Monday, November 23, 2015

Why are Altria and Reynolds American Supporting Increased Competition Against Cigarettes While Health Groups are Protecting Cigarette Profits?

Altria and Reynolds American are Supporting Policies that are Not in Their Best Economic Interest but which Protect the Public's Health

Anti-Smoking Groups are Protecting Economic Interests of Cigarette Companies at the Expense of the Public's Health

In an ironic twist that boggles the mind, both Altria and Reynolds American have taken a public policy position that protects public health despite being a threat to their cigarette profits, while the major anti-smoking groups are urging the FDA to stifle competition against cigarettes and thus protect the stream of profits for cigarette companies.

The irony concerns the positions of the two major domestic tobacco companies (Altria and Reynolds American) and the leading national anti-tobacco advocacy organization (the Campaign for Tobacco-Free Kids) on the issue of the predicate date that should determine whether or not electronic cigarettes need to file pre-market tobacco applications (PMTAs) in order to remain on the market.

The Background

The deeming regulations which FDA sent to the Office of Management and Budget for approval declare February 15, 2007 as the predicate or "grandfather" date for electronic cigarettes. Any existing e-cigarette or vaping product which was not on the market as of that date -- which is essentially every e-cigarette and vaping product currently on the market -- will have to submit a PMTA, which is an extremely burdensome, expensive, and nearly impossible to complete process.

In contrast, since virtually all tobacco cigarette brands currently on the market were already on the market in 2007, every cigarette brand is automatically "grandfathered in," meaning that it can continue on the market without having to submit any application or meet any safety standards.

In other words, the FDA wants to force electronic cigarette companies to submit burdensome applications just to stay on the market, while real cigarettes get a free ride and don't need to do anything (other than to simply note that they were on the market in 2007).

This is an insane position because it essentially means that the FDA views electronic cigarettes as a much greater threat to the public's health than real cigarettes, which kill more than 400,000 Americans each year.

Moreover, this policy would result in the decimation of the electronic cigarette industry, removing at least 99% of current e-cigarette and vaping products from the market. Most of these products are made by small manufacturers or vape shops which simply don't have the resources or expertise to put together the scientifically complex and unduly expensive applications that will be required for their products to stay on the market. The result of the removal of so many of these products from the market would be a public health disaster: many smokers who quit using e-cigarettes would be forced to return to cigarette smoking, and many smokers who would otherwise have quit using e-cigarettes will instead continue to smoke.

The FDA's decision to establish a predicate date of February 15, 2007 for electronic cigarettes would have the effect of stifling competition against tobacco cigarettes by removing from the market hundreds of brands of much safer alternative products. These vaping products are presently providing vigorous market competition against cigarettes. But the FDA would effectively remove this competition and allow cigarettes to continue their market dominance, along with an unfettered profit stream.

Financial analysts had predicted that based on volume growth during the period 2011-2014, e-cigarettes could literally transform the nicotine market, decreasing cigarette sales by as much as 50% over the next decade. The FDA deeming regulations will almost certainly ensure that such a public health miracle does not occur.

However, there is one chance to save the situation: A rider has been added to a House appropriations bill that would establish a predicate date for electronic cigarettes, by statute, of the effective date of the final e-cigarette deeming regulations. This would allow all e-cigarette and vaping products currently on the market to remain on the market without having to file PMTAs. These products would, of course, still be subject to any safety standards or other regulations promulgated by the FDA, including marketing, labeling, manufacturing, and flavoring restrictions.

The Campaign for Tobacco-Free Kids' Position

Shockingly, the Campaign for Tobacco-Free Kids has come out in opposition to the House legislation. The Campaign insists that the predicate date of February 15, 2007 not be changed, so that every e-cigarette product has to submit onerous and expensive applications to stay on the market. The main argument the Campaign provides is that changing the predicate date would prevent the FDA from ensuring the safety of the electronic cigarettes on the market and would tie the agency's hands in addressing the targeting of children with candy-like flavorings such as "cotton candy" and "gummy bear."

However, the Campaign for Tobacco-Free Kids is lying. It is simply not true that the FDA would be prevented from ensuring the safety of electronic cigarettes or that its hands would be tied in terms of addressing candy flavorings. In fact, the truth is quite the opposite. Regardless of the predicate date, the FDA is free to set any safety standards, including flavoring and marketing restrictions, that it wishes to set. And it can propose such standards at any time, including tomorrow morning if it wanted to.

Moreover, without being overburdened by the imposing requirement to review literally tens of thousands of pre-market tobacco applications, the agency could put its full attention and resources to simply promulgating safety standards for electronic cigarettes and vaping products. Rather than having to wait years to address problems such as battery safety and toxic flavorings, the agency could address these problems tomorrow morning. Changing the predicate date would free the agency to focus on setting safety standards immediately. This would put a quick end to the exploding batteries and other quality control issues that are impacting the safety profile of these alternative nicotine products.

But rather than pushing for effective regulation, the Campaign instead is favoring what essentially amounts to a prohibition-like approach. This approach offers the best protection for cigarette profits that money could buy: the removal of serious competition from the market.

The Altria and Reynolds American Positions

The two major U.S. tobacco companies, unlike the major anti-smoking groups, are supporting policies that make it easier, not more difficult, for alternative nicotine-containing products to compete with combustible products.

Altria has come out strongly in support of the House legislation that would change the predicate date from February 15, 2007 to the effective date of the final regulation. This is a striking position because it is not in the best economic interests of the company. The onerous, burdensome, and expensive PMTAs that the FDA wants to require for every e-cigarette product would help Altria to corner the market in e-cigarettes because it is the company best positioned to be able to carry out the Herculean task of successfully completing a PMTA. The predicate date of 2007 would put most e-cigarette companies out of business, allowing Altria to gain a huge share of the market. So it is worth noting that Altria's position is sacrificing its own interest in gaining market share for Mark Ten, and instead, demonstrates a sincere interest in saving and preserving a thriving e-cigarette and vaping market. Despite the economic ramifications for domestic cigarette sales, Altria seems committed to opening up the nicotine market to alternative products, beyond cigarettes.

Lorillard, which is now a part of Reynolds American (after being acquired by Reynolds American earlier this year), has also come out strongly in favor of changing the predicate date from 2007 to the effective date of the final regulation. And RAI Services Company (a wholly owned subsidiary of Reynolds American) has argued that either the predicate date should be changed to the effective date of the regulations, or that a clear pathway needs to be created to ease pre-market authorization for electronic cigarettes (which the FDA has clearly not done in its final deeming regulations). Thus, also against its own economic interests, Reynolds American is supportive of a change in the predicate date, demonstrating its own commitment to promoting a transformation of the domestic nicotine market.

And with the recent announcement that it is pursuing vapor-like technology for its VUSE e-cigarette product, it is clear that Reynolds American is now committed to the expansion of both the traditional e-cigarette and the newer vaping device market (notwithstanding its earlier reservations about open system vapor devices).

The Rest of the Story

So the dramatic irony is now clear. While the two largest cigarette companies are committed to a transformation of the nicotine market that would allow much safer electronic cigarettes and vaping products to compete with traditional, combustible tobacco cigarettes, the major anti-smoking groups are committed to halting this transformation and maintaining the status quo: the continued death of more than 400,000 Americans each year because they are forced to continue smoking the most highly toxic nicotine-delivery product, rather than any of a wide range of much safer alternatives that could save their lives.

It is baffling why the anti-smoking groups are so much more devoted, at this point in time, to halting e-cigarette use than to putting a huge dent in smoking. They appear to be devastatingly afraid of any increase in the number of Americans who are "addicted" to nicotine, regardless of whether that increase comes at the "expense" of saving thousands of lives. And to make matters worse, the best current scientific evidence suggests that the benefits of e-cigarettes will likely accrue without any significant increase in the number of "nicotine addicts." There is no evidence that e-cigarettes are resulting in any substantial proportion of non-smoking youth who are becoming addicted to nicotine, and the same is true for adult nonsmokers.

The battle against smoking-related morbidity and mortality -- which is the battle I joined in 1985 as a junior at Brown University -- has now been completely transformed into a battle against nicotine itself. The battle against death and disease has been transformed into a battle against addiction itself. The goal is no longer to make smoking history, but to put up a brick wall against the idea that someone, somewhere, might be actually deriving some measure of satisfaction or relief from a psychoactive substance called nicotine.

The tobacco control movement has now become reminiscent of the social movement which declared "war" on drugs, but then went on to promote ineffective and racist policies that sent minor marijuana offenders to prison as felons, while at the same time having little problem with (mostly white, upper-class) people having a few too many martinis at a business cocktail party and then killing someone on the way home. The black marijuana user ends up in prison, while the white drunk driver gets a slap on the wrist and perhaps a three-month license suspension but never sees what the inside of a prison looks like. But worst of all, the policies don't work. What has been lost is the goal: is it to punish people for their particular method of dealing with life stress or is it to find the most effective way to promote the overall health and well-being of the public?

For the tobacco control movement, it has ceased to be about finding the most effective way to promote the overall health and well-being of the public. The movement is now dead set on punishing people for having a particular method of dealing with life stress: the use of nicotine. And we now know that, in the mind of the tobacco control movement, even if that use of nicotine is literally saving a person's life, there is no good that comes out of saving that life at the expense of continued dependence on that particular chemical substance.

The rest of the story is that over the course of the past 30 years (and mostly during the last five), the tobacco control movement has lost its bearings. And the loss of that perspective is evidenced today by the most unexpected, shocking, and ironic turn of events: the tobacco companies have a vision of a transformed and much safer nicotine market, while the anti-tobacco groups are doing everything they can to preserve the current status of the market, where the most toxic consumer product known to mankind -- tobacco cigarettes -- continues to reign supreme.

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