Category: Print Edition

  • Health Authorities Have Needlessly Spooked Vapers

    Health Authorities Have Needlessly Spooked Vapers

    In their handling of the recent vaping scare, U.S. health authorities have unintentionally served the public poorly.

    By George Gay

    Konstantinos Farsalinos

    If there was one thing, and one thing only, that participants took away from September’s Global Tobacco & Nicotine Forum (GTNF), it was surely the idea that vaping precepts in the U.S., which have never appeared to form a coherent whole, were starting to resemble a witch’s brew. But how can this be? After all, vaping policy in the U.S. is guided by the Food and Drug Administration (FDA), which, in turn, makes decisions on the basis of science not on the basis of witchcraft or alchemy.

    There are clearly a lot of issues playing out here, but, according to Konstantinos Farsalinos, a research fellow at the Onassis Cardiac Surgery Center in Athens, Greece, one problem is that science is playing only a “very small” role in the vaping debate in the U.S., and even then, it is sometimes being misused to support “emotional aspects” of the debate. “You are seeing such a distortion of scientific facts that it is extremely disappointing for all of us outside the U.S.,” he told me during a telephone interview in November.

    But I should point out that Farsalinos, who gave a presentation at the GTNF held Sept. 24–26 in Washington, D.C., does not subscribe to conspiracy theories about scientists deliberately misleading the public. I asked him about the reaction by the Centers for Disease Control and Prevention (CDC) to an outbreak of acute lung disease among people using vapor devices—an outbreak that had become widely publicized only shortly before the GTNF was held. At that time, the CDC had apparently concluded that the outbreak, which by then had occurred only in the U.S. and, in respect of a single case, in Canada, could be due to vaping with nicotine alone. The first item on its list of advice concerning the illness was that people should “consider refraining from using e-cigarette, or vaping, products, particularly those containing THC [tetrahydrocannabinol].” This seemed to be an odd conclusion to draw given that, as Farsalinos pointed out in his presentation, people had been vaping with nicotine for more than 10 years around the world while the inhalation of THC by evaporating THC oils was a much more recent phenomenon.

    Nevertheless, other presentations made at the GTNF indicated that the CDC’s approach had spooked vapers, with some representatives of vape shop chains indicating that sales had dropped by up to 20 percent following the agency’s initial announcements and that the footfall of smokers looking to try vaping had fallen by about 50 percent.

    The easiest and most reasonable explanation for the way the CDC scientists behaved was their predisposition to taking a negative view of vapor products, Farsalinos said, before adding that he wasn’t suggesting the CDC scientists had set out intentionally to misinform the public or to cause harm. Speaking to me on Nov. 9, Farsalinos said the CDC had reported the previous day that all of the 29 cases of acute lung disease it had subjected to bronchoalveolar lavage analyses had revealed the presence of vitamin E acetate, which was a marker of THC oil usage. The CDC now almost accepted that all the cases it had examined had occurred among those who were using THC, he added, but, because of its earlier stance, nearly everyone was misinformed. Opinion polls showed that more people in the U.S. believed that nicotine vaping was dangerous than that THC oil inhalation was dangerous.

    So the CDC’s approach, Farsalinos said, and all the campaigns that were mounted had resulted in a “gross misinformation of the public,” something that was not unexpected when you examined what kinds of arguments the CDC scientists had been using, what kinds of press statements they had been issuing and what kinds of official reports they had been releasing. “I’m not saying this was intentional, but the scientists at the CDC—those at the FDA made a better case much sooner—allowed themselves to be influenced largely by the negative attitude toward electronic cigarettes in general, and they have unintentionally served the American public badly,” he said.

    Confirmation bias

    This of course raises a question. The people at the CDC are scientists, so why would they give way to emotion and prejudice: Why didn’t they stick to the science? Farsalinos said he believed this was a typical case of confirmation bias. The scientists had very strong negative opinions about electronic cigarettes, and this influenced the way they looked at the data. “One of the arguments they were using was that not all of the lung disease sufferers reported THC use,” he said. “But this is a naive argument because it is well known that people misreport. Some people will avoid reporting the use of THC, especially if they have been using illicit THC in states where it is illegal to use THC.”

    Farsalinos suggested also that the CDC scientists had lost track of an important aspect of such outbreaks. Epidemiology had demonstrated that while it might be possible theoretically for one epidemic to be generated by two very different causes, this almost never happened in practice, he said. So, it was not possible that both THC oils and nicotine liquids, which were two extremely different products, could have caused the same epidemic.

    And it would seem that the CDC required higher levels of proof of causal links in the case of the recent lung disease outbreak than it had in relation to other health problems. The causes of recent and fairly recent outbreaks of salmonella poisoning and Legionnaires’ disease, for example, had been rightly identified and accepted on the basis that about 80 percent to 85 percent of sufferers reported being in contact with the suspected cause. In the case of the recent lung disease outbreak, however, the CDC scientists needed higher levels of proof of causal links, and this again seemed to be a case of confirmation bias.

    Accepting the obvious

    While the FDA came out of the lung disease furor in better shape than the CDC, it too has had its problems, and I asked Farsalinos how it had reached the point where the FDA’s science seemed not to be getting harm reduction policy to the place where it should be. At this point, he turned to the issue of snus. Snus, he said, was a product whose harm reduction credentials were supported by a level of evidence that you could not even dream of in the case of any other tobacco or nicotine product. “We’re not talking about chemistry, toxicology, cell studies or animal studies,” he said. “We are talking about hardcore evidence: clinical evidence, long-term studies. We have meta-analyses of epidemiological and clinical data. We have known about this for 10 years at least.”

    Nevertheless, it took the FDA many years to accept the obvious—that snus use is a less harmful alternative to smoking, he said. (On Oct. 22, the FDA announced that it had authorized the marketing of eight Swedish Match USA snus products as modified-risk tobacco products.) And this was down to the rigidity of such organizations when it came to anything that was related to tobacco. It showed a dogmatic approach that said smokers should have no option but simply to quit their habit. “It would have been ideal if people were able to simply quit without using any aid or alternative products,” Farsalinos added. “The problem is [that] not all smokers are able to quit. We cannot provide them with very effective smoking cessation medications.

    “Instead of seeing harm reduction products as placing an obligation on the scientific community to provide as many tools as possible, additional tools to help people quit, parts of the scientific and public health community are doing the opposite. They are depriving smokers of an additional option [electronic cigarettes] to quit, which is absurd … it is literally absurd.”

    Farsalinos said there was, of course, a need for well-implemented restrictions and regulations in respect of vapor products, but the U.S. had done very little in this direction. It basically had no regulation, and it did not enforce the rules it did have, such as the ban on sales to young people. It had failed in enforcing this ban and was punishing smokers because of that failure. And worse, it was causing people who had used vapor products to quit smoking in the past to relapse by encouraging them to believe that they were going to be more harmed by vaping than by smoking.

    Farsalinos was also critical about the misuse of evidence in respect of vaping among young people. “We should definitely monitor it, and we should definitely try our best to prevent use by never smokers and by youth, but this is becoming an emotional obsession which has very little to do with the evidence.” The evidence pointed to the fact that vaping among young people was largely experimental and infrequent, he added, and it was largely confined to adolescents with a smoking history.

    Finally, Farsalinos said it was ironic that while, around the world, the concept of harm reduction was generally accepted, it faced more resistance in the case of tobacco. “I would accept a rejection of a harm reduction principle if we had the tools to make all or the vast majority of smokers quit,” he said. “But we don’t. When you have the most successful smoking cessation medication having a success rate of 25 percent in the long term, what is going to happen with the rest of the smokers? When you have smoking cessation medications that are unpopular among smokers, what are you going to do with the rest—punish them because they don’t want to use the medication or because they failed to quit with medication? It doesn’t make sense.”

     

     

     

  • Altria Retains its Lead in Tough Environment

    Altria Retains its Lead in Tough Environment

    The Altria Group continues to grow and remain profitable in a constantly changing tobacco market.

    By Timothy S. Donahue

    Howard Willard

    The Altria Group is always evolving. As cigarette sales started to slump, the largest tobacco company in the U.S. began to diversify. In 2008, Altria purchased U.S. Smokeless Tobacco Co. for $11.7 billion. The acquisition allowed Altria to expand beyond cigarettes, adding the successful smokeless brands Copenhagen and Skoal to its portfolio. The purchase also included Ste. Michelle Wine Estates, which allowed Altria to further diversify its portfolio. Ste. Michelle is among the top 10 producers of premium wines in the U.S.

    A decade later, the cigarette industry began to see major disruption by the vapor industry. As the growth of e-cigarettes accelerated, Altria entered the vapor business. At the end of 2018, the tobacco company invested $12.8 billion in Juul Labs, taking a 35 percent share. Around the same time, Altria took a $1.8 billion equity stake in Cronos Group, a Canadian marijuana company. Altria now has a 45 percent stake in Cronos with the option to boost its share to 55 percent.

    Most recently, Altria, through its subsidiary Philip Morris USA, introduced IQOS, a revolutionary heat-not-burn device, to the U.S. market. It was only the second time that the U.S. Food and Drug Administration (FDA) allowed a new tobacco product on the market through its premarket tobacco product application (PMTA) process, and IQOS was the first next-generation product to receive a PMTA approval. Altria has an agreement with Philip Morris International (PMI) to sell the device in the U.S. Globally, IQOS is available in more than 45 countries, and PMI estimates there are currently 12 million IQOS users.

    Juul Labs, IQOS and Cronos are expected to give Altria alternate, fast-growing revenue sources as tobacco smoking rates continue to fall, according to investment analysts. As a result, Altria has remained one of the most profitable companies. During its 2019 third quarter and nine months business results conference call in October, Altria reaffirmed its 2019 full-year adjusted diluted earnings per share (EPS) guidance and announced a new 2020–2022 adjusted diluted earnings per share growth objective.

    In August, Altria’s board of directors increased Altria’s regular quarterly dividend for the 54th time in the past 50 years. Altria’s current annualized dividend rate is $3.36 per share (up from $3.20 a share at this period last year), representing an annualized dividend yield of 7.3 percent as of Oct. 28, 2019 (up from 5.2 percent during the same period in 2018). Altria paid $1.5 billion in dividends in the third quarter (up from $1.3 billion for the same period in 2018).

    “Our core tobacco businesses delivered excellent third quarter financial results. Our 2019 plans remain on track, and we reaffirm our guidance to deliver full-year 2019 adjusted diluted EPS growth of 5 percent to 7 percent. We continue to believe the evolution of the tobacco industry represents a significant opportunity for Altria,” said Howard Willard, Altria’s chairman and CEO.

    “In light of these considerations, we announce a compounded annual adjusted diluted EPS growth objective of 5 percent to 8 percent for the years 2020 through 2022. We believe this new growth objective provides us the flexibility to make investments in noncombustible offerings for the long term, generate sustainable income growth in the core tobacco businesses and return cash to shareholders through a strong dividend. We also expect to maintain our dividend payout ratio target of approximately 80 percent of adjusted diluted EPS during this period.”

    During the results conference call, Willard also announced that Altria was writing down its investment in Juul Labs by more than a third, recording a $4.5 billion pretax charge against its third quarter earnings. “While there was no single determinative event or factor, Altria considered impairment indicators in totality, including increased likelihood of (FDA) action to remove flavored e-vapor products from the market pending a market authorization decision, various e-vapor bans put in place by certain cities and states in the U.S. and in certain international markets, and other factors,” Willard said.

    Change for the better

    While Altria’s future still looks bright, Willard acknowledged that there are some hurdles to jump, as evidenced by the Juul Labs write-down. The U.S. is battling what the FDA has termed an “epidemic” of youth vaping, for example. The vapor industry has also come under attack in the wake of an outbreak of vaping-related lung injuries in the U.S. Although the majority of victims reported vaping THC liquids, often obtained on the black market, some reported vaping nicotine liquids, and no single cause has been identified thus far.

    At press time, the FDA was also considering a ban on flavors in e-liquids as regulators seek to curb youth use. During the Global Tobacco & Nicotine Forum (GTNF) in September, Willard announced that Altria executive K.C. Crosthwaite would replace then Juul Labs CEO Kevin Burns to “help Juul [Labs] urgently confront and reduce underage vaping.” Willard also announced that Juul Labs would suspend all digital and print advertising and refrain from lobbying the FDA or the Trump administration over PMTA rules or flavor bans.

    “This is a pivotal moment for the industry, and strong action and leadership are needed … vaping is at an inflection point … the public has legitimate concerns about marketing practices, and flavored products and vaping products, including those that are illegal, are at the center of a national investigation,” said Willard. “Consumers are concerned and unclear about the health risks of these products and … policymakers are responding to the increased demand for action.”

    At the time of writing, eight states had banned flavored vapor products while others were considering banning flavors and even possibly banning vapor products outright. In September, the Trump administration announced its intent to pull “youth-friendly” flavored e-cigarettes from the market until they are approved by the FDA. Willard said that, given the tremendous progress in harm reduction over the past 30 years, he finds these challenges discouraging.

    Nonetheless, he remains optimistic.

    “Many of the leaders in this room … have confronted significant challenges before and have the ability to change this trajectory,” said Willard. “The next steps we take are critically important. It won’t be easy and requires us to think and act differently when put into the context of the 37 million adult smokers in the U.S. To me, it’s an easy decision to take bold and compelling action,” he said. “In our view, bold action requires thinking not in weeks or months but in terms of years as we try to change the current course and preserve the long-term potential of vaping and harm reduction.”

    Willard said that tobacco (and vapor) companies must confront youth e-vapor use with real solutions while remaining focused on reducing youth use of all nicotine products. One way to help overcome the challenge is by raising the minimum purchase age for tobacco and vapor products from 18 to 21. Several states and municipalities have already enacted the increase. Willard said that Altria supports the action and “that raising the minimum purchase [age] to 21 is the most effective action” for reducing youth use. “We would like to see it the law of the land,” said Willard, adding that raising the minimum age to 21 would guarantee that “almost no high school student could purchase tobacco products legally.”

    There isn’t an easy fix to the challenges facing next-generation tobacco products. Driving down underage vaping rates won’t happen overnight and will require the efforts of industry players, lawmakers and regulators alike, according to Willard. “Unlawful products that skirt the law harm legitimate manufacturers and hinder the collective progress on eliminating youth vaping,” he said. There is also a large amount of misinformation being spread about next-generation tobacco products, and Willard said the industry should not allow misinformation to drive policy.

    “It’s on manufacturers to continue innovating in creating noncombustible products,” he said. The FDA, he added, should optimize the PMTA process, “creating a more fluid, predictable process that reviews and decides on applications in an appropriate time period and is transparent with the industry, adult tobacco consumers and public health,” said Willard. “Innovation and harm reduction, unfortunately, cannot coexist within the process we have today. An unpredictable process discourages innovation and investment … there must be clear rules of the road to encourage manufacturers to develop new products and invest in scientific research. Good science is at the foundation of progress.”

  • Synthetic Nicotine is Gaining Acceptance

    Synthetic Nicotine is Gaining Acceptance

    Even as synthetic nicotine is gaining acceptance among customers, the product remains in a regulatory void.

    By Stefanie Rossel

    Though still a niche compared to tobacco-derived nicotine (TDN), the synthetic nicotine (SN) segment has been growing in the past years. In late August, California-based Next Generation Labs (NGL), a producer of bulk R, R-S and S nontobacco-derived nicotine, announced a doubling of its annual production capacity to meet increasing demand. Orders have been coming from vapor product manufacturers and device cartridge fillers, among other customers, with strong demand in the United States and South Korea.

    Established in 2014, NGL markets its synthetic nicotine under the tobacco-free nicotine (TFN) trademark. Because adult consumers are displaying an increasing preference for nicotine not sourced from tobacco and free of tobacco-derived components, trade customers have been increasing both order sizes and frequency, according to the company. “Our direct clients have reported transitioning from online and vape specialty retail into the convenience segment,” explains Ron Tully, a founding member of NGL.

    Tully is reluctant to share customer or production forecasts, however. “What we can say is that over the past five years, NGL has created this market for nicotine that did not exist prior to our innovation and commercialization of TFN,” he says. “As we have become more established and our TFN nicotine has gained acceptance with manufacturers, the trade and consumers, we have scaled accordingly. The current market demand for synthetic nicotine has increased annually and continues to grow year on year.”

    The substance, initially created in a lab, but now manufactured in large-scale production facilities, could play a much greater role in the future, says Torsten Siemann, managing director of Contraf-Nicotex-Tobacco (CNT). “If you think 10 to 15 years ahead and keep in mind the next-generation products market’s development of the past 11 years, tobacco-derived nicotine capacity might reach certain limits at one point,” he says. “Synthetic nicotine can become important in supplying markets such as China, India and Russia where you’ve got many nicotine users who still have to carry out the switch to next-generation products. We see enormous demand there, and the capacity for synthesis of chemicals is unlimited.”

    Since its creation in 1982, the German company has evolved into the world’s leading supplier of tobacco-derived, highly purified nicotine and nicotine derivatives to the pharmaceutical industry. In recent years, CNT has also become a significant provider of pharmaceutical-grade tobacco-derived nicotine to the e-cigarette industry. In 2015, CNT started research on SN. Since 2018, it offers synthetic S nicotine to its customers. The processing takes place at CNT’s exclusive manufacturer Siegfried in Switzerland. The companies jointly hold a patent on the manufacturing process of synthetic pharmaceutical-grade S nicotine. The share of SN in CNT’s business accounts for less than 1 percent, according to Siemann. “Presently, synthetic nicotine clearly is a negligible product for us in terms of volume,” he says.

    Same but different

    Whether manufactured naturally or artificially, the nicotine molecule has the same chemical structure, C10 H14 N2, meaning that it comprises 10 carbon atoms, 14 hydrogen atoms and two nitrogen atoms. What makes it special, independent of its origin, is that it is a “chiral” molecule: It has two stereoisomers that are mirror images of each other

    The most prevalent form is S nicotine, the physiologically active variant. Its mirror isomer, R nicotine, also occurs in plant-derived nicotine in very small amounts but is basically considered physiologically ineffective. NGL presently focuses on combinations of the R to S isomers for their potential physiological activity. The company has secured a U.S. patent for the use of R-S nicotine in nicotine reduction strategies. But the company also sells full USP S nicotine to customers, Tully says.

    The easiest product to create is a combination of S and R nicotine. However, to replicate the natural type, meet the established pharmaceutical monographs and have the same effect, the substance would have to undergo a second process to remove the R isomers. Otherwise, the amount of the combined R-S nicotine would have to be at least doubled.

    Opinions about the use of the R form in synthetic nicotine widely differ. “We think R-S nicotine, which contains a significant amount of R nicotine, can only be considered to be an intermediate, which requires further purification to the S form,” says Siemann.

    “There is not enough scientific evidence about the effects of the R form, but it is common knowledge in the pharmaceutical industry that enantiomers often exhibit profound differences in pharmacology and toxicology, some of which could be potentially harmful. In the best case, the same quantity of R-S nicotine can be considered to be only 50 percent effective, but we also foresee mislabeling concerns by describing R-S nicotine as equivalent to nicotine USP/EUP. Eur. For these reasons, CNT does not sell R-S nicotine.” He adds that his company has tested a number of SN samples, among them products from Chinese and Indian manufacturers, and 100 percent of them were R-S nicotine. “If you look at the European and the U.S. Pharmacopeias, the percentage of S isomers in nicotine must be higher than 99 percent,” Siemann explains. “The nicotine used in the pharmaceutical industry needs to have a specific optical rotation that only S nicotine can achieve.”

    NGL markets R, R-S and S nontobacco-derived nicotine. “Nicotine has been studied extensively in its naturally derived tobacco form, which includes the naturally occurring S and R isomers, which are metabolized in the consumption of current cigarette, vape and smokeless tobacco products,” explains Tully. “Although the uptake pathway for the R isomer is not fully elaborated, there is nothing to indicate that the R isomer is anything other than a positive attribute to the nicotine molecule. We are at an early stage in the evolution of isomeric nicotine and its utility. NGL is trying to ensure that companies have the option based on their evaluation of the utility and safety of synthetic nicotine in their products.”

    Benefits

    Synthetic nicotine offers a number of advantages over its natural counterpart. “Manufacturers have access to nicotine in its chiral R and S forms that may offer distinct benefits to consumers in potential takeup pathways for nicotine satiation,” says Tully. In November 2017, the U.S. company reported on research it had carried out on the isomeric character of its SN products. According to a press release, the studies revealed that specific ratios of the R to the S isomers could potentially offer nicotine use at satisfying but nonaddictive or less addictive levels. If proven, the artificially created nicotine might become a useful tool to help producers achieve the U.S. Food and Drug Administration’s (FDA) objective of lowering nicotine content in tobacco products to minimally addictive levels.

    SN can be produced in unlimited amounts independent of nature. In addition, its manufacture doesn’t involve the challenges associated with tobacco cultivation. “Synthetic nicotine requires fewer direct inputs environmentally than tobacco-derived nicotine,” says Tully. “We are not dependent on land availability, soil suitability, fertilizers, herbicides, seeds, labor, firewood, seasonal variations, or any other factor that may impact the finished product as a supply input.”

    Due to its artificial character, synthetic nicotine will also remain untouched by general agricultural challenges, Siemann adds. However, he doesn’t buy the frequently heard argument that synthetic nicotine provides a better taste to e-liquids due to TDN impurities. “This may be true for inferior quality TDN,” says Siemann. “However, CNT’s tobacco-derived nicotine has a purity of more than 99.9 percent, thus ensuring that it is of the highest standard from a sensory perspective.”

    For the time being, SN’s greatest downside is price. Siemann estimates that due to difficulty to purify the synthetic S nicotine from the R-S form and the comparably small amounts in which SN is currently produced, the artificial variant is about 20 to 30 times more expensive to manufacture than its natural counterpart, a factor that will decrease with growing demand and the upscaling of production.

    Tully notes that the price of SN has come down dramatically over the past five years. “As demand has gone up and production has scaled, pricing has decreased,” he says. “We have moved from pricing from a multiple that was 10 times greater than tobacco nicotine, to a most favored nation (MFN) pricing level that is only three to four times the current cost of tobacco-derived nicotine. The suggestion that synthetic nicotine manufacturers are not adjusting pricing to meet market demand is simply not true. Any company that commits to a TFN strategy and works with NGL will receive the benefit of MFN pricing as they scale.”

    Regulatory void

    Despite its growing popularity, SN remains in a regulatory void. Because the product is not derived from tobacco, it does not necessarily fall under the 2009 Family Smoking Prevention and Tobacco Control Act. Neither does SN meet the Federal Food, Drug and Cosmetic Act’s definition of a tobacco product. The FDA has suggested it would evaluate synthetic nicotine products on a case-by-case basis.

    “NGL has made clear to manufacturing customers that TFN is a tobacco-free nicotine designed to offer adult consumers the benefits of a nicotine that is free of all tobacco-derived components and contaminants,” says Tully. “It is an alternative recreational nicotine that aims to allow adult consumers to make a choice to separate their nicotine consumption from all forms of tobacco consumption. That is a laudable aim for all companies in the nicotine business that have the objective of separating nicotine use from tobacco use.”

    Various jurisdictions are trying to regulate TFN in the same way as tobacco nicotine. “We believe treating all nicotine within the same regulatory framework is not in the best interests of adult consumers who are seeking an alternative nontobacco recreational nicotine experience,” says Tully. He argues for science-based regulation of SN.

    Siemann expects regulation of SN in the U.S. as soon as the market has reached a critical size. He is optimistic, though, that the FDA will find a way to regulate synthetic nicotine differently than TDN. “SN could be taxed differently from TDN,” he suggests. “Perhaps it would be an interesting possibility for health authorities to reach public health goals in cooperation.”

    In the EU, SN’s status is similarly unclear. “The revised Tobacco Products Directive, which governs electronic cigarettes in the EU, specifies the use of high purity ingredients,” explains Siemann. “In the case of nicotine, TDN meeting USP/EUP. has been adopted as the established norm here. Hence in keeping with this, S form nicotine would be the only equivalent synthetic alternative.”

    Future potential

    The future for nicotine from the lab looks bright, according to Siemann and Tully. “There will be markets where products containing tobacco-derived nicotine will not be allowed but where synthetic nicotine will be permitted in consultation with health authorities,” says Siemann. “In the end, we will hopefully see an equivalence between SN and TDN where customers can decide which one to use for their products.”

    “Every market in which tobacco is consumed is a potential market for synthetic nicotine in the future for innovative product entrants for those markets,” says Tully. “Specific short-term opportunities for synthetic nicotine may develop in some markets for regulatory definitional or tax reasons, but those aside, the real opportunity will be in finding a commercialization pathway that marries TFN synthetic nicotine isomers with products that adult consumers are seeking,” he says.

    “The opportunities for TFN nicotine are limited not by the regulatory framework but by the mindset of the tobacco, vape and pharmaceutical [industries] and their willingness to explore the opportunities that the separated and selectively combined R and S isomers of nicotine offer to adult consumers,” says Tully. “A deeper understanding of synthetic nicotine, the uptake pathways of the isomers and the application of this unique product need to be better funded and developed for synthetic nicotine to find its place as the next big leap in adult nicotine consumption.”

    In a world where manufacturers are increasingly promoting products with descriptors such as “natural” and “organic,” it may be difficult to imagine selling a product on its artificial merits. In the case of nicotine, however, “synthetic” may be just the ticket.

     

     

     

     

     

     

  • At a Crossroads

    At a Crossroads

    Photo: mandritoiu

    Participants in the 2019 Global Tobacco & Nicotine Forum agreed that regulation will be decisive for the future of the vapor category.

    By Stefanie Rossel

    “The vaping market will look very different next year—there is no secure future of next-generation products (NGPs) anymore,” said Elise Rasmussen, founder and president of the Global Tobacco & Nicotine Forum (GTNF), at the opening of this year’s event, which took place in Washington, D.C., Sept. 24–26 under the theme “More choice, less risk.”

    The swiftly moving events outside the conference rooms of the Four Seasons Hotel only reiterated her prediction. During the two GTNF event days, Massachusetts and Rhode Island announced temporary bans on sales of flavored vapor products, following the examples of Michigan and New York, which had passed similar “emergency” legislation earlier in September. At the time of writing, Washington had joined them while Illinois, Delaware and New Jersey were considering like measures. Massachusetts announced a blanket ban on all vapor products.

    Meanwhile, Walmart announced it would stop selling all e-cigarettes. The U.S. Food and Drug Administration (FDA) opened a criminal inquiry into the supply chain of vapor products and devices. President Donald Trump also got involved in the debate. On Sept. 11, he announced that his administration would ban all nontobacco flavored e-cigarettes in order to cut down on the increasing number of youth e-cigarette users and to address widespread concern as a mysterious lung illness linked to vaping spread throughout the U.S.

    Trump’s plan would go further than previous restrictions announced by the FDA to ban the sale of all types of flavored e-cigarettes, excluding menthol and mint flavors, in stores that don’t have areas prohibiting people under the age of 18, the federal minimum age to buy tobacco products.

    The bans and Trump’s announcement hit the world’s largest vapor market at a time when the exact cause for the illness is yet unknown. The sudden turnaround in U.S. vaping policy also prompted Kevin Burns to step down as CEO of Juul Labs, the largest manufacturer of vapor products in the U.S. Juul Labs also suspended all broadcast, print and digital product advertising in the U.S. Furthermore, it caused Philip Morris International (PMI) and Altria to call off talks to reunite their businesses. Altria holds a 35 percent stock in the beleaguered Juul Labs.

    Opportunity for Progress

    “This is a pivotal moment for the industry, and strong leadership and action are urgently needed,” said Howard Willard, chairman and CEO of Altria Group, at the GTNF. “We must acknowledge that a key component of harm reduction, vaping, is at an inflexion point.” While the U.S. witnessed an epidemic of youth vaping and restrictions on vapor products for adults, he continued, the public had legitimate concerns about marketing practices and flavored products. “Vaping products including those that are illegal are at the center of a national investigation. Consumers are concerned and unclear about the health risks of these products. Given the tremendous progress made in tobacco harm reduction (THR) over the past 30 years, I find this very discouraging.”

    Nevertheless, Willard remained optimistic about the future, pointing out that the stakeholders, including industry officials, public health officials, policymakers, regulators and scientists, had confronted significant challenges before. “The next steps are critically important,” he said. Preserving the harm reduction potential of vaping by shaping proper regulation is a long-term process, according to Willard. With 37 million adult smokers and many of them demanding noncombustible alternatives, innovation and an appropriate regulatory framework, the U.S. has the opportunity to make more progress on reducing the harm caused by cigarettes in the next 10 years than they had in the past 15 years. The industry has an obligation to ensure that the public has access to scientifically grounded information.

    While the responsibility currently rests only with the manufacturers, those in public health and the FDA needed to be aware of the fact that adult smokers required their help in obtaining accurate and truthful information. From the confusion of the role of nicotine to the misinformation regarding the relative risks of different products, they had an important task in helping consumers make informed decisions, according to Altria’s CEO.

    Willard called for the FDA to optimize its premarket tobacco product application (PMTA) approval process to create a fluent, accelerated and predictable procedure that will be timely enough that consumers will still adopt those reduced-risk products (RRPs). The FDA, he said, should establish a process that accounts for different levels of complexity, permits changes to allow products to improve and gives manufacturers some certainty on what to expect for their efforts and investments.

    FDA’s approach criticized

    Some GTNF speakers criticized the FDA’s approach. Veronique de Rugy, economist and senior research fellow for the Mercatus Center at George Mason University, suggested that the effects of the regulatory hurdles erected were tantamount to having frozen development of the iPhone in 2008.  Referring to former FDA Commissioner Scott Gottlieb’s statements from 2017 that regulation should encourage not stifle innovation, health policy consultant Scott Ballin said that somewhere along the line in the last two years, the FDA had dropped the ball in moving the agenda forward. “Most of the discussion on e-cigarettes and harm reduction has become toxic, emotional and confusing to the public,” he said. “This didn’t have to happen.”

    Mitch Zeller, director of the FDA Center for Tobacco Products, listed the steps his agency had taken to reduce the health impact of tobacco. He underlined the FDA’s mission of a science-based review of tobacco products, stating that the FDA had helped make the review process more efficient, predictable and transparent while upholding its health mission. The day before,  acting FDA Commissioner Ned Sharpless testified before the House Energy and Commerce Subcommittee on Oversight and Investigation, saying that the FDA planned to “enforce existing law” rather than ban flavored cigarettes outright.

    Matthew Holman, director of the FDA Center for Tobacco Products’ Office of Science, stressed his agency’s efforts in tackling the surge in youth vaping, one of the big themes discussed at the GTNF. According to preliminary data for the 2019 National Youth Tobacco Survey (NYTS), he said, 25.7 percent of high school students were current e-cigarette users with the majority of them citing the use of fruit and menthol or mint flavors. The rise had occurred despite several youth and public education campaigns the FDA had launched in 2014. In 2018, the FDA announced a youth tobacco prevention plan that focused on preventing access, curbing the market of tobacco products aimed at youth and educating teens and their families. A major concern, Holman said, was the popularity of products that closely resemble USB flash drives, such as Juul products, that have high levels of nicotine and emissions that are hard to see.

    As part of its youth policy, the FDA had conducted a large-scale undercover nationwide “blitz” of brick-and-mortar stores and online retailers for illegally selling Juul products to minors, and the agency issued more than 1,100 warning letters and 131 civil money penalty complaints to retailers. Warning letters were also sent to Juul Labs and other e-cigarette manufacturers instructing them to submit plans on how they will address youth access and use of their products. An additional warning was directed at Juul Labs for marketing unauthorized modified-risk tobacco products. According to the FDA, the company had made unauthorized claims about the product’s safety to students.

    Get Your Data Right

    Brad Rodu, professor at the University of Louisville and senior scientist at the James Graham Brown Cancer Center, put the latest youth usage figures as well as the forecast of another 32 percent rise in teen vaping in 2019 into perspective: “The teen vaping epidemic will get worse in 2019,” he predicted, “because there have been changes in the NYTS questionnaire in 2019. It has been taken from paper and pencil to electronic on tablets. Juul is listed for the first time as a brand, and images representing the vape category are included.”

    The 2018 NYTS, he pointed out, assumed the high school e-cigarette “epidemic” to be large, showing a prevalence of 21 percent, or 2.29 million, of 15-year-olds to 17-year-olds in the U.S. currently vaping whereas others, such as Vallone and McKeganey, spoke of 11 percent and 9 percent, respectively. Of the vapers surveyed in the 2018 NYTS study, many vaped marijuana.

    Rodu concluded that while teenagers may vape more, there has been a historic decline in teen and young adult smoking. Among 12-year-olds to 17-year-olds, smoking rates dropped to under 3 percent in 2018, a decline of 11.5 percent since 2015. Among 18-year-olds to 25-year-olds, smoking prevalence fell by 9.5 percent during that period, standing at approximately 19 percent last year. These figures, he said, didn’t look bad compared to other “real” high school epidemics, such as texting/emailing while driving (39 percent), drinking alcohol (30 percent) or consuming marijuana (20 percent).

    Michael D. Stein, professor of health law, policy and management at the Boston University School of Public Health, sought to explain teens’ fascination with vaping by providing insights into the minds of youths. Looking at the question of whether adolescents can deliberate, he said that there were three vital factors determining youth behavior: self-control, the need for experimentation and taking risk, and future orientation. Self-control increases as adolescents are growing up. The quest for experimenting explains why driving fast is more rewarding for teenagers. Future orientation in teenagers is weaker, meaning that what they experiment with might not last forever. Vaping might thus soon no longer interest them.

    While smoking is at a generational low in the U.S., social sources remain the primary point of access, Jennifer Hunter, senior vice president of corporate citizenship for Altria Client Services, pointed out. Only a small percentage of 15-year-olds to 17-year-olds purchased their cigarettes, other tobacco products or e-cigarettes from stores; the vast majority had been offered the products, asked for them, gave money to someone to buy them or simply took them. Altria, like its competitors and most panelists, supports the recent U.S. policy to set the legal age of purchase for tobacco products to 21. The company has just started a new $100 million campaign to address youth vaping, Hunter said. The desired outcomes include that youth vaping rates will be on the decline and rates of traditional tobacco product usage continue to decrease by 2022. Furthermore, Altria hopes to see 21 as the legal age of purchase at the federal level or in the majority of states. Retailer compliance rates are aimed to stand consistently at 90 percent to 95 percent.

    The danger of twisted facts

    While panelists agreed that policy should be driven by facts and scientific data, many lamented the use of flawed science and the twisting of facts for ideological purposes. Konstantinos Farsalinos, research fellow at the Onassis Cardiac Surgery Center, pointed out that Michael Bloomberg’s public statement that most people who vaped had never smoked before remained uncontested despite publicly available data by the National Health Interview Surveys showing the opposite. He ticked off a series of flawed arguments used to support bans or restrictions of vapor products, including the suggestion that nicotine was a poison, that vaping was a trick of the tobacco industry to keep people addicted to nicotine and that flavors were introduced to hook kids on nicotine.

    He said that from an epidemiological viewpoint, the reports of respiratory failure should be classified as acute cases rather than problems relating to long-term use of e-cigarettes. Furthermore, the cases were unrelated to conventional e-cigarette products available in the U.S. and other countries—otherwise there would have been similar outbreaks in previous years and in other countries. Citing a characteristic case, he showed that the lung disease was most likely related to the vaping of THC oils, which use compounds such as vitamin E acetate as well as vegetable oils as solvents that are not used in conventional e-liquids.

    Despite these insights, alarmist headline writers have fingered vaping in general as the culprit.

    “There is a fierce opposition against e-cigarettes, with the U.S. becoming the leader,” Farsalinos said. “While concerns are legitimate and reasonable, they are presented in a distorted and irrational way. There is no clear warning on the real cause of acute lung failure cases. This unfortunate outbreak is used to speed up regulation, such as flavor bans that are irrelevant, while there is no debate about the uncontrolled illicit THC market. Most of the vape market will disappear, except for the big players, and there will be a relapse to combustibles.”

    Regulatory Superpowers

    Creating a smoke-free world with the help of reduced-risk products (RRP) will remain a challenge outside of the U.S. too, according to Michiel Reerink, vice president of global regulatory strategy at Japan Tobacco International (JTI) and outgoing chairman of the GTNF advisory board. “The World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC) recommended again that e-cigarettes should be banned,” he said. “There are now 14 countries where e-cigarettes are prohibited. Often, this regulation is initiated with a hint at use by minors.” By contrast, the United Kingdom, where 7 percent of the population vapes, had no youth use problems, said Reerink, quoting Action on Smoking and Health (ASH) U.K. In mid-September, India became the largest tobacco market to date to ban vaping. According to WHO data, the country has 1 million tobacco-related deaths a year. Of the 1.3 billion population, roughly 106 million adults smoke. Reerink said consumers would be better served by regulation than prohibition.

    Currently, there are three regulatory superpowers, according to Clive Bates, director of Counterfactual: the U.S., the European Union and the WHO, with the first two interacting with the latter. “They are different in approaching their task, but the most dangerous is the WHO,” Bates said. “It is a norm setter through political consensus and creates the legitimacy for a country to do the right thing. The system of the WHO is truly terrible—there is a tendency to extremes.” Countries compete to please the organization: “When India bans vaping, it gets a pat on the shoulder,” said Bates.

    The WHO’s strategy toward RRPs since 2014, he said, had been to deny any benefit of e-cigarettes. Two policies emerged from this point of view—outright bans and policies that treat vapor products like combustible cigarettes, subjecting them to measures such as plain packaging. Bates was concerned about next year’s FCTC Conference of the Parties. “More restrictive measures will go into the FCTC,” he predicted. “The WHO is a real threat; they want to stop development of RRPs in their tracks and to eradicate nicotine from their sketchbook altogether.”

    Mark Firestone, president of external affairs and general counsel for PMI, confirmed that internationally, RRPs are frequently treated by regulators as tobacco products. “We maintain the status quo of laws that are not contemporary with NGPs and innovation and technology. We have to challenge ourselves to have regulation internationally that is contemporary,” he said. Firestone recommended doing away with “false equivalencies” and listening to consumers in the literal and metaphorical sense when shaping regulation.

    Wanted: a culture-oriented approach

    While making an impact around the globe, regulation is mostly coined in only one region, according to Marewa Glover, director of the Centre of Research Excellence on Indigenous Sovereignty and Smoking. The FCTC, for example, is dominated by the Euro-Western school of thought. “What governments in the U.S. or the U.K. do has ramifications for the rest of the world, which is not always good,” she said. In her home country, New Zealand, a 10 percent tax hike on Jan. 1, 2015, made cigarettes unaffordable for many people. Tax increases are a tool promoted by the FCTC to drive down smoking rates. Because New Zealand’s isolated geography makes smuggling cigarettes into the country nearly impossible, criminals have found a different tool to “serve” the market—robbing convenience stores. Another example of the power of foreign influence was evident in New Zealand’s “vaping to quit” smoking campaign, which was delayed after U.S. President Trump announced his intention to ban flavored e-cigarettes. The New Zealand government is now too looking at banning flavors in vapor products.

    Tax increases dictated by the FCTC in Fiji, Glover continued, have driven indigenous Fijians back to smoking suki, a rope tobacco typical of the island state. In the north of Sweden, which has a cold climate, regulation had the opposite effect: Here, an indoor smoking ban caused the Sami people to switch from smoking to using snus, the country’s traditional oral moist snuff, which, as 30 years of scientific evidence suggests, is a less harmful alternative to combustible cigarettes.

    With vaping under pressure in many parts of the world, the U.K. continues to stand out as an example of effective regulation. According to ASH U.K., 7.1 percent of the British adult population currently uses e-cigarettes. Vaper, blogger and consumer advocate Martin Cullip reported that in the National Health Service’s 2018 Stoptober campaign, e-cigarettes were for the first time mentioned as a way to quit smoking. The U.K. government’s liberal stance toward vaping, he said, was all about saving healthcare costs. Nevertheless, its attitude is to quit smoking with vaping and then quit vaping—recreational nicotine use is not on the government’s agenda.

    Call for Industry Action

    In the light of delayed or abolitionist regulation of RRPs, initiating truthful and accurate communication with adult consumers has become a difficult task for the industry. James Dobbins, senior vice president, general counsel and secretary for Turning Point Brands, explained the negative effects of Juul Lab’s decision to stop all advertising in the U.S. “Most advertising was education about vaping and about switching. When 59 percent of people believe that vaping is as harmful as smoking and this advertising is no longer there, smokers will likely stay with combustibles.” He added that the situation had become chaotic since manufacturers couldn’t communicate that their products are at the less hazardous end of the risk continuum. “Is there room in the legal scheme statutes to make a reduced-risk claim?” he wondered.

    David Sweanor, adjunct professor of law at the University of Ottawa, feared that with FDA regulation slowed, there would eventually be recognition of the fact that the U.S. had a public health catastrophe. “Tobacco companies will be held responsible for not having done more because they had the better sales and health data but didn’t tell anybody.” He recommended that to be on the safe side in case of future liability claims by regulators, the industry should bring constitutional challenge to be able to inform consumers truthfully or even file complaint against itself for not disclosing information.

    George Adams, a cardiologist for Rex Healthcare at the University of North Carolina at Chapel Hill, insisted that robust scientific evidence that proves the absolute and not the relative risk of RRPs has to be the basis of truthful communication with consumers. He said that healthcare specialists, public health authorities and the industry should work together to initiate a study on smokers looking at preventing healthcare costs. Standardized trials to develop clinical trials should be used to show the safety and efficacy of RRPs, two factors that are vital to the recommendation of these products.

    Toward a Sustainable Future

    Ensuring a sustainable value chain was another topic this year’s GTNF tackled. Stephane Colard, project leader of Coresta who took over as the organization’s secretary general from Pierre-Marie Guitton on Nov. 1, 2019, examined whether the United Nations (UN) Sustainable Development Goals (SDGs) were a threat or an opportunity for creating value collectively and sustainably in the tobacco industry. The SDGs’ main objective is the reduction of inequalities within and between countries. The 17 goals of the 2030 development agenda, which UN member states adopted in 2015, include targets such as prevention of poverty and hunger, access to clean water and sanitation, and quality education. For the tobacco and alternative sectors, Colard observed, good health and well-being, decent work and economic growth, responsible consumption and production as well as industry innovation and infrastructure were the most important factors in the ranking. To remain competitive, companies needed to align their business strategies, decisions and actions with the SDGs, he said.

    Jim Lutzweiler¸ vice president of agriculture and livelihoods for the Foundation for a Smoke-Free World (FSFW), lamented that many in the NGO community do not understand how business works. “The world is not changing but restructuring,” he said. The FSFW is setting up a center for agricultural transformation in Malawi in order to reduce that country’s economic dependence on tobacco cultivation. “Our task is to start partnerships to help substantial development [growth],” Lutzweiler explained. “We are driven by one thing: profitability for small-scale farmers. It’s a complicated process and nothing short of changing their whole economic sector.” In order to achieve this objective, significant investments should be made in science, technology and innovation, policy transformation, and commercialization, he added.

    Gender equality is one of the UN sustainable development goals. In the traditionally male-dominated tobacco industry, 30 percent of employees today are women but only 21 percent of them are in managerial positions, according to Alexandra Solomon, senior research analyst for ethics and human rights at the FSFW. The number of women on boards is still low, amounting to 30 percent in Europe, 19 percent in Asia and 16 percent in the U.S. Yet studies have shown that companies with more women on their boards are more profitable. In most countries, the gender pay gap remains significant; in the U.K., where reporting on salary has become mandatory for companies, women working for British American Tobacco earn on average 34 percent less than their male colleagues and receive 67 percent less in bonuses, Solomon said.

    While challenges abound for the tobacco industry, investors agreed that the outlook for the sector was positive. Analysts predicted that in the U.S., the leading companies, including Juul Labs and PMI, were well prepared to eventually receive marketing authorization for their main products even after a court ordered the FDA to bring forward the deadline for premarket tobacco product applications. Smaller companies, by contrast, are likely to struggle to prepare the costly and time-consuming paperwork.

    On the global scale, regulation and affordability will be decisive for the development of the of NGP category, in particular, with regard to emerging markets. For investors, the combined tobacco and NGP sector will remain interesting, according to Jonathan Fell, partner and co-founder of Ash Park Capital. “Investors have moved away from tobacco recently, but in the long run, ‘sin stocks’ will be attractive,” he said. “They will boost the return for people that take the higher risk.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Seeking Substitutes

    Seeking Substitutes

    Ethical and scientific considerations are driving a move away from animal testing.

    By George Gay

    When I wrote asking for contributions to this story about replacing nonhuman animals in laboratory respiratory testing, one respondent replied that, unfortunately, this was outside his area of expertise, though not outside his area of interest. He went on to suggest that we replace the nonhuman animals with politicians before adding, in the words of the very wise W.S. Gilbert, “they’ll none of ’em be missed, they’ll none of ’em be missed.”

    It will come as no surprise that the person in question is based in the U.K. and that his comment can be seen as trying to lighten the pain caused by that country’s three years of political shenanigans over Brexit, though, as Louis MacNeice speculated about another matter, it is a moot point whether something so corrupted can be cured by laughter. But the comment was useful because it brought to mind the term “political animal” and reminded me that we are all animals, or, as William McIlvanney once said, “We are part animal. Humanity is an aspiration, not a fact of everyday life.”

    Regrettably, it would seem, this aspiration can hardly be said to have blossomed, at least within the tobacco and nicotine spheres, even though the weather is set fair, or perhaps it would be fairer to say that it has not been allowed to blossom. Amy Clippinger, president of the PETA International Science Consortium, told me during an email exchange in August that testing tobacco products on animals was banned in Belgium, Estonia, Germany, Slovakia and the U.K. on the grounds—unarguable in my view—that it was unethical to subject animals to testing products that are inherently unsafe for humans.

    This is all well and good, but it also suggests that something like 190 countries don’t ban such practices when, as Clippinger said, “We know that it is immediately achievable for all regulatory agencies to ban tests on animals for smoke and e-vapors—and all countries should follow suit.”

    This story arose out of an August press note from PETA that described how the Science Consortium, which works to accelerate the development, validation and global implementation of animal-free testing, had, together with Altria, British American Tobacco, Imperial Brands and Philip Morris International, donated equipment that could help to replace the use of animals in respiratory testing with more human-relevant, non-animal test methods.

    “The equipment—worth $110,000 and manufactured by Germany-based Vitrocell Systems—was donated to the Institute for In Vitro Sciences (IIVS), a nonprofit laboratory in Gaithersburg [Maryland, USA,] that conducts animal-free testing,” the press note said. “It will be used in the IIVS in vitro respiratory toxicology laboratory, which helps companies assess the effects of tobacco, nicotine and other aerosols on the human respiratory tract. Results from these tests will also help to show regulatory agencies, such as the U.S. Food and Drug Administration, that non-animal methods are accurate and effective and can be used instead of tests on animals.”

    That regulatory bodies still need convincing seems odd given that this is the 21st century and given what Clippinger had to say: “It often takes time to make changes to existing regulations but there is overwhelming scientific evidence that supports the use of animal-free testing approaches.”

    A different animal

    “We know that animal tests aren’t good predictors of human results—for example, negative results in animal studies were used for years to suggest that cigarettes don’t cause cancer,” she said in what appeared to me to be an incontrovertible repudiation of the value of animal testing—at the very least in this area. “It is well-established that differences in anatomy and physiology between the rodent and human respiratory tract limit the precision with which the rodent test predicts the human response.”

    For example, Clippinger said there were  differences in the ventilation rates and breathing modes between humans and animals. Humans breathed through their noses and mouths while rodents breathed only through their noses, a difference that affected particle and gas deposition.

    “Anatomically, there are differences in the airway architecture and branching pattern of the    respiratory tract,” Clippinger said. “The branching pattern in rodents is asymmetric or monopodial, which results in a relatively unimpeded airflow whereas the branching pattern in humans is bi- or tripodial, resulting in an airway pattern more susceptible to deposition at its bifurcation points.

    “There are also species differences in the cell types and their distribution within different regions of the respiratory tract, mucous composition and metabolic activity of critical enzymes.

    “All of these differences affect the deposition of an inhaled agent as well as its clearance or retention. Therefore, there has been significant interest in developing human cell-based approaches that can characterize the toxicity of inhaled substances while also providing a better understanding of how an inhaled material exerts its toxic effects in humans. We know there are more human-relevant and humane animal-free methods, and, sooner or later, regulations will catch up to the science.”

    Catching up

    Sooner, in my view, would be just fine—later, not so because from what is said above it would seem that all that is stopping the transition away from animal testing is inertia on the part of regulators, and there is no excuse for inertia in circumstances where countless nonhuman animals are being abused for no apparent reason. We know already that smoking is life-threatening, and common sense should tell us that vaping, though much less risky than smoking, is not going to be risk-free.

    The question arises, therefore, as to how long such a transition might take, and Clippinger indicated that the process would depend on whether the animal testing regimes in place were a matter of regulatory requirement or a nonrequired test. “In general, changing regulatory requirements for animal tests often involves a multi-pronged approach that includes having suitable alternative methods,” she said. “In the field of respiratory toxicology, for example, those methods include human cell lines and three-dimensional models. In fact, the Science Consortium funded the development of one such model and partnered with a biotech company to give away three-dimensional tissue models to researchers for free. Laboratories must also have the infrastructure needed to conduct these tests, which is why we donated the Vitrocell equipment. The remaining steps are for researchers and regulatory agencies to understand which non-animal assays are appropriate to use in specific testing situations and to gain confidence that the non-animal methods can protect human health as well as or better than the animal tests. The ongoing testing that we are funding and the educational opportunities that we provide will help overcome this hurdle.

    “It can take time for regulations to catch up with science—and often needs PETA to champion the transition. But we’re seeing signs of the replacement of animals in toxicity tests and know it is a matter of when, not if, these animal tests are eliminated altogether. The Dutch government plans to phase out many types of animal testing by 2025, and, in the United States, the Environmental Protection Agency is making strides as well. Companies are publishing on their work to advance animal-free testing approaches and proactively submitting data from non-animal tests to the United States Center for Tobacco Products to register their products. Because animals are often poor predictors of the human response, there are scientific and ethical factors driving the transition to animal-free testing.”

    The donations of Vitrocell in vitro equipment came about because the Science Consortium wanted to be sure that companies interested in transitioning to in vitro inhalation testing had facilities they could go to for this testing, and it had heard that there were few contract research organizations providing such services. Four of the Science Consortium donations of Vitrocell equipment were made during 2017 to facilities in Belgium, the U.K. and the U.S. while, in 2019, it recognized the need for two donations to provide additional equipment at IIVS. So this year, the Science Consortium donated a $50,000 Vitrocell Cloud device that can be used for testing personal care products, for example, but not tobacco products. And then, in order to spread the costs of the second donation, it approached the four tobacco companies known to be interested in advancing non-animal testing methods, and they contributed $20,000 each with the Science Consortium putting in $10,000.

    Vitrocell Systems describes itself as one of the pioneers of in vitro exposure systems with 20 years of experience in providing test systems in which cultivated cells from the respiratory tract or bacteria are exposed to aerosols.

    Managing Director Tobias Krebs told me that the company had significantly broadened its range of turnkey systems comprising smoking machines, exposure systems, dosimetry tools and analytical instruments. Demand for these advanced systems was creating constant growth, he said, due to two factors, one of which was the increased testing needs of industry, research institutes and regulatory bodies as new products were developed by the industry in ever shorter cycles. There was a need for electronic nicotine-delivery systems, heated-tobacco products and hybrid devices to be compared with traditional combustible products in respect of their toxicological profiles.

    At the same time, there was a clear trend for the industry and regulators to seek alternatives to animal testing. The acceptance of alternative methods had increased during recent years with the goals of sacrificing fewer animals, of obtaining reliable results faster and of reducing costs.

  • Rethinking filters

    Rethinking filters

    Cigarette filter manufacturers are increasingly focusing on sustainability and new nicotine products.

    By George Gay

    As you grow older, you come to realize that it is often better to be wrong than it is to be right. There are, of course, exceptions. You want to have been right as you come away from the tote with the Racing Times tucked in your back pocket, and you would want to have been right when you picked which side you were on in a lethal conflict.

    But such instances aside, even young people, I think, harbor this idea, though it might only appear occasionally in the periphery of their thought processes. Look at like this: If I say that a thing is A, and you say that no, it is B not A, and it turns out that you are right and I am wrong, I have learned something new, but you have learned nothing. I have gained but you have not. As the Israeli poet Yehuda Amichai wrote, “From the place where we are right / flowers will never grow / in the spring. / The place where we are right / is hard and trampled / like a yard.”

    Given this, I am grateful to Seng Keong Low, the marketing manager of Essentra Filters. I had always assumed that the switch by consumers from traditional tobacco cigarettes to electronic cigarettes—but not heat-not-burn cigarettes—meant a complete loss of business for those producing filter materials, but I was wrong. Seng Keong  told me in a July email that cellulose acetate tow (CAT), the main material in filter production, can be used in e-cigarettes to prevent leakage of e-liquids.

    Market drivers

    In my approach to Essentra, I had listed cigarettes, roll-your-own (RYO) products, cigars, heat-not-burn sticks, pipes and shisha as products that used filters of one sort or another and had asked whether there were others. Seng Keong  mentioned e-cigarettes and went on to say that Essentra offered a wide variety of filters that can be customized as required for each of the categories.

    Especially given the inclusion in the mix of e-cigarettes, it is not surprising that, asked what the main factors driving the markets for the filters that Essentra offers are, Seng Keong  described them as the need among tobacco industry customers for innovative products and the evolving regulatory environment. It is often the case that innovation and regulation go hand-in-hand. Regulation will give rise to innovation and innovation to regulation. And this is fertile ground at the moment. The traditional tobacco market is the subject of new and sometimes burdensome regulations while those producing new nicotine products are operating on what are often confusing markets where regulations, for better or worse, are evolving, sometimes at glacial speeds.

    “Innovative filters such as capsulated and visually attractive filters are driving the global markets,” Seng Keong  added. “Consumers are increasingly demanding new and innovative flavors, leading to opportunities for manufacturers to introduce exotic-flavored filters to cater to the consumers. Specialty filters, such as super slims and shaped filters, are also becoming more popular, especially in China and South Korea. With the rise of tobacco-heating products (THPs), filters catering to THPs will also be a key focus for innovations.”

    Turning to regulations and consumer aspirations, Seng Keong  said that, currently, biodegradability and sustainability were in the forefront of many consumers’ minds and that these consumers were expecting companies to invest in new technologies and products to address these issues. “Essentra has introduced filters that use paper, hemp and ochre as their base material as well as a proprietary processing technology called ‘BiTech,’ all of which increases the biodegradability factor of filters,” he said. “Essentra’s latest offerings, such as Groove Sensation, Corinthian Sensation, the ground-breaking Fine Wall Filter and the recently unveiled hemp filter, are there to address the constantly shifting market trends.”

    Of course, the core questions are whether the markets for these and other filters are expanding or contracting, by how much, and why—to which Seng Keong  responded that, according to Euromonitor International, global cigarette consumption in 2018, at 5.5 trillion sticks, was down by 1 percent from the previous year. This decline, he added, was mainly due to the growing demand for alternative tobacco products and next-generation products, which included e-cigarettes and THPs.

    Seng Keong  wouldn’t be drawn on whether Essentra’s volumes had increased or decreased, by how much, and why, but in response to similar questions about the value of the company’s sales, he said that, as reported in Essentra’s annual report for 2018, revenue had decreased by 6.3 percent (-2.9 percent at constant exchange) to £260 million ($324 million). Good progress had been made with independent customers, notably those in China, India and the Middle East, but this had been offset by the volatile nature of certain projects, which was characteristic of the tobacco industry.

    Product differentiation

    So what are the in-demand filters currently, especially those favored in the markets where Essentra is making good progress? “In China, there is a growing trend in specialty filters such as super slims and shaped filters,” said Seng Keong . “Meanwhile, there has been strong performance by flavor-capsule filters in India and Dubai. Cigarette manufacturers are using more sophisticated filters in their premium ranges to provide differentiation and unique smoking experiences for consumers. There is increasingly more variety, such as the recently launched ‘black tea’ flavor, because consumers continue to look out for ever-more new and interesting flavor experiences.”

    This is interesting. It has long been speculated that the sorts of cigarette flavors favored in the West are unsuitable for markets where consumers typically consume more spicy foods. Perhaps we are starting to see smoking trends more closely aligning with a nation’s traditional cuisine. Certainly, Seng Keong  said that with the presence of specialty filters providing differentiation, monoacetate filters were experiencing a steady decline and were now estimated to account for about 74 percent of the global filters market, again according to Euromonitor International data.

    A lot of people will welcome Seng Keong ’s response to a question about what Essentra believes are the up-and-coming filters. “With the rising focus of biodegradability and sustainability, manufacturers are looking into filters with alternative materials to improve on degradability,” he said. “Essentra research and development is focusing on these alternative materials to find a successor to CAT that offers the same value proposition while being more environmentally friendly.”

    And, of course, Essentra has shifted some of its innovation focus to emerging smoking product categories. “The market for THPs is on a fast-growing trajectory,” Seng Keong  said. “Opportunities for THPs have expanded, and tobacco companies are all aiming for a share of this emerging segment. Increasing innovations into THP heat sticks is expected, and filters will play a significant role in helping to achieve the best consumer experience for THPs.”

    Research and development

    While some of Essentra’s research and development is outlined above, it is easy to forget that the company has an R&D capability that takes it beyond filters, though filters are still very much its focus, as Seng Keong  described. “Essentra continuously experiments with new materials both internally and through high-level discussions with customers to meet their dynamic demands and regulations across different markets,” he said. “In addition to filter research, Essentra is also taking the lead in driving the standards for laboratory testing of tobacco products and coming up with brand new testing methods to meet increasingly strict regulations on tobacco chemical constituents. Essentra offers a complete solution to our partners through research of alternative materials, creative design of filters and cutting-edge laboratory testing of products.”

    Still on the question of research, I asked whether any progress has been made in designing filters that might be seen as helping to reduce the health risks posed by tobacco products, but Seng Keong  said that Essentra’s focus in filter design remained with alternative materials and tobacco-heating products.

    At the same time, the illegal trade in cigarettes is a focus for tobacco manufacturers, and I asked what part filters could play in reducing this trade. “Unique features such as markings can be imprinted on filters, allowing enforcement representatives to easily differentiate an illicit product and a legal cigarette,” said Seng Keong .

    And in answer to the vaguely connected question of what part filters can play in boosting brand awareness, Seng Keong  said that Essentra’s portfolio included filters that offered visual differentiation through shapes and colors. “By designing filters that represent a specific brand, this enables consumers to identify and resonate with the brand immediately upon opening the pack,” he said.

    So the question arises, where are these consumers? Where geographically are the main markets for filters, and where are the up-and-coming markets? Well, with the countries of Asia Pacific accounting for about 3.4 trillion—or about 62 percent—of the 2018 global cigarette consumption of 5.5 trillion, it is not surprising that this is where the main demand for filters is coming from. “China, Indonesia and Japan are within the top five countries for cigarette consumption, accounting for 51 percent of global cigarette sales,” said Seng Keong . “Within Asia Pacific, innovative filters are prevalent in countries such as South Korea and China, which provides for opportunities to develop and market special filters.

    “In addition, the growing market for THPs has also opened up more opportunities to new variants. In 2018, the volume of heat sticks was approaching 53 billion sticks, more than double the previous year. The top three markets for heated-tobacco products are Japan, South Korea and Russia, where the Asia region accounts for the majority of volumes—more than three quarters of the global volume.”

    Without necessarily expecting an answer, I asked Seng Keong  whether Essentra had made any fundamental changes to the way that it manufactured filters, but he did say that with the increasing demand for alternative materials in the market, new proprietary methods to process these materials in a cost effective and efficient manner were in development.

    This answer seemed to suggest that Essentra was looking to the future, so how does it see the future for the filters sector? “Although the traditional cigarette industry is under pressure with consumers switching to [next-]generation products and regulations becoming stricter across the world, opportunities abound as tobacco manufacturers shift their focus to THPs and sustainability,” said Seng Keong . “Innovations to support these initiatives through alternative materials and filter design will be the key to success in the future.”

  • Leader of the pack

    Leader of the pack

    An astonishing share of cigarette packages are printed and converted on the machines of a single supplier.

    By George Gay

    If I were asked to list suppliers of tobacco machinery, Bobst would not be one of them. And in a way, this is odd because, as Alfred Ulli, Bobst’s marketing and sales director, told me during a telephone interview in August, if you pull a cigarette from a pack, there is an 80 percent chance that the blank from which the pack was formed was printed and converted on a Bobst machine. Most of Bobst’s Lemanic tobacco industry-focused machinery is used for producing hinge-lid blanks, but some of its other machinery is used for producing other types of tobacco packaging along with printed tipping papers, inner frames and inner liners.

    It is also the case that roughly 80 percent of the Bobst Lemanic presses used by printers and converters for producing tobacco industry materials is used only for such purposes while just 20 percent is also used for producing materials for packing the products of other industries.

    Clearly, while Bobst might not be a tobacco industry machinery supplier in the strictest sense, it is a vital contributor to the industry’s supply chain. For all sorts of reasons, tobacco products may not be sold without first packing them.

    Of course, there are several reasons why Bobst’s printing and converting machinery cannot be seen to fit within the tobacco industry fold, not the least of which is scale. Such machinery is at least 40 meters in length, for instance. Bobst’s Lemanic lines usually run 24 hours a day, seven days a week, and the users invariably employ Bobst trained operators and maintenance crews to keep them running efficiently.

    This focus on training is unsurprising. Bobst offers a complete range of dedicated tobacco industry machinery, including, basically, two models of presses: a high-productivity machine for high-volume brands such as Marlboro and what it calls a medium-productivity machine with production levels about half those of the bigger machine. But each machine is custom-made to the user’s specifications; if you could see 100 machines, you would be looking at 100 different configurations.

    Asked what proportion of a machinery supplier’s business with the printing and converting industry would be accounted for by parts and services, Ulli estimated a maximum of one-third. In part, this would be because the printing and converting industry has a parallel supply chain for what it refers to as “tooling.” Tooling parts, such as printing cylinders and cutting forms, tends to be the preserve of local suppliers not press suppliers such as Bobst.

    Nevertheless, Bobst provides parts and services in a number of ways, one of which is a simple reactive service that can employ remote diagnostics and that delivers parts and, if needed, technicians when required. But in order to prevent nonscheduled production stops, Bobst offers preventative maintenance programs: half yearly or yearly inspections during which its technicians identify worn parts so they can be replaced before they fail. And yes, it will provide tooling parts as required for each job as well.

    On the other hand, Bobst offers training and instruction for machinery users’ own maintenance personnel so they can carry out regular and preventive maintenance, and it provides training for press operators and managers.

    As part of its maintenance scheme, Bobst runs an obsolescence program in which it regularly informs customers about parts that are no longer available on the market and offers replacements with an equivalent performance. These are mostly electric or electronic parts that Bobst does not make itself.

    Finally, it offers an upgrade program under which it will provide machine adaptations in line with new requirements, depending on the age of the machine and the changes required. Ulli gave as an interesting example the changes that had to be made to some machinery so that it could produce the new types of packaging required by the arrival of heat-not-burn products to the market.

    So what does the future hold for tobacco packaging requirements? Ulli made no bones about the fact that the years of volume growth, stretching from the 1970s to the early years of the new millennium, are over. Cigarette consumption simply isn’t growing. “At the same time, tobacco consumption is changing with ever new and more and more sophisticated packaging as well as new types of products,” he said. “What is new—and this is just the beginning—is that the brand owners are forced by consumers to come out with new products. There is a new market approach, which will require new designs, new boxes and all with faster time-to-market requirements. The tobacco industry will continue to develop, and Bobst will remain a supplier of choice.”

  • A rhetorical gambit

    A rhetorical gambit

    The absence of long-term risk assessments does not justify stifling the development of new, potentially less harmful nicotine products.

    By Clive Bates

    It’s a common refrain: “We just don’t know the long-term risks of vaping.” Those who oppose the transition of the consumer nicotine market from combustible to noncombustible products will often argue, correctly, that there are no long-term studies of the safety and health impacts of vaping or heated-tobacco products. What is wrong is to assume this is a slam-dunk clincher and that the argument should end there. Let us examine this claim in more detail.

    First, it is a statement of the obvious. We have not yet invented time travel and cannot venture forward to 2050 to find out what happened to life-long vapers. There will be no long-term studies until the long term has elapsed and the studies have been done. We have had about 10 years of science on vaping, and the story is positive so far, but we will not have 40 years of studies until 2050.

    Second, at least for now, almost everyone who vapes or switches to a heated-tobacco product is currently or has recently been a smoker. For that reason, long-term data on vaping will be “contaminated” with health consequences of prior smoking, and this will be difficult to untangle. It will be possible to follow cohorts of those who never smoked prior to vaping, but at present, these are a small fraction of the total user population. I hope that share will grow (there should be no need to go to a safer form of nicotine via the most dangerous) but that is not something the authorities wish to encourage.

    Third, some activists argue that it took years for us to discover the health risks of smoking. Smoking took off in the early 20th century, but it was not until the 1960s that the U.K. Royal College of Physicians and the U.S. Surgeon General issued their blockbuster reports on smoking and health. Surely, we should expect discoveries to emerge over decades. But this perspective ignores the march of scientific progress over the past 60 years. Today’s field of systems toxicology would be unrecognizable to the boffins of the 1950s. If cigarettes were invented today, a modern lab would need about half a day to establish the extraordinarily high risk, and that includes writing up the paper. We would not need to wait 40 years to declare that a hypothetical newly introduced cigarette would be very harmful to health.

    Fourth, it is true that we do not have long-term epidemiology for vaping, but that does not mean we know nothing. There is a lot of data that helps us assess what long-term risks are likely to be. These come from chemical analysis of the vapor aerosol and measurements of toxins in the blood, saliva and urine of users of the products. We are also seeing more measurements of improving indicators of health in users who have switched from smoking to smoke-free products. The totality of what we do know is impressive, and it all points toward much lower risks over the long term.

    Fifth, some analysts advocate a “precautionary approach” to address long-term but uncertain risks. This would mean some mix of prohibition, taxation, regulation and off-putting communications to deter use until someone can prove that the products are safe—or safe enough. The precautionary principle is perhaps the most shamelessly abused concept in all of policy-making (though it is a crowded field). The precautionary principle is not a free pass to ban anything with uncertain risks. It is really a sophisticated form of risk assessment that requires taking account of the consequence of both action and inaction and the consequences of being wrong. Given that smoke-free products are alternatives to smoked products, and we know beyond doubt that these are harmful, then there is every possibility that obstructing access to what looks like a much safer product will do more harm than good. In what I regard as the most important passage in its 2016 report, Nicotine without smoke: tobacco harm reduction, the Royal College of Physicians captured this challenge:

    “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 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.”

    Generally, the precautionary principle is most applicable where the risks are novel, systemic, irreversible and cause uncontrollable destabilization—for example, introducing new species or pathogens into an ecosystem or increasing the heat in the atmosphere. Vaping risks are not like this.

    Sixth, it is often assumed that “no long-term studies” implies there are bound to be risks but we just haven’t found them yet. However, it may turn out that the risks are negligible or well within the range of voluntarily accepted risks associated with living a normal enjoyable life. It is even possible that there may be health-protective effects that go beyond ameliorating the risks of smoking. It is possible, for example, that nicotine may have protective effects against some forms of neurodegenerative disease.

    Seventh, it is possible that unexpected risks will emerge. But it is likely that many plausible risks can be dealt with through regulation. For example, a recent study by Farsalinos and Lagoumintzis investigated the toxicity of flavor compounds used in e-liquids. It found that “one chemical (methyl cyclopentenolone) was found at a maximum concentration 150.7 percent higher than that needed to be classified as toxic.” There is an obvious regulatory response: Stop the use of this compound or ensure it is used only in concentrations well below the toxic threshold. This response is possible with vapor products because the vapor aerosol is more or less a heated version of the e-liquid, so controlling ingredients and contaminants in the e-liquid will also control human exposure. The same is not true for cigarette smoke. Vapor products generally operate below 300 degrees Celsius, but the temperature in the burning tip of a cigarette can exceed 900 degrees Celsius. At these higher temperatures, there is much more energy to break chemical bonds and to create thousands of new “products of combustion,” which can react with each other to create still more compounds. The combustion process of cigarettes is far more complex and chaotic than the heating process of vapor products and leaves the cigarette designer with only limited options to control toxic exposures. This is one reason why industry engineers have struggled to make a “safer cigarette.”

    Eighth, a common variant on the “we just don’t know” argument is that public health was badly caught out with “light and mild” low-tar cigarettes. These appeared to be safer and even had some public health endorsements as a harm reduction approach. These products appeared to be safer only when smoked by machines with fixed smoking regimes. It turned out that real humans adjusted their smoking behavior by blocking filter ventilation holes or drawing more frequently and deeply on the cigarette. Smokers adjusted their behavior—a process known as compensation—to achieve their desired dose of nicotine. And with the nicotine, they got the exposure to toxins in the smoke and were no better off. The situation with smoke-free products is very different. Low-tar cigarettes mostly just diluted smoke with air—the ratio of toxins to nicotine barely changed. Vapor products work by dramatically reducing the ratio of toxins to nicotine in the aerosol. So for a given dose of nicotine, a vaper will receive a much lower exposure to toxins than a smoker. The “light and mild” argument is misusing an analogy that does not hold true in reality. We should not use a mistake in the understanding of light cigarettes to justify a mistake in the understanding of smoke-free products.

    My concern is that the argument about the lack of long-term studies is essentially tactical: a rhetorical gambit designed to create an insurmountable evidence hurdle that will apply indefinitely. I do not believe it is a sincere attempt to grapple with inevitable uncertainties and to make the best decisions possible with the available evidence. To test the sincerity of those making this argument, I have devised what I call “the snus test.” Snus is a form of oral tobacco popular in Scandinavia. So my question is: Do you accept that the long-term evidence for snus use in Scandinavia shows it has reduced smoking prevalence and the burden of disease? If the answer is “no” and some other justification is offered, it is clear you are not dealing with a sincere truth seeker.

    The theme of this year’s Global Tobacco and Nicotine Forum (GTNF)  is “More choice, less risk.” The GTNF will be held Sept. 24–26, 2019, in Washington, D.C. See www.gtnf.org for more information.

    Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).
  • Filling the void

    Filling the void

    Producing some 95 percent of the world’s vapor devices, China has at last started regulating its domestic market.

    By Stefanie Rossel

    It’s a curious situation: Even though it is the birthplace of the modern e-cigarette and the epicenter of vapor product manufacturing, China’s domestic e-cigarette market is miniscule. According to Euromonitor International, the value of the global vapor market increased from $3.7 billion in 2013 to $15.8 billion in 2018. Of that, China represented only $750 million last year. Insight Solutions estimates that the country produces about 95 percent of the world’s electronic cigarettes, exceeding 1.6 billion units in 2017. Of those, 90 percent are exported to the United States and Europe whereas domestic sales account only for about 5 percent.

    Growth of the category has accelerated rapidly in recent years. A Market Watch report reveals that sales of vapor products in China increased from less than rmb1 billion ($142 million) to more than rmb4 billion between 2013 and 2017. Nevertheless, vapers are still an uncommon sight in China. While there is no official data, Guanyantianxia, a Beijing-based consultancy, estimates that there are currently only between 1.5 million and 2 million vapers in the country.

    This compares with 300 million to 350 million smokers of combustible cigarettes—an enormous untapped potential for China’s e-cigarette industry. If only 10 percent of Chinese smokers switched to vaping, the market value would exceed $15 billion.

    Due to its small size and value, the Chinese vapor market had long been overlooked by supervisory bodies, allowing it to develop in a regulatory vacuum. Access to and consumption of vapor products is hardly regulated apart from a ban of e-cigarette sales to minors issued in August 2018. There are no rules covering the production, manufacturing standards and oversight of e-cigarettes. In 2018, a joint circular published by China Tobacco, the country’s state monopoly, and the State Administration of Market Regulation (SAMR) warned that vapor products on the market varied widely in quality, and some might pose safety risks, such as liquid leakages or use of substandard batteries.

    Government drafts standard

    To fill the regulatory void and permit the sale of regulated e-cigarettes, China recently took a major step. On May 1, 2019, the country submitted plans for a set of e-cigarette standards to the World Trade Organization (WTO). The standard, to be finalized on a yet-to-be-determined date, is comprehensive: It specifies the levels of nicotine, the types of additives and other components allowed in battery-powered devices as well as definitions, technical requirements and test methods. The standard also covers packaging, identification, instructions, storage and transportation.

    Although the standard was published by the SAMR and the Standardization Administration of China, the agency responsible for drafting and maintaining it will be the State Tobacco Monopoly Administration (STMA).

    The new standard is expected to have a significant impact on the manufacturing, sale and import of e-cigarette products in China. The law firm Keller and Heckman expects Chinese authorities to release the standard later this year.

    The announcement of the new standard followed another joint measure by the SAMR and the STMA. In August 2018, they announced a ban on the sale of electronic cigarettes to minors. As in the United States, teenage vaping has increased sharply in China. The ban covers both physical stores and online platforms.

    Passing the renminbi

    One factor contributing to the longstanding lack of regulation in China was that none of the country’s agencies were willing to take on responsibility for the new ill-defined product category. For more than a decade, China’s regulatory authorities passed the buck to each other, as detailed in a 2016 study by the University of Pennsylvania Law School.

    The report cites the introduction of RuYan, one of the first e-cigarette brands, to the Chinese market in 2006. Proposals were made to assign regulatory responsibility to the State Administration for Work Safety, the State Administration for Industry and Commerce and the health ministry. China Tobacco argued that the e-cigarette should be regulated under the State Council’s dangerous chemicals regulations.

    The State Food and Drug Administration was also considered as a potential regulator, but that agency argued that, due to their use for eliminating nicotine withdrawal symptoms, e-cigarettes did not fit under the regulatory framework developed for medical devices in China.

    Due to policymakers’ reluctance to define e-cigarettes as medical devices, pharmaceutical or tobacco products, vapor products became ordinary consumer products in China, which is reflected in companies’ advertising and promotion efforts. Unlike their counterparts in Europe and the United States, e-cigarette manufacturers are allowed to make health claims and promote their products as lower risk alternatives to conventional cigarettes in China.

    Increasing investments

    In the absence of legislation and related pressure to consolidate, China’s vapor market has become highly fragmented. Insight Solutions estimates that there are nearly 4,000 e-cigarette companies in China. About 80 percent employ fewer than 50 people. China Tobacco has also joined the game. In 2014, its provincial subsidiary, Hubei Tobacco Co., launched its first e-cigarettes in Wuhan.

    There are indications that the country’s competitive landscape for e-cigarettes is about to heat up. In 2018, dozens of e-cigarette startups collectively raised tens of millions of dollars in venture capital, according to Bloomberg. The growing market has also attracted players from other fields, such as electronics and software. And then there is Juul, the U.S.’ leading vapor brand, which in July 2019 was rumored to be entering the Chinese market with plans to spend more than $100 million over 15 months on branding and marketing operations. Reportedly, the company is teaming up with JD, one of China’s largest e-commerce platforms, which saw e-cigarette sales grow about 600 percent during the country’s 2019 Mid-Year Shopping Festival.

    New supervisory agency

    As Chinese startups strengthen their financial muscle to make inroads into the blossoming category, their products will likely take a greater share of the country’s enormous cigarette market. This may explain in part regulators’ more active stance toward e-cigarette regulation.

    As the world’s largest producer of traditional cigarettes and leaf tobacco, China Tobacco provides the government with massive tax revenues. According to a Channel News Asia report, the monopoly contributed rmb1 trillion in taxes and profits in 2018, representing more than 5 percent of the central government’s revenue.

    China Tobacco operates under the STMA, which in turn is part of China’s Ministry of Industry and Information Technology. China’s Tobacco Monopoly Law gives the STMA control over the production, import, export and distribution of tobacco products in China. This means the entity is regulator and market player at the same time. The tobacco industry is also a significant employer in China. More than 20 million people, including farmers and retailers, are linked to the tobacco industry. An estimated 510,000 people work directly for China Tobacco, according to the Pennsylvania Law School.

    In this context, tobacco control has proven to be difficult. While China joined the World Health Organization’s (WHO) Framework Convention on Tobacco Control in 2006, it has yet to implement many of the treaty’s measures. The country has enacted indoor smoking bans in specified public places, including hotels and restaurants, but it must still pass a comprehensive tobacco control law at the national level.

    To separate regulatory and commercial functions, in March 2018, China assigned responsibility for tobacco control to the newly created National Health Commission (NHC), which will also oversee the vapor industry. The advisory body is expected to put more WHO rules into effect. At a press conference in July 2019, the NHC announced “severely strengthened” supervision of electronic cigarettes.

    Regional regulation enacted

    While national laws are still up in the air, several Chinese cities have taken steps to regulate e-cigarettes. On Jan. 1, 2019, Hangzhou became the first city to ban vaping in public. It did so through upgraded anti-smoking legislation that formally regulates e-cigarettes as tobacco products. As a consequence, vaping is now banned on specified indoor and outdoor premises, including bars, restaurants and public transport. Violators of the ban will face fines of up to rmb20,000.

    Shenzhen, Macao and Nanning have enacted similar e-cigarette bans. Hong Kong went a step further. In February, the city’s health authority proposed to ban the import, manufacture, sale, distribution and advertising of alternative smoking products altogether. Under the draft law, anyone who imports, makes, sells or promotes such products could face a hkd50,000 ($6,373) fine or six months in jail.

    If passed, the bill will prohibit visitors from bringing in any reduced-risk products (RRPs). Authorities fear resale of such products and the development of a black market in Hong Kong. Dedicated boxes for the collection of visitors’ cigarette alternatives are to be placed at borders; visitors voluntarily giving up their RRPs will not be considered violating the law.

    The measure reflects the city government’s intention to stifle vaping before it becomes entrenched in the former British crown colony. The bill has sparked a debate about its effects on smoking cessation efforts. In contrast to mainland China, Hong Kong already has a low smoking prevalence of 10 percent among people aged 15 and older. By 2025, the government aims to reduce this to 7.8 percent.

  • Celebrating choice

    Celebrating choice

    Forest marks its 40th anniversary.

    By George Gay

    The 180 guests who in June attended the 40th birthday gala dinner for the U.K.’s Freedom Organisation for the Right to Enjoy Smoking Tobacco (Forest) included a “pathetic” number of smokers, according to a speaker who had called for a show of hands. But like a lot of observations, while true, this one had the potential to mislead.

    As Simon Clark, director of Forest since 1999, told guests, Forest has always promoted choice not smoking. “Forty years on, we are more convinced than ever that advocating freedom of choice and personal responsibility is a cause worth fighting for,” he said.

    The guest list was said to include Members of Parliament, Parliamentary researchers and friends of Forest, many of whom would probably, like Clark, describe themselves as libertarians. And this need come as no surprise since, again, as Clark said, smokers must be one of the most vilified minorities in the country. It would have been a fruitless task to try to defend the interests of this “denormalized” group in isolation; so, over the years, Clark has reached out to the community of libertarians; and they, according to the accolades he rightfully received at the event, has been taken to their hearts.

    The dinner, which was held at Boisdale, Canary Wharf, London, a traditional Scottish restaurant with a cigar terrace, was a celebration, and a flavor of the mood and direction of play, at least among a vocal minority, can be gauged from the fact that mentions of Margaret Thatcher and Boris Johnson were greeted with applause. Though, it has to be said that mention of Liverpool Football Club’s 1979 league win seemed to encourage slightly more applause.

    There was much talk of the “nanny state” and even of the “tyranny” thereof, which seemed a little over the top given that the U.K. is still a democracy, though one standing on shaky ground at the moment partly due to the threat posed by the aforementioned Johnson and his supporters. To talk of tyranny in connection with, for instance, moves to require manufacturers to reformulate sugary drinks seems simply silly given that you can always add extra sugar to your drink if you feel the need—think Bex powder and cola. And to apply the word tyranny to goings-on in relation to tobacco comes perilously close to taking us back to the discredited tobacco wars.

    Indeed, there was talk of battles lost and wars still winnable. But Forest’s most successful campaign, we were told, was against standardized packaging, which it lost after a double U-turn by a government led at that time by Johnson’s pal, David Cameron (“referendum Dave”), so it’s probably time to move on. And in that respect, Forest says it is now supporting the interests of those who choose to use products less harmful than combustible cigarettes while vowing to never abandon smokers.

    Forest’s unstinting commitment to libertarianism was on display from the start of the event with an invitation that said the dress code was “as you like”—though, timings, I noticed, were set. But listening to the speakers, I couldn’t help wondering whether we weren’t all libertarians with different ideas about what people should be allowed to take liberties with and how far those liberties should be indulged. To question my own libertarian tendencies, I reflected on the dress code by asking myself whether I would vote in favor of changing the law so that people would be allowed to go about their normal business naked—surely, a basic human right that even semi-detached libertarians should support. But I have to admit that I was left exposed. There seems not to be even a vestige of a libertarian in me because I would vote against such a change in the law. I hasten to add, though, that I would do so on aesthetic rather than moral grounds. You see, I have an aversion to being confronted with tattoos that have been ballooned out of focus by the consumption of sugary drinks.