FDA Economic Impact Analysis

[Kent C]

K..so..they clearly have no problem with decimating e-cig businesses and limiting choices

There's no reason to believe they have a problem with it. Their predictions (in bold) are close to saying - cigalikes will live and all else will "exit" and even some cigalikes will.

 

[Kent C]

Yes. But the children will be grateful. Do you not like children?

Like Greg Gutfeld today on Fox said, (paraphrasing) "When you don't have an argument, it's the children!" That's true if it's ecigs, guns, alcohol or tax levies to raise wages for teachers. It's always "for the children", but it's the adults who are affected.

 

[Nermal]

So, all cost and no benefit. Sounds to me like a reason to NOT regulate.

Nothing to argue with in that analysis.

 

[CES]

Yes. But the children will be grateful. Do you not like children?

not so much- especially not right now

There's no reason to believe they have a problem with it. Their predictions (in bold) are close to saying - cigalikes will live and all else will "exit" and even some cigalikes will.

That's what i'd thought was hidden in the proposed regs, and obviously they came right out and said so in the economic analysis. And almost as clearly stated that that the consumers don't count. Maybe now that they've said it out right people will start to get it.

 

[Kent C]

not so much- especially not right now



That's what i'd thought was hidden in the proposed regs, and obviously they came right out and said so in the economic analysis. And almost as clearly stated that that the consumers don't count. Maybe now that they've said it out right people will start to get it.

That was surprising even to me. I should have put that in bold above

And if you think they have the consumer in mind in their regulations:

"We acknowledge that product exit reduces product variety and the range of choices available to consumers, but we do not estimate the value of this loss of consumer choice."

This is typical progressivism - limit the choice. It's why there was one cereal in the Soviet Union - "Generic".

 

[pianoguy]

That was surprising even to me. I should have put that in bold above

And if you think they have the consumer in mind in their regulations:

"We acknowledge that product exit reduces product variety and the range of choices available to consumers, but we do not estimate the value of this loss of consumer choice."

This is typical progressivism - limit the choice. It's why there was one cereal in the Soviet Union - "Generic".

There also didn't seem to be any mention in that pile of gibberish about the number of jobs that would be lost via the "exits" from the industry.

 

[Myrany]

There also didn't seem to be any mention in that pile of gibberish about the number of jobs that would be lost via the "exits" from the industry.

ooooooo lets add in all the taxes too. After all those employees have to pay the social security stuff, income tax at local,state and federal levels. Then there is the sales tax on the stuff sold in the shop.

 

[Kent C]

There also didn't seem to be any mention in that pile of gibberish about the number of jobs that would be lost via the "exits" from the industry.

Meh... they don't care about that. If they did we wouldn't have nearly 40% of the working population out of a job.

 

[moondragon]

I emailed FDA/CTP over the weekend because they had a link to the Economic Impact Analysis in ref 194 of the proposed regulation document, but it wasn't actually posted.

Happy to report that they posted it today, for any that are interested:

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

Thanks for following up with the FDA/CTP about this. Very interesting read. What struck me was acknowledging unknowns about ecigs, especially in terms of substitute use versus complementing (dual) use versus separate groups, yet they also appear to have no problems with totally disrupting the market and product choices, acknowledging that there will be exits, consolidations and less product choice available. It seems to me that the disruption of the market will make it impossible then to get accurate findings about substitute versus complementing versus separate groups. It gives me the feeling that they don't really care at all about really finding out the health benefits or harm reduction of ecigs.

 

[DaveP]

Meh... they don't care about that. If they did we wouldn't have nearly 40% of the working population out of a job.

Yep, if they wanted everyone to work they'd just create legislation to allow one working person per household and every household could have meaningful employment. It's those dual income households that cause the problem by taking all the good jobs.

<tongue in cheek in case anyone misunderstands>.

 

[y cherry y]

That was surprising even to me. I should have put that in bold above

And if you think they have the consumer in mind in their regulations:

"We acknowledge that product exit reduces product variety and the range of choices available to consumers, but we do not estimate the value of this loss of consumer choice."

This is typical progressivism - limit the choice. It's why there was one cereal in the Soviet Union - "Generic".

I get your point, but the Soviet Union isn't an example of progressivism or liberalism. Quite the opposite.

 

[CATastrophe]

I am working my way through this document and it's scary! Much more telling than the proposed deeming doc.

There are many parts of it that stand out and some have been posted, but here's one that's not been:

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.)

So if they decide not to approve the premarket applications, there will be no ecigs, ever. They also acknowledge that innovation will certainly be stifled if not halted completely:

However, the costs incurred to market new proposed deemed products could discourage development of new products in general.


I am just gobsmacked by how awful this whole deal is. We certainly aren't being Chicken Littles or crying wolf. The wolf is at the door and salivating. It's ALL about the money.

 

[malkuth]

Yes. But the children will be grateful. Do you not like children?

Not even they believe that BS. Their own table states Youth Access Restrictions NQ (very small) costs (less that $1M total).

 

[folkphys]

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.

So far, this is the part I hate the most.

The FDA is saying:
The relative health impact of Ecigs as a whole depends on what type of consumption relationship they bear to combustibles:
Either
1. they are substitutes
or
2. they are complimentary,
or
3. they are not related

However, it is clear (at least to me) that these three types of consumption relationships can only describe the circumstances for each individual ecig user, and thus NOT ecigs as a whole -- which is exactly what the FDA wants to say here. And so the only way you can actually assess the 'relative health impact' of ecigs generally is to try and estimate what proportions of us fall into each of those categories, give relative negative or positive health impact weights to each one, which especially in the case of 'substitutes' would directly depend on exactly how much safer ecigs are vs. combustibles (a quantification the FDA have slyly avoided in order to create at least one scenario with an obvious negative health impact), add them all up and see what your left with.

 

[patkin]

I don't see how any vendor or consumer can read this and NOT know that THEY KNOW they're handing the market to BT.

BT is enjoying their morning ecig and coffee with a smile on their face.

 

[ad356]

the for the children argument could be used to our favor if we were smart enough. i have a sister-in-law who was for the longest time, smoking in the small trailer with her kids inside. very, very very bad for them the 4 year old has asthma already, i wonder why?? anyways i got her into vaping and now they no longer smoke in the house. they are smoking less altogether but they arent smoking around their kids at all. this happens allot more then the antz would ever admit. how about for the children of parents that smoke around the kids and dont seem to know the implications or dont care, we keep this product openly avaliable and affordable. yes, i said for the children that dont want to live with 2nd hand smoke and dont want their parents sick or dying.

 

[patkin]

^ really, really, not being flippant here but, truthfully, they don't care.... health is NOT the issue with them for either children or adults.

 

[zoiDman]

I like this part of the Report...

5. Retail Sector

Like tobacco growers, distributors and manufacturers, tobacco retailers would be affected by any decrease in tobacco product sales. Retailers would, however, be in a position to shift shelf space and promotional activities to non-tobacco products, in order to take advantage of the increase in demand for other products that would be expected to accompany the decrease in spending on tobacco products. If some retailers who rely heavily on tobacco sales are not be able to fully offset their reduction in tobacco sales with sales of other products, other retailers would then experience some of the gain in sales associated with an increase in demand for those other products.

Exit Mom & Pop e-Liquid Retailers - Enter BT?

 

[Myrany]

^ really, really, not being flippant here but, truthfully, they don't care.... health is NOT the issue with them for either children or adults.

exactly

"For the Children" is a sound bit they have discovered plays well with the masses and nothing more.

/off topic aside
Patkin at one time I had a saying similar to your signature line on the wall of my classroom. Then one day one my 9th graders came up to me and said "Why should I limit myself I will stay stupid ty."

 

[ad356]

why should big tobacco be allowed to remain in business anyways. they are responsible far more murders then that of concentration camps of WWII. they are murders and should die a slow, painful death much like what their customers have suffered for the last 100 years. the general public should demand BT be allowed die.