Category: Clive Bates

The principle of proportionality

Photo: Milkos | Dreamstime
How to regulate reduced-risk products
By Clive Bates
How should society regulate reduced-risk products like e-cigarettes, heated tobacco products, novel nicotine products or smokeless tobacco? These products challenge existing systems of tobacco regulation, which generally assume the products are an unqualified threat to be contained. In reality, the products represent a public health opportunity with relatively minor risks to be mitigated.
If there is too little regulation, people may be harmed by dangerous products or fooled by misleading claims. But if there is too much regulation, the excessive compliance burdens will make perfectly good products ineffective or unviable, and small firms will exit the market. The U.K. Royal College of Physicians provides the best summary of this dilemma in its 2016 report, Nicotine Without Smoke: Tobacco Harm Reduction:
“A risk-averse, precautionary approach to e-cigarette regulation can be proposed as a means of minimizing the risk of avoidable harm, e.g., exposure to toxins in e-cigarette vapor, renormalization, gateway progression to smoking, or other real or potential risks.
However, if this approach also makes e-cigarettes less easily accessible, less palatable or [less] acceptable, more expensive, less consumer-friendly or pharmacologically less effective, or inhibits innovation and development of new and improved products, then it causes harm by perpetuating smoking. Getting this balance right is difficult.” (Section 12.10 page 187)
The question then is: How do we get this balance right? How do we find a “sweet spot” between inadequate and excessive regulation?
In its August 2018 report on e-cigarettes, the U.K. House of Commons Select Committee on Science and Technology provides some direction. This respected parliamentary committee calls for:
“… a wider shift to a more risk-proportionate regulatory environment, where regulations, advertising rules and tax/duties reflect the evidence on the relative harms of the various e-cigarette and tobacco products available.”
This is an elaboration of the “principle of proportionality,” an idea that underpins good policymaking in many jurisdictions. In the European Union, it is coded into the Treaty on European Union at Article 5.4. In the United States, the underlying concept can be found in longstanding Executive Orders (https://bit.ly/2zfCUhu and https://bit.ly/2KeFM2g) that govern regulatory planning and review. This is not really a revolutionary idea; it should be approached as part of normal good practice in policymaking.
What would it mean for regulation? First, we would start with an overall objective.
Many possible overarching objectives could be chosen, and many different goals are evident in the statements of public health advocates. These could include reducing the health consequences of nicotine use, reducing smoking or tobacco use, reducing nicotine use, protecting bystanders, preventing youth uptake, or even destroying the tobacco industry. For many years, it was possible for campaigners and governments just to say “all of the above” and duck any hard choices. This is because with cigarettes and other combustibles dominating the market, these goals seemed aligned and unified. But that is not the case now—many of these goals are now in conflict. If a regulator focuses on preventing nicotine use, they risk ending up with more cancer and heart disease because they have closed down reduced-risk nicotine products and made tobacco harm reduction more difficult. We may be concerned about youth uptake, but this is primarily because of later harm to health. In any situation where we give higher priority to a goal other than health outcomes, we implicitly accept that there are situations where we will accept more disease and premature death. It follows that the focus should be reducing disease—and this forms a basis for judging trade-offs between different objectives. A variation on this could be to pursue the greatest possible welfare—taking in enjoyment, stigma and distributional impacts of policies like taxation.
Second, we should adopt a broad finding: The key issue for public health is not whether nicotine products are tobacco or nontobacco or whether they are novel or long established. The key distinction is combustion versus noncombustion. It is the inhalation of smoke that dominates the harms arising from tobacco use. The difference in risk between combustible and noncombustible products is inherent in the chemical and physical processes involved, and it allows for a much more liberal approach to regulation and risk assessment. For reduced-risk products, there is no case to follow the playbook for regulating products that are, by universal consensus, very dangerous.
Third, we should consider some approaches to regulation that would be risk-proportionate for noncombustible products.
Notification not authorization. The route to market for noncombustible products should require notification of a regulator not authorization by a regulator. This would permit access to the market if a product complies with appropriate standards but gives powers to regulators to intervene if there is a material concern about health or safety. In an authorization system, regulators have to approve thousands of products but find it notoriously difficult to say “yes” to anything to do with tobacco. An authorization regime can create a very narrow and costly bottleneck preventing useful reduced-risk products reaching the market.
Focus on individual risk. The most relevant characteristic of a nicotine product for regulators is its impact on health and safety relative to other products, such as cigarettes, or by comparison with other common risks. However, some jurisdictions, including the United States, require assessments of “population effects” or how the pattern of use of consumers in the market changes as a result of introducing a new product. Some honesty is needed here: It ought to be acknowledged that this is completely unknowable in advance. Population effects are not even a characteristic of the product, but an emergent property of a complex system of thousands of interactions. Many of these have little to do with the product itself, for example, the innovation and pricing strategies of rival products. The effect of demanding answers to impossible to answer questions is predictable and damaging. So, for noncombustible products, the focus should be strictly on individual risk, with any concern about population effects addressed through postmarket surveillance and retrospective corrective action if needed.
Product and production standards. It is important that manufacturers and importers have a rulebook to work from and that this is comprised of standards that are transparent and proportionate—allowing producers to gear up to meet commonly applied standards. These should cover electrical, thermal, mechanical and chemical safety; standardized testing regimes; labeling requirements; and supply chain quality assurance. It should be possible to set purity standards for ingredients and to blacklist or place limits on any problematic ingredients.
Consumer risk information. Consumers should be empowered to make good product choices in their own interests and at their own expense. That means they need reliable information about risks. Health Canada has shown real leadership in proposing seven government-approved risk communication statements designed to inform consumers. These include, for example, “If you are a smoker, switching completely to vaping is a much less harmful option,” and, “Completely replacing your cigarette with a vaping product will significantly reduce your exposure to numerous toxic and cancer-causing substances.” The Canadian example shows how a public authority can take responsibility for consumer risk information and support informed consumer choice.
Allow advertising of an adult product. If regulators prevent producers of reduced-risk products from advertising their products and building brands, then they are protecting the harmful incumbent products from entrants that can benefit health. At the same time, there are concerns about advertising reaching teenagers and recruiting new users. There is no perfect way to segregate audiences, but the pragmatic solution, widely adopted for alcohol advertising, is to place restrictions on content and placement of advertising rather than ban advertising outright.
Let owners and managers decide policies on indoor use. The case for the state intervening to ban smoking rests on material risk to bystanders, especially workers. No such rationale has been established for vapor and heated-tobacco products, and it is unlikely to be. From a public health point of view, there is a strong rationale for treating vapers differently to smokers to encourage switching and to support switchers to remain smoke-free. This does not mean unconstrained use of these products would be permitted everywhere, but that the decision should rest with property owners to balance the needs of their customers and users. This would allow diverse and nuanced policies that are not possible under the terms of a mandatory ban. Public Health England has approached this issue by publishing guidance on setting vaping policies for property owners.
Excise tax should be zero or limited and proportionate to risk. One of the greatest drivers of switching from combustible products to reduced-risk products has been the relative pricing. Taking on something new is certainly a lot more appealing if it saves money too. Tax policy is usually underpinned by three objectives: raising revenue, avoiding harmful distortions or achieving positive goals, and keeping tax transaction costs to a small fraction of the revenue raised. These objectives point toward keeping excise at zero on vapor products and ensuring heated-tobacco products and smokeless tobacco products are taxed at zero or a small fraction of the lowest rates for combustible tobacco products.
Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).

December 1, 2018
Mapping the future

Can there be an ethical tobacco company—and what would it do?
By Clive Bates
Many years ago, I was scandalized when a prominent green campaigner joined a giant mining multinational to be its “sustainability champion.” How can a committed environmentalist work for a company that devastates the environment and destroys communities wherever it operates? “That’s the point,” he retorted bluntly. “You have to go to where the dirt is if you want to clean it up.” He was right, I was wrong, and I admire him to this day for making that move and for what he achieved in the role.
The point was not that large-scale mining operations would magically no longer tread with a heavy environmental footprint. Rather, a forward-looking mining company should try to reduce its impact to the greatest extent and at the greatest rate possible, consistent with its business objectives. The businesses with the heaviest footprints offer the greatest scope to reduce their impact and therefore can do the most good when they change.
So does this provide a useful pointer to what constitutes ethical behavior in companies that have high impacts? Should we judge the ethics of a company or an industry by the net harm its operations cause or by what it does to change to reduce harms over time? Can this logic be applied to the tobacco industry?
The existence of a tobacco industry is a fact, a reality that is likely to persist for many years to come. Almost all governments allow a market in tobacco and therefore a tobacco industry to supply the market. To varying degrees, governments regulate it and tax it, and sometimes they own it. They show no sign of abolishing it. There will, therefore, be an industry operating in a legal market selling nicotine products for at least the medium term to the long term. But that does not mean that one to two decades from now the tobacco industry will look anything like it does today.
Over the next two decades, I believe the industry will have to face up to and deal with the health burdens that are integral to its most successful products. But how to do this? Can we draw on advice for another industry facing an existential challenge that is fundamental to its leading products? We can turn for inspiration to a 2015 paper by energy expert Dieter Helm titled“What should oil companies do about climate change?” and draw out six strategies and how they might be applied to the tobacco industry.
First: denial. Go into ostrich-like denial, argue against the science, and fund lobbyists and think tanks to create distraction. There is no need to dwell on this one for the tobacco industry because it has already been tried for several decades, and it does not work.
Second: revolution. Oil companies should go “beyond petroleum,” pull out of the main fossil fuel businesses and become renewables companies. The equivalent for the tobacco industry is to pull out of manufacturing and selling cigarettes. That makes a good slogan, but it is not a viable strategy. This is because the company is owned by shareholders, and the management of the company has an obligation to protect their interests or expect to be fired. Shareholders will replace a management team that destroys their shareholding by eliminating the most profitable product line. Even if this were possible, the company would face a hostile takeover, or, alternatively, its facilities and intellectual property would have to be sold to someone else who would resurrect the business under new ownership, and nothing would be achieved. In fact, exiting the cigarette business is a common demand of health organizations. They have defined pulling out of cigarettes as the benchmark of industry credibility, even though it is impossible to achieve—or perhaps because it is impossible. Companies should even be wary of naming a date far in advance upon which they will pull out of cigarettes—they do not control the main consumer, policy and communication drivers that determine if and when this will become feasible.
Third: Only stick to the law. This attempts an amoral passive approach. The state defines the limits of what can be done by companies, and the companies respect that and operate within these constraints. Obviously, all companies must obey the law, and tobacco companies need to comply with the letter and spirit of the law controlling tobacco and trade. In an office far from corporate headquarters, it can seem that, whatever headquarters says to the contrary, the real drivers are the quarterly numbers and the fact that there is tacit approval for any deniable conduct that makes the financials work. That cannot be acceptable. To address it means companies taking a globally concerted and proactive approach to corporate conduct—with no exceptions and with serious consequences for error. The problem with making this the only strategy is a that there are too many very poor ideas for regulating the tobacco and nicotine markets—some that will increase criminality, waste public money and cause more ill health—for companies to be passive policy-takers. In a situation where regulators are capable of outlawing safer products altogether (e.g., the European Union’s snus ban and Australian or World Health Organization (WHO)-inspired vapor product prohibitions) it is not safe to assume that governments, regulators and activists are rational actors in public health.
Fourth: Drive technology transition. In the case of oil companies this means promoting a switch to a less harmful form of fossil fuel: a transition from coal to gas, which reduces carbon emissions by about half per unit of energy. In the case of tobacco this means running hard at a transition from combustible to noncombustible nicotine technologies (a reduction in harm that is dramatically greater than the switch from coal to natural gas) and building a business model that drives switching and cannibalization, not just a line extension. The aim is to change the market for consumer nicotine both as individual companies and collectively as an industry. But industry initiative can only take this so far: It needs a supportive policy framework.
Fifth: Be the policy champion. In the case of oil companies this means, for example, pressing for a meaningful carbon price, which shifts the market toward low-carbon fuels and investment. For the tobacco companies it means a steep risk-related excise gradient and embracing the full spectrum of “risk-proportionate regulation.” That in turn means acknowledging and accepting a stringent regulatory environment for cigarettes. This would be done by structuring a “grand bargain”—a consensus that allows for tough measures on combustible products in return for a relatively liberal regime on the noncombustible, low-risk alternatives, with a view to migrating smokers from smoking to using vapor or smokeless products. One of the reasons to focus on policy is to address the competitive imperative that drives companies’ pursuit of market share. If tobacco advertising is permitted, companies will fight over market share by advertising, with the side effect of increasing the market. A ban on cigarette advertising takes that option off the table, but allowing the advertising of vapor products would allow competition between vapor products—and at the expense of the incumbent cigarette trade. Each of the main policy measures in the WHO’s Framework Convention on Tobacco Control armory could be assessed in this way.
Sixth: Lead the innovation. This is about the future that companies are modeling when they spend on R&D, deploy staff, and invest in new plants and upgrades. For climate change, this means planning for greatly reduced carbon intensity and new technologies like electric vehicles, heat pumps and smart grids. For tobacco, it means seeing the world heading beyond combustion and moving into a consumer nicotine market based on the pleasure and functional rewards of nicotine use with far less damage to health, possible advantages to health (e.g., in relation to neurodegenerative diseases), and users willing and content to use it without the fear of death.
More than 5 trillion cigarettes are smoked each year by more than 1 billion human beings. That is clearly “where the dirt is.” The opportunity to dramatically reduce the harmful footprint of the tobacco industry is without parallel in any other industry and could be among the greatest public health wins of all time.
Can there be an ethical tobacco company? The competitive pressures to win market share in all segments, including cigarettes, make that a distant prospect. But there are, without doubt, ethical tobacco company behaviors. We should judge an incumbent tobacco company by its demonstrated commitment to change and by how aggressively it embraces the transition to noncombustible products. With millions of lives at stake, it would be unethical for governments, regulators or activists to try to obstruct it. This should be a project that unites public health professionals and the tobacco industry in a common aim, however uncomfortable that feels for veterans of the “tobacco wars.”
“Mapping the Future” is the theme of this year’s Global Tobacco & Nicotine Forum, which will be held Sept. 11–14, 2018 in London.
Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).

August 1, 2018
The duty of curiosity

GTNF—where the tobacco industry goes to think
By Clive Bates
In September I will be going to the Global Tobacco & Nicotine Forum (GTNF), which is to be held in my hometown of London and sponsored by the publisher of Tobacco Reporter and Vapor Voice. I’m proud to attend, and I’m looking forward to it. But why should someone who, like me, has spent years fighting Big Tobacco and who has a public health agenda go to a conference that has such a heavy tobacco industry presence? The industry will be there in force, with representation right through the full supply chain: growers, leaf merchants, machinery suppliers, the multinationals, retailers, and beyond to the analysts, consultants and lawyers that form the industry’s commercial ecosystem.
Surely, with that lineup, this is exactly the event to avoid? And there is plenty of encouragement to avoid it, too. Official discouragement comes from the highest levels. Guidance to the World Health Organization (WHO) tobacco control treaty asserts that: “There is a fundamental and irreconcilable conflict between the tobacco industry’s interests and public health policy interests.” Why get involved if our differences are fundamental and our interests are irreconcilable?
But is that statement actually right? The lowest smoking rate in the developed world by some distance is in Sweden. According to the European Commission’s 2017 Eurobarometer survey, Sweden’s adult daily smoking rate is now down to 5 percent, compared with a 24 percent average in the European Union overall. Sweden has significantly reduced smoking-related disease rates to show for it. And the cause of this outstanding public health triumph? The primary cause is, unambiguously, is a smokeless tobacco product, snus, marketed by a tobacco company, Swedish Match. So how can the WHO’s principle be universally and permanently valid if it fails a reality test like Sweden?
But this is only the start. We are now facing the prospect of generalizing this Swedish experience at a far greater scale with new generations of reduced-risk products: vapor devices, heated-tobacco products, smokeless tobacco and novel nicotine products. I am convinced that a major disruption of the tobacco industry is now underway yet still in its formative stages. Take Japan. According to figures produced by Japan Tobacco (JT), cigarette volumes have fallen by an incredible 27 percent in the past two years. This is largely due to the rise of heated-tobacco products, led by Philip Morris International’s (PMI) iQOS, but with British American Tobacco’s (BAT) Glo and JT’s Ploom Tech in hot pursuit.
Look at the phenomenal rise in the United States of the Juul e-cigarette product, which reached 60 percent e-cigarette dollar market share in convenience stores and 42 percent by volume in only a few months, and it is starting to hit cigarette sales. According to Adam Spielman, the lead tobacco analyst at Citigroup, “the U.S. tobacco market is beginning to be disrupted by Juul.” But as Spielman points out in the same April research note, that fight isn’t over. In fact, it’s hardly started: “Altria and Imperial have launched products that are similar to Juul but sold at a discount.” Bring it on, I say. Imagine another 10 years of innovation and disruption: What will the market look like then?
But what about the conventional cigarettes? Yes, they are the entrenched problem and why there is so much hostility to the industry. But if you are rigorously pressing for health and welfare outcomes, what really matters is change, and who or what is causing and leading change. As public health advocates, we can choose to stand back and issue condemnations of a situation we don’t like. But if we are serious about health, we should invest our time and energy in changing that situation for the better.
So, we are entering a fascinating era, a time of major technology disruption and upheaval in the tobacco policy world. Many of us in public health can sense a huge opportunity: a pro-health restructuring of the consumer market for nicotine, leading the market from primarily combustible products to primarily noncombustibles. And without the inhalation of the byproducts of combustion, the risks to the health of consumers fall dramatically.
So why go to a conference like the GTNF? Because this is where the industry goes to discuss and argue about these seismic shifts in the tobacco landscape. It is where the pros and cons are debated, new technology is discussed and the role of regulation is analyzed. The industry’s top figures reflect on strategy and explain their business reasoning. The GTNF is where the industry goes to think. Here are four reasons why I think it is worth a public health advocate participating in this event.
First, insights. I am constantly amazed by the conceit of many in the tobacco control world who claim to understand the industry but can somehow do this without ever talking to it. When 123 public health organizations recently called on PMI to “immediately cease the production, marketing and sale of cigarettes,” I was embarrassed by the naivety. Did they seriously not know why that is impossible and why, even if it were possible, it would achieve nothing? If your mission is change rather than position-taking, there is so much to learn. I want to know how they see reduced-risk products, who they take seriously in public health, where they are hurting and why, what’s in the pipeline, what affects their stock prices, what’s happening to the demand and profitability of cigarettes, and so on. It’s all under discussion at the GTNF.
Second, advocacy. I make no secret of it: I have an agenda. I want the disruption of the tobacco market to proceed at the greatest possible rate and the move to noncombustibles to be as fast and deep as possible. Conferences are an opportunity to make that case and to persuade others and, more humbly, to find out if your own ideas are useful or unworkable. One of the abiding myths in the public health world is that “Big Tobacco” is a thing. It isn’t. The companies compete vigorously with each other, and each company has factions and fiefdoms with rival visions of the future all competing for promotion and preferment. “Big Tobacco” is anything but a monolith under the direction of a single controlling mind. This is where coalitions of the willing can be forged. Public health advocates need to identify and encourage the people pressing for disruption from within, not just dismiss everyone involved as old-style evildoers as if this is somehow self-evident.
Third, engagement. It is always better to understand or at least listen to the perspective of others. I find contact with industry scientists, marketing and regulatory professionals and executives very worthwhile. It doesn’t mean I agree with or believe everything I hear. The public health side does not have a monopoly on truth and wisdom, and I am quite often surprised by what I hear at these meetings. Rather than bringing up quotes from decades-old industry documents as evidence of deceit or misconduct in the present, we need to listen to what insiders say about change in the industry, taking in the views of competitors, analysts, investors and critics. Businesses do business things for business reasons, and we in public health need to better understand what really makes them tick.
Fourth, challenge. It also provides a forum to lay out some hard truths about the business practices of the industry. There is little doubt that industry leaders want, with varying degrees of enthusiasm, to modernize and move out of the “merchant of death” business to the extent that they can, given their competitive environment and obligations to shareholders. But that will require a kind of contract with society along these lines: Yes, you can and must modernize the nicotine market, but no, you can’t carry on “flogging fags to kids in Vietnam,” as the U.K.’s Daily Mirror once memorably put it, just because you think no one is looking. Those days are over, and this is a forum to reinforce that message and call out bad practice.
I know that not all of my current and former colleagues in public health will accept this perspective. That’s their call, but I would like them to understand why many of us now think this is important. Public health is a tough discipline, with the lives of thousands, maybe millions, of other people on the line. So there should be a strong duty of curiosity: an imperative to think the unthinkable, to shake out our own long-held beliefs and not to let the threadbare cliches of tobacco control orthodoxy stand in the way of progress. The GTNF is a good forum to put that curiosity to the test and to feel the pulse of an industry undergoing a major disruption—a disruption that happens to be hugely positive for public health but challenges us to rethink society’s love-hate relationship with nicotine.
The GTNF will be held Sept. 11–14, 2018, in London.
Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).

June 1, 2018