FDA Economic Impact Analysis

[Jman8]

My apologies for not participating in the discussion on this thread so far, but I've been swamped dealing with state/local battles, compiling/analyzing research and news stories, dealing with the Senate HELP Cmte hearing two weeks ago.

Way cool. Appreciate the work you do.

If FDA acknowledged that one vendor claims to sell over 1,000 different e-cig products, I don't understand how the FDA could also

There are clearly more than 10,000 e-cig products currently on the US market, and Carl Phillips' assertion that there are more than 100,000 is probably correct (or at least it will be by the time FDA issues the Final Rule). If a vape shop mixes 50 types of e-liquid flavorings at 4 different nicotine levels, with 4 different ratios of PG/VG, that's 800 different e-cig products made by just one vape shop.

I'm operating under number of 14 million based on what one of my vendors note on their website as possible amount of combinations they can create. It is based on the "800 different eCig products" logic you are noting above. I truly believe we are talking millions and not thousands of products.

Regarding Kent's urging of FDA to extend the SE grandfather date from 2007 to the date of issuance of the Final Rule (or even to 2014), while I think its a good idea to urge FDA to do so, the agency is highly unlikely to do so because the last thing Zeller wants to deal with is another several thousand SE applications for e-cigs (especially considering that FDA has only approved 17 of the 4,000+ SE applications that have been submitted since 2011, and a key reason Mitch Zeller replaced Lawrence Deyton was because Deyton didn't process any SE applications). But if FDA decides to not extend the 2007 grandfather date, of course they'll claim its because the the 2007 date is written into the statute. While that may be true, I don't know anyone (except perhaps Banzhaf or another ANTZ lawyer) who would sue the FDA claiming the grandfathering date must remain 2007).

If grandfather date is extended to say Oct. 1st, 2014 (for instance), then I'm under impression no SE apps needed for everything that is on market before that. While realizing any new product after that would require SE app or NP app. I would think FDA would want this to ease their burden. I would think ANTZ would utterly despise this.

I also don't think adjustment of grandfather date ought to occur via FDA, and feel they will adjust it, if Congress instructs them to do so.

That's what's been up for discussion in this thread based mainly on wording of alternative (except for the bypassing FDA part).

 

[Kent C]

Regarding Kent's urging of FDA to extend the SE grandfather date from 2007 to the date of issuance of the Final Rule (or even to 2014), while I think its a good idea to urge FDA to do so, the agency is highly unlikely to do so because the last thing Zeller wants to deal with is another several thousand SE applications for e-cigs (especially considering that FDA has only approved 17 of the 4,000+ SE applications that have been submitted since 2011,....

Bill, thanks for responding. I'm on my way out but I wanted to address this (bold) from your response.

In the 'impact doc'

http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/UCM394933.pdf

... pg 69 where they are addressing 'Regulatory Alternative 3" (which sets the grandfather date at 'final rule'), it says this:

"This alternative would change the grandfather date for determining which products are new from February 15, 2007, to the date this rule is finalized. Therefore, new product submissions would not be required for products introduced between February 15, 2007, and the date of a final rule."

... and after the Table (same pg):

"The table shows the reduced burden for cigar manufacturers but this alternative would provide even greater relief for small businesses producing electronic cigarettes."

So they DO understand the impact that would make to small businesses.

This is part of the reason I addressed this in my 'paperwork reduction' comment. It eliminates applications and no SE required. However, of course, then anything that came after that would have to prove SE but the amount of products now existing, and that will exist at final rule, would provide many predicates in all shapes, sizes, etc.

 

[Jman8]

Bill, thanks for responding. I'm on my way out but I wanted to address this (bold) from your response.

In the 'impact doc'

http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/UCM394933.pdf

... pg 69 where they are addressing 'Regulatory Alternative 3" (which sets the grandfather date at 'final rule'), it says this:

I'm also, and mostly, coming from what's stated on p. 58 which is referenced as 3rd alternative. And just to note on p. 56 that heads this section, it reads:

F. Regulatory Alternatives and Proposed Options
We have identified and assessed several alternatives to the proposed rule. We note that not all of these regulatory alternatives are necessarily legally permissible. We use proposed rule option 1 as the baseline for comparisons among the alternatives.

Then on p. 58-59 the entire section reads:

Change New Product “Grandfather Date” to the Date of Issuance of a Final Deeming Regulation

Under this alternative, the grandfather date for determining which products are considered new would be moved from February 15, 2007, to the date this rule is finalized. All other aspects of the rule would remain as proposed. This would reduce costs in the first 24 months as new product submissions would not have to be prepared for products introduced into domestic commerce between February 15, 2007, and the date of the final rule; that is, manufacturers would not start with such a large multi-year backlog of new products.63 However, manufacturers would still bear the substantial costs of preparing new product submissions for the new products introduced each year.

If no valid predicate exists for electronic cigarette products, then changing the grandfather date would have additional implications for electronic cigarettes. In our analysis of the proposed rule, all electronic cigarette products would be new tobacco products and many would exit the market rather than bear the cost of submitting a premarket tobacco application, which would be required in the absence of a valid predicate product. By contrast, if we change the grandfather date, only electronic cigarette products introduced after the issuance of a final rule would be considered new, and a large number of candidate predicates would exist. We assume that new electronic cigarettes would then be marketed through the substantial equivalence (or exemptions) pathway. We would no longer assume that many electronic cigarette products would exit the market, but instead assume that all electronic cigarette labels would be changed to conform with the requirements of the proposed rule.

Under this alternative, the benefit associated with potentially preventing increased-risk products from entering the market could be reduced. Instead of having FDA evaluate proposed deemed tobacco products introduced between February 15, 2007, and the date of the final rule, such products would be grandfathered. This alternative would create an incentive for tobacco product manufacturers to rush new products to market before a final rule is issued to ensure that their products would be grandfathered. If some products introduced during that period are riskier than those existing before February 15, 2007, such products (and products found substantially equivalent to them) could be marketed in the absence of other grounds for their removal. For electronic cigarettes, the welfare effects of changing the grandfather date would be unknown (see Section II.A.4.b).

This alternative could be combined with Alternative 3 (exempt handmade cigars from labeling changes). Because they alter different aspects of the rule, the changes in estimated costs would be additive. Combining these alternatives would dramatically reduce the costs of compliance for handmade cigars.

I am leaving off table that is found on that page in quote above.

 

[Kent C]

I'm also, and mostly, coming from what's stated on p. 58 which is referenced as 3rd alternative. And just to note on p. 56 that heads this section, it reads:



Then on p. 58-59 the entire section reads:



I am leaving off table that is found on that page in quote above.

These alternatives are what we should be able to comment on*. Anti's too. And I think that may have been the original intent - otherwise, why create this 70 pg doc? ... only to decide @3 weeks later that they are all moot?

Again, I think the reason was that they got the letter from the Dem Senators to 'get moving' (crack down) on this issue.

I know this from the military - Captains and Majors get uptight (I could use a good analogy not for public use though) when Colonels come around. Colonels get uptight when Generals come around, and Generals get up tight only when Congressmen (and Prez) come around. I'm guessing this is a similar case. Most of the jobs at the FDA has Senate encouragement and/or approval. (some not) And they are their ultimate bosses.

eta:* Throughout the impact document:

http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/UCM394933.pdf

... they are requesting comments. "We request comments on....." 12 times in the doc. So this tends to validate my thoughts above about this is the doc that should be the target of comments, perhaps in addition to the deeming doc.

 

[DC2]

Just in case it is not clear, the economic impact analysis is required by law, and they are required to analyze the various options.
Other than that, please carry on.

 

[Kent C]

It also would be helpful for vapers and vendors (in comments urging FDA to scrap its proposed deeming regulation) to suggest a compromise that FDA apply the same exemption it has proposed for Premium Cigars to e-liquid products and Premium Vaporizers (AKA mods, tanks, open systems). Premium vaporizers and e-liquid products share many of the same characteristics as the FDA cited in proposing to exempt premium cigars (i.e. hundreds/thousands of small manufacturers, lots of new/different products made every year).

I found it interesting in that section of the deeming doc. @pg 99 and for 10 more pages they go on about the health problems of cigars and second hand smoke, and yet are willing to consider an exception for them, but not for ecigs where about their best argument on health is 'We don't know what effects ecigarettes might have' (paraphrasing). I don't want to disparage cigar smokers, but their proposals for ecigs vs. cigars is ridiculous along the lines of health concerns. The fact that such an exception for cigars even exists, given their view on health, suggests that this is either a well lobbied or pure political effort of which the FDA can live with.

Personally, I wouldn't ask for such a compromise, but I don't have a problem with others asking for it. It does push the 'equality' button they like so much, but I'd rather argue the Regulative Alternative 3 that allows all existing ecigs. I really don't think that either have a chance, so I'd rather lose big

 

[Kent C]

Just in case it is not clear, the economic impact analysis is required by law, and they are required to analyze the various options.
Other than that, please carry on.

I think it is clear to most here. They are also required to take the RFA and the Exec. Order 12866 (and likely a few others on small business impact) into consideration. They say in the deeming doc, that they think they've complied with all, but the 'proposed rule' belies that fact, imo. It does exactly the opposite of the intent and substance of all the above.

 

[Jman8]

I don't see anything in the deeming doc to prevent the alternative, other than language of "we don't believe we can adjust the grandfather date." Not exact quote, but I think everyone knows what I'm referencing.

My response to that is, "okay, you aren't really necessary in that adjustment. But will be adhering to the adjustment when instructed to do so, and we pro-vapers will do everything in our power to ensure that happens."

Anyway, I constantly want to bold stuff in the part I quoted, but don't, and so in this post, I'm going with bullet points of key items as I see it:

• Under this alternative, the grandfather date for determining which products are considered new would be moved from February 15, 2007, to the date this rule is finalized
• new product submissions would not have to be prepared for products introduced into domestic commerce between February 15, 2007, and the date of the final rule
• manufacturers would still bear the substantial costs of preparing new product submissions for the new products introduced each year
• In our analysis of the proposed rule, all electronic cigarette products would be new tobacco products and many would exit the market rather than bear the cost of submitting a premarket tobacco application, which would be required in the absence of a valid predicate product
• if we change the grandfather date ... a large number of candidate predicates would exist
• new electronic cigarettes would then be marketed through the substantial equivalence (or exemptions) pathway
• We would no longer assume that many electronic cigarette products would exit the market
• Instead of having FDA evaluate proposed deemed tobacco products introduced between February 15, 2007, and the date of the final rule, such products would be grandfathered.
• For electronic cigarettes, the welfare effects of changing the grandfather date would be unknown

For me, these are all critical items, but bolded ones are I think highly worthy of discussion going forward.

I strongly disagree with rationale behind last point as products will be allowed on the market when rule is in effect, so is either easily overcome via allowance FDA is already making (and which ANTZ currently despises) and/or could be made 'known' based on data that exists and will likely exist in coming months to few years.

Like we have said repeatedly here on ECF, just because effects are (allegedly) unknown, this is not reason to ban the product (via presumed exiting). And because they are CLEARLY not banning the product when the rule goes into effect, then this concluding statement is, in actuality, working against their logic.

IMO, the alternative is the reasonable solution. To the degree that is disputable, I'd like to have that debate here on this thread. I'm sure no pro-vaper wishes to conclude otherwise, but feel we ought to have that debate as if the other alternative (not grandfathering) is something that can somehow truly be justified given PRECISELY how the proposed regulations currently appear.

 

[Kent C]

It should also be noted that the performance and safety of products have evolved and improved from earlier models - models that may be the only ones grandfathered in the deeming doc. Why lose that safety aspect? And that what informed users (those who frequent forums) do in this regard - contacting manufacturers and vendors, requesting and suggesting improvements, that the whole industry benefits by a trickle down effect into products that weren't as good but must improve in order to compete with those that have made such adjustments.

And perhaps that new products after the final rule, should be considered substantially equivalent, as long as the basic structure and design upholds the battery, coil, wicking, tank aspects of the current products.

Or that a new standard be developed for assessing new products along the lines of Azim's idea (my post #231)

It is in the "Establishing a baseline predicate product" section:

Rather than requiring that companies find a specific
predicate product on their own, the FDA could establish
threshold specifications (e.g., product standards)
for a baseline e-cigarette against which companies could
make the case that their products are substantially equivalent.
Until the FDA has had time to develop such
e-cigarette product standards supported by sound science
(and promulgated via its rulemaking procedures), it may
consider either delaying publication of the deeming regulation
or the effective date of the rule.