Thursday, December 27, 2012

FDA Inaction Strengthens Cigarette Market Supremacy

Two weeks ago AP writer Michael Felberbaum published an interesting story, “FDA review of tobacco products grinds to a halt,” about how the FDA has failed to review 3,500 product applications required by the 2009 Tobacco Act (here).   

Felberbaum notes, “The reviews, which are supposed to take 90 days, has [sic] dragged on for years in some cases. About 90 percent of applications have lingered for more than a year.”

The story’s title is not entirely accurate, since it implies that the FDA review had been active.  In fact, the agency has not completed any reviews.

The number of applications is large, primarily because the Tobacco Act requires manufacturers to submit them even for minor product changes, and even if the new product is “substantially equivalent” to those already on the market.  I wrote in March 2011 that the FDA would “Require tobacco manufacturers to spend millions of dollars to keep their existing tobacco products on the market, and prevent the introduction of new products.” (here).

The accuracy of my prediction is confirmed by Felberbaum: “For example, [Lorillard CEO Murray] Kessler said that under the FDA's guidelines, if the nation's third-biggest tobacco company wanted to take a Kent brand cigarette and rename it ‘Newport,’ it would be subject to review even though ‘it's not substantially equivalent — it's exactly equivalent.’”  

At first glance, this FDA bottleneck looks like a win for public health, as it effectively blocks new cigarette introductions.  But as I noted almost two years ago, this process would result “in a regulatory nightmare for tobacco harm reduction by threatening existing smokeless products and completely inhibiting new-product innovation.”  

There is additional evidence of FDA inaction.  On December 17 the agency held a public hearing “to obtain comments …on FDA consideration of applicable approval mechanisms and additional indications for nicotine replacement therapies (NRTs), and to request input on a report to Congress examining the regulation and development of innovative products and treatments for tobacco dependence.” (here). 

Officials heard surprisingly consistent testimony – from advocates of tobacco harm reduction and e-cigarettes, strident anti-tobacco groups and tobacco and drug companies – that smoking, not nicotine and tobacco, is the public health problem and that the current federal government obsession with tobacco and nicotine abstinence is an utter failure.  The agency was encouraged to give smokers truthful information about the comparative risks of all tobacco products and, most importantly, to implement sensible regulations that would enhance smokers’ awareness of and access to vastly safer and satisfying cigarette substitutes that are already on the market. 

There is little reason to expect that the hearing will have any impact on FDA behavior.  Over two years ago the agency held a public workshop entitled “Risks and Benefits of Long-Term Use of Nicotine Replacement Therapy (NRT) Products” (here).  The consensus among experts was that long-term nicotine use has negligible risks and considerable benefits, but the hearing had no appreciable effect on the abstinence-only agenda.

In the past, the FDA has frequently been criticized for its regulatory actions, but hardly ever for regulatory inaction, which may partially explain its behavior.  Lars Erik Rutqvist, senior vice president of scientific affairs at snus manufacturer Swedish Match, thinks there is an industry focus: “I think there's suspicion within industry that this is how it's going to be in the future and this is more or less a way of punishing the industry.”

The FDA is not just punishing the industry.  By failing to review applications for new smoke-free products, the agency becomes an enabler of cigarette consumption, assuring continued market domination of the deadliest of nicotine delivery systems.  That is a public health tragedy.

Thursday, December 20, 2012

The E-Cigarette Revolution

Richard Craver, a writer for the Winston-Salem Journal, recently described the growing popularity of e-cigarettes (here).  Bonnie Herzog, a Wells Fargo security analyst who has followed the tobacco industry for many years, described e-cigarettes as “here to stay,” suggesting that sales would reach $1 billion within a few years.  In an August research note to investors (here), Herzog predicted that e-cigarette sales could surpass combustible cigarettes within ten years.

These predictions are based on impressive increases in e-cigarette sales since 2008.  The chart illustrates UBS data presented by NJOY CEO Craig Weiss during a conference call with Goldman Sachs on December 14.  U.S. e-cigarette sales totaled $20 million in 2008; they have doubled each subsequent year, to $500 million in 2012.  As Weiss noted, the explosive growth occurred even as the category was inundated with low-quality products that provided a suboptimal experience to smokers.  That problem is being resolved by substantial investment in quality improvement.  NJOY, which has a 40% share of convenience store e-cigarette sales, introduced King (here), describing it as “the first electronic cigarette with the look, feel and flavor of the real thing.”
Product improvements can be expected because cigarette manufacturers are also investing in the category.  In April, Lorillard purchased Blu (here), and Craver reports that the company has invested $40 million in a marketing campaign.  In July, Craver reported that RJ Reynolds launched e-cigarette Vuse in limited test markets in Virginia and North Carolina (here). 

British American Tobacco announced on December 19 that it had purchased CN Creative (here).  This company makes the Intellicig e-cigarette brand (here) and Ecopure nicotine solution (here), which it says is produced with pharmaceutical- and food-grade products and undergoes stringent testing.  BAT also owns Nicoventures (here), a company devoted to providing “…a new choice to smokers looking for a safer alternative to cigarettes.  Nicoventures will focus exclusively on the development and commercialization of innovative regulatory approved nicotine products that provide a consumer-acceptable alternative to cigarettes without the serious risk to health of smoking.  We want to explore the development of innovative nicotine products that, subject to regulatory approval, will provide smokers with an alternative to cigarettes and a product they actually want to use.”

Wells Fargo’s Herzog also notes that the steep decline in cigarette consumption will affect state payments from the 1998 Master Settlement Agreement.  While cigarette manufacturers promised to pay the 46 MSA states about $206 billion over more than 20 years, their payments will be reduced if cigarette sales decline.  This could lead state governments to impose excise taxes on e-cigarettes to cover those losses. 

So far, e-cigarettes have avoided excise taxes because they are not classified as tobacco products.  However, in 2011, federal courts ruled that e-cigarettes are tobacco products (here), so the “excise tax honeymoon” that e-cigarettes and their users have enjoyed won’t last forever.    

The tobacco harm reduction revolution is unstoppable, and e-cigarettes are poised to play a major role.  State legislators can facilitate smokers’ switch to healthier e-cigarettes by keeping excise taxes low, or nonexistent.

Wednesday, December 12, 2012

Snus is the Leading Smoking Cessation Aid for Swedish Men and Women

A Swedish population-based survey documents that “…snus continues to be the most frequently reported cessation aid among male smokers…” and “[u]se of snus at the latest quit attempt appeared to be associated with a higher success rate among both males and females than other reported methods…”

The article in Harm Reduction Journal (here) was written by Dr. Lars Erik Rutqvist, Senior Vice President for Scientific Affairs at Swedish Match.

Dr. Rutqvist conducted a telephone survey of current and former tobacco use among 6,008 Swedish men and women age 18+ years in November 2008 and September 2009; the results were weighted to represent the Swedish population.  The 12-question interview, which took about two minutes, asked whether subjects smoked or used snus regularly or sometimes, and about quit attempts and products.

The table shows that 16% of Swedish men were exclusive snus users, although only 10% were exclusive smokers.  In comparison, almost 14% of Swedish women smoked, and less than 3% used snus.  Dual use was also more common among men (almost 5%) than among women.    

Prevalence of Tobacco Use Among Men and Women in Sweden Age 18+ Years, 2008-2009
Exclusive Snus Use16.4%2.7%
Exclusive Smoking10.2%13.8%
Dual Use4.8%1.1%
The survey also revealed the methods that former smokers had used to quit smoking.  Sixty-eight percent of men had quit on their own; 22% used snus, making it the most popular aid by far.  Among women, 78% had quit on their own; 5% of former smokers used snus, which was more popular among women age 30-44 years (12%) and those 45-54 years (7%). 

This study provides additional proof that men and women in Sweden have quit smoking by switching to snus.  The Swedish tobacco experience has been reproduced in Norway (discussed here) and the U.S. (discussed here). Given the evidence, it is difficult to comprehend why the EU bans snus in all member countries other than Sweden, and the U.S. government promotes abstinence as the only quit-smoking option.  Public policy globally should embrace tobacco harm reduction in the interest of saving smokers’ lives.