October 30, 2013

Altria’s Clear Intention to Kill eCigs as we Know Them

People have long been skeptical of Big Tobacco's intentions toward e-cigarettes long before they got into the game with Lorillard’s takeover of blu. Since then, the other cigarette makers dipped their toes in the water with limited marketing of products in test markets. Ever since then, prohibitionists have had a field day with Big T's involvement with the e-cigarette industry.

Many opponents of e-cigarettes have linked e-cigarettes with tobacco's torrid past including advertising and marketing to kids. Most people in the know think that's an idiotic thought. However, Big Tobacco remains silent on the subject even though it is they who are being besmirched.

It could be that they just don't want to get involved and provide credibility to these arguments. Or, perhaps, to some degree, this is exactly what some companies want to happen. The controversy has energized prohibitionists everywhere to demand the FDA step in and regulate the market.

If anyone could withstand regulations, it would be the companies that have done it for years already. This move would only be bad for competitors. In fact, it's exactly why Altria got behind previous regulations, because it would cripple competitors.

It would make perfect sense Altria wouldn't be above playing dirty again, when most of the competition are companies that range from tiny to microscopic in comparison to Atria's multi-billions.

As it so happens, that's exactly what happened on October 10th when Altria sent a letter to the FDA commissioner throwing their full support behind regulations. They were even kind enough to outline exactly what regulations they felt would be best for consumers and kids.

Here's a copy of that letter for your perusal. I'll break down some of the more troubling lines in the note below.

Download (PDF, 228KB)

This thing is so full of troubling language, I don't even know where to begin.

For starters, that part about supporting the FSPTCA for 8 years. Yeah, that's the part where they supported because they owned 50% of the market and severely limiting marketing would ensure Altria maintained its dominant position in the market. Clearly, this isn't their first rodeo.

Ok, so what about the bullet points?  Let's dive into them one by one, shall we?

Registration

I'm not exactly sure what this might entail. Presumably, anyone who is going to manufacture e-cigarettes has to be registered with the FDA to legally market products. No telling how difficult the process may be, but it could open the door to rounding up small liquid manufacturers as unregistered entities.

Product Listing and Ingredient Listing

Ok, so probably not too bad, we know what's in this stuff after all.  Let's give them the benefit of the doubt on this one.

Good manufacturing requirements

On the surface this seems like it can actually be a good thing. After all we'd like our e-liquid to contain a minimal amount of roach legs and all. But, we're dealing with the government here, so the devil is in the details.  These requirements could range from common sense stuff similar to food handling, all the way up to requiring an FDA certified medicinal lab with an on staff chemist and an emergency response plan.  Probably not something your average mom and pop could muster.

User Fees

And now things start to get… dark. User fees are big piles of money pharmaceutical companies submit to the FDA so that they'll look at studies provided by the companies to determine if something can be put to market. These can literally be in the millions of dollars. Even if they are a more reasonable 5 figures, that would be too rich for a huge swath of small businesses in the e-cigarette industry.

Adulteration and Misbranding

Essentially a stick with which to beat someone over the head. It's kind of vague as well, but if a product isn't strictly within whatever the FDA has approved, companies can get the smackdown.

Premarket review requirements

This right here is the straight-up nuclear option. It will kill the e-cigarette industry dead.

Essentially, before a product can be brought to market, it would have to be submitted to the FDA for review and approval (along with the pile of cash from the user fees section.) Then the FDA will react with breakneck government speed to review and (hopefully) approve whatever product. Currently the FDA has finally started doing something with substantial equivalence applications it started collecting, oh, three years ago. At the rate the e-cigarette industry moves, a delay of even one year would effectively crush the innovation and rapid growth the industry has enjoyed. Do you remember how terrible products were a couple years ago?

All the other stuff

But wait, there's a nice little surprise beyond the list of bullet points. You might have been too enraged to have caught this one tiny sentence in the next paragraph:

We also support legislative efforts and FDA regulation to restrict underage access to tobacco products such as provisions that require all tobacco products be sold in a non-self-service manner.

So, just in case anyone survives the above “light touch” regulation ideas, might as well kill online sales for good measure.

The letter then concluded that e-cigarettes have a great potential to help people, so one-size regulations would be damaging to the industry. Which is kind of odd to see in a letter that proposes one-size regulations that are damaging to the industry.

This is all a bit heavy for me, so I'd like to hear your thoughts. Will the FDA go for measures this strict? Am I just being paranoid here?
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