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Tariff Legalities & Block on Flavored Vapes · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
0:09
Speaker 2: Yesterday, on so called Liberation Day, President Trump announced the
0:13
Speaker 2: steepest American tariffs in more than a century.
0:17
Speaker 3: So sixty seven percent. So we're going to be charging
0:20
Speaker 3: a discounted reciprocal tariff of thirty four percent. I think,
0:24
Speaker 3: my fellow Americans, this is Liberation Day. In other words,
0:29
Speaker 3: they charge us, we charge them, we charge them less.
0:31
Speaker 3: So how could anybody be upset?
0:33
Speaker 2: But obviously plenty of people are upset, leaving financial markets
0:38
Speaker 2: around the world reeling. Today. About two trillion dollars was
0:42
Speaker 2: erased from the S and P five hundred for its
0:45
Speaker 2: worst day in five years, as the tariffs threatened to
0:48
Speaker 2: slow growth, rekindle inflation, and wreak havoc on the global economy.
0:54
Speaker 2: Joining me is an expert in tariffs and national security law,
0:57
Speaker 2: David Townsend, a partner at Dorset and Whitney. Under what
1:02
Speaker 2: authority is President Trump imposing these tariffs?
1:07
Speaker 1: And so these tariffs are imposed under the International Emergency
1:10
Speaker 1: Economic Powers Act or AEPA. AEPA allows the President to
1:16
Speaker 1: declare a national emergency with respect to a variety of
1:20
Speaker 1: things that the President believes undermine US national security and
1:24
Speaker 1: has its basis and origin outside of the United States.
1:28
Speaker 1: Once the President declares that national emergency, it provides a
1:32
Speaker 1: legal basis for the President to take a number of
1:35
Speaker 1: restrictive actions with respect to commerce between the United States
1:40
Speaker 1: and the target of the AIPA executive order.
1:44
Speaker 2: He says it's an emergency, and he's citing the trade deficits.
1:48
Speaker 2: A lot of people wouldn't consider that an emergency. Does
1:51
Speaker 2: he get to decide completely?
1:53
Speaker 1: Well? Under AEPA, the President is provided by Congress broad
1:58
Speaker 1: authority to define what is or is not a national
2:02
Speaker 1: emergency under AEPA. Successive presidents have declared a wide variety
2:08
Speaker 1: of topics to constitute a national emergency, and to date
2:12
Speaker 1: there's not been any judicial decisions that have reversed a
2:17
Speaker 1: president in how they define a national emergency under AEPA.
2:21
Speaker 2: And so there have been challenges to a president's use
2:24
Speaker 2: of IEPA.
2:25
Speaker 1: Not really the use of I guess in this case,
2:29
Speaker 1: the use of IEPA to impose tariffs is a new
2:33
Speaker 1: use of IEPA. President Trump is the first president to
2:37
Speaker 1: use IEPA as a basis for increasing tariffs. Previously, IEPA
2:41
Speaker 1: has been used for targeting terrorist organizations or foreign countries
2:46
Speaker 1: that are deemed to be taking actions to undermine US
2:49
Speaker 1: national security. President Trump is using IEPA as a basis
2:53
Speaker 1: to change terrorf rates on imports into the United States.
2:56
Speaker 2: So IEPA is an exception because the Constitution gives the
3:02
Speaker 2: legislative branch the power to lay and collect tacks's duties,
3:07
Speaker 2: imposts and excises, and to regulate commerce with foreign nations.
3:12
Speaker 2: I mean traditionally this is a role of Congress.
3:15
Speaker 1: Right. AIPA is a statutory authority that Congress created to
3:22
Speaker 1: delegate their constitutional authority to regulate foreign commerce and impose
3:27
Speaker 1: tariff to the president. Now, one legal question that remains
3:32
Speaker 1: and is unknown at this time as whether APA was
3:36
Speaker 1: ever intended to allow the president and does allow the
3:39
Speaker 1: president to increase tariff rates. As I noted before, traditionally
3:43
Speaker 1: AIPA was used as a basis for economic sanctions against
3:47
Speaker 1: the target organizations, individuals, and foreign governments.
3:50
Speaker 2: Senator Chuck Grassley and Maria Cantwell introduced a bipartisan bill
3:57
Speaker 2: that would give Congress final approval on tariff imposed by
4:01
Speaker 2: a president.
4:02
Speaker 1: I think that's a new development that there is some
4:04
Speaker 1: momentum in Congress, including on a bipartisan basis to reassert
4:10
Speaker 1: congressional authority and their constitutional authority to establish tariffs. Congress,
4:17
Speaker 1: because they have that constitutional authority, can step in at
4:19
Speaker 1: any time. They could reverse the reciprocal tariffs that President
4:23
Speaker 1: Trump announced yesterday, and they could reverse the Section three
4:27
Speaker 1: one tariffs that have been in place since twenty eighteen.
4:30
Speaker 1: They've chosen thus far not to do that. But I
4:34
Speaker 1: do think what you're seeing now is because these tariffs
4:38
Speaker 1: are reaching new countries, including our neighbors such as Canada
4:43
Speaker 1: and Mexico, there is some momentum in Congress to re
4:46
Speaker 1: examine and potentially check what the President is doing in
4:50
Speaker 1: the tariff space.
4:51
Speaker 2: So, in other words, they don't need this new bipartisan bill.
4:55
Speaker 2: They could just negate his tariffs by themselves.
4:59
Speaker 1: Congress could as a statute establishing tariff rates for individual
5:04
Speaker 1: countries that would be and take precedence over the executive
5:08
Speaker 1: orders issued under AEPA. Congress also can introduce resolutions terminating
5:14
Speaker 1: a national emergency, so in theory, Congress could take action
5:18
Speaker 1: to withdraw the legal basis for the reciprocal tarifts that
5:21
Speaker 1: President Trump announced yesterday. They have not todate done that
5:26
Speaker 1: and again, I'd go back to the twenty eighteen tariffs
5:29
Speaker 1: against China. You know, that's an example where Congress has
5:33
Speaker 1: the authority to do something and to reverse it, but
5:36
Speaker 1: today has not done so. I think the main point,
5:40
Speaker 1: you know, is that Congress has a variety of tools
5:43
Speaker 1: they could use here to to modify, to reverse, to
5:47
Speaker 1: change what the executive branch is doing with respect to tariffs.
5:51
Speaker 2: Do you see a method in the way the tariffs
5:53
Speaker 2: have been imposed?
5:55
Speaker 1: The actions under AEPA are designed to allow the President
6:01
Speaker 1: to act with maximum speed and without really any process
6:06
Speaker 1: prior to the decision to impose the tariffs. And you know,
6:11
Speaker 1: under the executive Order, President Trump said there's a variety
6:14
Speaker 1: of foreign barriers that US companies face that justify these
6:19
Speaker 1: reciprocal tariffs. I think in terms of the final numbers,
6:24
Speaker 1: it's difficult to explain how those numbers were arrived at
6:29
Speaker 1: and what exactly the basis is for them. I think,
6:32
Speaker 1: you know, the numbers were higher than a lot of
6:35
Speaker 1: people expected. I think that's reflected in what the markets
6:39
Speaker 1: are doing today as they adjust and look at the
6:43
Speaker 1: full impact of what President Trump is doing.
6:45
Speaker 2: How will it impact businesses in the United States? What
6:51
Speaker 2: businesses in particular, will it have an impact on.
6:55
Speaker 1: I think of tariff as unique to each company. Really,
6:58
Speaker 1: each company operates in a different market with different price
7:02
Speaker 1: pressures and profit margins and competition, and so it's hard
7:05
Speaker 1: to generalize how these tariffs will hit. I think that
7:11
Speaker 1: businesses to the extent they can take a weight and
7:15
Speaker 1: see approach because they've built up inventory, you know, that's
7:18
Speaker 1: one strategy. It's unclear the way these tariffs are set up,
7:23
Speaker 1: whether over the medium the longer term they remain in effect.
7:26
Speaker 1: So to the extent companies have that buffer, that is
7:29
Speaker 1: a very valuable tool for them. I think for other
7:34
Speaker 1: companies that don't have the luxury of waiting, they're looking at,
7:38
Speaker 1: you know, to the extent they can pass pass the
7:40
Speaker 1: increased cost onto their consumers without undermining their volume of sales.
7:45
Speaker 1: And from my standpoint as an attorney who advises companies
7:49
Speaker 1: on tariffs, I also think a lot of companies realize
7:53
Speaker 1: that the compliance stakes are significantly increased when the tariff
7:57
Speaker 1: goes up this much, right, because if you or compliance
8:01
Speaker 1: practices don't get the country of origin correct or the
8:05
Speaker 1: valuation correct, that now translates into a fairly significant change
8:09
Speaker 1: in revenue that should have gone to the US government
8:12
Speaker 1: if you're getting it incorrect. So from a compliance standpoint,
8:15
Speaker 1: it's riskier now than it was on Monday. With respect
8:18
Speaker 1: to declarations to US customs, What are some.
8:22
Speaker 2: Of the biggest questions you're getting from clients.
8:25
Speaker 1: I think companies are at least as of right now,
8:28
Speaker 1: trying to fully understand what the map looks like, so
8:32
Speaker 1: to speak. With respect to the tariffs, one thing that
8:35
Speaker 1: I think is going to generate a lot of questions
8:39
Speaker 1: is because the tariff rates differ by different countries. If
8:44
Speaker 1: you have product lines that make multiple stops prior to
8:48
Speaker 1: be importing into the United States through further assembly or manufacturing,
8:53
Speaker 1: then the country of origin question becomes vitally important because
8:57
Speaker 1: you may have a tariff rate down to ten percent
9:00
Speaker 1: against the teriff rate that goes up to forty nine
9:02
Speaker 1: percent on these reciprocal tariffs, and a lot of tariff
9:06
Speaker 1: liabilities at stake in applying the rule of origin correctly.
9:09
Speaker 1: So I think I think that's going to be one
9:11
Speaker 1: area where companies are examining carefully. The other thing is
9:14
Speaker 1: if you're stuck paying the tariff, the amount of tariff
9:17
Speaker 1: you pay is going to be determined on how you
9:19
Speaker 1: value the import as it comes into the United States.
9:22
Speaker 1: And so a lot of companies who may not have
9:25
Speaker 1: thought very hard about valuation because teriff rates or zero
9:30
Speaker 1: or very low, or are looking at that question to
9:33
Speaker 1: make sure they're not under or overvaluing the merchandise as
9:36
Speaker 1: it comes into the United States.
9:39
Speaker 2: A lot of the burden of this is going to
9:40
Speaker 2: fall on consumers. The Yell Budget Lab estimates that all
9:45
Speaker 2: the Trump Administration's tariffs will cost the average household three
9:50
Speaker 2: eight hundred dollars in higher prices this year.
9:53
Speaker 1: Yes, I mean, I think to the extent that at
9:56
Speaker 1: the retail level, companies either can or must pass on
10:00
Speaker 1: that cost to their consumers. It's going to drive up
10:04
Speaker 1: the prices of a variety of things here in the
10:07
Speaker 1: United States for consumers.
10:09
Speaker 2: And what do you think the President is trying to
10:12
Speaker 2: accomplish with these tariffs.
10:15
Speaker 1: Well, I'll put it this way. The executive order gives
10:17
Speaker 1: the president the authority to increase, modify, decrease, remove the
10:23
Speaker 1: tariffs based on what foreign countries now do in reaction
10:29
Speaker 1: to this executive order. So he could get into a
10:33
Speaker 1: cycle of retaliation encounter retaliation. Alternatively, he might be able
10:38
Speaker 1: to reach concessions with foreign countries that result in these
10:42
Speaker 1: tariff freights coming down. I think one big unanswered question
10:46
Speaker 1: for the business community right now is whether the President
10:49
Speaker 1: intends for this to be a negotiation that results in
10:53
Speaker 1: changes in other countries policies and practices, or if the
10:58
Speaker 1: President just believes that a universe tariff that applies to
11:01
Speaker 1: all global sources is a policy choice that he thinks
11:05
Speaker 1: improves the United States economically. You know, we don't know
11:09
Speaker 1: which of those two it is until things unfold down
11:13
Speaker 1: the road.
11:15
Speaker 2: And how does a World Trade Organization factor in here?
11:19
Speaker 1: Well, one thing I think is interesting about the Executive
11:23
Speaker 1: Order is that it talks about the creation of the
11:29
Speaker 1: World Trade Organization and frames some of the issues here
11:36
Speaker 1: as the United States allowing other countries to get away
11:40
Speaker 1: with breaches of what they promised to do under the WTO.
11:44
Speaker 1: So that's the US perspective, I think. On the foreign perspective,
11:48
Speaker 1: they'll say, also pointing to the WTO, that we had
11:52
Speaker 1: a deal and the United States agreed to keep its
11:55
Speaker 1: tariffs low, and so they can't just sit by as
11:59
Speaker 1: the United slime States acts and violation of that commitment,
12:02
Speaker 1: and thus that becomes a basis for retaliation, and so
12:06
Speaker 1: it's hard to have that crystal ball to see whether
12:10
Speaker 1: this is going to create a spiraling effective retaliation or
12:13
Speaker 1: count of retaliation, or if instead we could get to
12:17
Speaker 1: some sort of equilibrium or these rates actually come down
12:20
Speaker 1: as a result of agreements between the US and trading partners.
12:23
Speaker 2: Under the WTO. Is there a mechanism if one member
12:28
Speaker 2: violates the trade.
12:29
Speaker 1: Laws, Yes, and that would be the complaint of the
12:34
Speaker 1: US trading partners. Here is that you could make a
12:37
Speaker 1: good argument that the WTO's entire purpose was to help
12:42
Speaker 1: countries define when another country is breaching it's WTO obligations
12:47
Speaker 1: through the dispute settlement process. There have been a lot
12:52
Speaker 1: of complaints from Democrats and Republicans alike about the WTO
12:56
Speaker 1: dispute settlement process, but I think the reality is that
13:00
Speaker 1: foreign countries, you know, view this as the United States,
13:04
Speaker 1: you know, walking away from that dispute settlement process and
13:07
Speaker 1: going completely to a sort of bilateral negotiating process for
13:12
Speaker 1: resolving trade disputes rather than multilaterally through the WTO.
13:17
Speaker 2: We'll see what tomorrow brings. Thanks so much, Dave. That's
13:20
Speaker 2: Dave Townshend of Dorsey and Whitney coming up next the
13:24
Speaker 2: Supreme Court, Sir, the Supreme Court sides with an agency unanimously.
13:29
Speaker 2: This is Bloomberg. More than one point six million middle
13:34
Speaker 2: and high school students use e cigarettes, and about ninety
13:39
Speaker 2: percent of them use flavored vapes. That's according to the CDC.
13:43
Speaker 2: So the FDA has cracked down on sweet flavored vaping,
13:47
Speaker 2: rejecting applications for more than a million nicotine products formulated
13:52
Speaker 2: to taste like fruit, dessert, or candy, often with names
13:56
Speaker 2: to attract kids. And this week the Supreme Court backed
14:00
Speaker 2: up the FDA's authority, throwing out an appeals court decision
14:05
Speaker 2: and ruling unanimously that the FDA's rejection of an application
14:10
Speaker 2: to sell vaping liquids in flavors like Jimmy the Juice
14:13
Speaker 2: in Peachey's Strawberry and Suicide Bunny Mother's Milk and Cookies
14:19
Speaker 2: did not violate federal law. As Justice Elena Kagan said
14:23
Speaker 2: during the oral arguments, the FDA's position has been clear.
14:28
Speaker 4: Do you know that FDA thinks that flavors? I mean,
14:31
Speaker 4: FDA has been completely upfront about this, and I think
14:35
Speaker 4: that the point you know that flavors you give people
14:38
Speaker 4: blueberry vapes. The difficulty with that and FDA, I think
14:44
Speaker 4: has tried to document this is that blueberry vapes are
14:48
Speaker 4: very appealing to sixteen year olds, not to forty year olds.
14:51
Speaker 2: Joining me is healthcare attorney Harry Nelson, a partner at
14:54
Speaker 2: leech Tishman Nelson Hardiman. A unanimous decision in a case
14:59
Speaker 2: in a federal agency. Surprise, surprise.
15:04
Speaker 5: I was surprised that the Supreme Court came out unanimous
15:07
Speaker 5: on this. You know, when it comes to administrative procedure,
15:11
Speaker 5: which has been so controversial lately, it's surprising to see
15:14
Speaker 5: the Court so unified. So it was a pleasant surprise
15:17
Speaker 5: to see them on the same page about supporting the
15:20
Speaker 5: FDA here.
15:21
Speaker 2: So let's go back a bit. The FDA rejected the
15:24
Speaker 2: applications to market the candy and dessert flavored vapes. What
15:29
Speaker 2: was the reason for the rejection.
15:31
Speaker 5: The FDA essentially said that there was no public benefit
15:36
Speaker 5: and that flavored products raised concerns about protecting the public health.
15:40
Speaker 5: That the product flavors and the marketing names, which were
15:45
Speaker 5: you know, very hip names, were specifically intended to appeal
15:49
Speaker 5: to teens and would get more kids to be using
15:53
Speaker 5: the cigarette so that was the justification for denying these
15:56
Speaker 5: applications for approval.
15:58
Speaker 2: So the justice this is undid this ruling from the
16:01
Speaker 2: Fifth Circuit Court of Appeals, which was an outlier among
16:05
Speaker 2: the circuits, and it accused the agency of a regulatory switcheroo.
16:10
Speaker 2: Tell us what the Fifth Circuit said.
16:13
Speaker 5: Yeah, So the twenty twenty three decisions from the Fifth
16:16
Speaker 5: Circuit was, you know, along the lines of the kind
16:19
Speaker 5: of conservative critique of federal agencies that we've heard in
16:23
Speaker 5: recent years, that they had essentially exceeded their authority under
16:27
Speaker 5: the Administrative Procedure Act, which is a federal law that
16:30
Speaker 5: gives federal agencies the right to make decisions, and they
16:33
Speaker 5: accused them of moving the goalposts by changing the evidentiary
16:37
Speaker 5: standard of how the decision on authorization of these products
16:41
Speaker 5: was made, you know, for example, adding a requirement to
16:44
Speaker 5: get studies with randomized controlled trials, even though that had
16:48
Speaker 5: not been clearly communicated as something that the day was
16:50
Speaker 5: going to expect a few years earlier. They also criticized
16:53
Speaker 5: them for inconsistency and lack of transparency in the decision
16:57
Speaker 5: making process. And frankly, it was not surprising to see
17:00
Speaker 5: the Fifth Circuit, which has been such a kind of
17:04
Speaker 5: you know, tip of the spear in the kind of
17:07
Speaker 5: activist conservative arguments against federal agency rulemaking, to see them
17:12
Speaker 5: sort of standing out for the other circuits and taking
17:15
Speaker 5: the FDA to task and siding with the industry. So
17:18
Speaker 5: that was the sort of underlying basis of their decision
17:22
Speaker 5: last term.
17:22
Speaker 2: They were the most reversed circuit, taking that position from
17:26
Speaker 2: the Ninth Circuit, which held it for a long time.
17:29
Speaker 2: So Justice Samuel Alito wrote the opinion, tell us what
17:33
Speaker 2: he said about the FDA's rejection of the applications.
17:38
Speaker 5: The decision, again, which was unanimous, was that, you know,
17:41
Speaker 5: the FDA we're talking now about a decision during the
17:43
Speaker 5: Biden administration, did not violate federal law and that there
17:47
Speaker 5: was not a basis to view their rejection of the
17:50
Speaker 5: applications from these two cigarette companies as arbitrary. And essentially,
17:55
Speaker 5: the decision was really that the FDA was entitled to
17:59
Speaker 5: evaluate the evidence that evaluated that there was no evidence
18:03
Speaker 5: that the FDA had made any kind of unreasonable or
18:07
Speaker 5: rational decision.
18:09
Speaker 2: The justices are remanding the case or sending a case
18:12
Speaker 2: back to the Fifth Circuit to consider one aspect of
18:16
Speaker 2: the case involving the company's marketing plans.
18:20
Speaker 5: The point of the remand was to allow the Fifth
18:23
Speaker 5: Circuit to go back and reconsider its decision, taking the
18:28
Speaker 5: guidance that the FAA did not overreach administratively and that
18:32
Speaker 5: decision was appropriate. But ultimately, as is always the case,
18:37
Speaker 5: the Supreme Court is remanding down so that the decision
18:40
Speaker 5: can be made at the appellate court level and rather
18:43
Speaker 5: than actually taking the active decision itself here, So the
18:47
Speaker 5: Fifth circuits hands are tied and they're bound by the
18:51
Speaker 5: Supreme Court's guidance.
18:52
Speaker 3: Here.
18:52
Speaker 5: The real question to me is what's going to happen
18:54
Speaker 5: at the FEA itself and whether the FDA is going
18:57
Speaker 5: to make any change here. There's been a lot of
19:01
Speaker 5: questions asked about President Trump's danced when he promised in
19:05
Speaker 5: the campaign to save vaping, whether that extends to these
19:08
Speaker 5: kind of you know, teen focused e cigarettes, And also
19:12
Speaker 5: because there's been changes at the FDA that have shifted
19:15
Speaker 5: the top regulator on tobacco out of the pictures. So
19:18
Speaker 5: there's a lot of questions looking to happen at the FVA.
19:20
Speaker 5: But for right now, essentially, the Supreme Court ordered the
19:23
Speaker 5: circuit to consider if there's any basis sports decision. In
19:27
Speaker 5: spite of this ruling, and in.
19:29
Speaker 2: The opinion, Alito highlighted the potential dangers of flavored e cigarettes.
19:38
Speaker 2: He wrote, the kaleidoscope of flavor options adds to the
19:42
Speaker 2: allure of e cigarettes and has thus contributed to the
19:46
Speaker 2: booming demand for such products among young Americans.
19:50
Speaker 5: Yeah. Absolutely, I mean, you know, it's impossible to look
19:53
Speaker 5: at these products and the names and the flavors and
19:56
Speaker 5: to think that these are not focused on kids. There
20:00
Speaker 5: were products like Jimmy the Juice Man, and peachy strawberry
20:03
Speaker 5: was an example of a flavor. Ano there's a flavor.
20:07
Speaker 5: One of the companies, Triton has suicide Bunnies, mother Milk,
20:10
Speaker 5: and cookies. These names are you know, very clearly oriented
20:14
Speaker 5: towards youth culture and in flavors to make the products
20:19
Speaker 5: as attractive as possible to kids. You know, we have
20:23
Speaker 5: a very established mature market of adult cigarette that don't
20:27
Speaker 5: have you know, branding like these things don't have flavors
20:30
Speaker 5: with you know, candy and fruit and so on. And
20:33
Speaker 5: it's very unmistakable that this is an effort to grow
20:37
Speaker 5: a new audience, a new consumer base, and presumably it's
20:41
Speaker 5: a very young one.
20:43
Speaker 2: Is there an epidemic of.
20:45
Speaker 1: Vaping, No question.
20:47
Speaker 5: I think that has really been one of the big
20:49
Speaker 5: issues that's driven the FDA response. There's clearly among kids,
20:53
Speaker 5: among teams, an epidemic in vaping. It may have you know,
20:57
Speaker 5: peaked or certainly reached epidemic levels a decade ago, and
21:01
Speaker 5: there has been some decline from maybe the twenty ten
21:06
Speaker 5: but right before the pandemic, I believe the numbers were
21:09
Speaker 5: reported by the US Surgeon General were like over five
21:12
Speaker 5: million high schoolers and middle schoolers using e cigarettes. We've
21:16
Speaker 5: famously had Jewel, the brand that was blamed for that.
21:20
Speaker 5: But there has been a decline in reported numbers, but
21:23
Speaker 5: we still are seeing something like ten percent of high
21:25
Speaker 5: school students using e cigarettes. That might be only half
21:29
Speaker 5: of the number, or you know, less than half from
21:31
Speaker 5: five or ten years ago, but that's still a troubling number.
21:35
Speaker 5: And it's clear that flavored e cigarettes remain incredibly popular
21:39
Speaker 5: and incredibly polarizing.
21:41
Speaker 2: Those on the other side of this equation have said
21:45
Speaker 2: that the agency, the FDA, hasn't accepted evidence that the
21:51
Speaker 2: e cigarettes are not as harmful as once believed, and
21:55
Speaker 2: that studies show they can help people quit smoking.
21:59
Speaker 5: That's the argument advanced by these cigarette makers that on
22:02
Speaker 5: a harm reduction level, that these products are safer than
22:07
Speaker 5: smoking actual cigarettes, that they're much less toxic, and that
22:10
Speaker 5: also that these are a tool because they are a
22:14
Speaker 5: safer alternative, they're a tool that can lead people to
22:17
Speaker 5: quit smoking. And you know, I'm sure that there is
22:20
Speaker 5: some evidence to support that view. This is these are
22:23
Speaker 5: complicated topics where on the one hand, we have we're
22:26
Speaker 5: facing an immediate public health problem of you know, the
22:30
Speaker 5: net effects of people using these products and cancer and
22:33
Speaker 5: all the other negative health effects. But at the same time,
22:36
Speaker 5: you know, it may be true that this particular product,
22:40
Speaker 5: among all the options of things that can be smoked,
22:43
Speaker 5: is one that is less harmful in its actual use
22:46
Speaker 5: and a pathway for people who want to quit. But
22:50
Speaker 5: it's almost impossible to resolve, you know, the net public
22:54
Speaker 5: health gain of any one product because there's so many
22:56
Speaker 5: choices in the market, and we're never going to get
22:59
Speaker 5: to a place of zeros, you know, smoking. We've made
23:02
Speaker 5: progress in the last few years, but it's really tough
23:04
Speaker 5: to talk about or make a compelling case in my opinion,
23:08
Speaker 5: that these products are ultimately positive for public health because
23:12
Speaker 5: there's more dangerous products out there.
23:14
Speaker 2: And the FDA, what's the line they draw because they
23:16
Speaker 2: have approved some tobacco flavored vapes and allowed the first
23:21
Speaker 2: mental flavored e cigarettes for adult smokers. I mean, what's
23:25
Speaker 2: the line that they're drawing.
23:27
Speaker 5: The standard that they've come to is, you know, net
23:30
Speaker 5: public benefit, and the question is whether a particular product
23:34
Speaker 5: is appropriate for protecting the public health. And essentially it's
23:37
Speaker 5: a balancing act that the FDA is engaging in of
23:40
Speaker 5: whether the product, you know, does it help adult smokers
23:44
Speaker 5: switch from using traditional combustible cigarettes with all the additional
23:49
Speaker 5: problems that those bring, or you know, does it entice
23:53
Speaker 5: use smokers, which isn't And that's the challenge is it's
23:56
Speaker 5: not either or if you can extent these products can
23:58
Speaker 5: make the case that they are giving adult smokers a
24:02
Speaker 5: healthier option and potentially a pathway to stop smoking, that's
24:07
Speaker 5: a positive public benefit. And on the other side that
24:09
Speaker 5: I seeweight against whether this is encouraging kids or non
24:13
Speaker 5: smokers to start smoking. So the FDA is balancing and
24:16
Speaker 5: looking for a net you know, decision about whether the
24:20
Speaker 5: benefit or the threat is worse.
24:23
Speaker 2: How important. Is this case? Is it a significant point
24:27
Speaker 2: in the FDA's battle with the vaping industry.
24:31
Speaker 5: I think this case is significant in that, you know,
24:34
Speaker 5: we've seen in the last year with the sort of
24:37
Speaker 5: you know, the remaking of the Chevron deference standard, we've
24:40
Speaker 5: seen the Supreme Court essentially move to a position that
24:44
Speaker 5: you know, that weakens the power of federal agencies to regulate.
24:48
Speaker 5: But here was a case where the Supreme Court is
24:50
Speaker 5: pushing back and clearly defending the FDA. So I do
24:55
Speaker 5: think this case is significant in kind of signaling that
24:59
Speaker 5: we may have a high water mark of how much
25:02
Speaker 5: Supreme Court is, you know, this Court is prepared to
25:05
Speaker 5: reign in federal agencies on the particular issue of e cigarette.
25:10
Speaker 5: You know, given all the changes going on at the FDA,
25:13
Speaker 5: it's it remains to be seen whether this decision will
25:15
Speaker 5: have any relevance because the FDA could on the ground
25:19
Speaker 5: make you know, new actors at the FDA could certainly
25:22
Speaker 5: come up with a more liberal decision, you know, if
25:25
Speaker 5: that is in fact the trend or the view of
25:28
Speaker 5: the current leadership. So I think it's a significant decision
25:30
Speaker 5: in sort of measuring where the Supreme Court is on
25:33
Speaker 5: federal agencies generally, but not necessarily the end of the
25:37
Speaker 5: story with regard to you know, kids and e cigarette flavors.
25:41
Speaker 2: So, as you mentioned, President Trump campaigned on saving vaping,
25:47
Speaker 2: and the executive director of the trade association that represents
25:51
Speaker 2: e cigarette companies after this decision, called on Trump to
25:54
Speaker 2: fulfill his campaign promise. Did Trump promise to say flavored
25:59
Speaker 2: vase or just vaping?
26:02
Speaker 5: This is a huge question. It's you know, by the way,
26:05
Speaker 5: in the first Trump administration, we saw that they were
26:07
Speaker 5: supportive of efforts to reign in flavored e cigarettes and kids.
26:11
Speaker 5: My sense is that what President Trump on the stump
26:14
Speaker 5: campaigning was when he talked about saving vaping was really
26:18
Speaker 5: to reign in public regulation at the state and local
26:22
Speaker 5: level of adults ability to smoke in public and outdoor venues.
26:27
Speaker 5: And we've constrained more and more as a society whether
26:31
Speaker 5: people can smoke in restaurants and cafes, in like public venues,
26:35
Speaker 5: in parks and concert venues. And I think I think
26:38
Speaker 5: President Trump was standing up for and saying, you know,
26:42
Speaker 5: I'm not going to let them take this away from
26:44
Speaker 5: you further and eliminate smoking from our society entirely. But
26:48
Speaker 5: I don't think he was in any way trying to
26:51
Speaker 5: take a position on this. And I think it's a
26:53
Speaker 5: really interesting issue because while we do see that there
26:56
Speaker 5: is this kind of libertarian you know, let people do
26:59
Speaker 5: what they want to do standard in the Trump administration
27:03
Speaker 5: to some extent, we also see like a push for
27:05
Speaker 5: you know, make America healthy again. And I don't personally
27:08
Speaker 5: believe that President Trump is going to put energy into
27:13
Speaker 5: resuscitating you know, the flavorty cigarette companies, you know, the
27:17
Speaker 5: promotions that are edgy and pushing towards a younger market.
27:20
Speaker 5: I just don't think that's where he was. To the
27:22
Speaker 5: extent anyone can read Bill tee leaves on what he's saying,
27:25
Speaker 5: I just don't think that's what he meant to say.
27:27
Speaker 2: And have there been changes at the FDA of people
27:31
Speaker 2: who work in this area.
27:33
Speaker 5: It's a challenge right now to figure out what's going on.
27:36
Speaker 5: We know that, like as I mentioned, Brian King, the
27:39
Speaker 5: previous head of tobacco regulation at the FDA, he has gone. Obviously,
27:43
Speaker 5: we're still learning what you know the role of RFK,
27:47
Speaker 5: Robert F. Kennedy is going to be. And we're seeing
27:50
Speaker 5: a massive you know, restructuring and pulling out of people
27:54
Speaker 5: in not only areas like vaccines and but also in tobacco.
27:59
Speaker 5: So I do expect that there's going to be a
28:01
Speaker 5: new team and a new direction on this, but it's
28:04
Speaker 5: still too early to tell exactly who is going to
28:07
Speaker 5: be leading it and exactly what the charge is going
28:10
Speaker 5: to be.
28:11
Speaker 2: Last month, the New York State Attorney General filed suit
28:14
Speaker 2: against thirteen manufacturers, distributors, and retailers of vape devices, accusing
28:21
Speaker 2: them of targeting young people with a highly addictive product.
28:24
Speaker 2: So we might see more state enforcement.
28:27
Speaker 5: Yeah, absolutely, that's it's going to you know, you get
28:29
Speaker 5: into a really interesting area of state federal where clearly
28:32
Speaker 5: states like New York and California are going to take
28:36
Speaker 5: a much more aggressive stance and take the lead on,
28:39
Speaker 5: you know, filling what they perceive as a gap as
28:41
Speaker 5: we see some more you know, liberal policies on a
28:45
Speaker 5: whole number of issues around tobacco. So I think it
28:48
Speaker 5: would not be surprising to see more states doing things
28:51
Speaker 5: like flavor bands and more you know smoke free air
28:54
Speaker 5: laws and more age restrictions. And it's clear that you know,
28:58
Speaker 5: those states that are at odds with the federal approach.
29:02
Speaker 5: Are going to step into the void here and we
29:05
Speaker 5: should expect to see that for the next few years.
29:08
Speaker 2: Coming up next on the Bloomberg Law Show is Robert F.
29:12
Speaker 2: Kennedy Junior confirming the worst fears about his running the
29:16
Speaker 2: Department of Health and Human Services. I'm June Grots. When
29:20
Speaker 2: you're listening to Bloomberg, I've been talking to healthcare attorney
29:23
Speaker 2: Harry Nelson, a partner at leech Tishman Nelson Hardiman. I
29:28
Speaker 2: want to turn to RFK Junior and his leadership of
29:32
Speaker 2: the Department of Health and Human Services. As many as
29:36
Speaker 2: ten thousand notices were sent to scientists, senior leaders, doctors, inspectors,
29:41
Speaker 2: and others in his massive restructuring of the agency. He's
29:46
Speaker 2: been a vaccine skeptic and subscribed to various fringe theories,
29:52
Speaker 2: and his position on vaccines was a top topic during
29:56
Speaker 2: his confirmation hearings. Here's an exchange with Democratic Senator Ron
30:01
Speaker 2: Wyden of Oregon.
30:04
Speaker 1: I support the measles vaccine. I support the pollio vaccine.
30:07
Speaker 1: I will do nothing as AHH as secretary that makes
30:12
Speaker 1: it difficult or discourages people from taking anybody who believes
30:16
Speaker 1: that on a look at the measles book, you wrote
30:19
Speaker 1: saying parents have been misled into believing that measles is
30:22
Speaker 1: the deadly disease. That's not true.
30:25
Speaker 2: But he's pushed out the top vaccine official at the FDA,
30:30
Speaker 2: he's announced plans to investigate already debunk theories between vaccines
30:37
Speaker 2: and autism, and he's still promoting alternatives to vaccines.
30:42
Speaker 5: Well, I mean, we've seen like a complete clearing house
30:45
Speaker 5: of all the vaccine leadership, you know, personnel, and multiple
30:49
Speaker 5: parts of the Department of Health and Human Services are
30:53
Speaker 5: being cleared out, so we're seeing that. Yeah, he's moving
30:56
Speaker 5: very quickly. By the way, it's going to be very
30:58
Speaker 5: interesting to watch him on to backover because he was
31:01
Speaker 5: seen during his confirmation hearing actually using a nicotine pouch.
31:05
Speaker 5: So there's a lot of people kind of questioning what
31:07
Speaker 5: his precise position is going to be on this issue.
31:09
Speaker 5: But clearly we've already seen from the moves that are
31:12
Speaker 5: being made aggressively to transfer and put on administrative leave
31:18
Speaker 5: people in leadership roles in vaccine strategy, that there's going
31:21
Speaker 5: to be major major changes coming in vaccine policy and
31:25
Speaker 5: a much more neutral position coming from the federal government.
31:30
Speaker 2: He did make promises to some senators to get confirmed.
31:35
Speaker 2: Of course, we know how much promise is made during
31:37
Speaker 2: the confirmation process. And what caught my eye was that
31:41
Speaker 2: he forced out the top vaccine official, the man behind
31:46
Speaker 2: the wrapping up of getting the COVID vaccine out.
31:49
Speaker 5: Forcing these leadership changes and presumably putting into place people
31:53
Speaker 5: who are much closer to his own position as a
31:56
Speaker 5: vaccine skeptic is going to be a huge difference. We've
31:59
Speaker 5: also seen quickly, you know that he's taking seriously a
32:02
Speaker 5: proposal to split the Center for Disease Control and Prevent
32:06
Speaker 5: It into separate agencies in terms of data collection and
32:10
Speaker 5: policy recommendations that could really change our vaccine response in
32:15
Speaker 5: vaccine policy. And you know, we've seen removal of testing
32:19
Speaker 5: requirements for in the head Start program, and so it's
32:22
Speaker 5: likely that a lot of the vaccine mandates at the
32:24
Speaker 5: federal level are going to be either weekend or removed.
32:27
Speaker 5: And just as we were talking about a minute ago,
32:28
Speaker 5: it's very likely that in many states those things will
32:31
Speaker 5: pop back up at state level requirements.
32:34
Speaker 2: As far as the measles outbreak, which has now spread
32:37
Speaker 2: to Kansas and Ohio after sickening about four hundred in
32:41
Speaker 2: Texas and New Mexico. He downplayed the importance of that
32:46
Speaker 2: vaccine in a Fox interview last month. He said, there
32:50
Speaker 2: are adverse events from the vaccine. It does cause deests
32:53
Speaker 2: every year, it causes all the illnesses that measles itself causes.
32:59
Speaker 5: Yeah. Yeah, you know, if we thought that a measles
33:02
Speaker 5: outbreak was going to, you know, cause a reversal on
33:07
Speaker 5: all the vaccine skepticism, that certainly wasn't enough, having more hospitalizations,
33:13
Speaker 5: having more burden placed on public health with these efforts,
33:18
Speaker 5: you know, it does not appear that it's going to
33:19
Speaker 5: change the tenor on vaccine outbreaks. We'll see if if
33:23
Speaker 5: things get much worse, if we if it gets really severe,
33:27
Speaker 5: if you know, the public perception will change and the
33:30
Speaker 5: public mogle change and whether we'll see a shift. But
33:33
Speaker 5: it does not seem that at least the initial measles
33:36
Speaker 5: outbreaks that we're seeing our driving any change of heart
33:40
Speaker 5: on the part of r K or you know, on
33:42
Speaker 5: a broader level, Harry.
33:44
Speaker 2: Is there any other area that he's you know, doing
33:47
Speaker 2: things in that concerns you.
33:50
Speaker 5: I mean, there's a lot of things that we're watching,
33:52
Speaker 5: you know, the announcements of cut in research across, you know,
33:57
Speaker 5: except with regard to chronic disease issues, and really narrowing
34:01
Speaker 5: the focus of government funded research is really concerning for
34:06
Speaker 5: the future of you know, drug development and just sort
34:10
Speaker 5: of health advances. I do think that RFK has very
34:14
Speaker 5: particular focuses and this will be a good time probably
34:17
Speaker 5: for investment in chronic disease research, but not for anything else.
34:22
Speaker 5: And we have a whole range of health problems, and
34:24
Speaker 5: of course, like we're watching closely on things like is
34:27
Speaker 5: there going to be more politicization at the FDA on
34:30
Speaker 5: a broader range of topics, not just on on ese cigarettes,
34:33
Speaker 5: but on reproductive health and other kind of controversial medications,
34:37
Speaker 5: on contraception. My hope is that you know that the
34:40
Speaker 5: FDA that as much as possible, will see you know,
34:43
Speaker 5: clinical research and government approvals of new therapies, new drugs,
34:48
Speaker 5: new devices and so on, you know, continue and not
34:51
Speaker 5: have a disruption to our public health infrastructure. But I
34:55
Speaker 5: am certainly worried that it could be a little chaotic
34:58
Speaker 5: in the months, in the next couple of years to come.
35:02
Speaker 2: Thanks Harry. That's Harry Nelson of Leech Tishman Nelson Hardiman,
35:06
Speaker 2: and that's it for this edition of The Bloomberg Law Show.
35:09
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35:11
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35:16
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35:28
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