Archives For e-cigarettes

Dan Mitchell is the co-founder of the Center for Freedom and Prosperity.

In an ideal world, the discussion and debate about how (or if) to tax e-cigarettes, heat-not-burn, and other tobacco harm-reduction products would be guided by science. Policy makers would confer with experts, analyze evidence, and craft prudent and sensible laws and regulations.

In the real world, however, politicians are guided by other factors.

There are two things to understand, both of which are based on my conversations with policy staff in Washington and elsewhere.

First, this is a battle over tax revenue. Politicians are concerned that they will lose tax revenue if a substantial number of smokers switch to options such as vaping.

This is very much akin to the concern that electric cars and fuel-efficient cars will lead to a loss of money from excise taxes on gasoline.

In the case of fuel taxes, politicians are anxiously looking at other sources of revenue, such as miles-driven levies. Their main goal is to maintain – or preferably increase – the amount of money that is diverted to the redistributive state so that politicians can reward various interest groups.

In the case of tobacco, a reduction in the number of smokers (or the tax-driven propensity of smokers to seek out black-market cigarettes) is leading politicians to concoct new schemes for taxing e-cigarettes and related non-combustible products.

Second, this is a quasi-ideological fight. Not about capitalism versus socialism, or big government versus small government. It’s basically a fight over paternalism, or a battle over goals.

For all intents and purposes, the question is whether lawmakers should seek to simultaneously discourage both tobacco use and vaping because both carry some risk (and perhaps because both are considered vices for the lower classes)? Or should they welcome vaping since it leads to harm reduction as smokers shift to a dramatically safer way of consuming nicotine?

In statistics, researchers presumably always recognize the dangers of certain types of mistakes, known as Type I errors (also known as a “false positive”) and Type II errors (also known as a “false negative”).

How does this relate to smoking, vaping, and taxes?

Simply stated, both sides of the fight are focused on a key goal and secondary issues are pushed aside. In other words, tradeoffs are being ignored.

The advocates of high taxes on e-cigarettes and other non-combustible products are fixated on the possibility that vaping will entice some people into the market. Maybe vaping wil even act as a gateway to smoking. So, they want high taxes on vaping, akin to high taxes on tobacco, even though the net result is that this leads many smokers to stick with cigarettes instead of making a switch to less harmful products.

On the other side of the debate are those focused on overall public health. They see emerging non-combustible products as very effective ways of promoting harm reduction. Is it possible that e-cigarettes may be tempting to some people who otherwise would never try tobacco? Yes, that’s possible, but it’s easily offset by the very large benefits that accrue as smokers become vapers.

For all intents and purposes, the fight over the taxation of vaping is similar to other ideological fights.

The old joke in Washington is that a conservative is someone who will jail 99 innocent people in order to put one crook in prison and a liberal is someone who will free 99 guilty people to prevent one innocent person from being convicted (or, if you prefer, a conservative will deny 99 poor people to catch one welfare fraudster and a liberal will line the pockets of 99 fraudsters to make sure one genuinely poor person gets money).

The vaping fight hasn’t quite reached this stage, but the battle lines are very familiar. At some point in the future, observers may joke that one side is willing to accept more smoking if one teenager forgoes vaping while the other side is willing to have lots of vapers if it means one less smoker.

Having explained the real drivers of this debate, I’ll close by injecting my two cents and explaining why the paternalists are wrong. But rather than focus on libertarian-type arguments about personal liberty, I’ll rely on three points, all of which are based on conventional cost-benefit analysis and the sensible approach to excise taxation.

  • First, tax policy should focus on incentivizing a switch and not punishing those who chose a less harmful products. The goal should be harm reduction rather than revenue maximization.
  • Second, low tax burdens also translate into lower long-run spending burdens because a shift to vaping means a reduction in overall healthcare costs related to smoking cigarettes.
  • Third, it makes no sense to impose punitive “sin taxes” on behaviors that are much less, well, sinful. There’s a big difference in the health and fiscal impact of cigarettes compared to the alternatives.

One final point is that this issue has a reverse-class-warfare component. Anti-smoking activists generally have succeeded in stigmatizing cigarette consumption and most smokers are now disproportionately from the lower-income community. For better (harm reduction) or worse (elitism), low-income smokers are generally treated with disdain for their lifestyle choices.  

It is not an explicit policy, but that disdain now seems to extend to any form of nicotine consumption, even though the health effects of vaping are vastly lower.

Fritz L. Laux is a Professor of Economics at Northeastern State University in Tahlequah, Oklahoma.

The puzzling lack of economic impacts

One focus in the analysis of smoke-free air (SFA) laws has been on measuring the impact smoking bans have on the restaurant and hospitality industries. The overwhelming or “consensus” result of this research is that bans impose no adverse impact on industry revenues and employment levels (Scollo et al., 2003; Scollo and Lal, 2008; Hahn, 2010; CDC Fact Sheet, 2014).

What’s puzzling about this literature is that the “no-statistical-significance” result is presented as a neutral or, “this takes the issue off the table” result. I would suggest that the robustness of this finding should be presented as “shocking” and highly significant (if not “statistically significant”).

The economic model for the behavior of profit-maximizing firms would indicate that any restaurant or hospitality venue that could benefit from a smoking ban would already have implemented such a ban. Thus, the imposition of smoking bans should never help and should always hurt such industries. While our model predicts that bans can never help restaurants and can only hurt them, our finding shows that bans tend to have no impact, and may slightly help the average restaurant. This should be viewed, if not highlighted, as surprising.  

Clearly, we understand why the result might be presented with the “no adverse economic impact” headline. Restaurant and hospitality industry groups are important constituencies that can influence policy, and estimates of the business impacts of SFA laws can motivate or placate policy activists. If the laws have, on average, no adverse impact on the members of a local restaurant association, then that restaurant association should have no incentive to oppose SFA ordinances.

My suggestion, however, is that we should give more attention to the strangeness of this result and to the investigation of how this result can be occurring. Where is the market failure that prevented more restaurateurs from implementing SFA policies of their own accord, without need for SFA ordinances? Can efforts to bring more publicity to these market failures help restaurateurs and the public better to understand why SFA policies can make good policy?

Sources of market failure

The obvious (if not tautological) explanation for this weird result is that restaurateurs have somehow been consistently misestimating the business impact of SFA. There are several possible reasons for why this would happen and the most likely of these, it seems, is that social norms play a role in defining how restaurant employees and customers respond to a ban (Leibenstein, 1950). Before imposition of a ban, if the norm is to allow for smoking, then politeness dictates that we will expect restaurants to allow smoking. After a ban (and the resulting change in norms), just as nobody expects to smoke at a fitness club, smoking customers experience reduced desire or expectation of smoking in restaurants. Thus, if the ban changes the norm in ways that restaurateurs do not anticipate, we see empirical results such that industry impact is positive or zero instead of negative.

Borland (2006) with coauthors from the International Tobacco Control project provide evidence of just this kind of an effect. In a survey of current smokers, they found that for those U.S. smokers reporting that they lived in jurisdictions where restaurant smoking was not banned, only 17.5% supported bans on restaurant smoking. For smokers who reported total bans on restaurant smoking in their jurisdictions, 65.5% supported bans on restaurant smoking. Not surprisingly, it seems that expectations and preferences are affected by changes in norms.

With over three-fourths of the U.S. population now living in jurisdictions covered by 100% smoke-free restaurant laws, such shifts in norms within the U.S. are well underway. However, in communities where restaurant smoking is still commonly accepted, complaining to a restaurant manager about another customer’s smoking might seem a bit strange and confrontational. In these situations, patrons and employees may also not be as aware of the health consequences of secondhand smoke. After the publicity of a smoke-free air ordinance heightens awareness and after having experienced eating in a smoke-free restaurants, the value patrons place on smoke-free air may go up. Similarly, restaurant employee may acquire increased preferences for work in smoke-free establishments (Tang et al., 2004).

Although this argument seems less convincing (given the large percentages of restaurants that did go smoke-free well in advance of SFA law implementation), another possible explanation for how restaurateurs could have so consistently misestimated the business impact of smoke-free air policies is that they may have been influenced by incorrect or biased information. From the 1980s through the early 2000s, restaurant managers would have received lots of communication from various state and national industry associations arguing either that smoking restrictions would hurt business or that improved ventilation, rather than going smoke free, would be the correct industry response. As can be seen in online archives of tobacco industry documents, the Tobacco Institute was actively working with hospitality industry associations to promote such an “accommodation strategy” (via improved ventilation and smoking sections) for restaurants during these years when most smoke-free air legislation was passed (Dearlove et al., 2002). This industry-funded analysis, as intended, did likely have some influence the decisions made by restaurateurs.

Implications

From those who oppose SFA laws, the primary argument has been that, if bans do not hurt the restaurant and hospitality industries, why do they need to be imposed on these industries? Would not any restaurants and bars that could benefit from smoking bans have already implemented such bans of their own accords? My suggestion is that, in any advocacy for SFA, it may be appropriate to try to answer these objections more directly. Using research like the Borland et al. (2006) article, we can suggest why it is that restaurateurs, who would benefit from SFA implementation, don’t implement SFA policies of their own accords. Then, after having offered theoretical explanations, we can present our empirical analyses of the economic impact on the restaurant and hospitality industries with more credibility. The idea is that, just as good empirical work gives credence to theory, intuitive theoretical explanations give credence to empirical results.

Carrie Wade, Ph.D., MPH is the Director of Harm Reduction Policy and Senior Fellow at the R Street Institute.

Abstinence approaches work exceedingly well on an individual level but continue to fail when applied to populations. We can see this in several areas: teen pregnancy; continued drug use regardless of severe criminal penalties; and high smoking rates in vulnerable populations, despite targeted efforts to prevent youth and adult uptake.

The good news is that abstinence-oriented prevention strategies do seem to have a positive effect on smoking. Overall, teen use has steadily declined since 1996. This may be attributed to an increase in educational efforts to prevent uptake, stiff penalties for retailers who fail to verify legal age of purchase, the increased cost of cigarettes, and a myriad of other interventions.

Unfortunately many are left behind. Populations with lower levels of educational attainment, African Americans and, ironically, those with less disposable income have smoking rates two to three times that of the general population. In light of this, how can we help people for whom the abstinence-only message has failed? Harm reduction strategies can have a positive effect on the quality of life of smokers who cannot or do not wish to quit.

Why harm reduction?

Harm reduction approaches recognize that reduction in risky behavior is one possible means to address public health goals. They take a pragmatic approach to the consequences of risk behaviors – focusing on short-term attainable goals rather than long-term ideals—and provide options beyond abstinence to decrease harm relative to the riskier behavior.

In economic terms, traditional public health approaches to drug use target supply and demand, which is to say they attempt to decrease the supply of a drug while also reducing the demand for it. But this often leads to more risky behaviors and adverse outcomes. For example, when prescription opioids were restricted, those who were not deterred from such an inconvenience switched to heroin; when heroin became tricky to smuggle, traffickers switched to fentanyl. We might predict the same effects when it comes to cigarettes.

Given this, since we know that the riskiest of behaviors, such as tobacco, alcohol and other drug use will continue—and possibly flourish in many populations—we should instead focus on ways to decrease the supply of the most dangerous methods of use and increase the supply of and demand for safer, innovative tools. This is the crux of harm reduction.

Opioid Harm Reduction

Like most innovation, harm reduction strategies for opioid and/or injection drug users were born out of a need. In the 1980s, sterile syringes were certainly not an innovative technology. However, the idea that clean needle distribution could put a quick end to the transmission of the Hepatitis B virus in Amsterdam was, and the success of this intervention was noticed worldwide.

Although clean needle distribution was illegal at the time, activists who saw a need for this humanitarian intervention risked jail time and high fines to reduce the risk of infectious disease transmission among injection drug users in New Haven and Boston. Making such programs accessible was not an easy thing to do. Amid fears that dangerous drug use may increase and the idea that harm reduction programs would tacitly endorse illegal activity, there was resistance in governments and institutions adopting harm reduction strategies as a public health intervention.

However, following a noticeable decrease in the incidence of HIV in this population, syringe exchange access expanded across the United States and Europe. At first, clean syringe access programs (SAPs) operated with the consent of the communities they served but as the idea spread, these programs received financial and logistical support from several health departments. As of 2014, there are over 200 SAPs operating in 33 states and the District of Columbia.

Successes

Time has shown that these approaches are wildly successful in their primary objective and enormously cost effective. In 2008, Washington D.C. allocated $650,000 to increase harm reduction services including syringe access. As of 2011, it was estimated that this investment had averted 120 cases of HIV, saving $44 million.

Seven studies conducted by leading scientific and governmental agencies from 1991 through 2001 have also concluded that syringe access programs result in a decrease in HIV transmission without residual effects of increased injection drug use. In addition, SAPs are correlated with increased entry into treatment and detox programs and do not result in increases in crime in neighborhoods that support these programs.

Tobacco harm reduction

We know that some populations have a higher risk of smoking and of developing and dying from smoking-related diseases. With successful one-year quit rates hovering around 10 percent, harm reduction strategies can offer ways to transition smokers off of the most dangerous nicotine delivery device: the combustible cigarette.

In 2008, the World Health Organization developed the MPOWER policy package aimed to reduce the burden of cigarette smoking worldwide. In their vision statement, the authors explicitly state a goal where “no child or adult is exposed to tobacco smoke.”

Using an abstinence-only framework, MPOWER strategies are:

  1. To monitor tobacco use and obtain data on use in youth and adults;
  2. To protect society from second-hand smoke and decrease the availability of places that people are allowed to smoke by enacting and enforcing indoor smoking bans;
  3. To offer assistance in smoking cessation through strengthening health systems and legalization of nicotine replacement therapies (NRTs) and other pharmaceutical interventions where necessary;
  4. To warn the public of the dangers of smoking through public health campaigns, package warnings and counter advertising;
  5. To enact and enforce advertising bans; and
  6. To raise tobacco excise taxes.

These strategies have been shown to reduce the prevalence of tobacco use. People who quit smoking have a greater chance of remaining abstinent if they use NRTs. People exposed to pictorial health warnings are more likely to say they want to quit as a result. Countries with comprehensive advertising bans have a larger decrease in smoking rates compared to those without. Raising taxes has proven consistently to reduce consumption of tobacco products.

But, the effects of MPOWER programs are limited. Tobacco and smoking are often deeply ingrained in the culture and identity of communities. Studies repeatedly show that smoking is strongly tied to occupation and education, smokers’ self-identity and also the role that tobacco has in the economy and identity of the community.

As a practical matter, the abstinence approach is also limited by individual governmental laws. Article 13 of the Framework Convention on Tobacco Control recognizes that constitutional principles or laws may limit the capabilities of governments to implement these policy measures. In the United States, cigarettes are all but protected by the complexity of both the 1998 Master Settlement Agreement and the Family Smoking Protection and Tobacco Control Act of 2009. This guarantees availability to consumers – ironically increasing the need of more reduced-risk nicotine products, such as e-cigarettes, heat-not-burn devices or oral Snus, all of which offer an alternative to combustible use for people who either cannot or do not wish to quit smoking.

Several regulatory agencies, including the FDA in the United States and Public Health England in the United Kingdom, recognize that tobacco products exist on a continuum of risk, with combustible products (the most widely used) being the most dangerous and non-combustible products existing on the opposite end of the spectrum. In fact, Public Health England estimates that e-cigarettes are at least 95% safer than combustible products and many toxicological and epidemiological studies support this assertion.

Of course for tobacco harm reduction to work, people must have an incentive to move away from combustible cigarettes.There are two equally important strategies to convince people to do so. First, public health officials need to acknowledge that e-cigarettes are less risky. Continued mixed messages from government officials and tobacco use prevention organizations confuse people regarding the actual risks from e-cigarettes. Over half of adults in the United States believe that nicotine is the culprit of smoking-related illnesses – and who can blame them when our current tobacco control strategies are focused on lowering nicotine concentrations and ridding our world of e-cigarettes?

The second is price. People who cannot or do not wish to quit smoking will never switch to safer alternatives if they are more, or as, expensive as cigarettes. Keeping the total cost of reduced risk products low will encourage people who might not otherwise consider switching to do so. The best available estimates show that e-cigarette demand is much more vulnerable to price increases than combustible cigarettes – meaning that smokers are unlikely to respond to price increases meant to dissuade them from smoking, and are less likely to vape as a means to quit or as a safer alternative.

Of course strategies to prevent smoking or encourage cessation should be a priority for all populations that smoke, but harm-reduction approaches—in particular with respect to smoking—play a vital role in decreasing death and disease in people who engage in such risky behavior. For this reason, they should always be promoted alongside abstinence approaches.

In January a Food and Drug Administration advisory panel, the Tobacco Products Scientific Advisory Committee (TPSAC), voted 8-1 that the weight of scientific evidence shows that switching from cigarettes to an innovative, non-combustible tobacco product such as Philip Morris International’s (PMI’s) IQOS system significantly reduces a user’s exposure to harmful or potentially harmful chemicals.

This finding should encourage the FDA to allow manufacturers to market smoke-free products as safer alternatives to cigarettes. But, perhaps predictably, the panel’s vote has incited a regulatory furor among certain politicians.

Last month, several United States senators, including Richard Blumenthal, Dick Durbin, and Elizabeth Warren, sent a letter to FDA Commissioner Scott Gottlieb urging the agency to

avoid rushing through new products, such as IQOS, … without requiring strong evidence that any such product will reduce the risk of disease, result in a large number of smokers quitting, and not increase youth tobacco use.

At the TPSAC meeting, nine members answered five multi-part questions about proposed marketing claims for the device. Taken as a whole, the panel’s votes indicate considerable agreement that non-combustible tobacco products like IQOS should, in fact, allay the senators’ concerns. And a closer look at the results reveals a much more nuanced outcome than either the letter or much of the media coverage has suggested.

“Reduce the risk of disease”: Despite the finding that IQOS reduces exposure to harmful chemicals, the panel nominally rejected a claim that it would reduce the risk of tobacco-related diseases. The panel’s objection, however, centered on the claim’s wording that IQOS “can reduce” risk, rather than “may reduce” risk. And, in the panel’s closest poll, it rejected by just a single vote the claim that “switching completely to IQOS presents less risk of harm than continuing to smoke cigarettes.”

“Result in large number of smokers quitting”: The panel unanimously concluded that PMI demonstrated a “low” likelihood that former smokers would re-initiate tobacco use with the IQOS system. The only options were “low,” “medium,” and “high.” This doesn’t mean it will necessarily help non-users quit in the first place, of course, but for smokers who do switch, it means the device helps them stay away from cigarettes.

“Not increase youth tobacco use”: A majority of the voting panel members agreed that PMI demonstrated a “low” likelihood that youth “never smokers” would become established IQOS users.

By definition, the long-term health benefits of innovative new products like IQOS are uncertain. But the cost of waiting for perfect information may be substantial.

It’s worth noting that the American Cancer Society recently shifted its position on electronic cigarettes, recommending that individuals who do not quit smoking

should be encouraged to switch to the least harmful form of tobacco product possible; switching to the exclusive use of e-cigarettes is preferable to continuing to smoke combustible products.

Dr. Nancy Rigotti agrees. A professor of medicine at Harvard and Director of the Tobacco Research and Treatment Center at Massachusetts General Hospital, Dr. Rigotti is a prominent tobacco-cessation researcher and the author of a February 2018 National Academies of Science, Engineering, and Medicine Report that examined over 800 peer-reviewed scientific studies on the health effects of e-cigarettes. As she has said:

The field of tobacco control recognizes cessation is the goal, but if the patient can’t quit then I think we should look at harm reduction.

About her recent research, Dr. Rigotti noted:

I think the major takeaway is that although there’s a lot we don’t know, and although they have some health risks, [e-cigarettes] are clearly better than cigarettes….

Unlike the senators pushing the FDA to prohibit sales of non-combustible tobacco products, experts recognize that there is enormous value in these products: the reduction of imminent harm relative to the alternative.

Such harm-reduction strategies are commonplace, even when the benefits aren’t perfectly quantifiable. Bike helmet use is encouraged (or mandated) to reduce the risk and harm associated with bicycling. Schools distribute condoms to reduce teen pregnancy and sexually transmitted diseases. Local jurisdictions offer needle exchange programs to reduce the spread of AIDS and other infectious diseases; some offer supervised injection facilities to reduce the risk of overdose. Methadone and Suboxone are less-addictive opioids used to treat opioid use disorder.

In each of these instances, it is understood that the underlying, harmful behaviors will continue. But it is also understood that the welfare benefits from reducing the harmful effects of such behavior outweigh any gain that might be had from futile prohibition efforts.

By the same token — and seemingly missed by the senators urging an FDA ban on non-combustible tobacco technologies — constraints placed on healthier alternatives induce people, on the margin, to stick with the less-healthy option. Thus, many countries that have adopted age restrictions on their needle exchange programs and supervised injection facilities have seen predictably higher rates of infection and overdose among substance-using youth.

Under the Food, Drug & Cosmetic Act, in order to market “safer” tobacco products manufacturers must demonstrate that they would (1) significantly reduce harm and the risk of tobacco-related disease to individual tobacco users, and (2) benefit the health of the population as a whole. In addition, the Act limits the labeling and advertising claims that manufacturers can make on their products’ behalf.

These may be well-intentioned restraints, but overly strict interpretation of the rules can do far more harm than good.

In 2015, for example, the TPSAC expressed concerns about consumer confusion in an application to market “snus” (a smokeless tobacco product placed between the lip and gum) as a safer alternative to cigarettes. The manufacturer sought to replace the statement on snus packaging, “WARNING: This product is not a safe alternative to cigarettes,” with one reading, “WARNING: No tobacco product is safe, but this product presents substantially lower risks to health than cigarettes.”

The FDA denied the request, stating that the amended warning label “asserts a substantial reduction in risks, which may not accurately convey the risks of [snus] to consumers” — even though it agreed that snus “substantially reduce the risks of some, but not all, tobacco-related diseases.”

But under this line of reasoning, virtually no amount of net health benefits would merit approval of marketing language designed to encourage the use of less-harmful products as long as any risk remains. And yet consumers who refrain from using snus after reading the stronger warning might instead — and wrongly — view cigarettes as equally healthy (or healthier), precisely because of the warning. That can’t be sound policy if the aim is actually to reduce harm overall.

To be sure, there is a place for government to try to ensure accuracy in marketing based on health claims. But it is impossible for regulators to fine-tune marketing materials to convey the full range of truly relevant information for all consumers. And pressuring the FDA to limit the sale and marketing of smoke-free products as safer alternatives to cigarettes — in the face of scientific evidence that they would likely achieve significant harm-reduction goals — could do far more harm than good.