 

Figure 7: Center for Tobacco Products (CTP) Office of Science (OS) 
Positions as of March 31, 2014: 

[Refer to PDF for image: vertical bar graph] 

Number of positions: 

Fiscal year 2010: 18; 
Fiscal year 2011: 90; 
Fiscal year 2012: 134; 
Fiscal year 2013: 179; 
Fiscal year 2014: 205. 

Source: GAO summary of FDA information. GAO-14-561. 

Notes: Information for fiscal year 2014 is as of March 31, 2014. 

According to CTP, there were no OS staff in fiscal year 2009. 
Positions include students and consultants, including special 
government employees, at the end of each fiscal year. 

[End of figure] 

Tobacco industry stakeholders expressed concerns, however, about 
whether CTP will have a sufficient number of staff to review the 
backlog of the more than 4,000 new tobacco product submissions 
received as of March 31, 2014, and also review new submissions that 
may be made in the future, particularly if new types of tobacco 
products--such as cigars or e-cigarettes--are deemed to be subject to 
FDA's regulatory authority as the agency has proposed. In addition, 
CTP officials reported that a slow information technology system 
impacted the rate at which staff could enter data during reviews of SE 
submissions, which slowed down review times for such submissions. CTP 
officials told us that in January 2014, CTP deployed a new information 
technology system (known as the Office of Science Review Information 
System) to support the tracking, management, and review of 
submissions. They told us they expect this new system to provide for 
more efficient oversight of reviews, and they expect to use the system 
if new types of tobacco products are deemed to be subject to FDA's 
regulatory authority. 

FDA will continue to face challenges as it conducts regulatory science 
activities for what FDA considers to be a complex product that had not 
been subject to previous regulation. The following examples illustrate 
the continuing challenges related to implementing a tobacco product 
review process, building the scientific research base, and building 
the scientific basis to support regulations and guidance: 

* Novel issues in submissions. CTP officials told us that product 
reviews continue to have novel issues that OS officials need to 
carefully consider in light of establishing precedent for future 
reviews. They said that this will continue to be a challenge as OS 
staff conduct additional reviews and tobacco manufacturers make 
changes to their products. 

* Incomplete submissions. CTP officials also reported that SE 
submissions for new tobacco products have been challenging to review 
because they have not been complete. Industry stakeholders reported 
that determining and providing what CTP would consider sufficient 
information in SE submissions has been challenging because FDA's 
guidance has been lacking. For example, as we previously reported, 
industry stakeholders told us that the SE guidance document issued by 
FDA in January 2011 did not direct manufacturers to include some 
information, such as environmental assessments, that CTP later 
requested from manufacturers in its September 2011 draft guidance or 
through direct communication with manufacturers. CTP officials noted 
that the agency has made efforts to publish additional guidance and 
conduct webinars to address the issue and that they plan to develop a 
standardized form for manufacturers to use when submitting information 
for review. According to CTP officials, as of April 25, 2014, CTP was 
developing a proposed regulation on the content and format of SE 
submissions, but the center could not identify an estimated time frame 
for implementing such a regulation. CTP officials noted that they have 
begun seeing some overall improvement in submissions, but they expect 
that incomplete submissions will continue to be a challenge moving 
forward. 

* Regulating menthol in cigarettes. According to FDA officials, the 
issue of menthol in cigarettes is complex and there is a broad range 
of scientific evidence on the issue. As a result, FDA has not acted on 
findings from the Tobacco Products Scientific Advisory Committee's 
2011 report that the removal of menthol cigarettes from the market 
would benefit public health, nor has it acted on the findings from its 
own additional, independent evaluation on menthol, which took an 
additional 2 years before the agency issued an advanced notice of 
proposed rulemaking. According to public health stakeholders, FDA 
could have taken action on menthol in cigarettes based on the 2011 
report from the Tobacco Products Scientific Advisory Committee. In 
July 2013, about 4 years after the passage of the Tobacco Control Act 
and about 2 years after the release of the advisory committee report, 
FDA issued an Advanced Notice of Proposed Rule Making to obtain 
comments on its evaluation and on potential regulatory action. 
According to CTP officials, as of March 25, 2014, FDA was in the 
process of reviewing what it considers to be an unusually large number 
of comments--174,000--received in response to the notice. 

* Reporting HPHC data to the public. FDA officials stated that the 
agency needs to evaluate the quality of HPHC data and conduct more 
research before it can meet the Tobacco Control Act requirement to 
provide the public with understandable and not misleading information 
regarding HPHCs in tobacco products. While CTP has established a list 
of HPHCs, FDA has not released HPHC information to the public by the 
April 1, 2013, deadline required in the act because, according to CTP 
officials, the center has needed to evaluate the quality of HPHC data 
collected from manufacturers and the center does not yet have 
sufficient evidence that the HPHC data can be presented to consumers 
in an understandable way that is not misleading. Industry stakeholders 
stated that because CTP has not provided standards or regulations for 
how HPHC testing should be conducted, the HPHC data that manufacturers 
have spent time and money producing for FDA may not be useful because 
of the variation in testing methods used by manufacturers. According 
to CTP officials, CTP is developing a proposed regulation related to 
manufacturers' testing and reporting of HPHC data. The Tobacco 
Products Scientific Advisory Committee and FDA's Risk Communication 
Advisory Committee made recommendations on further research and 
strategies to communicate HPHC information in public education 
campaigns to help consumers make informed decisions about tobacco 
products, and according to CTP officials, FDA does not plan to release 
its list of HPHCs that will be understandable and not misleading to 
the public as required by the Tobacco Control Act until additional 
research is completed.[Footnote 62] As of June 4, 2014, CTP officials 
had not publicly disclosed an updated timeline for developing a 
proposed regulation related to the testing and reporting of HPHCs, but 
indicated it plans to do so. 

* Regulating other tobacco products. According to CTP officials, there 
is much that needs to be learned about the types of tobacco products 
that FDA does not currently regulate, and FDA will not be able to 
obtain some information about these types of products until they are 
subject to FDA's authority and FDA can require that manufacturers 
provide the information. However, the agency conducted research and 
developed information regarding these products in order to propose 
deeming additional types of tobacco products to be subject to its 
regulatory authority.[Footnote 63] In April 2014--about 3 years after 
FDA announced its intention to deem additional types of tobacco 
products to be subject to its regulatory authority--FDA issued a 
notice of proposed rulemaking that would subject other types of 
tobacco products, such as e-cigarettes, to federal regulations, 
including minimum age requirements.[Footnote 64] In the view of public 
health stakeholders, FDA has moved too slowly to deem additional 
tobacco products to be subject to its authority, allowing new types of 
tobacco products that stakeholders believe negatively impact public 
health to enter the U.S. market. However, CTP officials said that 
agencies must comply with certain requirements in developing 
regulations and that FDA was required to meet these requirements 
before issuing a proposed rule. In addition, the officials explained 
that FDA spent a significant amount of time ensuring that support for 
its proposed regulation to deem additional tobacco products subject to 
the agency's authority was strong and complete, which included 
spending time ensuring a strong scientific underpinning for regulation. 

Finally, relating to the product review processes, we have previously 
recommended that FDA establish and monitor performance measures for 
its review of new tobacco product submissions.[Footnote 65] 
Specifically, in September 2013, we recommended that FDA establish 
performance measures that include time frames for making decisions on 
new tobacco product submissions, and monitor performance relative to 
the established time frames, to allow CTP to evaluate its efficiency 
and effectiveness and help it make appropriate adjustments.[Footnote 
66] HHS agreed with our recommendation, and on April 18, 2014, 
announced new performance measures for regular SE submissions, 
Exemption from SE submissions, and MRTP submissions received in fiscal 
years 2015 through 2018, meaning that FDA will start monitoring the 
time it takes to review and take action on these submissions.[Footnote 
67] FDA has not, however, specified when it will establish time frames 
for provisional SE submissions--the type of SE submission that 
comprises the bulk of submissions received by FDA and that represent 
new tobacco products that may continue to be marketed unless and until 
CTP finds that they are not substantially equivalent. According to 
FDA, as the agency gains more experience with reviewing provisional SE 
submissions, it intends to identify and implement performance 
standards for these submissions as well.[Footnote 68] The continued 
lack of time frames for reviews of provisional SE submissions will 
limit CTP's ability to evaluate policies, procedures, and staffing 
resources in relation to CTP's review process for provisional SE 
submissions and, in turn, limit CTP's ability to reasonably assure 
efficient operations and effective results. 

Concluding Observations: 

In the 5 years since the Tobacco Control Act was enacted, FDA has set 
up a new center and undertaken numerous activities to regulate a 
previously unregulated product using a public health standard, and the 
agency remains in the process of conducting research and setting up 
its regulatory structure. FDA has taken some steps to address our 
previous recommendation to institute performance measures for its 
review of new tobacco products by establishing time frames for regular 
SE and Exemption from SE submissions, as well as for MRTP submissions, 
and by planning to monitor its progress towards meeting those time 
frames. However, we remain concerned that the agency has not yet 
established any performance measures for the more than 3,000 
provisional SE submissions, representing tobacco products that can 
stay on the market unless and until FDA finds them not substantially 
equivalent. It is important that the agency move forward on reviewing 
these submissions--particularly, those that FDA has identified as 
having the greatest potential to have a public health impact--to 
ensure that only products that meet the act's requirements are 
permitted to be on the market. The agency has indicated that it 
intends to identify and implement performance measures for these 
provisional SE submissions as it gains more experience reviewing them. 
We continue to believe that until FDA establishes performance measures 
including time frames for completing reviews of the large backlog of 
provisional SE submissions, the agency's ability to operate 
efficiently, achieve effective results, and plan appropriately will be 
hampered. This will be particularly pressing as FDA moves forward with 
plans to deem additional types of tobacco products to be subject to 
its regulatory authority, which has the potential to generate a 
substantial number of new submissions requiring review. Similarly, it 
will be important for the agency to establish time frames for 
submissions for any newly deemed products, as FDA has indicated that 
the just-released time frames will not apply to submissions for newly-
deemed products. 

Agency Comments: 

We provided a draft of this report to HHS for comment, and its 
comments are reproduced in appendix IV. HHS agreed with the need for 
performance measures related to its new tobacco product review 
process. In its comments, the department noted several reasons why it 
has been difficult for FDA to set performance measures for provisional 
SE submissions. According to HHS, FDA received a large number of 
provisional SE submissions in a short period of time, which required 
the agency to prioritize the review process based on the complexity of 
the public health concerns likely to be raised by the products under 
review. As a result, HHS noted that the initial reviews are more 
complicated, with unpredictable time frames. Additionally, because 
provisional SE submissions were received early in CTP's SE review 
process, HHS commented that many submissions have deficiencies that 
require corrections from manufacturers and further slows the review 
and approval process. However, HHS noted that the knowledge gained 
during the review of provisional SE submissions will inform the 
process in the future and allow FDA to eventually set performance 
goals for these submissions. 

While we acknowledge there are complexities to the provisional SE 
review process, we believe that it is critical that FDA set 
performance measures for managing the review process of provisional SE 
submissions, including establishing time frames for review and 
monitoring progress toward meeting those time frames. Since these 
products can remain on the market unless and until FDA determines they 
are not substantially equivalent, it is important for FDA to 
effectively manage the review of these products to fulfill its 
responsibility to protect the public health. 

HHS also provided technical comments that were incorporated, as 
appropriate. 

We are sending copies of this report to the Secretary of Health and 
Human Services, the Commissioner of FDA, and other interested parties. 
In addition, the report will be available at no charge on the GAO 
website at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-7114 or at crossem@gao.gov. Contact points for 
our Office of Congressional Relations and Office of Public Affairs can 
be found on the last page of this report. Other major contributors to 
this report are listed in appendix V. 

Signed by: 

Marcia Crosse: 
Director, Health Care: 

[End of section] 

Appendix I: Summary of Center for Tobacco Products Offices and Key 
Activities: 

This appendix provides a summary of the offices that comprise the Food 
and Drug Administration's (FDA) Center for Tobacco Products (CTP), 
their key activities, spending on each key activity, and examples of 
activities through March 31, 2014 (see table 6). 

Table 6: Summary of Center for Tobacco Products (CTP) Offices, 
Spending, and Key Activities as of March 31, 2014: 

CTP office and key activities: Office of the Center Director; 

Leadership and Management; 
Spending in fiscal years 2010-2014[A]: $16 million; 
Examples of activities: 
* Oversee all tobacco program operations. 

CTP office and key activities: Office of Compliance and Enforcement; 

Tobacco Retailer Inspections; 
Spending in fiscal years 2010-2014[A]: $123 million; 
Examples of activities: 
* Contract with states and territories for tobacco retailer 
inspections; 
* Commission and train inspection program participants; 
* Conduct advisory and enforcement actions in response to Tobacco 
Control Act violations. 

Manufacturer and Import Inspections and Enforcement[B]; 
Spending in fiscal years 2010-2014[A]: $36 million; 
Examples of activities: 
* Conduct inspections of domestic tobacco manufacturers; 
* Implement and enforce import compliance program for tobacco products; 
* Consult with CTP's Office of Science on status of predicate product 
cited in substantial equivalence submissions. 

Promotion, Advertising, and Labeling Surveillance; 
Spending in fiscal years 2010-2014[A]: $19 million; 
Examples of activities: 
* Surveillance of tobacco product websites and social media; 
* Surveillance of tobacco product advertisements in magazines and 
other publications; 
* Review of tobacco labeling and advertising submissions. 

Outreach and Small Business Assistance; 
Spending in fiscal years 2010-2014[A]: $3 million; 
Examples of activities: 
* Respond to questions from small businesses and retailers; 
* Provide educational webinars on relevant tobacco regulation and 
guidance topics for small businesses and retailers. 

CTP office and key activities: Office of Health Communication and 
Education; 

Public Education Campaigns; 
Spending in fiscal years 2010-2014[A]: $450 million; 
Examples of activities: 
* Establish contracting mechanism for multi-year tobacco education 
campaigns; 
* Launch initial youth campaigns; 
* Develop and implement retailer education campaign on new tobacco 
laws and regulations; 
* Fund research to inform and improve campaigns. 

Communicating CTP Activities; 
Spending in fiscal years 2010-2014[A]: $58 million; 
Examples of activities: 
* Educate and inform key audiences about CTP's creation, FDA's 
authorities over tobacco, and its work related to tobacco regulation. 

CTP office and key activities: Office of Management; 

Administrative Services; 
Spending in fiscal years 2010-2014[A]: $47 million; 
Examples of activities: 
* Manage administrative programs such as travel, CTP Document Control 
Center, acquisitions, training, safety and security, organization 
changes, and emergency planning; 
* Establish office spend plans to budget CTP funds according to 
strategic center priorities; 
* Establish administrative infrastructure for partnership with the 
National Institutes of Health. 

CTP office and key activities: Office of Policy[C]; 

Policy, Research Analysis, and Liaison Activity; 
Spending in fiscal years 2010-2014[A]: $28 million; 
Examples of activities: 
* Host listening sessions with members of industry; 
* Represent CTP at external public health stakeholder and industry 
meetings; 
* Conduct outreach calls to public health stakeholders and members of 
industry. 

CTP office and key activities: Office of Regulations; 

Issue Guidance; 
Spending in fiscal years 2010-2014[A]: $4 million; 
Examples of activities: 
* Issue revised draft guidance on compliance with reissued 1996 rule; 
* Issue draft guidance on tobacco retailer training programs and civil 
monetary penalties; 
* Issue final guidance regarding use of light, mild, low, and similar 
descriptors; substantial equivalence submissions; harmful and 
potentially harmful constituents (HPHC) in tobacco products and 
tobacco smoke. 

Issue Regulations; 
Spending in fiscal years 2010-2014[A]: $14 million; 
Examples of activities: 
* Reissue 1996 rule establishing restrictions on the sale and 
promotion of cigarettes and smokeless tobacco products; 
* Issue final rule requiring graphic warnings on cigarette packages 
and in cigarette advertising; 
* Clear proposed rule establishing requirements for submission of data 
needed to calculate user fees for manufacturers and importers. 

CTP office and key activities: Office of Science; 

Building a Scientific Research Base; 
Spending in fiscal years 2010-2014[A]: $449 million; 
Examples of activities: 
* Coordinate with federal agencies to develop a tobacco research 
plan/strategy for providing the scientific research base needed to 
inform FDA's regulatory decisions; 
* Design and conduct an experimental study to test the relative 
effectiveness of graphic warnings; 
* Meet with manufacturers on the science of smoked, smokeless, and 
dissolvable tobacco products and e-cigarettes, and conduct 
manufacturer site visits to learn more about the manufacturing, 
marketing, and distribution of tobacco products; 
* Conduct focus groups with adults and youth on their understanding 
and interpretation of HPHCs and conduct an experimental study to test 
the effects of HPHC lists on consumer understanding and perceptions of 
tobacco products; 
* Fund research at federal agencies and other private entities to 
better understand tobacco products, health effects, use patterns, and 
risk perceptions. 

Developing and Implementing a Tobacco Product Review Process; 
Spending in fiscal years 2010-2014[A]: $25 million; 
Examples of activities: 
* Develop and implement process for review and evaluation for 
Substantial Equivalence (SE) submissions; 
* Review SE submissions, modified risk tobacco product applications, 
investigational use, postmarket, and premarket tobacco product 
applications; 
* Hold webinars to update industry on SE submissions; 
* Design and implement a system to receive, process, and assess 
tobacco product adverse event and product problem reports; 
* Host two Tobacco Products Scientific Advisory Committee meetings 
related to modified risk tobacco products. 

Regulation and Guidance Support; 
Spending in fiscal years 2010-2014[A]: $5 million; 
Examples of activities: 
* Host Tobacco Products Scientific Advisory Committee meetings to 
address statutory requirements; 
* Publish (draft) guidance, including guidance on applications for 
premarket review of new tobacco products and industry reporting of 
HPHCs; 
* Hold public workshops; e.g., tobacco product analysis; 
* Issue advanced notices of proposed rulemaking. 

Source: GAO summary of FDA information. GAO-14-561. 

Notes: Spending for compliance and enforcement activities includes 
tobacco-related spending of FDA's Office of Regulatory Affairs. 

[A] Information for fiscal year 2014 includes activities for the first 
two quarters (as of March 31, 2014). 

[B] Includes the tobacco-related spending of FDA's Office of 
Regulatory Affairs. 

[C] According to CTP officials, as a result of an organizational 
review, entities within the Office of Policy were reassigned as of 
April 1, 2014, to the Office of the Center Director, the Office of 
Management, and the Office of Science. 

[End of table] 

[End of section] 

Appendix II: Examples of Tobacco-Related Research Projects Supported 
by Food and Drug Administration Spending: 

This appendix provides examples of research projects supported by the 
Food and Drug Administration (FDA) spending of tobacco user fees in 
fiscal years 2010 through March 31, 2014. Although FDA spending 
supported these research projects, in addition to FDA, other federal 
agencies, such as the National Institutes of Health (NIH) or the 
Centers for Disease Control and Prevention (CDC), as well as non-
federal entities, such as research institutes, conducted or had 
oversight over these research projects (see table 7). 

Table 7: Examples of Tobacco-Related Research Projects Supported by 
FDA Spending and the Entity Conducting or Overseeing the Project as of 
March 31, 2014: 

Fiscal year: 2010; 
Research project examples (entity conducting or overseeing project): 
* Marketing of New Tobacco Product Use Among Adults (NIH); 
* National Youth Tobacco Survey (CDC); 
* Brand Comparison of 50 Tobacco Products (CDC); 
* Experimental Study for Cigarette Graphic Health Warnings; 
* (Non-federal entity); 
* Focus Groups on Tobacco Products and HPHCs[A] (Non-federal entity). 

Fiscal year: 2011; 
Research project examples (entity conducting or overseeing project): 
* Uptake of Carcinogens by Menthol Cigarette Smokers (NIH); 
* Evaluating the Toxicity and Inflammation in Human Tissue Produced by 
Tobacco Products (FDA); 
* National Youth Tobacco Survey (CDC); 
* Brand Comparison of 50 Tobacco Products (CDC); 
* Influences on Tobacco Use Decisions (Non-federal entity); 
* Experimental Study of Emerging Tobacco Products (Non-federal entity); 
* Experimental Study on Presentation of HPHCs[A] (Non-federal entity). 

Fiscal year: 2012; 
Research project examples (entity conducting or overseeing project): 
* Rapid Response Human Testing of Smokeless Tobacco Products (NIH); 
* Survey of Microbes in Snuff Smokeless Tobacco Products (FDA); 
* National Youth Tobacco Survey (CDC); 
* Brand Comparison of 50 Tobacco Products (CDC); 
* Experimental Study on Little Cigar Topography (Non-federal entity); 
* Data on Poison Events Associated with Tobacco Products (Non-federal 
entity); 
* Epidemiological Studies of Tobacco Use and Cardiovascular Outcomes 
(Non-federal entity); 
* Focus Groups on Hookah, E-Cigarettes (Non-federal entity). 

Fiscal year: 2013; 
Research project examples (entity conducting or overseeing project): 
* The Impact of Tobacco Exposure on the Lungs (NIH); 
* Market Research to Predict Emerging Tobacco Product Use in Diverse 
Young Adults (NIH); 
* Influence of Advertising and Product Type on E-Cigarette Demand 
among Smokers (NIH); 
* Biomarkers for Bladder Cancer Associated with Tobacco Smoke (FDA); 
* National Youth Tobacco Survey (CDC); 
* Brand Comparison of 50 Tobacco Products (CDC); 
* Population Assessment of Tobacco and Health Study (Non-federal 
entity); 
* Assessment of Tobacco Pharmacology and Behavior in Humans (Non-
federal entity). 

Fiscal year: 2014[B]; 
Research project examples (entity conducting or overseeing project): 
* Genetic Biomarkers of Nicotine Addictions (NIH); 
* Effects of Hookah Tobacco Smoke in the Human Respiratory System 
(NIH); 
* Expansion of National Youth Tobacco Survey (CDC); 
* Harmful and Potentially Harmful Constituent Method Development and 
Baseline Analysis (CDC); 
* Biomarkers for Tobacco Smoke Associated with Bladder Cancer (FDA); 
* Nicotine Self-Administration in Rodents (FDA); 
* Pharmacokinetics and Topography of E-Cigarettes (Non-federal entity). 

Source: GAO analysis of FDA information. GAO-14-561. 

Note: Non-federal entities include, for example, the Research Triangle 
Institute International, American Association of Poison Control 
Centers, American College of Cardiology, and Battelle Memorial 
Institute. 

[A] HPHC stands for harmful and potentially harmful constituent. 

[B] Information for fiscal year 2014 includes examples for the first 
two quarters (as of March 31, 2014). 

[End of table] 

[End of section] 

Appendix III: Positions at the Center for Tobacco Products (CTP) at 
the End of Each Fiscal Year as of March 31, 2014: 

Office: Office of Health Communication and Education; 
Fiscal year: 
2009: 0; 
2010: 14; 
2011: 33; 
2012: 37; 
2013: 47; 
2014[A]: 49. 

Office: Office of Science; 
Fiscal year: 
2009: 0; 
2010: 18; 
2011: 90; 
2012: 134; 
2013: 179; 
2014[A]: 205. 

Office: Office of Compliance and Enforcement; 
Fiscal year: 
2009: 0; 
2010: 37; 
2011: 79; 
2012: 101; 
2013: 117; 
2014[A]: 151. 

Office: Other CTP Offices[B]; 
Fiscal year: 
2009: 1; 
2010: 74; 
2011: 128; 
2012: 155; 
2013: 159; 
2014[A]: 153. 

Office: Total; 
Fiscal year: 
2009: 1; 
2010: 143; 
2011: 330; 
2012: 427; 
2013: 502; 
2014[A]: 558. 

Source: GAO analysis of FDA data. | GAO-14-561: 

Notes: Position numbers include students and consultants, including 
special government employees. 

[A] Data for fiscal year 2014 includes activities for the first two 
quarters (as of March 31, 2014). 

[B] Other CTP offices include the Office of the Center Director, the 
Office of Management, the Office of Policy, and the Office of 
Regulations. According to CTP officials, as a result of an 
organizational review, entities within the Office of Policy were 
reassigned as of April 1, 2014, to the Office of the Center Director, 
the Office of Management, and the Office of Science. 

[End of table] 

[End of section] 

Appendix IV: Comments from the Department of Health and Human Services: 

Department of Health and Human Services: 
Office of The Secretary	
Assistant Secretary for: Legislation: 
Washington, DC 20201: 
	
June 4, 2014: 

Marcia Crosse: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Ms. Crosse: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) report entitled, "Tobacco Product Regulation: Most FDA Spending 
Funded Public Education, Regulatory Science, and Compliance and 
Enforcement Activities" (GAO-14-561). 

The Department appreciates the opportunity to review this report prior 
to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

General Comments Of The Department Of Health And Human Services (HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"Tobacco Product Regulations: Most Spending Funded Public Education, 
Regulatory Science And Compliance And Enforcement Activities" (GAO-14-
561): 

The Department appreciates the opportunity to review and comment on 
this draft report. 

In its findings, GAO emphasized the need for performance measures 
related to its new tobacco product review processes. We agree, but 
would like to clarify the issues that make establishing performance 
measures for provisional substantial equivalence (SE) reports 
difficult at this time and to explain what is required before FDA can 
put these performance measures in place. 

Substantial equivalence reports fall into two categories. One is 
"provisional" SE reports that apply to new products introduced to 
market between February 15, 2007, and March 22, 2011, and for which SE 
reports were submitted to FDA by March 22, 2011. These products can 
remain on the market unless FDA finds they are "not substantially 
equivalent" (NSE). The other category is "regular" SE reports for new 
products, submitted after March 22, 2011, and which may not be 
marketed unless FDA issues an order that the tobacco product is 
substantially equivalent. 

With the experience gained by review of hundreds of regular SE 
Reports, FDA has been able to develop performance measures for this 
type of SE reports. Through guidance, webinars, letters, and meetings 
with individual companies, we have communicated with applicants the 
information that FDA needs to make SE/NSE decisions. Moving forward, 
we expect the overall quality and completeness of incoming regular SE 
Reports to be substantially improved compared to the regular SE 
reports received to date. Based on this premise, FDA has set 
performance goals for regular SE Reports. 

Products for which provisional SE reports have been submitted may 
remain on the market unless FDA finds them to be not substantially 
equivalent. Therefore, the primary purpose of review of these 
provisional SE Reports is to identify and remove from the market those 
products that are not substantially equivalent (e.g., have different 
characteristics and raise different questions of public health, do not 
have eligible predicate tobacco products, etc.). It is important to 
note that any tobacco product may raise different questions of public 
health. FDA evaluates all provisional SE Reports to determine whether 
the tobacco products are substantially equivalent to a valid predicate 
product. However, the large number of provisional SE Reports submitted 
within a very small timeframe has made it not practical or appropriate 
to use the first-in/first-reviewed approach identified for regular SE 
reports. Thus, FDA has prioritized the review of provisional SE 
reports in an order based on key tobacco product attributes and the 
relative potential to raise different questions of public health. 
Because products with significant differences in characteristics as 
compared to the predicate tobacco product (e.g., a non-conventional 
tobacco product) are most likely to raise different questions of 
public health, the first provisional SE reports to be reviewed are 
those that raise the most complex issues. For example, the 
substitution of numerous additives or a radically different product 
design that can impact toxicity, appeal, or addictiveness requires a 
more complex scientific analysis of the new and predicate products 
than the substitution of a single additive or a simple design change. 
Because FDA is prioritizing the review of provisional SE reports that 
are most likely to raise different questions of public health, the 
initial reviews will be both more complicated and require timeframes 
that are less predictable. But, the increased scientific knowledge 
that FDA is gaining in reviewing these Reports will enable us in the 
future to set appropriate performance goals for provisional SE reports. 

For regular SE reports, FDA has already had many discussions with 
companies about the deficiencies in their reports and how these 
deficiencies may be resolved. Because of these discussions, we expect 
that regular SE reports that are now being submitted will be more 
complete, better organized and will have fewer deficiencies than those 
received to date. As provisional SE Reports were submitted very early 
in CTP's SE review program, applicants did not have their current 
experience and knowledge when developing their provisional SE 
applications. Thus, provisional SE reports are likely to be less well 
organized, have many more deficiencies, and require a more complicated 
review by FDA than SE reports for regular products that are now being 
submitted. The potential for both large numbers of deficiencies and 
varying quality of provisional SE reports prevents FDA from predicting 
the time necessary for completing the review and making a final 
decision. This is especially true as long as FDA continues to provide 
applicants with the opportunity to correct deficiencies through 
responses to FDA requests for information and clarification. While it 
is important that FDA makes review decisions about tobacco products in 
a timely manner, it is absolutely critical that these marketing 
decisions are sound, well-grounded in science, and based upon the 
applicable public health standards. Once FDA has had more experience 
addressing provisional SE reports, we expect to better understand the 
time that will be needed to review individual reports. Then we will be 
able to set performance goals for provisional SE reports. 

FDA continues to move forward with improvements to the product review 
program. We continue to hire and train new staff, to develop better IT 
systems for tracking submissions, and to address the scientific policy 
issues that result from developing a new regulatory review program. As 
reported in the GAO Report NEW TOBACCO PRODUCTS: FDA Needs to Set 
Timeframes for Its Review Process" (GAO-13-723), 82 percent of the 
staff of the Office of Science were involved in product review in 2013 
and the number of staff continues to increase. We will continue to 
advance our efforts to review and act on provisional SE reports while 
also meeting the performance goals for regular SE reports, and 
modified risk tobacco product applications. We are committed to 
completing the review of provisional tobacco products. Products found 
not to be substantially equivalent will be removed from the market as 
provided in the Family Smoking Prevention and Tobacco Control Act. 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Marcia Crosse, (202) 512-7114 or crossem@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Kim Yamane, Assistant 
Director; Hernán Bozzolo; Sandra George; Cathleen Hamann; Erin 
Henderson; and Mariel Lifshitz made key contributions to this report. 

[End of section] 

Footnotes: 

[1] Department of Health and Human Services, The Health Consequences 
of Smoking--50 Years of Progress: A Report of the Surgeon General 
(Atlanta, Ga.: Jan. 17, 2014). 

[2] Pub. L. No. 111-31, div. A, 123 Stat. 1776 (2009). Tobacco 
products that FDA currently regulates include cigarettes, cigarette 
tobacco, roll-your-own tobacco, and smokeless tobacco products. The 
Tobacco Control Act enables FDA to assert jurisdiction over other 
tobacco products through rulemaking. Under the public health standard, 
FDA regulates tobacco products for the protection of the public 
health, taking into account the risks and benefits of tobacco products 
on the population as a whole, including users and non-users. 

[3] § 101(b), 123 Stat. at 1787 (codified at 21 U.S.C. § 387a(e)). 

[4] § 101(b), 123 Stat. at 1826 (codified at 21 U.S.C. § 387s). 

[5] § 106 (b), 123 Stat. at 1842 (codified at 21 U.S.C. § 387u(b)). 

[6] For the purposes of this report, spending means obligations, 
including those for which expenditures have been made. The term 
obligation refers to a definite commitment by a federal agency that 
creates a legal liability to make payments immediately or in the 
future. According to FDA, CTP spent $4.9 million in the fourth quarter 
of fiscal year 2009 for startup activities. The center, which was 
established in August 2009, did not report fiscal year 2009 spending 
by office or activity. 

[7] § 101(b), 123 Stat. at 1786 (codified at 21 U.S.C. § 387a). 
Tobacco products that FDA currently regulates include cigarettes, 
cigarette tobacco, roll-your-own tobacco, and smokeless tobacco 
products. The Tobacco Control Act enables FDA to deem other products 
that are made or derived from tobacco and intended for human 
consumption--for example, cigars, pipe tobacco, hookah, and e-
cigarettes--subject to its authority by rulemaking. 

[8] § 101(b), 123 Stat. at 1796, 1803 (codified at 21 U.S.C. §§ 
387f(d)(3), 387g(d)(3)). Section 104 of the act directs FDA to convene 
an expert panel to conduct a study on the public health implications 
of raising the minimum age to purchase tobacco and to submit a report 
to Congress by April 2015. According to CTP officials, FDA has 
contracted with the Institute of Medicine to empanel a committee of 
experts and develop a report for CTP by January 2015. The Institute of 
Medicine report will be used as a basis for FDA's report to Congress. 

[9] § 102(a), 123 Stat. at 1830 (codified at 21 U.S.C. § 387a-1(a)). 
FDA reissued this final rule in March 2010. 75 Fed. Reg. 13,225 (Mar. 
19, 2010). 

[10] §§ 101(b), 201(a), 123 Stat. at 1799, 1845 (codified at 21 U.S.C. 
§ 387g(a)(1)(A) and 15 U.S.C. § 1533(d)). While the Tobacco Control 
Act explicitly exempted menthol from the flavor ban, it required 
additional research on the public health impact of menthol in 
cigarettes and gave FDA the authority to ban menthol if it finds such 
a ban is appropriate for the protection of the public health. § 
101(b), 123 Stat. at 1804 (codified at 21 U.S.C. § 387g(e)). In June 
2011, FDA issued a final rule specifying nine color graphic images to 
accompany new textual warnings for cigarette packages and 
advertisements. 76 Fed. Reg. 36,628 (June 22, 2011). In February 2012, 
however, a federal appeals court found that FDA failed to provide 
substantial evidence that the rule's specific requirements would 
reduce the number of Americans who smoke and, therefore, that the rule 
unconstitutionally restricted cigarette manufacturers' First Amendment 
rights. The court vacated the rule and remanded it to FDA. R.J. 
Reynolds Tobacco Co. v. F.D.A., 696 F.3d 1205 (D.C. Cir. 2012). FDA 
did not appeal the court's decision. As of April 25, 2014, FDA has not 
issued a revised rule, but indicated plans to conduct research in an 
effort to do so. 

[11] A predicate tobacco product is a product commercially marketed in 
the United States on February 15, 2007, or previously found by FDA to 
be substantially equivalent, provided the product has not been removed 
from the market at FDA's initiative or has not been determined by a 
judicial order to be misbranded or adulterated. 

[12] Manufacturers can make a submission under the Exemption from SE 
pathway if the product is modified by adding, deleting, or changing 
the quantity of an additive and (1) the new product is a minor 
modification of another tobacco product marketed by the same 
manufacturer; (2) an SE submission is not necessary to ensure that 
permitting the tobacco product to be marketed would be appropriate for 
the protection of the public health; and (3) an Exemption from SE is 
otherwise appropriate. 

[13] The PMTA submission must include, among other things, full 
reports of investigations of health risks, and must meet the public 
health standard described under the Tobacco Control Act. To determine 
whether marketing of a new tobacco product would be appropriate for 
the protection of the public health, CTP applies standards that take 
into account the risks and benefits to the population as a whole, 
including the likelihood that existing users of tobacco products will 
stop using such products and the likelihood that those who do not use 
tobacco products will start using such products. 

[14] § 101(b), 123 Stat. at 1812 (codified at 21 U.S.C. § 387k). MRTPs 
can only be legally marketed after FDA issues an order permitting 
their marketing. 

[15] §§ 6, 101(b), 123 Stat. at 1783, 1791 (codified at 21 U.S.C. §§ 
387d(a)(3), (e)). Manufacturers are required to report HPHC data at 
least 90 days prior to introducing a tobacco product that was not on 
the market on June 22, 2009. 

[16] §§ 6, 101(b), 123 Stat. at 1783, 1790-91 (codified at 21 U.S.C. § 
387d(d)). 

[17] § 101(b), 123 Stat. at 1804 (codified at 21 U.S.C. § 387g(e)). 
The Tobacco Control Act established the Tobacco Products Scientific 
Advisory Committee, a 12-member advisory committee, to review and 
evaluate safety, dependence, and health issues relating to tobacco 
products and provide appropriate advice, information, and 
recommendations to FDA for tobacco-related regulations. Tobacco 
Control Act, § 101(b), 123 Stat. at 1824 (codified at 21 U.S.C. § 
387q). The committee was established on March 23, 2010. 

[18] § 101(b), 123 Stat. at 1826-28 (codified at 21 U.S.C. § 387s(b)-
(c)). Tobacco products subject to FDA regulation include those 
products specified in the Tobacco Control Act--cigarettes, cigarette 
tobacco, roll-your-own tobacco, and smokeless tobacco--and any other 
tobacco products that FDA deems to be subject to its authority. User 
fees are a fee assessed to users for goods or services provided by the 
federal government. The Tobacco Control Act specified the total amount 
of user fees authorized to be collected for each fiscal year beginning 
with fiscal year 2009, and authorized user fees to remain available 
until expended (which means that FDA may carry over user fees to 
subsequent fiscal years if they are not obligated by the end of the 
fiscal year in which they were collected). Fees are collected and 
available for obligation only to the extent and in the amount provided 
in advance in appropriations acts. For fiscal year 2014, Congress 
appropriated $534 million in tobacco user fees for collection and 
obligation--the total amount authorized under the Tobacco Control Act. 

[19] ORA assists with CTP's compliance activities by inspecting 
regulated products and manufacturers, conducting sample analyses of 
regulated products, and reviewing imported products offered for entry 
into the United States. 

[20] In addition to the work carried out by CTP and ORA, tobacco user 
fees also support U.S. General Services Administration rent, other 
rent, and rent-related activities and other tobacco-related activities 
carried out by FDA, including headquarters and the Office of the 
Commissioner. 

[21] Data include spending for CTP overhead (information technology 
infrastructure and centralized funding for, among other things, 
furniture, office equipment, and center-wide training); ORA; tobacco-
related spending of FDA headquarters and the Office of the 
Commissioner; and General Services Administration rent, other rent, 
and rent-related activities. 

[22] According to CTP officials, FDA is on track to meet its fiscal 
year 2014 spend plan; 80 percent of the planned acquisitions items 
will be awarded in the second half of the fiscal year, per FDA 
acquisition deadlines. Additionally, officials noted that the majority 
of the reimbursements for ORA, FDA headquarters, and the Office of the 
Commissioner will also take place in the second half of the fiscal 
year. 

[23] See GAO, New Tobacco Products: FDA Needs to Set Time Frames for 
Its Review Process, [hyperlink, 
http://www.gao.gov/products/GAO-13-723] (Washington, D.C.: Sept. 6, 
2013). 

[24] FDA officials noted there are multiple agencies that conduct 
activities related to tobacco issues, including public education 
activities. To avoid duplication, CTP participates in an HHS tobacco 
control working group that meets monthly. The working group includes 
representatives from the Office of the Surgeon General, Centers for 
Disease Control and Prevention, Health Resources and Services 
Administration, and the Office of the Assistant Secretary for Health, 
among others. 

[25] Information on FDA's campaign can be found at "The Real Cost 
Campaign," accessed May 6, 2014, [hyperlink, 
http://www.fda.gov/TheRealCost]. 

[26] We have previously reported on the importance of developing a 
systematic approach to designing program evaluations in order to 
enhance the credibility of the evaluation and ensure resources are 
being used effectively (see GAO, Designing Evaluations: 2012 Revision, 
[hyperlink, http://www.gao.gov/products/GAO-12-208G] (Washington, 
D.C.: Jan. 2012)). We have also reported on the difficulties 
associated with evaluating public communications campaigns (see, for 
example, GAO, ONDCP Media Campaign: Contractor's National Evaluation 
Did Not Find that the Youth Anti-Drug Media Campaign Was Effective in 
Reducing Youth Drug Use, [hyperlink, 
http://www.gao.gov/products/GAO-06-818] (Washington, D.C.: Aug. 25, 
2006)). 

[27] Spending on building the scientific research base has primarily 
been through grants and contracts, while product review spending 
represents staffing within CTP. 

[28] CTP officials reported plans to continue research to show that 
graphic warning labels will benefit public health; however, they did 
not have a time frame for completing the research or issuing a new 
graphic warning label regulation following a February 2012 federal 
appeals court decision that vacated the agency's original rule. 

[29] The Population Assessment of Tobacco and Health study started to 
enroll participants in September 2013 and plans to enroll up to 59,000 
people (both tobacco users and non-users) ages 12 and older. 

[30] Department of Health and Human Services, Food and Drug 
Administration, "FDA and NIH Study: Population Assessment of Tobacco 
and Health," accessed April 24, 2014, [hyperlink, 
http://www.fda.gov/TobaccoProducts/PublicHealthScienceResearch/ucm337005
.htm[. 

[31] Department of Health and Human Services, Food and Drug 
Administration, "Tobacco Centers of Regulatory Science," accessed 
April 24, 2014, [hyperlink, 
http://www.fda.gov/TobaccoProducts/PublicHealthScienceResearch/ucm369005
.htm]. The 14 Tobacco Centers of Regulatory Science include scientists 
with a broad range of expertise, including epidemiology, economics, 
toxicology, addictions, and marketing, located primarily within 
universities. 

[32] On April 25, 2014, FDA issued a proposed rule that, if finalized, 
would deem all products that meet the statutory definition of a 
tobacco product--including currently unregulated marketed products, 
such as e-cigarettes, cigars, pipe tobacco, nicotine gels, waterpipe 
(or hookah) tobacco, and dissolvables--to be subject to FDA's 
regulation under the Tobacco Control Act. 79 Fed. Reg. 23,142 (Apr. 
25, 2014). 

[33] For additional information on FDA's new tobacco product review 
process, see [hyperlink, http://www.gao.gov/products/GAO-13-723]. 

[34] Regular SE submissions are for new tobacco products not yet 
commercially marketed. Regular SE submissions were received by FDA 
after March 22, 2011. The tobacco products represented in these 
submissions may not be marketed until CTP issues an order that they 
are substantially equivalent. 

[35] As of March 31, 2014, CTP had refused to accept 36 of the 61 
Exemption from SE submissions received by FDA because the submissions 
did not meet statutory requirements. CTP had refused to file the 4 
PMTA submissions FDA had received as of that date. According to CTP 
officials and industry representatives, one reason for the lack of 
submissions under the PMTA pathway may be the challenge in 
demonstrating that a manufacturer has met the public health standard 
(appropriate for the protection of the public health) for the PMTA 
pathway. See [hyperlink, 
http://www.fda.gov/TobaccoProducts/Labeling/MarketingandAdvertising/ucm3
39928.htm], accessed April 10, 2014, for information on FDA's tobacco 
product marketing orders. 

[36] Provisional SE submissions are for new tobacco products 
commercially marketed after February 15, 2007, but before March 22, 
2011. Provisional SE submissions were received by FDA by March 22, 
2011. The tobacco products represented in these submissions may be 
commercially marketed unless and until FDA issues an order that they 
are not substantially equivalent. 

[37] As of March 31, 2014, CTP received 70 submissions regarding 
investigational use of tobacco products; 62 have completed review and 
8 were pending review. In addition, CTP reviewed 62 correspondences 
regarding investigational use of a tobacco product. Under the Tobacco 
Control Act, FDA may exempt tobacco products intended for 
investigational use from these requirements under conditions as FDA 
may prescribe by regulation. § 101(b), 123 Stat. at 1812 (codified at 
21 U.S.C. § 387j(g)). As of March 31, 2014, however, FDA had not 
issued such regulations, and FDA was exercising enforcement discretion 
for the premarket review requirements when investigators can ensure 
that studies on the tobacco product are well-controlled, data derived 
from such studies are reliable, and study subjects are adequately 
protected. In addition, the investigational tobacco product should not 
be promoted, advertised, distributed, commercially marketed, and/or 
sold to consumers. 

[38] In addition, CTP officials reported that there were two other 
reasons for prioritizing regular SE submissions over provisional SE 
submissions: FDA received a large number of provisional SE submissions 
on March 21, 2011 (the day before the statutory deadline for 
submitting provisional SE submissions), making it impractical to 
prioritize reviews by the date the submission was received; and CTP 
required time to assess which approach to reviewing provisional 
submissions would be the most effective at addressing the public 
health burden of tobacco use. 

[39] The FDA/NIH Safety Reporting Portal is used by consumers, 
healthcare professionals, and other individuals to report safety 
concerns about products such as medical products, foods, cosmetics, 
and veterinary products. HHS, the Department of Defense, and the 
Department of Veterans Affairs created the portal to improve 
coordination among federal agencies for adverse event and product 
problem reporting. 

[40] Department of Health and Human Services, Food and Drug 
Administration, Tobacco Products Scientific Advisory Committee, 
Menthol Cigarettes and Public Health: Review of the Scientific 
Evidence and Recommendations (Silver Spring, Md.: Mar. 23, 2011). 

[41] Department of Health and Human Services, Food and Drug 
Administration, Preliminary Scientific Evaluation of the Possible 
Public Health Effects of Menthol Versus Nonmenthol Cigarettes, 
accessed April 14, 2014, [hyperlink, 
http://www.fda.gov/downloads/ScienceResearch/SpecialTopics/PeerReviewofS
cientificInformationandAssessments/UCM361598.pdf]. 

[42] 78 Fed. Reg. 44,484 (July 24, 2013). 

[43] 77 Fed. Reg. 20,034 (Apr. 3, 2012). 

[44] Department of Health and Human Services, Food and Drug 
Administration, Center for Tobacco Products, Draft Guidance for 
Industry: Reporting Harmful and Potentially Harmful Constituents in 
Tobacco Products and Tobacco Smoke Under Section 904(a)(3) of the 
Federal Food, Drug, and Cosmetic Act (Silver Spring, Md.: March 2012). 
In its draft guidance, FDA noted that given the short time frame 
between issuance of the draft guidance and the required HPHC reporting 
date, FDA did not intend to enforce the statutory requirement for 
manufacturers to provide data on all HPHCs; rather, FDA established an 
abbreviated list of HPHCs for manufacturers to use for initially 
reporting HPHC data. According to the draft guidance, FDA will 
implement and enforce the statutory requirement to report all HPHCs on 
FDA's list "as appropriate." FDA issued a public notice describing the 
criteria the agency had tentatively concluded it would use to assist 
the agency in identifying HPHCs and listing 96 HPHCs the agency had 
identified using those criteria, in August 2011. 76 Fed. Reg. 50,226 
(Aug. 12, 2011). 

[45] § 101(b), 123 Stat. at 1791 (codified at 21 U.S.C. § 387d(d)). 

[46] FDA announced this planned publication date in the Fall 2013 
Regulatory Plan and the Unified Agenda of Federal Regulatory and 
Deregulatory Actions, accessed June 9, 2014, [hyperlink, 
http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201310&RIN=0910-
G59]. According to HHS, as of June 4, 2014, the agency plans to update 
the estimated publication date in the next edition of the Unified 
Agenda. 

[47] Department of Health and Human Services, Food and Drug 
Administration, Section 905(j) Reports: Demonstrating Substantial 
Equivalence for Tobacco Products (Silver Spring, Md.: Jan. 5, 2011). 

[48] Department of Health and Human Services, Food and Drug 
Administration, Center for Tobacco Products, Draft Guidance for 
Industry and FDA Staff Demonstrating The Substantial Equivalence of a 
New Tobacco Product: Responses to Frequently Asked Questions (Silver 
Spring, Md.: Sept. 22, 2011). 

[49] The Tobacco Control Act directs FDA, to the extent feasible, to 
contract with states and territories to carry out inspections of 
tobacco retailers in connection with enforcement of the act. § 103(g), 
123 Stat. at 1837 (codified at 21 U.S.C. § 372(a)(1)(B)). 

[50] FDA may impose a no-tobacco-sale order prohibiting the sale of 
tobacco products at retail outlets that have committed repeated 
violations of the law. § 103(c), 123 Stat. at 1835 (codified at 21 
U.S.C. § 333(f)(8)). According to FDA officials, other enforcement 
actions can include seizures, injunctions, and criminal prosecution. 

[51] FDA plans to collaborate with tribal communities to contract with 
the agency to enforce regulations on tribal lands. According to FDA, 
the agency has contracted with an American Indian-owned company to 
further its efforts to collaborate with American Indian tribes and 
gain insight on the best approaches to disseminate information about 
the Tobacco Control Act to Indian tribes and to tobacco retailers 
located on tribal lands. 

[52] FDA also conducts investigations where free smokeless samples are 
distributed. Since beginning these investigations in fiscal year 2012, 
FDA had conducted 23 investigations as of March 31, 2014. 

[53] Department of Health and Human Services, Food and Drug 
Administration, Report to Congress: Progress and Effectiveness of the 
Implementation of the Family Smoking Prevention and Tobacco Control 
Act (Silver Spring, Md.: Sept. 27, 2013). FDA has not established 
tobacco product manufacturing practices for tobacco manufacturers. FDA 
officials said they plan to do so. 

[54] As of April 29, 2014, FDA reported there were 104 registered 
manufacturing facilities. 

[55] Imported tobacco products must conform to the same regulatory 
requirements as domestic tobacco products with the following 
exception: foreign firms are not required to register their facility 
and to list their tobacco products. 

[56] More than 650 determinations were related to an SE submission and 
more than 700 determinations were made in a stand-alone grandfathered 
review. 

[57] In February 2014, FDA issued draft guidance stating that FDA does 
not intend to take enforcement action for 30 days on previously 
purchased products that a retailer has in its inventory. Department of 
Health and Human Services, Food and Drug Administration, Center for 
Tobacco Products, Guidance for Industry and Tobacco Retailers: 
Enforcement Policy for Certain (Provisional) Tobacco Products that FDA 
Finds Not Substantially Equivalent (Draft Guidance), accessed March 
14, 2014, [hyperlink, 
http://www.fda.gov/downloads/TobaccoProducts/GuidanceComplianceRegulator
yInformation/UCM386629.pdf]. 

[58] For more information on these surveillance activities, see 
Department of Health and Human Services, Food and Drug Administration, 
Progress and Effectiveness of the Implementation of the Tobacco 
Control Act. 

[59] The Tobacco Control Act requires any smokeless tobacco product 
imported, sold, or distributed in the United States to have a product 
package label that includes one of the following required statements, 
"WARNING: This product can cause mouth cancer;" "WARNING: This product 
can cause gum disease and tooth loss;" "WARNING: This product is not a 
safe alternative to cigarettes;" "WARNING: Smokeless tobacco is 
addictive." § 204, 123 Stat. at 1846 (codified at 15 U.S.C. § 
4402(a)). The act also imposes specific requirements for the display 
of the warning label, including placement on the package and the type, 
size, and color of font used on the label. The act also includes 
requirements for advertisements of smokeless tobacco products, 
including the amount of space a warning must comprise and the language 
in which the advertisement appears. 

[60] [hyperlink, http://www.gao.gov/products/GAO-13-723], 27. 

[61] OS staff is responsible for the regulatory science activities 
carried out by CTP, including building a product research base, 
conducting product reviews, and providing support for regulations and 
guidance. 

[62] According to HHS, CTP has begun incorporating messages about the 
chemicals in tobacco products and specific HPHCs into its ongoing 
tobacco prevention campaign targeting at-risk youth, and additional 
messages may be incorporated into future public education campaigns 
currently in development. 

[63] Among other things, CTP conducted and funded research on the 
initiation, use, perception, and toxicity of cigars, e-cigarettes, and 
other unregulated tobacco products. 

[64] FDA issued the proposed rule on April 25, 2014. Comments on the 
proposed rule are due to FDA within 75 days, or July 9, 2014. 79 Fed. 
Reg. 23,142 (Apr. 25, 2014). 

[65] The Tobacco Control Act does not mandate a time frame for CTP's 
review of new tobacco product submissions with the exception of PMTA 
submissions. For PMTA submissions, the act requires CTP to issue an 
order stating whether the product may be marketed as promptly as 
possible, but not later than 180 days after FDA's receipt of a 
submission. 

[66] [hyperlink, http://www.gao.gov/products/GAO-13-723]. 

[67] According to FDA, the time before October 1, 2014, will be used 
to develop tracking systems for monitoring progress in meeting the 
performance goals. See Department of Health and Human Services, Food 
and Drug Administration, "Establishing Four Performance Measures," 
accessed April 21, 2014, [hyperlink, 
http://www.fda.gov/TobaccoProducts/NewsEvents/ucm393894.htm]. FDA 
officials indicated that submissions for any newly deemed tobacco 
products received in fiscal years 2015 through 2018 would not be 
subject to the performance measures and time frames established on 
April 18, 2014. 

[68] CTP prioritized its review of regular SE submissions over 
provisional SE submissions, and the agency made its first decisions on 
a regular SE submission in June 2013--about 8 months prior to its 
first decision on a provisional SE submission, which occurred in 
February 2014. Furthermore, CTP had completed the review process for 
seven times as many regular SE submissions (30 decisions) than 
provisional SE submissions (4 decisions) as of March 31, 2014. 

[End of section] 

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Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, DC 20548. 

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