2016 in e-cigarettes – rapid change, new regulation, and some shocks

candles-2016-900x540May 2016 saw the two biggest regulatory developments in the short history of the e-cigarette so far. But the U.S. deeming regulations and European TPD were far from the only stories brought to you by ECigIntelligence in another year of rapid change – in the industry and beyond.

Both the deeming regulations and the EU Tobacco Products Directive (TPD) regulate e-cigarettes as consumer tobacco products rather than as pharmaceuticals. And both allow governments – those of U.S. states in the case of the Food and Drug Administration (FDA), EU member nations in the case of the TPD – much leeway in regulating further as long as they do not clash with the over-arching rules. But in the detail there are more differences than resemblances – as we explained in our May report “Only distant cousins”.

Right at the start of the year, the UK Department of Health delivered a bouncing bundle of good news to the e-cig industry by recommending a TPD-lite package of regulations. Not surprising, given that Public Health England had already given e-cigs a cheery thumbs-up, but welcome all the same.

Across the pond, Reynolds American – maker of the popular Vuse e-cigarettes – announced it was setting up a subsidiary devoted to e-cigarettes and other next-generation nicotine products.

The new firm, RAI Innovations Company, has been tasked with centralising product development, which Reynolds said would enable it to get products to market more quickly.


Second thoughts


Meanwhile, Germany said it would be banning menthol e-liquids, as well as other flavours, once the TPD had been introduced. The list of banned ingredients also included vitamins – or anything that might possibly be considered healthy. A perhaps counter-intuitive health measure, but one since adopted by much of Europe.

Around the same time, Denmark announced it had had second thoughts about imposing a strict, tobacco-style regime on vaping in public places. A new draft of wide-ranging legislation making e-cigarettes available as consumer products, transposing the TPD, setting a minimum purchase age of 18 as well as regulating public usage of e-cigs was put before the Danish parliament at the end of 2015.

February saw Robert Califf unveiled as the new head of the FDA. As commissioner of the agency spearheading federal regulation of e-cigarettes, Califf became one of the most powerful people in the U.S. e-cigarette world – in theory, at least, and until he is replaced (if he is) by Donald Trump.

As March rolled around, reports suggested the black market was flourishing in southeast Asia. E-cigarette regulation was being mooted in both Malaysia and Hong Kong, while Thailand and Vietnam faced continuing battles with illegal imports.

Meanwhile, in Wales a glib remark caused the failure of an attempt to ban public vaping. The long-anticipated public health bill was widely expected to become law as the Welsh Assembly wrapped up its final session before elections in May. The bill included a controversial measure that would ban e-cigarette use in a range of public places.

The Welsh Labour party, the main supporters of all measures in the bill, held 30 of the 60 Assembly seats and with support from some members of Plaid Cymru, the Welsh nationalist party, Labour thought it had enough votes to see the bill through. However, in speeches before the debate Welsh Labour’s minister for public services, Leighton Andrews, joked that Plaid was a “cheap date” as it had gone along with another Labour-led proposal earlier in the legislative year.

Plaid Cymru members did not take kindly to the comments and the bill failed to pass, voted down by 27-26. When the bill returned in November, it would do so with the proposed public vaping ban deleted.


Health warnings


May saw the publication of the FDA’s long-awaited deeming rule, bringing e-cigs under federal regulation for the first time. Under the rules, e-cigarette makers are required to submit for regulatory review any products that were not on the market on 15th February 2007 – in other words, effectively all e-cigarettes. But they were given up to two years to submit those applications, and can continue to sell the products concerned during the review period, which could last a year.

Companies were also required to register manufacturing facilities with the FDA – and under the rules many vape stores are considered manufacturers.

Products will now have to carry health warnings, and e-cigarette sales to under-18s are prohibited, with photo ID being required for purchasing. Despite some fears, however, there was no ban on flavours.

Initial industry reaction was mixed, with opinions falling along largely predictable lines. The document was greeted with enthusiasm by a number of health charities and public health advocates while vaping associations and smaller e-cigarette businesses looked on with dismay.

While America was reacting to the FDA rules, Europe was getting ready for article 20 of the European Union’s Tobacco Products Directive (TPD), which came into practical effect on 20th May, the first pan-European legislation specific to e-cigarettes.

With the TPD having no direct force on companies or individuals, each EU member state became obliged to implement (transpose) the TPD into its own legislation. Around half of them missed the deadline.


ENDS and means


The main measures of the TPD affecting e-cigarettes and other electronic nicotine delivery systems (ENDS) include e-liquid nicotine concentration being limited to 20 mg/ml (2%); tanks, clearomisers and pre-filled cartridges having a limit of 2 ml of liquid; a ban on advertising and leeway for individual EU states to ban distance (online) sales.

Products already on the market at the time TPD came into force had to be notified to the relevant authority in each country within six months, while new products after that date must now be pre-notified six months before they can be sold.

Meanwhile, ECigIntelligence reported on a cunning design to get round the TPD tank size restrictions: a twin-tank system delivering a customisable cocktail of e-liquids, with each refillable tank conforming with the 2 ml capacity limit. A nifty piece of innovative thinking by Paris-based Enovap, whose CEO Alexandre Scheck declared: “The e-cigarette is able to shape the nicotine curve after one week of use. It can determine how much nicotine you need at each point of the day.” Always good to keep your nicotine curves in shape.

With the British e-cig industry reluctantly prepared for the TPD, a spanner was thrown in the works in the shape of the EU referendum.

On 23rd June, Britain voted narrowly to leave the EU – meaning the TPD could be implemented in the UK only to be repealed at a later date. In fact, it took just a week for the so-called Brexit vote to lead for a call for the ban on advertising to be lifted.


Summer of litigation


As July dawned, the head of the UK’s Advertising Association (AA) called on the government to reverse the ban on certain forms of e-cig advertising. Tim Lefroy wrote to Sajid Javid, the secretary of state for business, and John Whittingdale, secretary of state for culture, media and sport, requesting a rethink of a range of advertising control measures in light of the vote.

Meanwhile, in America a summer of litigation loomed over the deeming regulations.

As the e-cigarette industry was getting used to the new legal frameworks, a report found that there was uncertainty over the legal age for buying e-cigs in England.

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    Four out of ten English retailers were found to be unsure about age restrictions on e-cigarette products, with vape stores among the worst offenders when it came to selling products to under-18s.

    Officers from trading standards departments – the local government agencies in charge of enforcing a range of retail regulations – conducted a series of under-18 tests at a variety of premises selling e-cigarette products across England. They found that 246 out of 634 (39%) of the tested retailers still sold nicotine e-cigs and e-liquids to under-18s between January and March 2016. Under-age sales have been illegal since the Nicotine Inhaling Products (Age of Sale & Proxy Purchasing) Regulations came into force in the UK in 2015.


    Filing for bankruptcy


    In September, the deeming regulations were still creating headlines – with one company citing them as a reason for its financial difficulties.

    NJOY, one of the best-known and longest-established U.S. e-cigarette makers, filed for bankruptcy, and this became one of our most-read stories of the year.

    Along with the failure of its upgraded King disposable product and the expenditure of relaunching the NJOY brand itself, “substantial expenses” of preparing for the deeming regulations and complying with state laws were said to be factors.

    Homewood Capital would go on to lead the consortium that was handed court approval to buy NJOY in a deal valued at more than $30m.

    In Canada, federal legislation was promised, with e-cigs regulated as consumer products. It finally appeared later in the year.

    The federal agency Health Canada said legislation would try to “balance the need to protect youth from nicotine addiction and tobacco use while allowing adult smokers to legally access vaping products for smoking cessation or as a potentially less harmful alternative to tobacco”. Try saying that with an e-cig in your mouth.


    Cross-border confusion


    Come October, there appeared to be some confusion surrounding cross-border sales in the EU. While the TPD allows EU member states to ban cross-border sales, the EU was working on proposals that could, in effect, force some e-commerce vendors to sell across borders.

    And as the conflicting rules looked like making a confusing picture more complex still, there were warnings that the planned “anti-geo-blocking” regulation to prevent retailers from refusing to sell to consumers in other EU member states could lead to an increase in online black or grey market sales.

    After almost two years of presidential campaigning, November finally saw America go to the polls. While the rest of the world reacted with a mixture of shock and disbelief to the election of former Apprentice USA host Donald Trump to the White House, the U.S. vaping industry was more cautiously optimistic about what the future might hold.

    “Things are a bit more positive today than they have been for some time,” declared William Bartkowski, president of VapAria. “The election of Mr Trump in some respects represents a populist and anti-regulatory sentiment in the U.S. If the vapour community can consolidate this sentiment appropriately in concert with legislators and those in the public health community who support them, they can do a great deal to improve the prospects of the industry.”

    One of Trump’s first moves as president-elect was to nominate Tom Price as his health secretary.


    Stringent WHO


    While America’s industry chiefs were feeling more upbeat, in India the World Health Organization (WHO) was advocating a more stringent stance on e-cigs.

    At the seventh Conference of the Parties (COP7) to the Framework Convention on Tobacco Control (FCTC), delegates maintained much the same line on e-cigarettes that had characterised previous positions: more focused on risks than benefits, and advocating strong regulation or even bans.

    In something of a counter move, ECigIntelligence revealed that 2017 could mark a breakthrough for the Australian e-cig market, with the regulator due to review a proposal that e-cigarettes could be allowed, subject to a maximum nicotine concentration.

    In early December, as America’s presidential administration began preparing for the big hand-over, the country’s surgeon general, Vivek Murthy, released a report which characterised the uptake of vaping among young people as alarming for public health, and recommended that authorities should pay particular attention to e-cig marketing.

    The report met with a mixed response, representatives of the industry claiming it ignored the benefits e-cigarettes can provide to those trying to avoid cigarettes, while medical groups and other organisations praised its call for action.


    Cigarette-free future


    The impending festive season saw Philip Morris International launch its heated tobacco device iQOS in London. First launched in Japan in 2014, the device has been gradually rolled out in selected countries over the past year.

    “We certainly see a future where Philip Morris no longer will be selling cigarettes in the market,” said Martin Inkster, managing director of PMI UK and Ireland. He added that this could take many years and that companies would need the help of both governments and regulators in the course of the transition away from smoking.

    Back in America, the FDA gave a last-minute extension to some manufacturers of vapour products. This will allow them an extra six months to register their companies and products as required by the deeming regulations.

    The revised deadline applies only to manufacturers who were already making their products as of 8th August 2016, when the deeming regulations came into effect – a group which includes vape stores that mix their own e-liquids.

    Meanwhile in China, the world’s most populous country, where a huge proportion of the world’s e-cig products are made but few as yet are used, government departments continued to fall over each other in their eagerness to pass the regulatory buck.

    As so ends a tumultuous year in which governments of various persuasions have attempted to rein in an industry and a range of products whose status – consumer product or pharmaceutical, lifestyle choice or aid to stop smoking – remain in many places undetermined and controversial. A market which is certain to keep growing in 2017, whatever the WHO, the Indonesian health ministry or the U.S. surgeon general have to say about it.

    – ECigIntelligence staff

    Photo: Anthony Quintano

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    This article was written by one of ECigIntelligence’s international correspondents. We currently employ more than 40 reporters around the world to cover individual vaping markets. For a full list, please see our Who We Are page.

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