Investing.com -- Shares of Altria Group (NYSE:MO) dropped 4.5% following a U.S. Supreme Court decision largely in favor of the Food and Drug Administration’s rejection of applications for flavored vaping products. The ruling supports actions taken during Joe Biden’s presidency, as the Supreme Court unanimously dismissed claims that the FDA violated the law when denying applications from companies looking to sell flavored vaping liquids.
The high court’s decision reaffirms the FDA’s authority to regulate tobacco products that could be harmful to public health. Since a 2009 law requiring FDA approval for new tobacco products, the agency has denied millions of applications, many of which were for flavored vapes. The impact of the ruling may be somewhat limited considering President Donald Trump’s campaign promise to "save vaping," although his administration has not yet detailed its approach to the FDA’s regulatory oversight.
The Supreme Court’s ruling sends the case back to the 5th U.S. Circuit Court of Appeals to reconsider one aspect: the FDA’s refusal to review the companies’ marketing plans. Justice Samuel Alito, writing for the court, directed the 5th Circuit to determine whether the FDA’s change in position was a "harmless error."
The case involves Wages and White Lion Investments LLC, doing business as Triton Distribution, and Vapetasia LLC, which argued that the FDA did not provide fair notice of the changed requirements for new flavor authorizations. Under the Tobacco Control Act of 2009, companies must demonstrate that products introduced after February 15, 2007, are "appropriate for the protection of the public health."
The decline in Altria’s stock reflects broader market concerns as the industry faces ongoing regulatory challenges. Other tobacco companies, including Philip Morris (NYSE:PM) and British American Tobacco (NYSE:BTI), also saw their shares fall by 2% and 2.6%, respectively, signaling a market response to the Supreme Court’s decision and its implications for the tobacco and vaping industry.
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