I just sent another email to the Homeland Security and Governmental Affairs Committee.
Dear Senators,
Yesterday you should have received a response from the FDA to Sen. Ron Johnson’s letter regarding the burdensome e-cigarette regulations. I urge you to review the material very carefully. I suspect much of the response will be based on Final Regulatory Impact Analysis (Docket No. FDA-2014-N-0189).
I am a member of the Electronic Cigarette Forum, a web forum with over 244,000 members. Many of us have been analyzing the Final RIA line-by-line (as we have, and continue to do, with any other relevant documents we find) and, honestly, the report is more complex, confusing and contradictory than the Final Deeming regulations.
Here is a short list (I realize it’s actually long, but there are a lot of troubling statements in the document):
1) It is clear the FDA has little information on how many businesses the regulations impact. They seem pretty arrogant about it as well.
"In comments, the CEO of Vape World is cited as saying there are more than 3,500 independent vape shops in the U.S. Comments cited industry analysts estimating that there are 5,000 to 10,000 vape shops in the U.S. In comments, an individual from a trade association is said to estimate that there are 14,000 to 16,000 brick and mortar vape shops in the U.S. The Tobacco Vapor Electronic Cigarette Association estimates that brick and mortar stores will sell more than $1 billion in vaping equipment and products in 2014."
FDA response:
"As the comments describe, the industry is in a state of flux; during the time that the proposed rule was in review, and since the proposed rule was published, the ENDS industry has grown and additional vape shops have opened. The comments on the number of ENDS manufacturers did not provide concrete data sources, but rather industry estimates for which the bases were not given."
"In the RIA for this final rule, based on logo counts from trade association websites and FDA listening sessions, we estimate that there are 168 to 204 manufacturers of ENDS products, other than retailers who mix their own e-liquids, selling goods in the US market. We also estimate that there are 14 importers of ENDS products."
I don't see how "logo counts from trade association websites and FDA listening sessions" are more concrete data sources than industry estimates. All they have identified are manufacturers with logos who are members of trade associations.
2) The word “consolidation” appears 37 times in the report. According to my interpretation, it suggests Big Tobacco companies that can afford to comply with the regulations will buy-out smaller companies they forecast to be profitable. As for the rest, all they have to do is wait for the competition to exit the market.
The word “exit” appears 147 times.
“…consolidation and exit would be expected to occur under the baseline as successful firms represent an increasing share of market sales, market leaders perhaps absorb smaller firms and products, and smaller firms merge into larger entities or exit from the market). We expect a much larger share of ENDS products to exit rather than submit a premarket application.”
“We continue to assume a substantial amount of product consolidation and exit will occur as a result of regulation, as described in the final RIA.”
“[The] FDA acknowledged in the PRIA that premarket submission requirements could lead to significant product exit and reduced entry.”
“To the extent that smaller firms or firms in particular segments of the industry have relatively low sales volume per product, they will be disproportionately burdened…”
“…the growth we have seen in the ENDS market, we now forecast that a larger number of requests for marketing authorization will be submitted for e-liquids and ENDS delivery systems…”
“We also assume 54 percent of delivery systems and somewhere between 50 and 87.5 percent of e-liquids will not submit a marketing application and will exit the market after the initial compliance period for the submission and FDA receipt of PMTAs ends. The e-liquid share is particularly difficult to predict in view of uncertainties about the number of distinct products currently available on the market.”
3) The high estimate of smaller companies exiting the market isn't surprising when one considers:
“…at the low end of the average cost spectrum would be product lines of cartridge- or disposable e-cigarettes which have an identical underlying delivery system, flavor variants likely to share basic ingredients, and similar ingredients and constituents for which existing information can be used to support a PMTA. This case is assumed to have total costs of $285,656.”
“…at the high average cost end is a single open-system device requiring considerable original research and testing amounting to $2.6 million.”
It is clear these estimates give an unfair advantage to the makers of cartridge or disposable e-cigarettes, which are what Big Tobacco companies currently have on the market.
I also have yet to find a specific definition of a “single open-system device.” Does that refer to the battery tube/box? The tank? The drip tip? The device I am using this very moment is made up of components from 5 separate companies. Does that really mean it would take 13 million dollars to bring the same configuration to market?
By using what I think is an “open system,” I was able to quit cigarettes 4 years ago after smoking for 40 years. I’m very worried about this situation as a consumer, a supporter of small businesses, and as person who wants other smokers to have the same options to stop using combustible tobacco as I did.
Thank you in advance for having common sense.
Sincerely,