E-Cigarette – FDA Vaping Rules

The post Bootleggers and Baptists touched on the corrupt bargain now bringing together a coalition to suppress vaping (close to harmless) as a substitute for cigarettes (cause of most lung cancer deaths.)

The FDA has announced their plan to regulate vaping (and cigars, etc.), which seems designed to drive all vaping products off the market — except those provided by Big Tobacco companies. As usual with the FDA, the process for getting approval will be lengthy and costly, when a simple filing of ingredients (and prohibition of dangerous ones) would be cheap and quick. Only the largest companies will be able to afford the approval process.

The New York Times story:

WASHINGTON — The Food and Drug Administration made final sweeping new rules that for the first time extend federal regulatory authority to e-cigarettes, popular nicotine delivery devices that have grown into a multibillion-dollar business with virtually no federal oversight or protections for American consumers.

The 499-page regulatory road map has broad implications for public health, the tobacco industry and the nation’s 40 million smokers. The new regulations would ban the sale of e-cigarettes to Americans under 18 and would require that many people buying them show photo identification to prove their age, measures already mandated in a number of states.

The long-awaited regulations shift the terms of the intense public debate over e-cigarettes, which deliver nicotine without the harmful tar and chemicals that cause cancer. The devices were introduced about a decade ago and have exploded in popularity. There are an estimated 9 million adult e-cigarette users in the United States.

But they have sharply divided American public health experts. The central question is whether they help people stop smoking — or whether they are a gateway to traditional cigarettes, especially for younger people. Health experts in Britain have decided they are effective in helping people quit, and have urged smokers there to switch to them. American experts have been more cautious, warning that they may eventually result in young people moving from vaping to smoking traditional cigarettes.

The answer is important because smoking is still the largest cause of preventable death, with over 480,000 tobacco-related deaths each year in the United States.

The regulations, which will take effect in 90 days, establish oversight of what has been a market free-for-all of products, including vials of liquid nicotine of varying quality and unknown provenance. Finalizing them has taken years. They stem from a major tobacco-control law Congress passed in 2009 and were first proposed in draft form in 2014….

Perhaps the biggest change is a requirement that producers of cigars and e-cigarettes register with the F.D.A., provide the agency with a detailed accounting of their products’ ingredients, and disclose their manufacturing processes and scientific data. Producers will be subject to F.D.A. inspections and will not be able to market their products as “light” or “mild,” unless the F.D.A. allowed them to. Companies will be prohibited from giving out free samples….

The American Vaping Association, a trade group for the industry, seemed to take that view, arguing in a statement on Thursday that the agency had gone too far. “This is not regulation — it is prohibition,” the group said in a statement. It said the process for submitting an application, in terms of number of hours spent, would exceed a million dollars.

But federal health officials countered that the industry will have ample time to respond to the rules. Companies with products on the market now, including vape shops that mix their own liquids, will have two years to submit an application to the F.D.A. for approval of a product. It can stay on the market for another year while the agency reviews the application.

As for the cost, officials and advocates said it was too soon to tell, but added that there was broad agreement — including in federal statute — that the industry needed to be regulated, not unlike the food industry, for example, and that these rules were a thoughtful way to accomplish that. Mr. Zeller. said that until now the industry had been the “wild, wild West.”

…The rules also impose regulations on all tobacco cigars, a tougher move than originally anticipated as the agency was pondering excluding so-called premium cigars….

“At last, the Food and Drug Administration will have basic authority to make science-based decisions that will protect our nation’s youth and the public health from all tobacco products, including e-cigarettes, cigars and hookah,” Harold P. Wimmer, president of the American Lung Association, said in a statement.

The F.D.A. announcement followed a ruling by Europe’s highest court on Wednesday upholding the right of the European Union to place restrictions on the sale of electronic cigarettes. Europe’s rules are to take effect this month.

So based on so-far-unfounded speculation that vaping will induce kids to smoke regular cigarettes, regulators who purport to care about the millions of deaths due to lung cancer will, in effect, make it more difficult and expensive to quit cigarette smoking by using the much-less-harmful e-cigarettes.

I don’t vape and I suspect vaping has some minor negative health effects, but relatively speaking they’ve already been shown to be minimal. Yet the knee-jerk reaction is to clamp down on something these regulators don’t do or know much about, because it *resembles* cigarette smoking and those poor weak-minded citizens need to be protected. I’m sure it’s just a coincidence that vaping threatens tax revenues and the business models of both Big Pharma and Big Tobacco, and the approvals process is designed to suit Big Tobacco while shutting out small companies.

From the Bootleggers and Baptists post:

Tobacco: Vaping equipment, or e-cigs, provide the appearance of cigarettes and a dose of the nicotine smokers crave in a delivery format (evaporated carrier with nicotine and flavoring) that is much less harmful to smoker’s lungs. Many experts recommended smokers switch to e-cigs immediately, since harm to their health would be much reduced. But e-cigs threaten both the makers of the highly-regulated and taxed legacy cigarettes and the makers of smoking cessation products like nicotine gum and patches — often the same companies! So paid “medical authorities” and lobbyists began to work hard to promote the view that the new and untested e-cigs were just as hazardous — if not more hazardous, since their long-term effects were unknown! — than traditional cigarettes. Cato’s Regulation put out a good paper on the Bootleggers-and-Baptists pattern in this new propaganda war:

Now consider the situation with electronic cigarettes (e-cigs) and their incumbent competitors: tobacco companies that produce and sell traditional cigarettes and drug companies that produce nicotine replacement therapies (NRTs). The U.S. cigarette market has been regulated, one way or another, since colonial times. Along the way, federal regulation—coupled most recently with the state attorneys general Master Settlement Agreement (MSA, about which we say more later)—effectively cartelized the industry, bringing increased profits to the industry and higher cigarette prices and reduced cigarette consumption throughout the nation. Falling cigarette consumption gladdened the hearts of health advocates, who fought for the elimination of tobacco products, while higher industry profits brought joy to tobacco company owners.

This happy Bootlegger/Baptist equilibrium is now threatened by the exploding sales of e-cigs, a new technology for delivering nicotine to all who want it without simultaneously bringing the harmful combustion-induced chemicals associated with burned tobacco. Today, there are many e-cig producers and numerous small shops selling e-cigs and customized nicotine-dispensing products. It is a rapidly evolving market that has been relatively open to new entrants and innovation in product design. Given the quick growth in e-cig use (much of which comes at the expense of cigarette sales), previous political deals that stabilized tobacco industry profits are at risk. The major tobacco companies are understandably not sitting idle. They, too, have entered the e-cig marketplace and are responding in other ways to the new competition.

The major pharmaceutical companies have not been idle either. The makers of smoking cessation products, including NRTs such as the nicotine patch and nicotine gum, are major players in the politics of tobacco and nicotine. The producers of traditional nicotine delivery devices and NRTs are at work trying to stop the disruptive e-cig producers. These Bootleggers are joined by health advocates (Baptists) who raise questions about unknown potentially harmful effects that may be associated with e-cig use. Both groups—cigarette and NRT producers on the one hand, and health advocates on the other—would like to stop new e-cig producers or severely crimp their ability to compete.

Lawfare between the tobacco industry and state attorneys general was settled in 1998 with the MSA (Master Settlement Agreement), which set the payments due to the states to compensate them for the additional Medicare and Medicaid costs states would bear because of tobacco products. The agreement was carefully designed to send money to the states while protecting the incumbent manufacturers from competition, allowing them to raise prices more than required to pay the fines.

Again from Cato’s paper:

The heart of the MSA was the promised payment of $206 billion by the four participating cigarette companies to the participating states. Those payments would be tax deductible and the costs would be paid by consumers in the form of higher cigarette prices. (Because cigarette consumption is highly price inelastic, the cost of the price increase was largely borne by consumers rather than producers.) The MSA presented state legislatures with a simple choice: either accept the MSA, in which case they would be able to spend their state’s share of the billions of dollars raised from smokers, or reject the proposed statute and their states’ smokers would still pay the higher prices necessary to fund the deal but they would lose their claim on the money. Not surprisingly, every state legislature took the money.

Responsibility for the payments was allocated among the cigarette companies in proportion to their current market share, thereby reducing the incentive for the participating cigarette companies to engage in price competition to increase their respective market shares. The structure of the MSA thus provided a powerful incentive for each company to be satisfied with the status quo.

The MSA also attempted to protect the major cigarette companies from new competition. At the time of the agreement, the four participating cigarette companies accounted for about 99 percent of domestic cigarette sales. Increasing cigarette prices to pay for the settlement risked a loss of market share to marginal competitors or new entrants. Therefore the MSA provided that for every percent of market share over 2 percent lost by a participating cigarette manufacturer, the manufacturer would be allowed to reduce its payments to the states by 3 percent, unless each participating state enacted a statute to prevent price competition from non-participating manufacturers (which each state did). The statutes require nonparticipating cigarette producers to make payments equal to or greater than what they would owe had they been participants in the agreement, to eliminate any cost advantage.

The MSA also included restrictions on cigarette marketing practices agreed to by the participating producers. The advertising limits were portrayed as a public health measure because they reduced advertising that could influence young adults and teens. The limits also reinforced the anticompetitive nature of the MSA by making it more costly for new brands or entrants to secure market share through promotional efforts.

The MSA’s cartel-reinforcing provisions sufficiently suppressed competition to enable cigarette companies to take advantage of the price inelasticity of cigarette demand and obtain record profits. This made it possible for the major cigarette manufacturers to increase prices by more than was necessary to make the mandated MSA payments.

Having made a deal to get big money for states and attorneys while protecting the companies from competition and raising prices more than enough to make the addicted smokers themselves pay the full cost of the settlement, many of the states decided to grab their money immediately by selling municipal (federal tax-free) bonds backed by the MSA payments expected. California alone issued at least $16.8 billion in such bonds, proceeds being used for both immediate expenses and long-term capital improvements. Legislators appear to have forgotten that the supposed purpose of the payments was to cover smoking-related expenses of future medical care for the state’s population, and instead chose to spend the money immediately on unrelated matters while leaving the burden of those health expenses with future taxpayers.

In some cases, however, the bonds are backed by secondary pledges of state or local revenues, which creates what some see as a perverse incentive to support the tobacco industry, on whom they are now dependent for future payments against this debt.

Tobacco revenue has fallen more quickly than projected when the securities were created, leading to technical defaults in some states. Some analysts predict that many of the bonds will default entirely. Many of the longer-term bonds have been downgraded to junk ratings. More recently, financial analysts began raising concerns that the rapid growth of the electronic cigarette market is accelerating the decline of $97 billion outstanding in tobacco bonds…. Lawmakers in several states proposed measures to tax e-cigarettes like traditional tobacco products to offset the decline in TMSA revenue. They anticipate that taxing or banning e-cigarettes would be beneficial to the sale of combustible cigarettes. — Wikipedia on “Tobacco Master Settlement Agreement”

Vested interests, including tobacco companies and the states, now actively seek to suppress e-cigs or at least tax them enough to make up for any lost revenue as they are adopted. This means they are actively working to keep smokers addicted to the most hazardous form of nicotine consumption, with its resultant cancers and other diseases. The original Baptist goal of helping smokers quit the habit to avoid cancer and early death has long since been forgotten.

Death by HR: How Affirmative Action Cripples Organizations

[From Death by HR: How Affirmative Action Cripples Organizations,  available now in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. Here’s the condensed version; view the entire review here.

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness, and Death by HR is an important research tool… All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.

More reading on other topics:

Jane Jacobs’ Monstrous Hybrids: Guardians vs Commerce
The Great Progressive Stagnation vs. Dynamism
Death by HR: How Affirmative Action is Crippling America
Death by HR: The End of Merit in Civil Service
Corrupt Feedback Loops: Public Employee Unions
Death by HR: History and Practice of Affirmative Action and the EEOC
Civil Service: Woodrow Wilson’s Progressive Dream
Bootleggers and Baptists
Corrupt Feedback Loops: Justice Dept. Extortion
Corrupt Feedback Loops, Goldman Sachs: More Justice Dept. Extortion
Death by HR: The Birth and Evolution of the HR Department
Death by HR: The Simple Model of Project Labor
Levellers and Redistributionists: The Feudal Underpinnings of Socialism
Sons of Liberty vs. National Front
Trump World: Looking Backward
Minimum Wage: The Parable of the Ladder
Selective Outrage
Culture Wars: Co-Existence Through Limited Government
Social Justice Warriors, Jihadists, and Neo-Nazis: Constructed Identities
Tuitions Inflated, Product Degraded, Student Debts Unsustainable
The Morality of Glamour

On Affirmative Action and Social Policy:

Affirmative Action: Chinese, Indian-Origin Citizens in Malaysia Oppressed
Affirmative Action: Caste Reservation in India
Diversity Hires: Pressure on High Tech
Title IX Totalitarianism is Gender-Neutral
Public Schools in Poor Districts: For Control Not Education
Real-Life “Hunger Games”: Soft Oppression Destroys the Poor
The Social Decay of Black Neighborhoods (And Yours!)
Child Welfare Ideas: Every Child Gets a Government Guardian!
“Income Inequality” Propaganda is Just Disguised Materialism

The greatest hits from SubstrateWars.com (Science Fiction topics):

Fear is the Mindkiller
Mirror Neurons and Irene Gallo
YA Dystopias vs Heinlein et al: Social Justice Warriors Strike Again
Selective Outrage
Sons of Liberty vs. National Front
“Tomorrowland”: Tragic Misfire
The Death of “Wired”: Hugo Awards Edition
Hugos, Sad Puppies 3, and Direct Knowledge
Selective Outrage and Angry Tribes
Men of Honor vs Victim Culture
SFF, Hugos, Curating the Best
“Why Aren’t There More Women Futurists?”
Science Fiction Fandom and SJW warfare

More reading on the military:

US Military: From No Standing Armies to Permanent Global Power
US Military: The Desegregation Experience
The VA Scandals: Death by Bureaucracy