im just going to paste this whole section because it needs to be read. basically what they are saying is we don't know anything about them but we want to deem e-cigs under our control
b. Electronic Cigarettes and Other Non-Combustible, Novel Tobacco Products
Due to the emerging nature of these products, their health effects, which are not fully
known, and their yet-to-be established relationship to other tobacco products, the benefits of
including electronic cigarettes in this proposed rule are unknown and therefore cannot be
quantified.
The size of the health and welfare effects of electronic cigarettes depends in part on how
widespread their use becomes. The use of this product has grown rapidly in recent years but we
cannot predict if that growth will continue. The use of electronic cigarettes could level off at
current levels or it could continue to grow rapidly and perhaps eventually – as some predict—
rival traditional cigarettes in popularity. The directions of the effects we describe here do not
depend on how large the market for electronic cigarettes becomes but the size of these effects
will be proportional to the size of the market. 20
The direction of the effects of electronic cigarettes on health and welfare depend on two
characteristics:
• Relative health effects. Are electronic cigarettes safer than the reference products, which
would likely be cigarettes or cigars? In other words, are there negative health effects
associated with electronic cigarettes? And, if so, are they less than, greater than, or about
the same on average as the tobacco products consumers now use?
• Relationship with other products. Are electronic cigarettes on balance substitutes,
complements, or not closely related to other tobacco products?13
o Substitutes. Substitutes are competing goods. If electronic cigarettes are
substitutes for cigarettes and cigars, then consumers would use electronic
cigarettes instead of these other tobacco products. All else the same, as more
electronic cigarettes are consumed, fewer cigarettes and cigars are consumed.
o Complements. Complements are goods that are consumed together. If electronic
cigarettes are complementary to traditional tobacco products, then as more
electronic cigarettes are consumed, more cigarettes and cigars are consumed.
o Not closely related. If the consumption of electronic cigarettes has no effect on
the consumption of other tobacco products (and vice versa) then the two goods
are not related. We would think of the two activities and possibly the two groups
of consumers as independent.
The possible welfare outcomes associated with the growing consumption of electronic
cigarettes are shown in Table 12. If electronic cigarettes are substitutes for traditional cigarettes,
then their effect on welfare depends on the relative health effect. If electronic cigarettes are safer,
then substituting them for cigarettes and cigars increases health and welfare; if they are less safe,
such substitution decreases welfare. If electronic cigarettes are complementary to cigarettes and
cigars, then their growth always reduces welfare because it encourages consumption of cigarettes
or cigars. Finally, if electronic cigarettes are not closely related to other tobacco products, then
their effect on welfare depends on their effects on health. If those effects are of the same order of
magnitude as cigars and cigarettes, we would expect the welfare effect to be negative. If they are
much safer than cigarettes and cigars, then the welfare effects depends partly on their safety
compared with substitute products and partly on other characteristics such as degree of
addictiveness and the consumer’s ability to recognize and internalize potential health costs.
13 Different consumers could treat these products differently, with some using electronic cigarettes as complements
to traditional cigarettes and some as substitutes. The analysis presented here is based on the overall market effect. In
technical terms, goods are substitutes if the market cross-price elasticity of demand is greater than zero,
complements if the market cross price elasticity of demand is less than zero, and not closely related if the market
cross-price elasticity of demand is approximately zero. 21
If electronic cigarettes are deemed to be subject to chapter IX of the FD&C Act, the cost
of premarket applications would increase the cost of entering and remaining in the market. (It is
uncertain whether there are any valid predicates for the electronic cigarette products currently on
the market. If no such predicates exist or if they are hard to identify, then all or most electronic
cigarettes would require premarket applications in order to remain on the market.) In addition,
warning labeling would serve as a negative signal to consumers and possibly discourage use.
The combined effects of these two requirements would reduce consumption below levels that
would be observed without regulation. It is important to note that this comparative reduction is a
separate consideration from any general secular trend toward greater use of electronic cigarettes.
This discussion would also apply to other novel non-combustible tobacco products, such
as certain nicotine gels. We focus on electronic cigarettes because they are the most widely used
novel non-combustible product.
