Up in Smoke: Distrust of E-cigarettes Cement Big Pharma’s Monopoly

David Smith

Last Updated: 14, June 2013

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.

Over-zealous regulators in Europe and the US are threatening the growing market for e-cigarettes, reducing their revolutionary potential to save millions of lives in the 21^st century by weaning smokers off the poisons in traditional cigarettes.

Clive Bates, the former head of the British charity Action on Smoking and Tobacco (ASH), says e-cigarettes could save hundreds of millions of lives in the 21st century, but only if over-zealous regulators in the EU and the US don’t spoil the party.

Bates, who spent a large amount of his career campaigning to reduce cigarette smoking, says that if left alone e-cigarettes could become one of the most revolutionary consumer products of all time. The problem is that regulators in the US and Europe don’t share his views and won’t stop interfering. The UK decided this week to regulate e-cigarettes as medicines from 2016, which could have a drastic effect on their enormous market potential. The EU and the US Food and Drug Administration (FDA) are considering similar actions.

“I can say with only modest exaggeration that e-cigarettes could be one of the greatest health inventions since vaccines or antibiotics,” said Bates. “The World Health Organization (WHO) estimates there will be a billion smoking-related deaths this century on current trends. But if the market for e-cigarettes continued to grow at current rates, they could save hundreds of millions of lives.

“These new nicotine products deliver clean nicotine without the tar, carbon monoxide and volatile hot gases of cigarettes and as a way of taking nicotine they are pretty near harmless to health. For people who switch from cigarettes, they hugely reduce risk, while satisfying any need for the drug nicotine and some of the behavioural aspects of smoking. They also reduce passive smoking, irritation, smell, litter, fire risk… What’s not to like?”

Growth in the e-cigarette market is spectacular. In the UK, the number of e-cigarette smokers will reach 1.2 million this year, up from just 300,000 in 2010, according to ASH. In the US, sales have doubled every year since 2007 and will reach US$1 billion in 2013. Wells Fargo analyst Bonnie Herzog said consumption of e-cigarettes could overtake traditional cigarettes in the next decade. “They’ll only evolve and improve as time goes forward, at far less risk. The technology portion of it is sort of like Apple. This is just Version 1,” she said.

The avaricious American tobacco companies have noticed the trend and have begun trying to claim a large slice of the market. Marlboro-maker Altria will release its MarkTen e-cigarette this summer and Reynolds American’s VUSE e-cigarette will be launched in Colorado in this year ahead of a planned national rollout. The third-largest US Tobacco company, Lorillard, last year acquired Blu e-cigarettes, which make up about one-third of sales at US convenience stores.

“The tobacco manufacturers are worried they will be the Kodac in the new digital camera story. It is a potentially massive transformation to the market which really could be comparable to the digital transformation. The cigarette market has sold the same product for the last century and now there’s a new product which has the potential to eat their lunch!” said Bates.

[quote]But industry regulators are intent on spoiling the show and driving millions back to the noxious fumes of cigarettes. Already, e-cigarettes are banned outright in Turkey, Brazil, Argentina and Singapore and sales are prohibited in Norway, Denmark and Belgium. Other European countries, including France, have outlawed their use in public spaces. This week the UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) announced its decision to regulate them as a medicinal product.[/quote]

Bates says the regulation is illogical because the manufacturers are making no claims about their medicinal benefits. It will also have a disastrous effect on their business. “Medicines regulation involves disproportionate costs, compliance burdens and restrictions, none of which apply to cigarettes. So the MHRA decision is a good day for the cigarette makers as their competition will be weakened. We need regulation to encourage these products to compete with cigarettes, not smother them with red tape,” he said.

The medicines regulation will also slow down innovation. The lengthy and costly authorisation process does not lend itself to the more experimental approach that works for consumer products.

“Medicines regulation will reduce the diversity of products available. The process has to be repeated for each product which is slow and time-consuming and not worth it for niche products. This is bad because it narrows the potential appeal and removes some of the pleasures vapours find in experimenting with new products,” he said.

It is likely that regulators will impose restrictions to the product design. “For example the dozens of frivolous flavours are part of the appeal as an alternative to smoking, but will the stern suits of the MHRA really approve ‘pina colada’ flavour?”

The fun element of e-cigarettes is a key component of their element of their appeal. “What the e-cigarette sector doesn’t need is ‘boring’. That has been tried and failed with NRT. It needs marketing verve, style and buzz, not the dull deadening hand of bureaucratic approvals. That applies to product design, packing, marketing and sponsorship. The public health challenge is to get as many smokers to switch as possible, not to make perfectly safe products that no-one wants,” said Bates.

A further downside to regulatory overkill will be the requirement to have ‘clean room’ facilities. “Most consumer nicotine is delivered in a filthy mix of burning particles of tobacco and hot toxic gases. But the current supply chain for e-cigarettes is long and extends to China. Most factories will not be able to attain this standard, so MHRA will destroy the existing supply chain,” he said.

The potentially disastrous effect on the e-cigarette market could be repeated throughout Europe if the proposals in the European Union’s Tobacco Product Directive are passed later this year. The Directive proposes to regulate e-cigarettes either as medicinal products, or as tobacco products. Bates says it is exasperating that the regulators are considering such irrational policies.

“It’s as though everyone in the EU parliament and everyone in the health lobby are all crowding around this. They’ve got regulators’ itch and they cannot stop scratching. They have to get in and control it and in doing so they will kill the golden goose.”

“The outright bans in Brazil and other countries are utterly stupid, but in Europe we have nothing to shout about as we already do something equally crazy. Smokeless tobacco is allowed in Sweden, but banned everywhere else in Europe. But all the studies show it is vastly less damaging than cigarettes,” he said.

Figures show that Sweden’s smoking rate is 13%, the lowest in the EU, well below the average of 28%. As a result, Sweden has half the rate of lung cancer compared to its Scandinavian neighbour Denmark. “Having seen this amazing success story, the EU regulators ban it. It’s another example of the belief that regulation must make it safer, but actually when you regulate you impose burdens, costs and restrictions,” Bates said.

[quote] The FDA in the US has not interfered yet, but it has also hinted at tighter regulation of the market. On its website, the FDA says the safety and efficacy of e-cigarettes is unproven and the products may contain harmful chemicals. This is always the argument of regulators in both the EU and the US, although there is already a considerable body of evidence suggesting that e-cigarettes are vastly less harmful than traditional cigarettes.[/quote]

For example, one of Europe’s leading researchers, Jean-Francois Etter, a Professor of Public Health at the University of Geneva, has just completed a research project into the properties of e-liquids. Etter’s team purchased 20 bottles of e-liquid on the internet and had the solutions analysed in the same Swedish laboratory where nicotine patches and gums are manufactured. “The quality was surprisingly good,” he said. “The liquids deliver far fewer chemical compounds than tobacco smoke which has several thousand chemical compounds and hundreds of toxic ones. There is a need for more studies but e-cigarettes are, of course, much less toxic than cigarettes.”

Etter presented some of his findings to a European Parliament workshop on e-cigarettes in May this year, but his positive assessment of their properties was overshadowed by the negative viewpoint espoused by the influential World Health Organisation (WHO). Etter was galled by what he considered the misinformation in the WHO presentation.

“The chief scientist of WHO Europe, Roberto Bertollini, made a presentation at the EU workshop which was appalling,” Etter said. “It consisted in cherry-picking negative studies that show e-cigarettes are bad, and deliberately omitting studies that suggest that e-cigarettes could be useful in helping people quit smoking. So I confronted him on that and he didn’t like it. He claimed that acute intoxication could be possible in children.”

“If a student had presented such work I would have given him a very bad grade. The WHO, after all, is here to protect the health of the public, so by taking such an approach they are not doing their job. Astonishingly, the most vocal opponents of e-cigarettes are people from the public health community, who perhaps don’t understand what is at stake, and just don’t like the product because it looks too much like a cigarette,” he said.

In the US, the leading researcher into e-cigarettes, Dr Michael Siegel, of the Boston University School of Public Health, is similarly irked by the FDA’s distrust of e-cigarettes. “The FDA and major anti-smoking groups keep saying that we don’t know anything about what is in e-cigarettes,” Siegel said. “The truth is we know a lot more about what is in electronic cigarettes than regular cigarettes.”

Dr Siegel’s report in Journal of Public Health Policy came to the same conclusions as Professor Etter’s recent study. He reviewed 16 laboratory studies that identified the constituents of e-cigarette liquids. Carcinogen levels were up to 1,000 times lower than in tobacco cigarettes.

Yet, ever since e-cigarettes came onto the market in the US, the FDA has threatened to ban them in the US and six anti-smoking groups – the American Cancer Society, American Heart Association, American Lung Association, Campaign for Tobacco-Free Kids, American Legacy Foundation, and Action on Smoking and Health – have also called for their removal from the market.

“Taking these products off the market would force thousands of users to return to cigarette smoking,” Siegel said. “Why would the FDA and the anti-smoking groups want to take an action that is going to seriously harm the public’s health? The only ones who would be protected by a ban on e-cigarettes are the tobacco companies, as these new products represent the first real threat to their profits in decades.”

The regulators’ attitudes have provoked a rush of conspiracy theories about the malign influence of Big Tobacco and Big Pharma behind the scenes. This is of course, difficult to prove. Big Tobacco has seen sales of cigarettes fall sharply in recent years and now has a major stake in the e-cigarette industry so their perspective is ambivalent.

[quote] But Big Pharma, on the other hand, has good reasons to be threatened by the arrival of the e-cigarette. The pharmaceutical industry in the UK makes about £120 million a year from nicotine replacement therapies, a market undermined by the attractiveness of e-cigarettes. As Bates has pointed out, the regulation of e-cigarettes would reduce their competitive edge. [/quote]

The regulatory body in the UK which says it will regulate e-cigarettes – the MHRA – also has strong ties to the pharmaceutical industry. Although an official arm of the UK government, most of its income comes from pharmaceutical companies, arguably a massive conflict of interest. It’s also the case that many of the MHRA’s staff, including senior officials, have previously worked for the pharmaceutical giants.

A House of Commons Committee report on The Influence of the Pharmaceutical Industry set out this complicity in stark terms. The official British Government report said:

“Over the years many personal relationships have grown between regulatory officials and the staff of pharmaceutical companies, helped by a ‘revolving door’ and frequent meetings to address regulatory matters. The argument has been that experience of working in the industry is highly desirable, if not essential, to understanding the practical implications of regulatory issues. Similarly comfortable contacts have existed between many of the members of the Committee on Safety of Medicines and industry, and this continues. These close working relationships over decades have meant that industry views have been much more prominently represented—and to a notable extent internalised—in drug regulation than the interests of patients and consumers, or of clinicians.”

Big Pharma also has fantastic lobbying power in Europe. A report from Health Action International (HAI) says big Pharma spends at least €40m a year lobbying the EU. But the figure could well be closer to €91 million as registration to the Transparency Register is voluntary. The higher figure is to Big Pharma’s lobbying investments in the US. It is naive to believe such sums do not buy influence over health policies.

Direct evidence in support of conspiracy theories is hard to come by and Dr Siegel finds several other explanations for the regulators’ diffidence. He says the tobacco industry has made regulators jumpy by repeatedly bringing out products purporting to be safer than cigarettes, which turned out not to be. “But e-cigarettes are not a tobacco industry ploy. The people in public health have to recognise it’s a different industry and a different product,” he said.

And there is another factor behind the regulators’ paranoia, he said. “The second reason is ideological. Anti-smoking groups have a hard time condoning a behaviour that looks so much like smoking. Holding and using one looks like they’re smoking and that scares many people in tobacco control. How can we condone something that looks like smoking?”

“But they have lost sight of the fact that it’s not smoking per se we’re trying to protect people from, it’s death! If I can find a way to allow that behaviour which is much less harmful, or doesn’t cause death, then perhaps that’s something we should support.”

By David Smith

David is an English journalist who, when he’s not exploring the social consequences of political actions, likes to write about cricket for some light relief.

Get more special features in your inbox: Subscribe to our newsletter for alerts and daily updates.

Do you have a strong opinion on this article or on the economy? We want to hear from you! Tell us what you think by commenting below, or contribute your own op-ed piece at [email protected]

About David Smith PRO INVESTOR

An English journalist who, when he's not exploring the social consequences of political actions, likes to write about cricket for some light relief.

View all posts by David Smith