FDA Economic Impact Analysis

[Kent C]

Yes, it is!

Please, start a thread in either CASAA or the FDA Regs forum. They need to know--and Bill G needs to know.

Great find, Kent!

Ok. After sending a PM off to Bill, it dawned on me the pamdis' post right after my #13 is right. (I didn't appreciate the full context of the doc or pam's comments). And it shows the true concern Bill had. Of those 'alternative deemings', the FDA chose the worst scenario for us and for our small vendors, when they choose the Feb 2007 date as the grandfather date.

It would be nice to know how they came to that conclusion and while one can never know 'intent', that choice is the best indicator that they intended to go to cigalikes if anything. The urgency in Bill's comments are rather clear. It wasn't fear mongering as some had assumed (not me btw) but simply based on his knowledge of the choices they had, and the choice they made. I was behind the curve, pam to her credit, wasn't.

I suppose if there was enough uproar to Congress to show how that decision decimates the small vendors and the jobs involved to attempt to get them to reverse the choice, is about the only way possible and that it thin.

 

[Jman8]

Ok. After sending a PM off to Bill, it dawned on me the pamdis' post right after my #13 is right. (I didn't appreciate the full context of the doc or pam's comments). And it shows the true concern Bill had. Of those 'alternative deemings', the FDA chose the worst scenario for us and for our small vendors, when they choose the Feb 2007 date as the grandfather date.

Based on the idea that FDA cannot amend the statute.

It would be nice to know how they came to that conclusion and while one can never know 'intent', that choice is the best indicator that they intended to go to cigalikes if anything. The urgency in Bill's comments are rather clear. It wasn't fear mongering as some had assumed (not me btw) but simply based on his knowledge of the choices they had, and the choice they made. I was behind the curve, pam to her credit, wasn't.

I suppose if there was enough uproar to Congress to show how that decision decimates the small vendors and the jobs involved to attempt to get them to reverse the choice, is about the only way possible and that it thin.

I guess I'm not understanding why there wouldn't be enough of an uproar to Congress. I think we can assume that those who called a Congressional committee hearing for today aren't likely to be ones we'll ever win over. Yet, unless SBA is lying about its advocacy with regards to regulatory flexibility analysis, then I would SBA would be an asset going forward.

If petitioning to FDA to go with the alternative, I think FDA will turn a deaf ear and proceed as planned.
If petitioning to SBA and Congress, I think FDA will sit up and take notice. I think ANTZ will do everything possible to kill that tangent, which is why we ought to be do everything we can to keep it alive and get the branch of government involved that gave this authority to FDA.

Once Congress is involved, I would think there is 3 ways this could play out:
1 - Congress ultimately ends up saying it is up to FDA, nothing changes
2 - Congress ends up saying FDA must exempt eCigs from TCA and/or start over with different ruling
3 - Congress instructs FDA to go with the alternative due to the impact on small businesses and costs associated with implementing regulation

While 1 is possible, I would think it would be because we (consumers, vendors, manufacturers) chose to downplay this course as a viable route. While 2 is possible, I think it is too late in the game for that to occur, but is best case scenario from our end, and for all we know, once Congress is involved it could theoretically go that way. I see #3 as plausible because I see enough people on our side wanting to create an uproar around these proposals, and it lets everyone know the regulations will occur, but that FDA wasn't granted authority to 'provide exit from the markets' based strictly on red tape, and burdening small businesses.

 

[Kent C]

Based on the idea that FDA cannot amend the statute.



I guess I'm not understanding why there wouldn't be enough of an uproar to Congress. I think we can assume that those who called a Congressional committee hearing for today aren't likely to be ones we'll ever win over. Yet, unless SBA is lying about its advocacy with regards to regulatory flexibility analysis, then I would SBA would be an asset going forward.

If petitioning to FDA to go with the alternative, I think FDA will turn a deaf ear and proceed as planned.
If petitioning to SBA and Congress, I think FDA will sit up and take notice. I think ANTZ will do everything possible to kill that tangent, which is why we ought to be do everything we can to keep it alive and get the branch of government involved that gave this authority to FDA.

Once Congress is involved, I would think there is 3 ways this could play out:
1 - Congress ultimately ends up saying it is up to FDA, nothing changes
2 - Congress ends up saying FDA must exempt eCigs from TCA and/or start over with different ruling
3 - Congress instructs FDA to go with the alternative due to the impact on small businesses and costs associated with implementing regulation

While 1 is possible, I would think it would be because we (consumers, vendors, manufacturers) chose to downplay this course as a viable route. While 2 is possible, I think it is too late in the game for that to occur, but is best case scenario from our end, and for all we know, once Congress is involved it could theoretically go that way. I see #3 as plausible because I see enough people on our side wanting to create an uproar around these proposals, and it lets everyone know the regulations will occur, but that FDA wasn't granted authority to 'provide exit from the markets' based strictly on red tape, and burdening small businesses.

I agree.... I would like to think the Congress knew the whole path, that they knew there were other options available for the FDA to take, and that they know that the FDA took the most stringent path that would affect small businesses and jobs as well as consumer choice. Again, I'd like to think that they knew. But it took us a while lol.... and we were focused on it, perhaps too much ;- ) .... so imo, it is very likely that many in Congress (other than the Senators who sent the letter right before the deeming decision was made) didn't know and will shortly be finding out. I don't know how your options 2 or 3 would go. Whether there's any precedent for such actions, etc. etc. I suppose CASAA would just say 'that's done, focus on the current 'comment' path.

I may fire off a few emails. I think I'll skip Sherrod Brown

 

[Jman8]

I agree.... I would like to think the Congress knew the whole path, that they knew there were other options available for the FDA to take, and that they know that the FDA took the most stringent path that would affect small businesses and jobs as well as consumer choice. Again, I'd like to think that they knew.

The one thing I don't fully understand when we discuss Congress with regards to anything related to Tobacco regulations is why we might convey that Congress is stagnant. Congress did such and such in the 1990's for tobacco regulations, then Congress did this other thing in 2009. That makes it seem like same people are up to similar thing. But Congress is changing its makeup frequently, and so a new Congress may have different mindset than what Congress was looking at in terms of regulating Tobacco products from a 1990's perspective.

In last 5 years, Congress that I'm aware of is overtly concerned about how current administration is impacting small businesses. I reckon all Congressional sessions have had this as a concern, but 'big' and 'small' government is currently a really huge deal in American politics. And while we might be best served by a new congressional makeup after 2014 midterms, I think we are even better served exploiting that right now while these people are campaigning. If we go by what person like Bill G. is saying with regards to how these regulations could impact the industry and then go by what say your average Tea Party person believes about big government, I would think there is every reason to believe that at least some members in Congress would wish to get involved with these regulations at this time, to create an alternative, which FDA has already noted would keep businesses in the marketplace and reduce governmental spending in implementing these regulations, or adversely placing a huge burden on 'the little guy.'

 

[Kent C]

The one thing I don't fully understand when we discuss Congress with regards to anything related to Tobacco regulations is why we might convey that Congress is stagnant. Congress did such and such in the 1990's for tobacco regulations, then Congress did this other thing in 2009. That makes it seem like same people are up to similar thing. But Congress is changing its makeup frequently, and so a new Congress may have different mindset than what Congress was looking at in terms of regulating Tobacco products from a 1990's perspective.

In last 5 years, Congress that I'm aware of is overtly concerned about how current administration is impacting small businesses. I reckon all Congressional sessions have had this as a concern, but 'big' and 'small' government is currently a really huge deal in American politics. And while we might be best served by a new congressional makeup after 2014 midterms, I think we are even better served exploiting that right now while these people are campaigning. If we go by what person like Bill G. is saying with regards to how these regulations could impact the industry and then go by what say your average Tea Party person believes about big government, I would think there is every reason to believe that at least some members in Congress would wish to get involved with these regulations at this time, to create an alternative, which FDA has already noted would keep businesses in the marketplace and reduce governmental spending in implementing these regulations, or adversely placing a huge burden on 'the little guy.'

No, I hear ya.... either people have woken up to what's happening and there will be a massive swing back of the pendulum or there won't. If the later, prep, you're at risk and on your own.

 

[Jman8]

Still can be enough of a swing back to alter the course of these regulations.

Again, this keeps the regulations in place, and would have high burden on vendors 2 years out, though even then SBA may have something to say about that.

But going this route, we could viably change the way in which the regulations are implemented and keep 99+ % of all vendors/manufacturers on the market, grandfathered in, under the TCA.

 

[Kent C]

Still can be enough of a swing back to alter the course of these regulations.

Again, this keeps the regulations in place, and would have high burden on vendors 2 years out, though even then SBA may have something to say about that.

But going this route, we could viably change the way in which the regulations are implemented and keep 99+ % of all vendors/manufacturers on the market, grandfathered in, under the TCA.

Perhaps 'massive swing' understates what has to happen

Although they'd try to misinterpret it, but if in the next two years if the smoking percentage drops to 15% - I don't think that's out of the question - I think that may get some of their attention. Esp. if we had good studies showing it.

 

[DC2]

I don't know if anyone else has, but I sent an email to CASAA board of directors (board@casaa.org) to make them aware of this discussion.
I'm not sure this isn't something they are already looking into themselves, but it can't hurt to make sure.

 

[Kent C]

I don't know if anyone else has, but I sent an email to CASAA board of directors (board@casaa.org) to make them aware of this discussion.
I'm not sure this isn't something they are already looking into themselves, but it can't hurt to make sure.

I'm awaiting the transcripts of the hearing but.... and I wonder if any of you noted this, but I thought Zeller seemed to indicate that this 'deeming' is 'in process', not nailed down, so this option may be still open. Again, I want his exact words but of course it was exactly what I thought of in one of his phrasings. I had PM'd Bill then did a 'never mind' followup after my earlier thoughts today before the hearing..... we'll see.

Again, I'd be interested if anyone else 'heard' that.

 

[Roger_Lafayette]

I'm awaiting the transcripts of the hearing but.... and I wonder if any of you noted this, but I thought Zeller seemed to indicate that this 'deeming' is 'in process', not nailed down, so this option may be still open. Again, I want his exact words but of course it was exactly what I thought of in one of his phrasings. I had PM'd Bill then did a 'never mind' followup after my earlier thoughts today before the hearing..... we'll see.

Again, I'd be interested if anyone else 'heard' that.

I'm listening to them again and am almost done, and the only reference I can think of which might match what you're describing is in the discussion on flavors. Harkin is asking why they haven't gone after flavors, and Zeller is simply explaining that nothing can be done before they have the authority under the proposed rule. At least that's what I got. Looks pretty similar to what they say in the PDF.

Digression: It's worth mentioning that they don't need a blanket policy in the FRegs on flavors to simply reject all the applications for any flavor besides tobacco and menthol (or even just besides tobacco). All they have to say is that the public health evidence doesn't support a particular use of flavors in a specific application - in terms of the overall statistically expected effect on the population. (For that matter, they could reject all applications that way.) This broader public health standard is built into the FSPTCA, and explains why the statute makes it almost impossible to approve any new tobacco product. Zeller referred to it at least twice when discussing vaping, in answer to Qs about harm reduction aske by Burr. So all this talk about whether they're going to explicitly ban flavors might miss the point: they don't have to ban them, they just don't have to approve any.

Anyway I didn't take notes, so we'll have to see what the transcripts said. But I listened fairly carefully so I'm pretty sure I'm right.

http://www.c-span.org/video/?319401-1/fda-regulation-ecigarettes has a partial "transcript" if you scroll down on the left. If you know the first sentence or two of what you're looking for, you can use it to play the chunks. It's in an IFRAME.

 

[aikanae1]

I thought I heard Zeller explain that there was no wait time anymore, that they could start rejecting applications immediately (in answer to a question about backlogged applications). If that happened, would a product need to reapply or go off the market immediatley?

The comment made me think that there really wasn't a guarentee of a 2 year window and I'd wait until the very last second to file an application.

 

[Kent C]

I'm listening to them again and am almost done, and the only reference I can think of which might match what you're describing is in the discussion on flavors. Harkin is asking why they haven't gone after flavors, and Zeller is simply explaining that nothing can be done before they have the authority under the proposed rule. At least that's what I got. Looks pretty similar to what they say in the PDF.

Digression: It's worth mentioning that they don't need a blanket policy in the FRegs on flavors to simply reject all the applications for any flavor besides tobacco and menthol (or even just besides tobacco). All they have to say is that the public health evidence doesn't support a particular use of flavors in a specific application - in terms of the overall statistically expected effect on the population. (For that matter, they could reject all applications that way.) This broader public health standard is built into the FSPTCA, and explains why the statute makes it almost impossible to approve any new tobacco product. Zeller referred to it at least twice when discussing vaping, in answer to Qs about harm reduction aske by Burr. So all this talk about whether they're going to explicitly ban flavors might miss the point: they don't have to ban them, they just don't have to approve any.

Anyway I didn't take notes, so we'll have to see what the transcripts said. But I listened fairly carefully so I'm pretty sure I'm right.

FDA Regulation ECigarettes | Video | C-SPAN.org has a partial "transcript" if you scroll down on the left. If you know the first sentence or two of what you're looking for, you can use it to play the chunks. It's in an IFRAME.

I think that you're right - it's in the flavor discussion where he says "In the preamble to the proposed deeming rule' 48:10 and also "when deeming is final" - which means the door is open until that point. I'm also thinking there was wording when asked about expanding the comment time, but I'm sick of listening to this guy right now, so I'll check that later But thanks, Roger.

 

[Bobbilly]

I thought I heard Zeller explain that there was no wait time anymore, that they could start rejecting applications immediately (in answer to a question about backlogged applications). If that happened, would a product need to reapply or go off the market immediatley?

The comment made me think that there really wasn't a guarentee of a 2 year window and I'd wait until the very last second to file an application.

That's how I figure it. Day 1 of final decision. "Oh btw We reject all applications for new products" they are gateways to cigarettes and have flavours.

 

[Fitzie]

This is the first thing I've seen that seems to have some real potential.

After doing some quick research, I think it does have potential. I caution anyone reading this that I am in no way an expert in this area. Far from it. So, if I'm full of hot air on this, please forgive me for wasting your time .... lol

This is where we are right now with regard to the proposed FDA regs:

Regulatory Flexibility Act

§ 603. Initial regulatory flexibility analysis
(a) Whenever an agency is required by section 553 of this title, or any other law, to publish general notice of proposed rulemaking for any proposed rule, or publishes a notice of proposed rulemaking for an interpretative rule involving the internal revenue laws of the United States, the agency shall prepare and make available for public comment an initial regulatory flexibility analysis. Such analysis shall describe the impact of the proposed rule on small entities....
(b) ..........
(c) Each initial regulatory flexibility analysis shall also contain a description of any significant alternatives to the proposed rule which accomplish the stated objectives of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities. Consistent with the stated objectives of applicable statutes, the analysis shall discuss significant alternatives such as —
(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities;
(2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities;
(3) the use of performance rather than design standards; and
(4) an exemption from coverage of the rule, or any part thereof, for such small entities....

This is the next step after the comment period closes and FDA analyzes and considers all the comments made regarding the proposed regs:

§ 604. Final regulatory flexibility analysis
(a) When an agency promulgates a final rule under section 553 of this title, after being required by that section or any other law to publish a general notice of proposed rulemaking, or promulgates a final interpretative rule involving the internal revenue laws of the United States as described in section 603(a), the agency shall prepare a final regulatory flexibility analysis. Each final regulatory flexibility analysis shall contain —
(1) a statement of the need for, and objectives of, the rule;
(2) a statement of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a statement of the assessment of the agency of such issues, and a statement of any changes made in the proposed rule as a result of such comments;

(6) a description of the steps the agency has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected; ...

These are just snippets from the Regulatory Flexibility Act to make my point that I believe the alternatives are available. How you get the FDA to select an alternative different from the grandfather date (2/1007) ????? If I'm right, I guess that's the next area for research.

One last thing. If anyone is interested, there's a Duke Law Journal article which really helps to explain the impact of the Regulatory Flexibility Act. Unfortunately, I still suck at inserting links here.

http:// scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2804&context=dlj

 

[Kent C]

After doing some quick research, I think it does have potential. I caution anyone reading this that I am in no way an expert in this area. Far from it. So, if I'm full of hot air on this, please forgive me for wasting your time .... lol

This is where we are right now with regard to the proposed FDA regs:

Regulatory Flexibility Act

§ 603. Initial regulatory flexibility analysis
(a) Whenever an agency is required by section 553 of this title, or any other law, to publish general notice of proposed rulemaking for any proposed rule, or publishes a notice of proposed rulemaking for an interpretative rule involving the internal revenue laws of the United States, the agency shall prepare and make available for public comment an initial regulatory flexibility analysis. Such analysis shall describe the impact of the proposed rule on small entities....
(b) ..........
(c) Each initial regulatory flexibility analysis shall also contain a description of any significant alternatives to the proposed rule which accomplish the stated objectives of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities. Consistent with the stated objectives of applicable statutes, the analysis shall discuss significant alternatives such as —
(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities;
(2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities;
(3) the use of performance rather than design standards; and
(4) an exemption from coverage of the rule, or any part thereof, for such small entities....

This is the next step after the comment period closes and FDA analyzes and considers all the comments made regarding the proposed regs:

§ 604. Final regulatory flexibility analysis
(a) When an agency promulgates a final rule under section 553 of this title, after being required by that section or any other law to publish a general notice of proposed rulemaking, or promulgates a final interpretative rule involving the internal revenue laws of the United States as described in section 603(a), the agency shall prepare a final regulatory flexibility analysis. Each final regulatory flexibility analysis shall contain —
(1) a statement of the need for, and objectives of, the rule;
(2) a statement of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a statement of the assessment of the agency of such issues, and a statement of any changes made in the proposed rule as a result of such comments;

(6) a description of the steps the agency has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected; ...

These are just snippets from the Regulatory Flexibility Act to make my point that I believe the alternatives are available. How you get the FDA to select an alternative different from the grandfather date (2/1007) ????? If I'm right, I guess that's the next area for research.

One last thing. If anyone is interested, there's a Duke Law Journal article which really helps to explain the impact of the Regulatory Flexibility Act. Unfortunately, I still suck at inserting links here.

http:// scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2804&context=dlj

Nice work Fitzie. From reading that, it sure looks like that the FDA 'skipped a step'. The comments now only come after the 'deeming', when it looks as if it should have come before. They did lay out all the 'alternatives' and the tables, but that is in the doc that pam found that precedes the deeming doc. Sure seems like they should have asked for comments after that doc first, which actually gives choices as to what to comment about. Now our comments are only about what they've already decided, violating the intent and content of the Regulatory Flexibility Act.

 

[Fitzie]

Thanks Kent. Believe me, they wouldn't mess up the procedural stuff. They did it correctly. I worked for the federal government for almost 33 years. No matter what the public might think, there are a lot of sharp people working for the government (and their lawyers would've gone through everything with a fine tooth comb before it was published).

The current comment period for the regs is where/when the public, small businesses, etc. get to provide their input about the "alternatives" in the IRFA, along with the regs themselves.

This info is from SBA's website "The RFA in a Nutshell."

"During the preparation of a proposed rule, an agency must prepare an initial regulatory flexibility analysis (IRFA) if it determines that a proposal may impose a significant economic impact on a substantial number of small entities. The RFA requires agencies to publish the IRFA, or a summary, in the Federal Register at the same time it publishes the proposed rulemaking."

What I'm wondering is where this part of the process comes in:

"Consistent with an agency’s obligations under section 609 of the RFA, agencies should perform outreach to interested groups to help develop regulatory solutions. In doing so, agency personnel should recognize that different sectors of an industry may have very different perspectives on a particular regulatory approach. The agency, before adopting one approach, should ensure that it contacts small entities and their representatives as well as large entities and their representatives. This type of communication is not prohibited by the APA and will help the agency focus on potential benefits and costs of various approaches to small businesses."

This is the good part for us:

"When it comes time to draft the final rule, the RFA requires agencies to either publish a certification statement with a factual basis as in the proposed rule, or a final regulatory flexibility analysis (FRFA). Agencies must prepare a FRFA unless the agency finds that the final rule will not have a significant economic impact on a substantial number of small entities or the final rule is issued under the APA provision allowing for good cause to forego notice and comment rulemaking."

"The RFA mandates that agencies revise their initial regulatory flexibility analysis based on the public comments received. Agencies routinely create a summary of the public’s comments to be published along with the final rules. In developing this summary, the agency should specifically summarize comments from small entities. Once the agency determines that it cannot certify the final rule under section 605(b), the agency must prepare a FRFA. If the agency determines that the rulemaking will not result in a significant economic impact on a substantial number of small entities, the head of the agency may so certify under section 605(b) of the RFA, and provide a copy of the certification to the Chief Counsel for Advocacy."

"A number of important questions will assist the agency in preparing a final regulatory flexibility analysis under the RFA:
• Have all significant issues raised in the public comments regarding the IRFA been summarized and assessed and have any changes been made to the rule as a result of those comments?
• Has the number of small entities been estimated? If not, did the agency explain why?
• Has the adverse economic impact on small entities been minimized?
• Have all significant alternatives been reviewed?"

 

[aikanae1]

I hope someone see that who understands our options better. From what I got from the economic analysis is that small to medium sized businesses will "exit" (close). I would think that's significant.

 

[Kent C]

"The RFA mandates that agencies revise their initial regulatory flexibility analysis based on the public comments received. Agencies routinely create a summary of the public’s comments to be published along with the final rules. In developing this summary, the agency should specifically summarize comments from small entities.

Another one our vendors should see or know. The more vendors online, M&P's, even small wholesalers that comment along the lines outlined in some of my and others posts earlier in this thread - and give enough proof that it would mean the end of business for them, the more likely that the current deeming rules could be rolled back - or at least rejected for not passing this requirement.

I guess as a consumer, one could comment that the place where I get all my vaping supplies said they're going out of business if this is the 'final rule'. I'm beginning to believe my 'take' on Roger's comments.

 

[Fitzie]

I hope someone see that who understands our options better. From what I got from the economic analysis is that small to medium sized businesses will "exit" (close). I would think that's significant.

It is significant. That's the point of Regulatory Flexibility Act (RFA). It requires agencies, like the FDA, to consider the impact of their regulatory proposals on small entities, to analyze effective alternatives that minimize small entity impacts, and to make their analyses available for public comment (per the RFA Nutshell).

 

[Kent C]

It is significant. That's the point of Regulatory Flexibility Act (RFA). It requires agencies, like the FDA, to consider the impact of their regulatory proposals on small entities, to analyze effective alternatives that minimize small entity impacts, and to make their analyses available for public comment (per the RFA Nutshell).

If the number of applications necessary - according to the FDA's own assessment of what is needed and the FDA's estimate of costs of those as well, then the impact on small entities will be gargantuan.

I don't really see how the FDA can make the 'most will exit' statements and not connect that aspect to the RFA?? It's as though they are already admitting to failing those requirements.