Looking at the ups and downs of the e-cigarette and nicotine-alternatives headlines from the past few months, it might be tempting to focus on manufacturers.
Reynolds and Lorillard completed one of tobacco’s biggest acquisitions for years, after all, with Lorillard’s Blu finding a new owner as part of the complicated process. Pax Labs – the renamed Ploom now freed from its alliance with Japan Tobacco International (JTI) – seemed to be steaming ahead with ambitious product plans.
Philip Morris International (PMI) continued international rollouts of its iQOS heat-not-burn product. And, just as we were writing this review, Reynolds American all but pulled the plug on its heat-not-burn venture, Revo, citing lukewarm consumer interest.
But we won’t start with any of them: because, despite it being a season when many law-makers and members of the judiciary traditionally wind down for a long leisurely summer, the really big news of recent months has been regulatory.
No single development is, on its own, industry-changing; we haven’t had the final version of the U.S. Food and Drug Administration’s (FDA’s) deeming regulations for e-cigarettes yet – which will, along with the implementation of the European Union’s revised Tobacco Products Directive (EU TPD), surely be the e-cig regulatory story of this year and next.
But the sheer volume of regulatory activity is startling in itself, and suggests that the vapour/tobacco-alternatives industry is rapidly ceasing to be the unregulated “Wild West” it’s so often been described as.
Indeed, a recent World Health Organization (WHO) report suggested that more than 50 countries now regulate e-cigs explicitly, and that figure has surely risen since it was published. According to the WHO’s tally, 25 countries prohibit them altogether, a further 18 regulate them as tobacco products, and 12 treat them as medical products. Seventeen include them in national legislation on smoke-free environments; 13 cover e-cigarettes with national laws on advertising, promotion and sponsorship; and nine require health warnings.
At ECigIntelligence we’re not wholly convinced by the WHO’s math – not only are the figures likely out of date, but some of the fearsome-sounding “bans” on e-cigarettes will be side effects of other laws on issues such as the sale of pure nicotine, rather than deliberately-enacted prohibitions specifically targeted at e-cigs.
All the same, it’s clear that the pace of regulation is increasing. That’s partly prompted by the TPD, partly by the efforts of individual U.S. states to fill the regulatory vacuum left by the non-appearance to date of the FDA’s deeming rules, and partly a result simply of the products’ higher profile, increased availability and – it has to be said – increased debate over possible negative public-health impacts.
It’s impossible to generalise that the tone of e-cig regulation around the world is overall positive or overall negative. There’s too much variation. Southeast Asia, for instance, has been largely dubious about the products, yet Malaysia seems likely to favour quite a gentle regime. And even within the U.S., two potentially important recent developments have gone in diametrically opposed directions.
Friends in high places?
In Washington, a Congressional committee waved through proposed legislation which would exempt many e-cigarettes from aspects of the deeming regulations. The House Appropriations Committee voted in favour of changing the grandfathering date in the FDA’s proposed regulations to the day that the final regulations are published.
Currently the intended grandfathering date is 15th February 2007, meaning that only e-cigs on the market then – in effect, none of them – would be exempt from the FDA’s full product-approval process. Changing the grandfathering date to a newer one would exempt all e-cigs currently on the market.
The committee voted 26 to 23 against an amendment which would have stripped the date-change language from an appropriations bill that funds the FDA and other agencies. It still has to pass through Congressional floor votes and the White House, so it’s no safe bet, but it indicates interesting sympathy for the e-cig industry in the corridors of DC power – and even if it does fail, the idea will have a second chance, with an identical measure proposed in separate legislation.
The FDA itself indicated, too, that it was still actively contemplating the final form of the deeming regulations – and perhaps implied some explanation for the delay in their release – with the release of an advance notice of proposed rulemaking (ANPRM) in which it seeks comments on “nicotine exposure warnings and child-resistant packaging for liquid nicotine and nicotine-containing e-liquid(s) that are made or derived from tobacco and intended for human consumption, and potentially for other tobacco products”.
The FDA is, of course, responding to Congressional and public criticism over the lack of child-proofing and other safety requirements in the original version of the regulations.
The potentially positive sign for the industry, however, is that the federal agency is still asking very basic questions about how child-proofing and other measures should be implemented, rather than leaping to any draconian conclusions.
Nobody really disagrees that such measures are desirable, but it should be some reassurance for the e-cig sector that the FDA is apparently keeping its mind open on how to implement them – rather than automatically siding with vaping’s opponents – and, perhaps, is unsure whether they are crucial enough to justify a delay in the entire deeming regs process that would leave the regulatory situation unclear for even longer. (The agency has the option to issue the rules as drafted without major changes, then act on child-proofing separately later.)
On the other side of the U.S., however, the portents look more ominous. A relatively strong anti-vaping bill in California proposed by senator Mark Leno has been resuscitated by the legislature’s leadership, despite seeming to have died after a legislative committee tore out some of its most significant measures.
Leno’s Senate Bill 140 – which would prohibit the use of e-cigarettes in nearly all enclosed workplaces with a few exceptions, strengthen penalties for selling e-cigarettes to under-18s, and also cover zero-nicotine devices – is one of a group of tobacco-related proposals that will be considered by the state legislature at a special healthcare session, called by governor Jerry Brown, soon after it reconvenes on 17th August.
It won’t be a disaster for the industry even if it does pass, but with California seen as a pioneer in tobacco control, the eventual decision in Sacramento could either inspire many other states to implement similar rules, or make them think again.
In Europe, of course, the e-cig regulatory situation is in some ways the reverse of that in the United States. We already know exactly what the grand, over-arching rules – the TPD – say; the question is how the member states will implement, and add to, them. And all the signs are that there is going to be great variety.
One of the most radical approaches comes from a country which is not an EU member state, but is nevertheless inclined to toe the TPD line for trade reasons. Switzerland is preparing to legalise nicotine-containing e-cigarettes, which are currently prohibited there.
The Swiss Federal Office of Public Health now believes that e-cigs should be brought into the country’s tobacco regulation regime, and included in a new Tobacco Products Act. That is likely to be presented to the Swiss parliament this autumn, be voted on in 2016, and come into force in 2018, although – like any measures in Switzerland – it could be put to a public referendum.
Under the proposed law, nicotine-containing e-cigs will be allowed under much the same rules as tobacco products. Vaping in workplaces and public enclosed spaces will be prohibited, again as for tobacco, as will sale to minors, and most forms of advertising and promotion to consumers. The Federal Council will retain the right to specify maximum contents of ingredients, in effect allowing it to impose a cap on nicotine content.
The proposed legislation also allows the federal government and cantonal authorities to tax e-cigarettes. It does not provide details of how this would be implemented but says taxation would be based on “principles of equivalence” – presumably linking the e-cigarette rate to the tax levels for comparable quantities of tobacco products, as in Italy.
In the much bigger UK market, things are hazier. The British government has released a draft law for the partial implementation of the TPD which largely follows the EU requirements, clarifies the anticipated regime on e-liquid container sizes and packaging safety, and also names the Medicines and Healthcare Products Regulatory Agency (MHRA) as the competent authority for managing the regulation of e-cigarettes in the UK – contradicting some rumours that the MHRA, believed to have wanted and expected the job, would not be given it.
However, the draft legislation and accompanying documents leave many questions unanswered. Perhaps most importantly, they do not address restrictions on e-cigarette advertising and promotion.
Nor does the government’s impact assessment for the e-cig industry give any solid forecasts for the cost of compliance, beyond an estimate of £1000 (€1400, $1600) per SKU, which it stresses is likely to be revised.
And nor do they mention public vaping, which is not expected to be subject to a UK-wide ban. However, that does not mean it will be permitted everywhere, because Wales is already taking a much bolder line which has disappointed many e-cig advocates.
Wales is likely to become the first part of the UK to prohibit vaping in workplaces and enclosed public spaces. Like Scotland and Northern Ireland it has a devolved government able to set policy in some areas independently of the UK’s central administration, and it is using this to enact the Public Health (Wales) Bill, which would ban vaping in workplaces and in buildings and vehicles open to the public. Contemplated for more than a year, it has now begun its progress toward a vote in the National Assembly.
It also requires sellers of nicotine products such as e-cigs (including online businesses) to sign up to a register along with tobacco sellers, and makes it an offence to give e-cigarettes to minors under 18.
Scotland, too, is acting independently of the central government in London. Its Health (Tobacco, Nicotine etc. and Care) (Scotland) Bill put before the Scottish Parliament introduces a new offence of selling e-cigs to under-18s, and mandates that retailers operate an age-verification policy.
It prohibits sale from vending machines, and extends the existing tobacco vendors’ register to sellers of e-cigarettes. It does not address the issue of public usage, even though Scotland was the first part of the UK to ban tobacco smoking in public places.
All these measures are uncontroversial, but more surprising may be the clause that allows the Scottish government to “make provision prohibiting or restricting” advertising, brand-sharing, and sponsorship by e-cigarette companies. The Edinburgh government has indicated it will act on this if London does not.
So it is clear that implementation of the TPD is going to produce a rather variegated European regulatory picture, and one not without unexpected twists. For example, a country where we did not expect to see strong regulation – Poland – is now planning to impose stiff restrictions on public vaping as well as e-cigarette advertising and retailing when it transposes the TPD.
E-cigs are currently treated as consumer products in Poland, with a relatively lax regime. But now an Act Amending the Act on the Protection of Health Against the Consequences of Using Tobacco and Tobacco Products has been released for consultation by the government.
Along with transposing into Polish law the specific requirements of the TPD in areas such as product characteristics, it introduces a number of further restrictions, which include the extension of the current ban on smoking in indoor public places to e-cigarettes.
Where advertising is concerned, while the TPD only restricts cross-border advertising that can be seen in other EU member states, Poland will completely outlaw all advertising for e-cigarettes targeted at consumers – including that in media such as cinema and outdoor, where there is no risk of cross-border exposure.
All these developments are further complicated by the possibility of legal challenges, and the e-cigarette industry has already won some cases against regulation in Europe’s courts (although only at individual member state level, and not against the provisions of the TPD as such).
In Austria, for example, the constitutional court – one of the country’s highest – has rejected a proposed amendment to the Tobacco Monopoly Law which would have meant that nicotine-containing e-liquids, including pre-filled e-cigarettes, could from October only be legally sold through licensed tobacco stores.
The court said the amendment was unconstitutional because the justifications for its introduction – public health and the protection of minors – were not strong enough to outweigh retailers’ right to conduct their business.
Austria currently has minimal e-cigarette regulation, mirroring its comparatively relaxed regime on smoking. However, it is expected to prohibit vaping in public places where smoking is banned, although that law will likely not arrive until 2018.
In Italy, meanwhile, the latest bench decision on Rome’s attempts to tax e-cigarettes has suspended taxation on zero-nicotine e-liquid, but left in place the controversial levy on nicotine-containing products.
The Administrative Court of the Italian region of Lazio (TAR Lazio) has suspended the tax on nicotine-free products until 4th November, when it will give a full decision – which it indicated is likely to make that suspension permanent.
The ruling came in a case brought by the Italian e-cig trade group ANAFE and a number of companies, which had requested a suspension of the tax on all e-liquid, including nicotine products. Despite that, the TAR Lazio left the excise tax of €0.373 ($0.41) per millilitre on nicotine-containing e-liquid unaffected, following the Italian Constitutional Court’s decision in May that it could indeed be taxed.
Importantly, though, in its 4th November decision the TAR will also rule on the tax for nicotine-containing products.
That could be the beginning of resolution for the long-running saga of Italy’s e-cigarette taxation. A bigger resolution, on broad TPD-related issues, might come closer when we finally get a court decision on Totally Wicked’s challenge to the directive. But even so, we will surely have to wait a lot longer for the pan-European – let alone the global – regulatory environment to settle down.
– Barnaby Page ECigIntelligence staff
Photo: Peat Bakke