Senator Johnson continues his support for Vaping
Today, Wisconsin Senator Ron Johnson officially asked incoming Health and Human Services Secretary Mark Price, to support rolling back the FDA’s overreach. This comes just days after California Congressman Duncan Hunter sent a similar letter. The EVCA has seen a tremendous amount of progress in educating these legislators on the ongoing actions of the FDA. The FDA deeming regulations threaten the free market that has allowed a lot of “mom and pop” stores to thrive in the industry.
The Food and Drug Administration’s decision to regulate electronic cigarettes as tobacco products under federal law could do more to benefit Big Tobacco than to safeguard public health. Major cigarette manufacturers stand to benefit from regulations that both reduce the comparative advantage of electronic cigarettes and constrain competition within the e-cigarette market. For this reason, it should be no surprise that the Big Two tobacco companies — Altria and Reynolds — supported the FDA’s proposal to begin such regulation.
Big Tobacco would like to use regulation to do for e-cigarette markets what has already been done to cigarette markets. In these efforts, Big Tobacco (which was the Big Four, then the Big Three and now the Big Two) has often joined forces with public health groups to support greater regulation, forming a “bootlegger and Baptist” coalition. So, for example, tobacco giant Altria joined forces with some anti-smoking groups to draft and then lobby for the Family Smoking Prevention and Tobacco Control Act. This law helped suppress competition in cigarette markets and is the source of the FDA’s purported authority to regulate e-cigs — authority that both Big Tobacco and many anti-smoking groups encouraged the FDA to use.
Reynolds subsidiary RAIS filed comments in support of the FDA deeming rule as well. Further, as Professor Berman notes, Reynolds called upon the FDA to ban all “open-system” e-cigarette and vaping products. Why? Because Reynolds manufactures the popular Vuse e-cig. Should the FDA refuse to take such a drastic step, Reynolds urged it to subject e-cigarettes to the same degree of regulation as traditional cigarettes, creating a uniform regulatory environment that works to the benefit of Big Tobacco.
Producers of smoking cessation products, such as GlaxoSmithKline (which sells nicotine gum and patches), supported the FDA’s deeming rule too. This is because e-cigs compete with gums and patches as smoking cessation and reduction aids (and many smokers find e-cigs to be more effective nicotine delivery devices than gums or patches).
Whether or not one thinks the FDA deeming rule is a good idea, that Big Tobacco companies and other economic interests supported the rule should be beyond dispute. As some public health groups supported the rule as well, the claim that tobacco “bootleggers” joined pro-regulatory “Baptists” in pushing for greater e-cig regulation should be beyond dispute.
Why would Big Tobacco support the FDA’s deeming rule? Because it is in their interest. Both when the deeming rule was proposed and when it was finalized, financial analysts, such as Bonnie Herzog at Wells Fargo, judged the rule a win for Big Tobacco. Subjecting e-cigs to the same regulatory controls as cigarettes makes it more difficult for e-cigs to gain market share from cigarettes. It also channels advertising, promotion, and shelf-space-acquisition efforts into those avenues already dominated by the big producers.
Big Tobacco stands to benefit from subjecting e-cigs to the terms of the Master Settlement Agreement (as some legislators have proposed) and greater taxes on e-cigs. It’s no surprise that Reynolds supports e-cig taxes (despite producing a popular e-cig brand of its own).
Some use e-cigs to help them quit smoking, while many others use them as a replacement for some portion of their cigarette consumption. In other words, for a substantial share of the market, e-cigs “function as a substitute for cigarettes.”
There is further evidence that regulation of e-cigarettes benefits Big Tobacco. For example, two recent studies (here and here) have found that the adoption of measures to reduce youth access to e-cigarettes results in increased teen smoking rates. This occurs because cigarettes and e-cigs function as substitutes for one another, at least in this portion of the market. This, more than flimsy “gateway” hypotheses, may explain why youth smoking rates have dropped as youth e-cig use has increased.
See Senator Johnson’s letter below.