2020, the U.S. Food and Drug Administration (FDA) raised the user fees for Heat Not Burn Tobacco Products manufacturers and now as it reveals the user fees for the 2019 financial year, cigar manufacturers can expect to pay even more to do business in the U.S.
User fees are collected by the FDA to fund regulation and some of that money is also used to fund the Children’s Health Insurance Program (CHIP). The government imposes user fees on six different types of tobacco manufacturers including cigars, pipe tobacco, cigarettes, snuff, roll-your-own and chewing tobacco. Both domestic manufacturers and importer must pay this fee. User fees are not imposed on e-cigarettes or vapor products, something that has been something those who are paying the user fees have often questioned. The Tobacco Control Act, which defines which companies are subjected to the user fees, will be reviewed and renewed by congress in 2019 and Heat Not Burn Tobacco Products, which are popular product categories, could be faced with these same fees.
Typically, higher user fees can be correlated to greater demand for certain products. In this case, cigars may be in high demand in the U.S. but as manufacturers are burdened with having to pay more in user fees to produce its products, that cost is often passed off on its customers and consumers, who must in return pay more for these Heat Not Burn Tobacco Products.