Properly interpreting what is being proposed
It is possible to envision genuinely beneficial regulation of e-cigarettes by the federal government or other authorities. Indeed, FDA’s proposed deeming of e-cigarettes is widely interpreted among officials and members of the public who are vaguely familiar with the proposal as a mere assertion of authority that allows beneficial regulations to be created. The reality is that due to the details of the TCA, compounded by FDA’s procedures for regulating tobacco products, the deeming itself is actually a massive policy intervention that largely forecloses the possibility of genuinely beneficial regulation. It is effectively a blanket ban of the products that will replace the high-quality legal market that currently exists with unregulatable alternative markets (discussed below). It needs to be evaluated with this in mind.
Three basic facts define any legitimate discussion of the proposed FDA rule:
1.The proposed rule is a de facto ban on an entire product category, and not regulation in any normal sense of the word. FDA has failed to analyze the rule in the context of the real impacts, analyze the real impacts, or even to clearly state that this is what the rule would do.
2.The potential (gross) benefits of this rule are extremely low. There is nothing close to a compelling public need for this rule. FDA has failed to provide convincing justification -- either scientific evidence or policy analysis -- that there is a problem that the proposed rule could solve.
3.The immediate effects of the rule create enormous costs, and the secondary effects will probably be greater still. FDA has failed to conduct anything that could be considered a remotely legitimate cost-benefit analysis.
A ban, not real regulation
The most important thing to understand about this proposed rule is that it is not actually a regulation in any normal sense of the word. It does not contain manufacturing, product, or performance standards that producers can endeavor to meet. It does not contain technical details that might be the subject of debate or compromise. It does not impose rules designed to fix problems related to product quality, public health and safety, or other legitimate regulatory concerns. The real implications of this rule, quite contrary to what FDA has implied it will do, are driven by the following three characteristics. For all practical purposes these are the only factors that really matter for the proposed deeming; details of any subsequent rulemaking under the deeming (short of the massive and unlikely alteration of current FDA procedures addressed below) will have relatively trivial impact.
a) Almost all the impact of the regulation comes merely from the act of deeming.The deeming would subject e-cigarettes to the same bans and approvals processes that exist for cigarettes and smokeless tobacco. There are no details of the proposed rule itself that offer any room for consequential amendments or compromise on this point. Normal regulations involve room for compromise over quantities or other details, but there are no such details in this case.
b) The details of the TCA include a provision that any products not on the market as of February 15, 2007 must go through an approval process as a new product. Since there is currently no e-cigarette product sufficiently similar to any product that existed on that grandfather date, this means that the “regulation” is a ban of all existing e-cigarette products, with the theoretical option that they can secure approval as a “new” product under the premarket tobacco application (PMTA) process . This is fundamentally different from the imposition of a real regulatory standard that manufacturers could bring their products into compliance with. There is no such option for compliance. (It has been suggested that this date be changed for e-cigarettes, though FDA’s position is that it is immutable; in any case, merely changing the grandfather date would provide very limited reduction in the net harms caused by this rule, as noted below.)
c) The FDA approval processes for tobacco products is, by design and as demonstrated in practice, arbitrary and primarily intended to prevent new products from being approved. The approval processes -- for new products (PMTA), to be able to make health-related claims about products (the “modified risk tobacco product” (MRTP) process), and even to be able to make minor changes in existing products (the “substantial equivalence” (SE) process) -- are extremely expensive and onerous. Applications are usually rejected or denied by FDA, often for reasons that the applicant had no way of anticipating. Whatever one might think of imposing such a process to impede innovations in highly risky combustible tobacco products, the function of these processes must be seen for what they are: creeping prohibition-by-paperwork under the guise of regulation. FDA provides no standards for any of these processes, such that if a product meets them, the manufacturer can expect the application will be approved. Thus, every application is not just expensive, but highly uncertain, and decisions are ultimately arbitrary.
While there are not clear standards for what an application should contain, the FDA “guidance” documents for applications for products they currently regulate calls for information similar to that required for pharmaceutical product applications. This alone makes the process extremely expensive, to say nothing of being a very bad fit for a product that is freely chosen by consumers based on many characteristics, not merely because of medicinal efficacy. This misfit presumably contributes to there being no actual requirements for what a manufacturer must demonstrate in an application, as there are with pharmaceuticals. This makes the expensive process also utterly uncertain. It thus can only be considered feasible for a product that is expected to generate tens of millions of dollars in revenue per SKU. It is not conceivable that there will be serious new product applications for more than about 25 e-cigarette products (these are FDA’s own estimates, which seem plausible). Probably only the major tobacco companies could navigate this regulatory maze, and even some in that sector have told us that the burden appears to be insurmountable even for them. Therefore, the net effect of the proposed regulations will be to permanently ban on the order of 99.99% of the roughly 100,000 e-cigarette products on the market today.
These three observations mean that the proposed deeming contains no room for reasonable compromise. Regulations are normally assessed, debated, and compromised upon based on their details. But these three factors mean that a mere one-sentence version of the proposed rule (“E-cigarettes are tobacco products and subject to FDA tobacco product regulation.”) would contain basically all the payload.
