Tag: GTNF 2021

  • The Fork in the Road

    The Fork in the Road

    Photo: Malcolm Griffiths

    The vaping industry faces many challenges. The road to a viable future for these products must pass through sensible regulations based on science. In the current environment, unfortunately, this will be challenging, according to speakers on the GTNF plenary panel The Fork in the Road: What is Next for Tobacco and Nicotine. Misperceptions surrounding nicotine and vaping products, the panelists agreed, are furthered by the mass media’s “wonton disregard” for the science behind the tobacco harm reduction potential of electronic nicotine-delivery systems (ENDS).

    One speaker noted that in addition to many countries banning or erecting insurmountable barriers to vaping products, well-funded anti-nicotine activists are attacking the people who are bringing reduced-risk products to adult combustible cigarette smokers trying to quit smoking. These groups are opposed to the tobacco harm reduction that science and innovation can bring.

    All of these activities together only serve to enhance the vaping industry’s problem: the massive public misperception that vaping is as deadly as smoking cigarettes. The fact that a significant number of physicians mistakenly belief that nicotine, rather than combustion, is responsible for smoking-related illness, bodes ill for the perceptions among the general population. “If physicians believe this, imagine the views of the average smoker in Kenya or Chicago, Illinois, or in Australia,” one speaker said.

    While anti-nicotine activists have done their share to misperceptions, the vaping industry too is partly to blame, according to one panelist. The ENDS industry can do a lot more than feel helpless or complain, this speaker noted. Innovation in harm reduction cannot occur without the vaping industry’s support. That means responsible marketing, combating illicit trade, limiting youth access and making sure that the ENDS industry is doing what it can to prevent underage use.

    Panelists also expressed concern about the direction of the vapor market in the wake of the U.S. Food and Drug Administration’s marketing denial orders (MDOs), with some describing a “Wild West” scenario. After receiving MDOs, some companies have turned to synthetic nicotine because that product currently is outside of the agency’s jurisdiction. A panelist said that the FDA’s “scorched earth” approach to flavored products is only creating bigger problems in the market, adding that if a market isn’t regulated, there is still going to be an unregulated illicit market that has the potential to be more deadly than that for combustible tobacco.

    “Nobody wants kids to take up the products … it’s a very significant responsibility that we in industry be there to be the stewards of that concept in generating science and evidence,” a panelist said. “We should all be proud of the good science that is being generated … that is our responsibility: to generate and publish and participate in the scientific debate and pursue reasonable regulation. What is reasonable? I don’t know. It’s not going to be nothing. We all have to get over it and figure out what is the right way forward so we can go back to helping the consumer and making sure we’re only serving smokers who are looking for alternatives to combustibles.”

  • Diversity and Inclusion

    Diversity and Inclusion

    Photo: Malcolm Griffiths

    “Diversity is being asked to the party; inclusion is being invited to dance.” As the tobacco and nicotine products industries undergo a period of transition, leadership needs to change too. During the Women in Tobacco meeting at the Global Tobacco and Nicotine Forum (GTNF) 2021, panelists looked at how diversity and inclusion can contribute to this transformation. “If the industry doesn’t embrace diversity at all levels—not only on the management board—if it doesn’t adapt, then it will sadly shrink and die,” said Nermeen Varawalla, chief medical officer and head of clinical development at pharmaceutical company Atlantic Healthcare. “Within the industry, players who adapt will be the winners and the forerunners.”

    Carlista Moore Conde, group head of new sciences at BAT, left Procter and Gamble after 20 years and joined BAT in order to become part of this transformation process. BAT, she confirmed, was quite serious about change. With these vectors of difference, as she called them, she had to learn how to quickly build familiarity with people that perhaps wouldn’t necessarily interact with someone like her, a female scientist with an African-American background in a leadership role. She found she could solve this issue by being proactive in joining with coworkers and sharing her story as a way to connect.

    Diversity, behavioral scientist and consultant Lawrence Kutner pointed out, often was defined in too narrow terms, referring mostly to the phenotype. However, diversity was about effectiveness, insight, taking advantage about multiple perspectives. “When we use that word, ‘diversity,’ we tend to oversimplify and lose sight of the goal. So that’s one of the things that I, in running organizations, try to consciously avoid.”

    Introducing her new book, Leading with Love—Rehumanizing the Workplace, Karen Blakeley, an independent academic, leadership coach and teacher, said inclusion was about respecting people and caring for them; about seeing people and their motivations; about hearing their perspective and including it into one’s worldview. “If you have tons of diversity and got no inclusion, then nothing is going to change,” she stressed. Organizations should be serving humanity and not the other way around. In the research for her book, Blakeley asked her network to nominate someone who was leading with love. While most people couldn’t think of any example, the few nominees all had “roots, values, mission and purpose.” “It was not about their career and success—they got a ‘why,’ a larger mission.” The trunk, she explained, was character. “Character building is about controlling your own needs. If you have achieved this, leading with love is embodied. You make difficult, brave decisions. You yield power, and everyone who is really interested in creating diverse and inclusive workplaces needs to learn how to use power.”

  • Kingsley Wheaton

    Kingsley Wheaton

    Photo: Malcolm Griffiths

    Tobacco harm reduction (THR) has arrived at a critical stage, according to Kingsley Wheaton, chief marketing officer at BAT. In 2021, some countries banned or heavily restricted reduced-risk products (RRPs) despite the scientific evidence supporting their benefits. If the World Health Organization tries to further choke off the category during its meeting in November, that would seriously undermine progress in RRPs. “THR is neither a battle to be won nor lost; it’s about science, consumer choice and the need for pragmatic solutions,” said Wheaton. “If we fail to come together and find solutions, then there will be no winners. It will be hard to imagine anything more damaging to global THR efforts than further exclusion of these alternative products.”

    While RRPs are not completely risk free, they are far safer than combustible products. About 100 million smokers have already switched to RRPs. Restricting access to RRPs, Wheaton said, was both misguided and repressive. “In light of evidence showing that former smokers might revert to combustible cigarettes, governments should be revoking bans on alternative products, not introducing them,” he noted. “A whole-of-society approach is required.”

    Maximizing the impact of THR requires an evidence-based approach, proportionate regulations, freedom to innovate, engagement in dialogue and communication, and responsible marketing practices, according to Wheaton.

    The impact of THR could be larger still if the scientific community paid serious attention to the potential of RRPs to help adult smokers. Wheaton cited a massive study of BAT’s Glo tobacco-heating product (see “Milestone Study,”. Tobacco Reporter, July 2021), which revealed biomarkers comparable to smoking cessation. Furthermore, clinical modeling data, he said, had shown that by 2100, smoking may lead to 30 million life years lost.

    Wheaton emphasized his company’s commitment to encouraging smokers to switch, stressing BAT’s ambitions to have 50 million consumers for its noncombustible products by 2030. But he was concerned about the high level of misinformation among consumers. Despite the growing body of evidence supporting reduced-risk products, 62 percent of respondents to a 2018 European survey believed that e-cigarettes are more harmful than combustible cigarettes—an increase from 59 percent in 2016. “This is a development that concerns BAT, and it should concern society,” said Wheaton. “While this should be the basis of public health policy discussions, there was a vociferous minority in the public health community that did not believe in THR, causing a detrimental effect on development and ultimately holding back collective progress. “Nowhere in history has exclusion been useful—we need inclusive solutions.”

    The way forward, Wheaton explained, is to continue innovation and create a vaping experience that closely mimics smoking. “Innovation should be fostered and focus on consumers’ needs,” he said.

  • A Better Treaty

    A Better Treaty

    Photo: Malcolm Griffiths

    GTNF panelists offer suggestions for transforming the FCTC.

    TR Staff Report

    The recent Global Tobacco and Nicotine Forum (GTNF) included a well-timed panel discussion on the Ninth Conference of the Parties (COP9) to the World Health Organization’s Framework Convention on Tobacco Control (FCTC). Scheduled to take place Nov. 8–13, 2021, COP9 originally planned to convene in the Netherlands but moved online due to the persisting coronavirus pandemic.

    While the delegates are unlikely to make major decisions during the virtual gathering, the shift in format could have negative implications for the nicotine business. Rather than adopting or rejecting important reports, the delegates will merely “note” them this year.

    Unfortunately, experience suggests that many COP participants will treat noted reports—including those based on poor science—as adopted and start transposing their recommendations into national legislation. The result could be more counterproductive prohibitions and restrictions on potentially reduced-risk nicotine products, especially in low-income and middle-income countries (LMICs), by the time COP10 rolls around.

    Moderated by Flora Okereke, BAT’s head of global regulatory insights and foresights, the GTNF discussion panel brought together top experts on the FCTC, including Derek Yach, a leading architect of the treaty and current president of the Foundation for a Smoke-Free World; Ming Deng, head of NGPs Industry Study at Yunnan University; Michiel Reerink, international corporate affairs director and managing director of Alliance One International; and Chris Snowdon, head of lifestyle economics at the Institute of Economic Affairs.

     

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    Okereke reminded her audience of how much had changed since the creation of the FCTC 20 years ago. In 2000, she recalled, there was no iPhone. The U.S. Food and Drug Administration had no authority to regulate tobacco, and the EU Tobacco Products Directive was not even on the horizon.

    While the WHO claims there are 100 million fewer smokers today than there were in 2000, the FCTC and its related procedures have attracted considerable criticism from industry and tobacco harm reduction advocates, who complain about a lack of transparency and mission creep, among other shortcomings. Over the years, its detractors contend, the FCTC’s purpose of mortality reduction has evolved into a war on nicotine.

    Snowdon contrasted the FCTC COP with the United Nations’ Climate Change Conference (COP26) scheduled for Oct. 31–Nov. 12 in Glasgow. The Scottish event, he predicted, will get lots of coverage. Politicians will be scrambling to get in the limelight and lining up to take credit or pass blame. Business, including fossil fuel and renewable energy companies, will be present—not only to learn what regulations governments have in store but also to show how they can be part of the solution. This, said Snowdon, is hugely different from the FCTC COP, which explicitly bans the industry it oversees from taking part in its deliberations.

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    While activists often justify industry exclusion by pointing to the FCTC’s infamous Article 5.3, Snowdon noted that the original objective of that section was merely to prevent the tobacco industry from interfering in health policies; it was never meant as a blanket ban on interaction. Yach recalled how the WHO in the early days of the FCTC even invited leading scientists from the tobacco industry to share their views on the direction of harm reduction. “That was the first and the last time they were ever allowed in the building,” he lamented.

    The GTNF panelists also expressed concern that the FCTC has gone beyond its remit, looking to restrict not just tobacco but also products that contain no tobacco and are helping millions of people to stop smoking. As Snowdon pointed out, the treaty defines tobacco control as being “a range of supply-demand and harm reduction strategies that aim to improve the health of a population by eliminating or reducing the consumption of tobacco products and exposure to tobacco smoke.” Products such as e-cigarettes clearly do all of these things, he said—yet the WHO remains firmly opposed to such products.

    Yach noted that while the FCTC text has stood the test of time relatively well, it has not properly considered innovation and intellectual property. Contrary to their counterparts in the fight against HIV/AIDS at the turn of the century, the drafters of the FCTC did not expect many technological developments to take place in their field; tobacco was generally viewed as a staid legacy sector. “How wrong we all were,” said Yach, referring to the tremendous technological advancements that have disrupted the tobacco industry in recent years.

    Not all players have been equally forward thinking, however, and Yach said it was no longer appropriate to speak of “the tobacco industry.” Instead of an industry with a homogeneous view, he noted, there is now one group of players, led by publicly traded companies, making serious changes to their business, and another group, led by state monopolies, resisting change. Unfortunately, the latter group accounts for a far greater share of cigarettes sales than the first. “Many COP delegates are unaware that if you add up the sales of PMI, BAT and JTI, Imperial and Altria, they come to less than the sales of China Tobacco,” he said. However, being owned by their respective governments, the state tobacco firms are indirectly represented at COP, even as their more progressive counterparts are excluded. Deng said it was the secretariat’s job to develop a better mechanism to deal with this issue.

    Yach said the industry should come together and show authorities it was willing to push the change process collectively by having a joint plan to end youth smoking, for example. Reerink reminded his audience that the industry had attempted exactly that 20 years ago, but the development got lost in other news. “I cannot blame Derek for missing it,” he said, “because it was announced on Sept. 11, 2001.” With the FCTC finances one of the few items certain to be decided at this virtual COP9, Reerink shared his insights into the budget, which he said is probably one of the treaty’s least read documents. The FCTC has a biannual budget of about $20 million. Half of that—$9 million—is reserved for “activities.” Reerink detailed how the U.K., Australia and Norway provided millions of dollars for the FCTC 2020 Project. This project, he said, is about the FCTC secretariat telling a handful of LMICs that they have to fully implement the FCTC, with bans on reduced-risk products and plain packaging. “None of these are obligations from the FCTC, but that’s the message to the LMICs,” said Reerink.

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    The GTNF discussion wrapped up with an audience question-and-answer session, and one delegate asked about the opportunity for the U.K., with its comparatively pragmatic approach toward new nicotine products, to influence the debate at the FCTC now that it is outside of the European Union. Yach said both the U.K. and U.S. governments have an obligation to be more vocal in the FCTC process. Even though the U.S. is not a full signatory to the FCTC, its representatives can still participate in the debate as registered observers. The U.K., he noted, is currently the world’s gold standard in reducing smoking rates. The FDA for its part, should share the scientific logic that went into its deliberations for approving marketing applications for Swedish snus and IQOS. That insight is important; due to the FDA’s unrivaled investment in regulatory science, its decisions tend to become global norms.

    Asked about the path forward for reform, Yach recalled the dark days of apartheid in South Africa, when a research paper examined what would happen to the economy if the system continued on its current track versus how the economy would fare in an open democracy. That research helped galvanize the population and encouraged reforms. He encouraged the industry to present simple studies detailing how many lives could be saved if regulators integrated tobacco harm reduction, better cessation and treatment into its programs. “It’s not that difficult to give some reasonably good predictions,” he said. Such studies could be used to spur delegates into action. “You can ask them: Are you not willing to save x number of lives? What is the cost of inaction in lives lost because you are sitting around twiddling your thumbs?”

    Flora Okereke

    Flora Okereke, who moderated the GTNF panel on the Framework Convention on Tobacco Control, is head of global regulatory insights and foresights at BAT. In this role, she is responsible for analyzing and forecasting regulatory developments across BAT’s 180-plus global markets.

    She previously held a number of senior country, regional and global roles at BAT, including legal, corporate and regulatory affairs director for West Africa; head of regulatory affairs for Africa, the Middle East and Eastern Europe; and global head of regulatory strategy and engagement.

    Most recently, she served as senior director of government affairs and international policy at Reynolds American Incorporated Services, a subsidiary of RJR Tobacco based in Washington, D.C. In this role, she led engagements with U.S. government agencies, foreign embassies and global institutions on international trade, anti-illicit trade, tax and regulatory issues on behalf of Reynolds American Inc. and BAT. Prior to joining BAT, Flora was a commercial litigation solicitor in the City of London.

  • Roya Ghafele

    Roya Ghafele

    The Importance of Intellectual Property

    I figured I’d drawn the short straw when I was told I had to cover the GTNF session on intellectual property (IP), so I probably wasn’t paying as much attention as I should have been until I heard the presenter say she wanted to share her “passion for patents.”

    At that suggestion, my ears pricked up. I had never heard the phrase “passion for patents,” and I had assumed I never would, given that it seemed to encapsulate the ultimate oxymoron. And, as it turned out, what was being spoken about wasn’t a passion for patents only but a passion for IP, which, in turn, wasn’t only about patents, trademarks and copyrights. Roya Ghafele, managing director of the law and economics consultancy OxFirst, told her audience that IP was about ownership, knowledge, creativity, new views, new perspectives and new ways of seeing the world and about how we were going to organize and manage property rights, private property or what’s in our brains. “I can’t think of anything more revolutionary and more exciting than that,” she said.

    But then Ghafele, who is also a visiting professor of IP law and economics at the School of Law at Brunel University, London, went on to speculate about whether we were taking capitalism to the next step, leaving the audience to ponder, I guess, whether such a step would be up, down or sideways or, indeed, whether it would be revolutionary, not a word normally associated with capitalism. But there again, we are living in interesting times. The theme of the GTNF was “Continuing Change: Innovation and sSustainability,” and continuing change seems to speak more to concepts of anarchy than capitalism.

    This is not to get away from the subject. Ghafele made the point that considerations of IP went beyond our normal understandings into the territory of how we perceive politics and also into the areas of organizing business, economics, society and beyond. “Would emotional property follow on from intellectual property?” she wondered.

    Who knows? Currently, we’re apparently at the stage where everybody wants to lead by harnessing innovation. Though, one problem here is that the IP underpinning such innovation is the elephant in the boardroom. IP tends to be left in the hands of legal teams and, in extremis, the judiciary, which is concerned with the law and is not democratically accountable, while those who are accountable, politicians, do not have IP, nor potential policy governing it, in the forefront of their minds. Ghafele said that, in her view, even CEOs lacked adequate understanding of business strategy around IP. In fact, there was a way of looking at IP that she found conservative and paradoxical. The thinking behind governance structures that helped frame the basis of innovation was not itself innovative. It was rather cautious and backward looking.

    Patents, it turns out, are not, or, certainly, were not, in the DNA of tobacco corporations, which, in the past, were solely part of an industry tied up with consumer brands and trademarks. Patents came to the fore with the introduction of novel products in reaction to the major governance change brought about by the coming into existence of the World Health Organization’s Framework Convention on Tobacco Control. We know this because Ghafele’s presentation was based on research carried out into IP in the tobacco space, with sponsorship from the Foundation for a Smoke-free World—research she described as being one of the first projects to start thinking seriously about patents and new technologies in the context of fighting the smoking pandemic.

    But while patents might not have been in the industry’s DNA, the industry hasn’t done too badly during the past 10 years. The research turned up 70,000 patents in the fields of nicotine vapor products, smokeless nicotine products and heated-tobacco products, broadly describing technologies aimed at reducing the harm of smoking. This level, which was boosted somewhat by nontobacco/nicotine industry players, was described as indicating a good level of investment.

    Now for the bad news. Ghafele said she had been shocked by the massive gap between developed and developing countries when it came to patent filing. It was a good rule of thumb that companies did not intend to sell their products in countries where they were not filing patents, and they were not filing them in large numbers in developing countries where the smoking pandemic was particularly pronounced. While acknowledging that patent systems in some developing countries were unsophisticated, Ghafele said the current situation was wrong. “There is nothing else to say but that is wrong,” she said.

     

     

  • Science Driving Policy

    Science Driving Policy

    Although the Covid pandemic has shown that science can be accelerated, tobacco harm reduction (THR) advocates are still fighting a war against biased policymaking, according to participants in the “Science Driving Policy” discussion panel at the 2021 GTNF. Despite a clear consensus among scientists that proper science is the way to go for evidence-based policy, there is a frustrating lack of education among regulators.

    Gizelle Baker, vice president of global scientific engagement at Philip Morris International, spoke about patently false health information with contradictory and/or conflicting findings that changed evidence. While misinformation is not a new phenomenon, she said, technological advances have aggravated the problem. In the digital era, it is hard to differentiate between science and opinion. Visual misinformation is difficult to control; releasing more information and just hoping that misinformation will go away is unlikely to be a successful strategy.

    In the case of Covid, there are hotlines to report misinformation. By contrast, after Stanton Glantz published an article that incorrectly linked vaping to myocardial infarction, the paper was retracted but never corrected. As a consequence of such persisting misinformation, 59 percent of U.S. consumers were unable to accurately identify the cause of risk in combustible cigarettes. Nevertheless, she stated, almost 80 percent called for smokers to have access to reduced-risk products (RRPs) and information on them.

    Citing the experience of Sweden, where a century of snus use has driven down smoking prevalence to record lows, Karl Fagerstrom, president of Fagerstrom Consulting, pointed out that the Nordic country’s death rates due to smoking in men aged 45–49 were the lowest in the European Union.

    He compared Sweden’s figures to those of the U.S., where marijuana use has gone up during the past five years. As cigarette use declined to 26 percent in 2019, marijuana consumption increased to 18 percent. Public health, he concluded, would certainly prefer pure nicotine intake via RRPs over marijuana. For Fagerstrom, it would be acceptable if nicotine-containing products were regulated like alcoholic beverages in terms of taxation and availability according to the products’ degree of harm.

    Qingyuan Hu, director general of the China National Tobacco Quality Supervision and Test Center, provided reviewed tobacco science development and regulation. The World Health Organization Framework Convention on Tobacco Control, he said, was determined to promote tobacco control measures based on current scientific, technical and economic considerations. From the beginning in the 1950s, the views in epidemiology in smoking-caused diseases were controversial among some scientists and the tobacco industry. To support the regulation of novel and emerging tobacco products, long-term monitoring is needed. However, epidemiological data of new products is almost unavailable today, and it remains a tool to influence public health action and policy, Hu said. Many research gaps still need to be filled, especially in the risk assessment of various products. There is lack of consistency in regulatory policy on nicotine, novel tobacco products and THR across the leading regulatory authorities, he said.

    Although THR is a pragmatic, achievable, evidence-based approach, there continues to be confusion about alternative tobacco products and their potential for public health, according to David O’Reilly, director of scientific research for British American Tobacco. Thirty-seven percent of people believed that vaping was as dangerous or even more dangerous than smoking, whereas the most recent Cochrane report showed that e-cigarettes are more efficient as a cessation tool than nicotine-replacement therapy or electronic nonnicotine-delivery systems. Censorship and poor epidemiological studies have been damaging to the tobacco harm reduction effort, O’Reilly noted. While there is a lot of science on nicotine, it is vital to decouple the substance from the process of combustion in cigarettes. Policies, he stressed, must acknowledge that nicotine is not responsible for cancer.

    Brad Rodu, professor at the University of Louisville School of Medicine, reported how in 2007 he had tried to validate data by the Centers of Disease Control that claimed that there were 480,000 tobacco-related deaths per year. The figures had never been validated by anyone outside the American Cancer Society, he said. Rodu was repeatedly denied access to the data. He listed a number of recent false claims about tobacco that had been published by the U.S. National Institutes of Health since 2016 based on flawed studies with proven false results, among them the findings that teen vaping increased the risk for Covid manifold or that snus use had led to an increased mortality. The U.S. federal mission for a tobacco-free society, Rodu concluded, drives the tobacco control industry and bad tobacco science. Pre-publication or post-publication peer review of tobacco science is almost nonexistent, hence validation is as good as nonexistent. Both the tobacco industry and tobacco control are tolerant of the status quo. He called for the Food and Drug Administration to use the same standard to evaluate research from the tobacco industry and from the tobacco control industry. Otherwise, he cautioned, the “publication tsunami” about e-cigarettes would provide the “scientific evidence” for harsh regulation.

     

  • Open Mic

    Open Mic

    Photo: Malcom Griffiths

    One of the panelists at the final session of the Global Tobacco and Nicotine Forum (GTNF) 2021, the Open Mic, indicated that he and his colleagues were spending a lot of time trying to validate innovative ways of substantiating tobacco harm reduction. He was responding to a question about whether breaking through to those so far unconvinced about the harm reduction credentials of new-generation tobacco/nicotine products would require more research or whether a different approach was needed. It was obvious that regulators would want to see the results of high-quality studies, he said, but what was not so obvious was what kinds of studies were needed. It was known, however, that if somebody stopped smoking tobacco, they benefited from a whole world of physical improvements that could be measured; the problem was how to measure those changes effectively and in a timely manner.

    The Open Mic session lasted one-and-a-half hours and provided event participants with the opportunity to ask some challenging questions, one of which touched on the fact that in some tobacco markets, up to 35 percent of smokers are occasional or nondaily smokers, most of whom don’t use other nicotine products on days when they don’t smoke. Given this, what was the role of nicotine in moving people away from combustible products?

    One response suggested that the issue of addiction or dependence was oversimplified, as though all smokers were the same and all were addicted, an idea that was not entirely true. There had been overexposure of the problem of addiction and dependence, especially in relation to young people, when, in fact, some people were able overnight and without withdrawal symptoms to quit a smoking habit that had lasted up to 40 years. It was time for the book of addiction and dependence to be rewritten.

    Another panelist took the view that the issue of the spectrum that took in addiction, dependence and pleasure was complex, and focusing on it as if it were the main moral question that had to be grappled with was not helpful. Having such a focus was to miss the target. The target should be to reduce risk and to reduce disease. In fact, the important moral question was do physicians and members of the scientific medical community give smokers an additional option or not? Do they provide them with proper guidance on how to quit but give them the right to choose, or do they condone only the methods of which they approve?

    Broadly speaking, the Open Mic session included three panelists from the world of science and healthcare and three from the world of business, one of whom appeared remotely from China. The session started, however, with a comment from one of its two moderators, who said the 2021 GTNF was the first conference she had been at where the consumer was front and center. But there was a sting in the tail. Some consumers, she added, those who still used traditional tobacco products, were not at the center except in the sense that they were the subject of discussions on how to get them to move to one of the many new-generation products coming onto the market. In a way, the suggestion seemed to be: Where was the “T” in GTNF?

    A corollary to this question came up later when it was asked whether committed traditional tobacco users should be continually bombarded with information by those wanting them to quit or switch to less risky products or whether, at some point, it should be accepted that since they were determined to continue with their habit, they should be left alone to enjoy it. Nobody got to grips with this question, perhaps because it was too raw or because this “hard core” of smokers would make up the 5 percent who would still exist in countries that had “eliminated” smoking. Although one panelist made the point that in a relatively free world, people should be allowed to do what they wanted to do with a legal product, most merely suggested that new-generation products and the messages around them should be improved, presumably until even the hard core of smokers came on board.

    There is clearly a problem with such communications, however. One simple but insightful question asked where a smoker looking to quit should go for advice. This presents a conundrum because the tobacco/nicotine and pharmaceutical industries have financial interests in the outcome, many healthcare professionals are ill-informed and social media is crawling with conspiracy theories. One panelist made the point that it could turn out that your friend who had already benefited from switching from consuming traditional tobacco products to using new-generation products could prove to be the most important medical adviser you would ever consult.

  • Investment Panel

    Investment Panel

    Photo: Malcom Griffiths

    A New Case for Tobacco

    Despite the rough ride for tobacco stocks in recent years, the investment case for tobacco and nicotine remains strong, according to the participants in the Global Tobacco and Nicotine Forum (GTNF) 2021 investors panel. Under the direction of Eric Bloomquist, four prominent tobacco analysts—Jonathan Fell of Ash Park Capital, Rupert Wilson of Strategic Business Consulting, Pieter Vorster of Idwala Research and Gaurav Jain of Barclays—debated the outlook for tobacco in a rapidly changing business environment. Even as the industry suffered from Covid-19-related fallout, its legendary pricing power remained intact and continued to deliver profit growth and cash flow. With supply chain disruptions affecting many sectors, tobacco has even become a safe hiding place again, one panelist ventured.

    That said, some companies have clearly done better than others. Those with greater exposure to noncombustible products are attracting higher valuations than those with a lower portion of their revenues coming from that business, and the panelists debated whether that discrepancy would prompt investors to pressure the underperformers to “get their act together.” Not everybody was convinced. As one participant pointed out, shifting the world’s 1.1 billion smokers to noncombustibles is a very long-term project. “Realistically, there is time for the companies who don’t have the right strategy to eventually get there,” he said. A word of caution was also uttered against compromising the cash flow machines: The transition to less risky nicotine products requires lots of investment, and many of those funds are still generated by sales of traditional cigarettes.

    Speculating on possible mergers and acquisitions, the panelists considered a reunification of Altria Group and Philip Morris International unlikely in the near future. As one participant pointed out, PMI has publicly committed to deriving more than 50 percent of its net revenues from smoke-free products by 2025. Because Altria currently receives a smaller share of its earnings from such offerings than does PMI, it would be harder for the combined entity to meet PMI’s target. What’s more, many PMI investors like the fact that they can currently choose whether or not they want exposure to the uncertain U.S. market—an option that would no longer be available after any merger.

    One panelist suggested Swedish Match as an acquisition target for PMI. After the recently announced separation of its cigar business, Swedish Match would offer PMI attractive complementary smokeless businesses, such as snus and modern oral, the panelist said. Others contemplated the possibility of spinoffs by Imperial Tobacco, which has announced greater focus on its core markets. The problem here, noted one panelist, would be the buyer: With all large tobacco companies keen to reduce their dependence on combustibles, there is no obvious taker for such a business—at least not among the publicly listed firms. This, in turn, led to speculation about the designs of China’s State Tobacco Monopoly, which is not accountable to shareholders—but the panelists quickly agreed it was futile to figure out “what is happening in China.”

    The discussion then turned to the impact of environmental, social and governance (ESG) initiatives on investors. Would tobacco companies’ efforts to transition smokers away from deadly combustibles prompt investors who might otherwise have shunned the sector to take another look? Panelists agreed that the Foundation for a Smoke-free World’s Tobacco Transformation Index, which evaluates tobacco manufacturers on efforts and actions relating to tobacco harm reduction, could prove to be a valuable tool for investors. Companies that are doing the most in this area are already enjoying the best valuations, one panelist pointed out. They also pointed to the entrance into the market of new nicotine companies that offer no combustibles, such as RELX and SMOORE, which have broadened the options. PMI’s recent acquisitions of pharmaceutical companies, such as Vectura, could also generate interest from a new class of investors, the analysts ventured.

    At the same time, the panelists acknowledged the challenges facing tobacco companies in escaping the tobacco “taint.” Many financial websites offer investors a dropdown menu with the option to exclude “tobacco”—a broad label that includes both companies wedded to traditional cigarettes and firms at the forefront of transitioning smokers away from such products.

    One panelist detected a marketing opportunity. Its premise would be simple: Rather than pretending tobacco companies don’t exist, such a fund could offer to invest in their depressed stocks and help them change. “That would be a useful approach for the world and an interesting proposition for investors,” he said. 

  • Joe Murillo and Todd Cecil

    Joe Murillo and Todd Cecil

    Photo: Malcom Griffiths

    The regulator’s view

    When the U.S. Food and Drug Administration began issuing marketing denial orders (MDOs) for vapor products, the industry was understandably shocked. Many companies that had submitted timely premarket tobacco product applications by Sept. 9, 2020, had expected to first receive a deficiency letter and not immediately an order to remove their products from the market. Some MDO recipients complained the agency had “moved the goalposts” by suddenly requiring studies that it had previously said were not required.

    At least three companies have filed lawsuits over their MDOs. All are accusing the agency of making “arbitrary” decisions and not reviewing the submitted data according to the statutes. In a “fireside chat” between Joe Murillo, chief regulatory officer for Juul Labs, and Todd Cecil, deputy director of the Office of Science for the FDA’s Center for Tobacco Products, during the recent GTNF in London, Cecil acknowledged the missing data that caused the flurry of MDOs is not required by the statutes that regulate tobacco products.

    When asked what the “level of expectation” the FDA had in deciding whether to issue a deficiency letter or an MDO after a premarket tobacco product application (PMTA) was moved into scientific review, Cecil said that the agency followed “a randomized approach” to choose the applications the FDA would work on.

    “The randomized approach identified a number of manufacturers’ products that went into this scientific review, and we … evaluated them from top to bottom,” he said. Cecil noted the agency began to see in some applications that “tended to have problems or missing materials that we needed in terms of benefits [of flavors]; that we learned we have to have that benefit piece … that evaluation that we spent several months working on taught us what we had to look for to be able to [conduct] a full scientific review.”

    Cecil said that the agency just figured “if we know going right in that there are pieces missing, why will they go through a deficiency process and with a very short turnaround expecting to get back a full study that wasn’t completed previously?” So, instead of issuing a deficiency letter as required by statute, the FDA just handed out MDOs because the agency knew that it would take a company a significant amount of time and expense to conduct the new required longitudinal and cohort studies. Cecil was then asked why the agency filed the applications in the first place.

    “We had to make a determinant how can we streamline this evaluation and determine those products that have at least the bare minimum for us to do a real and complete evaluation,” Cecil said. “This evaluation is not a standard. It is not a de facto standard or anything else. This is information that we need to see, but it’s not a requirement. An RTF [refuse to file] are those things that are required by the statute. And these studies are not necessarily required by the statute.”

    The FDA has also been facing an unprecedented amount of scrutiny on how its handling of regulation of electronic nicotine-delivery system (ENDS) products and the PMTA process. Numerous health groups, anti-nicotine groups, states attorneys general and even members of Congress have criticized the FDA and demanded action. When asked if the FDA’s actions were influenced by these groups, Cecil said the agency focuses on science.

    “We’re science-based,” he said. “We need look at what is presented to us in the application and in the laboratory. That is what we’re most focused on. If there is new data out there and that new data is brought to our attention through one of these [groups], then that’s fine. We would be happy to get those up and understand the bigger picture, all of the data … We need to evaluate those as scientifically or make a determination based upon that science.”

    Only 100,000–200,000 products remain under FDA review. Of the 6.7 million submitted PMTAs, all others have received either a refuse-to-accept, an RTF or an MDO response. Cecil denied the agency was making a “categorical policy decision as opposed to an application-by-application decision” about flavored products. “We are stating that we understand that there is a significant youth initiation risk that comes from flavored ENDS products,” he said. “We are, in fact, reviewing all of those, and what we have found as we’ve done our reviews is that none of the literature is sufficient to demonstrate that there is not a youth initiation risk for individual flavors.

    “We see that tobacco has a lower initiation risk. We see that menthol has some issues with it, and we are going to be evaluating that as we go forward. However, all of the data points to the flavored products as having significant youth initiation concerns. So what we’re looking for is an adequate indication that there’s a benefit on the other side of the equation. This is not a decision that we aren’t going to accept flavored products. Absolutely opposite. We need to ensure that there is concrete and robust data that demonstrates that there is an existing user benefit for those products.”

    Cecil declined to say when more MDOs would be issued or when the agency would rule on major products, such as Juul, NJOY, blu and Vuse. “We continue to work diligently,” is all he would say. “There are a number of products that are well along. But no, I can’t tell you how many are those ones, but there are some that we’re hoping to move forward in the short term.”

    The FDA’s recent action against flavored e-liquids does not mean that the FDA will never approve a flavored e-liquid, according to Cecil. He said that the rejected applications just lacked the required information that those products met the agency’s “appropriate for the protection of public health” standard. “You are welcome to reapply once you have addressed the issues that we provided to you,” he said. “And we will reevaluate that at a future date.”

  • Amanda Wheeler

    Amanda Wheeler

    Photo: Malcom Griffiths

    Continuing the fight

    Amanda Wheeler got involved in the vapor business after a personal tragedy. Despite a cancer diagnosis, she was unable to quit smoking for years—until she discovered vapor products. Eager to share her success with others, Wheeler and her husband, Jourdan, opened JVapes, an e-liquid manufacturer and retail store in Prescott, Arizona, USA, in 2012.

    The business was successful, quickly expanding to multiple locations across three states. Wheeler was helping her customers quit smoking combustibles and became increasingly involved in advocacy.

    In October of 2020, Wheeler and fellow business owner Char Owen created the American Vapor Manufacturers Association (AVM) to help small businesses navigate the U.S. Food and Drug Administration’s onerous premarket tobacco product application (PMTA) submission process. The organization also engaged in federal lobbying and sought to provide reduced-cost scientific testing and expert regulatory compliance advice to members preparing PMTAs.

    The deadline for submitting PMTAs to the FDA was Sept. 9, 2020. Wheeler submitted timely applications and was allowed to keep her products on the market for up to one year while the FDA reviewed her submissions. But on Sept. 9, 2021, Wheeler received a marketing denial order (MDO). The regulatory agency appeared determined to put the company she and her husband had built, along with the industry she passionately defended, out of business.

    That day, the FDA issued MDOs to more than 130 companies, requiring them to pull an estimated 946,000 products from the market. The bloodbath continued in the following weeks. At press time, the FDA had issued 323 MDOs accounting for more than 1,167,000 flavored electronic nicotine-delivery systems (ENDS). As of Sept. 28, not a single ENDS had been approved.

    “[The] FDA knew that they didn’t have the time or the resources to give our products fair consideration, but instead of asking for help, they let the 9/9 deadline pass and left the more than 500 companies subject to their decision in an unstable and probably untenable position,” Wheeler explained. “The FDA’s arbitrary ruling effectively criminalizes thousands of long-standing businesses in communities all across the country. Those entrepreneurs now have to junk their inventory, fire their employees, stiff their investors, and defer their dreams.”

    Wheeler said she was standing up for the “little guy”—the thousands of small business owners who manufacture, distribute and retail open system products in vape shops all over the United States. She explained that her business and other AVM members made every attempt within their means to comply with the FDA regulations. It was an expensive process. It was also a system designed for small businesses to fail from the very beginning, she said.

    “My company personally submitted several hundred thousand pages of documents to the FDA in an attempt to comply with this one premarket tobacco application standard. The [FDA’s] decision doesn’t just make a mockery of that earnest work. It also makes the more than 10 million Americans who made the switch to vapor products—in our vape shops, with our liquids—into outlaws, too,” said Wheeler. 

    Wheeler said the FDA, in an act of “regulatory arson,” was creating a tobacco-led monopoly over the vaping industry, as only the companies with the deepest pockets stand a chance to survive the agency’s cumbersome PMTA process.

    She also focused on what she perceived to be one of the biggest challenges facing the industry today: misinformation. “There is one other group I want to address with my time here. It’s the activists and the press who—whether because they are misguided or malicious—spread the falsehoods and distortions that directly led to this tragic outcome,” she said.

    The biggest victims of the FDA’s actions, according to Wheeler, are the vapers who will now struggle to acquire the products that have helped them stay off of cigarettes. Wheeler vowed she would continue to fight for her customers and fellow business owners. “Even through their dismay, I am hearing a constant refrain: We are not going to stand for it,” she noted.

    “We will be at the FDA’s doorstep demanding answers or forcing them through Freedom of Information Act laws and the courts. We are not surrendering our business or abandoning vapers to cigarettes,” she said. “As we say in Arizona, this is more than just a fight. It’s going to be a reckoning.”