Sunday, 17 November 2019

How cheap will vaping products get before we see price as part of the youth vaping problem?

Vaping Product
Retail signs
Montreal & Ottawa
Nov 5-9, 2019
A price war is underway among the four main manufacturers of the pod-style vaping products that are sold in convenience stores. Over the fall, each of the companies which sell these JUUL-type products has reduced its retail and/or on-line prices.

The cost of a tellingly-labelled "starter kit" for JUUL imitators (Logic and Vype) is now less than $10. The JUUL starter kits are more expensive (as low as $30), but are half the price they were this summer. It is now cheaper to vape all day than than to buy a specialty coffee.

With this latest round of price cuts, convenience store prices for vaping prodpucts have fallen by 45% to 75% over the past year.
  • British American Tobacco's Vype ePod was launched in January to compete with JUUL at a price of $40.00. This week it is being sold in mainstream convenience outlets, like Circle K/Couche-Tard for $10.00, tax included. (The online-price without tax is $8.99). 
  • JUUL was launched in Canada last summer with a starter kit priced at $64.99. This week it is for sale at $29.99 in Couche-Tard (a somewhat higher price of $39.99 is listed on JUUL's  web-store).
  • Logic Compact was launched by Japan Tobacco's Canadian subsidiary this winter at a lower price than its competitors - $19.99. It is now for sale in stores at $10.99. (Logic does not sell products through its web-site).
The price of the nicotine pods used in these devices has also fallen. A package of 2 Vype e-pod cartridges was selling in Montreal this week for $6 (half the original listed price), and 2 Logic cartridges could be bought for $5. (One pod is loosely understood to be the equivalent of a package of 20 cigarettes).

Lower prices can be expected to result in more young people vaping

Decades of research have shown that low tobacco prices lead to higher rates of children and young adults smoking (and higher tobacco prices reduce it!). It stands to reason that the well-established economic principle of higher-prices-reduce-use would apply to e-cigarettes.

Price discounts are now the tobacco industry's major marketing tool.

Pricing is a key component of all marketing strategies, and has become increasingly so with tobacco. The U.S. Federal Trade Commission is unique among governments in demanding and make public the aggregate promotional budgets of the tobacco industry. Earlier this year it reported that 85% of the advertising budget of U.S. companies ($7.3 of $8.6 billion) was spent on price discounts. As traditional advertising has been banned or fallen out of favour, the companies are focusing their efforts on the sticker price.

Tobacco companies with deep pockets are well-positioned to engage in a long-term price war, and there are reasons that their shareholders will be happy to endure the short-term losses that could result:
* low prices allow them to expand their long-term (addicted) customer base, on which they can make future profits.
* low prices allow them to undercut vaping businesses that sell through vape shops, and may drive these these small-business competitors out of the market.

This year tobacco companies can afford to spend even more on promotions

Last March, Canada's 3 large tobacco companies sought protection under Canada's insolvency laws (the Companies' Creditors Arrangement Act), including the manufacturers of Vype and Logic. As a result, the profits that they would normally send back to their multinational owners has been frozen with the expectation that this will be handed over to the provinces and others who are suing them. The court did not, however, freeze their promotional budget for tobacco or vaping products. Deep spending in Canada on vaping promotions (even if it exhausts their Canadian cigarette revenues) will not affect the overall profitability of their multinational owners -- and it may enhance their long term profits.

Regulatory experience with affordable addiction

1)  Tax officials can use excise and sales taxes to ensure a minimum price. 

Taxes are one of the most highly recommended public health strategies to reduce youth use of harmful substances like alcohol and tobacco. Evidence shows that taxes are very effective at protecting young people (and others!) from tobacco use. In Canada, the federal government currently imposes a tax of $2.44 on each package of 20 cigarettes, and provincial government taxes on the same package range from $2.98 to $5.90.

Many jurisdictions are moving to implement vaping taxes, and 2 Canadian provinces are also taking this important step. This week British Columbia announced that as of the new year, the provincial sales tax on these goods would increase from 7% to 20%. This was one component of a larger set of reforms to address what health minister Adrian Dix described as an "addictions trap for our youth". Three weeks ago the Alberta government promised that would impose a tax on vaping products next year, but has not yet set the amount or the style of tax.

Taxes can reduce affordability - but only if they are set at a high enough level. 

Under B.C.'s new tax, vaping will still be twice as cheap as smoking cigarettes. A JUUL nicotine cartridge that is priced at $5.25 before tax will cost $6.56 after tax (up from $5.88 today). The after-tax cost of a $10 starter kit will increase from $11.20 to $12.50. (In B.C., the cheapest advertised price for a package of 20 cigarettes is around $12.)

As a World Bank report recently pointed out, there are additional ways to address affordability through taxes. Available structures include taxing the devices, imposing a tax per ml of nicotine fluid, or per mg of nicotine, or per pod. Sales taxes alone encourage price competition because reducing the price also reduces the tax, whereas using excise taxes to set level of tax per unit helps ensure a minimum price.

This is illustrated by comparing the current situation (A) with the impact that B.C.'s upcoming sales tax increase will have (B) and also with the impact that would result if each pod of nicotine were taxed at 75% the rate of the current taxes on a pack of 20 cigarettes (C)

2) Health regulators can use price regulation to reduce experimentation. 

Canadian governments have used other regulatory means to prevent manufacturers from using price to increase the consumption of harmful products"
* minimum unit pricing of alcohol is a measure adopted by many Canadian provinces (including Ontario).
* minimum package size is a measure used in tobacco control to prevent companies from selling "kiddy packs" of fewer than 20 cigarettes.
* Quebec has combined minimum pricing with minimum package sizes to implement a de facto minimum price for little cigars of $10.00.

Other countries have managed prices in ways that prevents price wars among manufacturers or retailers for tobacco products.  In France, Brazil and Japan, for example, retailers can only charge the price for cigarette brands that are on a government-approved list. (Although France does not impose a price list for e-cigarettes, Japan and Brazil ban these products altogether).

Federal regulatory changes which facilitate nicotine price wars can be undone.

Tobacco companies have established distribution structures which give them greater control over retail pricing. A decade ago, tobacco products were distributed through wholesalers, and each retailer paid the same price. But after changes to the federal Competition Act in 2009, manufacturers were given the right to use "discriminatory pricing" to give special discounts to selected retailers. The contracts under which retailers gain this advantage commit them to using lower mark-ups, and passing the saving on to consumers.

The result is that in some stores cigarettes and vaping products are much cheaper than in others, even in the same neighbourhood. 

The challenging road ahead

With deep pockets, a well-established route to market, decades of experience and a loyal (addicted) consumer base to maintain revenues, tobacco companies can afford to use vaping products as a lost leader for nicotine use.

Amazon and Uber have shown how sacrificing profits can be used to expand a market footprint and to both create and dominate a new market category. There is no reason to discount this as the marketing strategy of the oligopoly that makes pod-style e-cigarettes.

Monday, 11 November 2019

ICYMI: How e-cigarettes can break your heart

Last week yet another publisehd study raised concerns about health impact of e-cigarettes.

Much of the attention this fall has been on injuries to the lung, especially the Ee-cigarette or vaping product associated lung injury (EVALI) that has been experienced by thousands of American vapers and a much smaller number in Canada. Less reported have been papers exploring risks to other parts of the body, or which look at longer-term health effects.

One helpful study considered past studies on animals and humans to explore the various ways in which long-term cardiovascular damage might arise from using e-cigarettes. The paper Cardiovascular risk of electronic cigarettes: a review of preclinical and clinical studies was commissioned from 6 researchers associated with the Ohio State University. It was written last spring, and published last week in the journal Cardiovascular Research.

The authors (Nicholas D Buchanan, Jacob A Grimmer, Vineeta Tanwar, Neill Schwieterman, Peter J Mohler and Loren E Wold) note that there is a significant knowledge void to fill, as the the long-term effects of vaping on the cardiovascular system were "essentially unstudied".

To address that gap, they considered the state of knowledge about the individual constituents found in the emissions from vaping products, such as  (a) nicotine, (b) particulate matter and metals, and (c) carbonyl compounds (produced by the solvents used to hold the nicotine) and flavourings. While there are many designs of e-cigarettes, virtually all result in users inhaling these subtances.

The authors located several dozen studies made of the effects of these substances on animals and tissues (preclinical studies) and also on humans (clinical studies). They considered what the results of these studies implied for the cardiovascular health of an individual who was exposed to these substances through vaping for an extended period.

Potential adverse cardiovascular effects induced by various constituents of e-cigarette aerosol.

Each of these components of e-cigarette vapour has been demonstrated to pose a risk to the cardiovascular system:  a) nicotine can increase blood pressure and heart rate, or cause inflammation or stiffness in the arteries; b) fine particles find their way into the blood stream and directly affect the cardiovascular system, c) flavouring ingredients, even if they are considered safe to eat, can cause harm when they are inhaled, by triggering inflammation or other reactions.

This review identified many mechanisms by which e-cigarette use could increase cardiovascular risk, individually and in combination with each other. "As a result, great caution and hesitation should remain concerning e-cigarette use until its health risk profile is better established."

Mechanisms of e-cigarette induced cardiovascular dysfunction.

After completing this review, the researchers conclude that, with respect to cardiovascular disease, the risks from e-cigarettes cannot be said to be less than they are from smoking cigarettes until more research can show this to be the case. "While the current but still limited literature suggests that e-cigarette use may lead to fewer negative cardiovascular effects than conventional cigarettes, our review supports that there is not sufficient data to conclusively make these resolutions."

They urge that e-cigarettes be subject to the kind of pre-market scientific reviews that are required of other drugs. With this kind of "clinical trial data determining the general safety profile of e-cigarettes, regulatory guidelines defining their proper use and public perception can be better formulated."

Enough evidence of harm to implement protective measures

Already several comprehensive scientific reviews have been conducted about the health effects of vaping on behaviour of major health authorities like the World Health Organization (2015), Public Health England (2015, 2018), the National Academies of Science, Engineering and Medicine (2018),  Public Health Ontario (2018) and others. These reviews have provided regulators and practitioners with inconsistent and sometimes conflicting advice on the regulatory approach that should be taken with respect to e-cigarettes.

The contributions of recent papers, like the one cited above, increasingly call for regulators and practitioners to insist on more evidence before acting as if e-cigarettes were less harmful. Last month, for example, a study lead by Jeffrey Gotts looking into the question "What are the respiratory effects of e-cigarettes?" This team also cautioned that it is not possible at this time to "determine whether the respiratory health effects of e-cigarette are less than those of combustible tobacco products."

These recent papers and other key research findings are summarized in our new fact sheet, The Health Effects of Vaping.

Tuesday, 5 November 2019

Yet another novel nicotine product on the Canadian horizon: tobacco-less oral tobacco

"An exciting new space"

That's how BAT's category director Vincent Duhem described Oral Tobacco products to investors earlier this spring.

Unlike vaping products, he pointed out, Oral tobacco had assets that other next generation products did not. Unlike vaping products, no device was required and it can be used in places where vaping is not allowed (he showed a picture of an airplane). Even more - it offered additional "sensorial stimulations" and could be successfully marketed to women too. (Slide 8)

The "Modern Oral" product Mr. Duhem was promoting was designed to span the gap bewteen between tobacco products and pharmaceutical grade nicotine products. BAT has developed three branded products cover that space: EPOK (white tobacco), LYFT (no tobacco)  and VELO (no tobacco). (Slide 11)

Everything Old is New Again

Oral tobacco is older than cigarettes, and is still a common form of nicotine use in some parts of the world - including the United States, Scandinavian countries and much of the Indian subcontinent.

The challenge for BAT and other companies wanting to rehabilitate this traditional practice is to convince people to put a small bag in their mouth several times a day and hold it there for half an hour. For many, this will seem an odd way to spend their time.

The companies' strategy to accomplish this seems to have focused on reducing the "yuck" factor, and making a mouth full of 'stuff' look less gross and less dangerous. They seem to have approached the task of whitewashing oral tobacco quite literally: both the product and packaging have been purified in white.
* In EPOK, the tobacco was bleached white, and then flavoured and adjusted to be less unpleasant tasting. (One of the patents involved can be found here).
* In LYFT, the nicotine was embedded in bleached fibers from pine trees, as well as other flavouring agents and stabilizers. (The process is described here)

Another major step to making this product palatable to new users is to make it, well, palatable. With LYFT, the sharp tingle of nicotine in the mouth is masked with no fewer than 9 fruity and minty taste and strength options. Is this the alcopop of nicotine? (Slide 20)

Forget ugly-brown, taxed tobacco. Instead, try some pure-white, tax-free nicotine-infused pine.

Taking nicotine out of the tobacco and then putting it into a different plant fiber may seem like a peculiar manufacturign process, but getting consumers to re-think oral tobacco is only one of the advantages to tobacco companies.
  • Nicotine pouches circumvent the EU ban on oral tobacco (see later)
  • Nicotine pouches aren't taxed like tobacco is. No excise tax revenue going to the treasury leaves more pricing room for manufacturers' profits. Mr. Durhem told investors that BAT made 3.1 times the profit on LYFT compared with factory made cigarettes. (Slide 16)
  • Nicotine pouches don't face the same advertising restrictions. 
BAT may not be able to give its cigarettes away for free, but it can offer free samples LYFT nicotine pouches.

"Welcome to a new world of stimulation," beckons the LYFT web-site. "Anytime. Anywhere. Are you in? Click here for a free sample."

Subsequent packs, of course, are not free. The price of a can with 24 pouches is £7.99 - cheaper than the over £10 price tag on a package of UK cigarettes.

Other tobacco companies are also eager to fill that space.

Similar products made by other tobacco companies are already on the market:

Catching regualtors off-guard.

Exposing cracks in Canada's tobacco regulatory system:
The "exciting new space" that these new nicotine products are designed to fill is not one that has yet been addressed in Canada or in many other countries. The federal Tobacco and Vaping Products Act regulates tobacco products and nicotine products which "produces emissions in the form of an aerosol." Tobacco-free nicotine pouches are not embraced by this law, and would not be subject to any of its provisions.

The other federal Canadian law which would apply is the Food and Drugs Act. Last year, the rules for non-prescription nicotine were 'clarified', and it now appears that these new tobacco company products would be exempt from prescription drug controls as long as they contain 4mg or less of nicotine. The newly clarified exemption applies to "in a form to be administered into the oral cavity by means of a non-active device (one that operates on energy generated by the human body or by gravity) that delivers 4 milligrams or less of nicotine per dose for buccal absorption."

Its not clear how long before such products may be offered for sale in Canada. As of November 1, 2019, neither LYFT nor VELO were registered in Canada as trademarks for nicotine products, although Zyn was registered  in Canada last February and ON! was registered in August.

Benefitting from the cracks in EU tobacco regulation:
The marketing of these novel oral product in the U.K., Austria, Germany and other parts of the EU shows similar cracks in their tobacco and nicotine control systems. The EU tobacco directive bans oral tobacco, and requires warning labels on all tobacco products. (Sweden is the singular exception to this ban, and Norway and Switzerland are not members of the EU). Nicotine pouches are now sold by tobacco companies in EU countries without package health warnings.

Seeking approval in US tobacco laws:
The U.S. Food and Drug Administration has determined that oral nicotine can is deemed to be a tobacco product, and has asserted its authority over the marketing. Its rules include the ability of the companies to ask for permission to market these as less harmful products.

Last month General Snus became the first tobacco product allowed by the FDA to make reduced risk claims. Altria is asking for the same right for its Copenhagen brand of snuff. Last week, in a presentation to investors, it illustrated how it intends to use this authority.

As the FDA processes similar applications for nicotine pouches, one might presume that similar authority will be given to these more recent products too.

A product for every consumer 

Tobacco industry marketing plans used to revolve around finding a brand image that they could match to every consumer group. Tough macho brands for people who wanted to be thought of as touch and macho (Export A), urban sophisticated brands for people who aspired to that lifestyle (du Maurier, Benson & Hedges), etc.

Recent investor presentations (like slide 6 on a presentation made by BAT last October) show the development of this integrated range of nicotine systems. Some (cigarettes) are for people who love the taste of smoking, others (Oral) for those who feel the social pressure to not smoke or (vaping) who don't like the smoking experience.

With the increased presence of these next generation products, the need is growing for next generation regulatory approaches.

Friday, 1 November 2019

How much has vaping reduced cigarette sales? Not much, says Altria to its investors

Yesterday Altria made a regularly-scheduled presentation to investors, giving them an update on their business results for the first 9 months of their fiscal year.

Altria sells that country's most prominent cigarette brand (Marlboro), but there was very little interest in its report of the cigarette marketing.

Instead, investors' focus was on Altria reports on the value of the 'strategic investment' it made last December when it spent $12.8 to get a one-third stake in JUUL.Because JUUL is not a publicly traded company, this is as close to insider information on the vaping market that investors will get. (Altria reported that JUUL is now worth about $12 billion less than it was at the beginning of the year - losing one-third of its market value.)

Under the hood

Altria's main business is cigarettes, but it is looking to increase sales in new forms of Oral Tobacco (ON!), Heated Tobacco (IQOS) and to profit from investments in E-vaping (JUUL), wine, beer and cannabis.

In yesterday's slide presentation to investors (the web-cast script is not available at this time), Altria focused investors' attention on the shifting patterns of nicotine use.

Three slides from that presentation are worth a second look.

#1: Vaping among adults (21 years and over) is not growing fast.

With the push for age 21 rules, the industry's definition of adult smoker has changed. Altria's estimates of the number of vapers (including those who do and who do not also smoke cigarettes) shows that the number of adult vapers is not much different than it was 5 years ago, although the proportion of those who also smoke cigarettes is falling somewhat.

#2: Cigarette sales are dropping:
- for every 20 cigarettes smoked last year, this year there are only 19.

Volume sales of cigarettes in the United States are down more than 5% this year compared with last -- a greater dip than in any other of the past 5 years. That's the equivalent of 1 less cigarette in every package in 2019, compared with 1 less cigarette in every carton in 2015.

The reason? Altria says it is because smokers are substituting some cigarettes with e-cigarettes and because some smokers have completely switched to vaping. "We continue to believe that increased adult smoker movement to e-vapor and increased exclusive e-vapor category usage are the primary drivers of the accelerated decline."

But when Altria looks more closely at the 5% decline, vaping is only half of the  reason ....

#3: Vaping and other nicotine products have reduced cigarette sales:
- for every 48 cigarettes smoked last year, 1 has been replaced with an e-cigarette.

Altria "decomposes" the 5.5% decline in cigarette smoke and attributes the decline as follows:
  • 45% of the decline (2.5% of total cigarette volume) is a result of the ongoing drop in tobacco use, which it refers to as "secular decline".
  • 20% of the decline (1.1% of the total cigarette volume) is the result of cigarettes being too expensive
  • 38% of the decline (2.1% of the total cigarette volume) is attributed to "cross category movement"... i.e. smokers getting their nicotine from other products. 
It also reassures investors that at this time there is no reason to think that vaping will lead too many smokers to quit any time soon. "We reaffirm our 2019 U.S. cigarette industry volume decline estimate of 5% to 6% and maintain our compounded annual average U.S. cigarette industry volume decline estimate through 2023 of 4% to 6%."

Can we trust these numbers?

Credibility is an ongoing challenge for tobacco companies, and the health sector has good reason to avoid using industry data as the basis of any public health decisions. Nonetheless, this Altria presentation shows ways in which the factors that might influence the tobacco market can be disentangled.

Grist for the mill! 

Wednesday, 30 October 2019

Finland's strong controls on e-cigarettes include a ban on flavours.

Recently the academic journal Tobacco Control published a new study on Finland's experience with banning flavours in e-cigarettes. In this paper, Eeva Ollila of the Cancer Society of Finland analyzed the legal challenges and defiance to the law by manufacturers and retailers, and identified the need for greater controls at the EU and other levels. See you in court: obstacles to enforcing the ban on electronic cigarette flavours and marketing in Finland.

Canadians reading her research may be forgiven for thinking 'we should be so lucky'.

Despite the enforcement challenges, Finland has largely succeeded in protecting its young people from e-cigarette uptake. This is shown in the results from its annual school health survey which were reported in Eeva Ollila's paper. Colour was added for ease of reading.

This data show that, unlike Canada, after Finland legalized e-cigarettes (in 2016), use by early high school students went down (green lines). (Snus - which is illegal in Finland - may be a different issue!).

Finland’s tobacco endgame includes lowering e-cigarette use.

Finland has embedded a tobacco end-game in its national public health strategies and also in its tobacco laws.

Finland puts limits on nicotine, flavours and ingredients:Under Finland’s 2016 Tobacco Act manufacturers of e-cigarettes must:
  • Not use any flavourings in e-cigarette liquids other than tobacco flavour. (s. 24)
  • Comply with other aspects of EU Directive (i.e. maximum nicotine concentration of 20 mg/ml) (s. 52)
  • Restrict the size of nicotine liquid containers to 10 ml. (s.24)

Finland requires manufacturers to file extensive reports to government.
  • Six months before putting a product on the market, manufacturers must  provide comprehensive information on the ingredients and their toxicological profile, as well as a description of other manufacturing processes. (s. 26) A modest (150 euro) fee is required for each notification. 
  • Manufacturers must provide annual reports on sales volume, by brand name and type of product, on preferences of various consumer groups, on market surveys (s. 27)
  • Manufacturers must maintain a record of any suspected adverse effects on human health, and provide this to government. (s. 28)

Finland requires manufacturers to provide information to consumers.
Manufacturers must provide health-related information on and in packages.
  • In addition to the health warning required by the European Union directive, manufacturers must include a leaflet with “instructions for use and storage (including statement that product is not recommended for use by young people and non-smokers), information on illnesses and other health-related circumstances preventing the use of the product, warnings for specific risk groups, information on the product’s possible adverse effects, information on the addictiveness and toxicity of the product.”

In Finland, tobacco and e-cigarette retailers pay high licensing fees.
Retailers of tobacco and/or nicotine-containing liquids are regulated by Valvira, the National Supervisory Authority for Welfare and Heath. Retailers must:
  • Have a retail licence issued by the local authority.
  • Submit an annual payment at a rate set by local authorities. The maximum is EUR 500 per point of sale (i.e. for each cash register). The maximum for retailers who sell both tobacco products and nicotine-containing liquids is EUR 1,000. 
  • Refrain from displaying tobacco or nicotine products in their stores. Tobacco specialty stores may do so, but not if the displays are visible from outside. Retailers are permitted to show purchasers a catalogue of available products and price list, if they have been asked. Standards for this material is set by regulation.
  • Have one employee designated as a monitor of the store’s compliance with regulations. 

A public register of retail licences and wholesale notices for tobacco and nicotine products is maintained by Valvira. (There are about 7,250 tobacco and nicotine retail licences in Finland (because each point of sale or cashier must be licensed, this means there will be fewer than 7,250 retail outlets). Of these, about 340 sell nicotine liquids. About 2,750 annual visits are made by municipal inspectors to licensed tobacco/e-cigarette retailers.

Finnish health authorities do not promote the use of E-cigarettes as part of a harm-reduction strategy.
The Finnish Institute for Health and Welfare (a government agency) does not promote using e-cigarettes or identify harm reduction as a goal of e-cigarette regulation. The first messages on its web-page on e-cigarettes caution:
  • The nicotine in electronic cigarettes is highly addictive and has its own health effects.
  • The use of electronic cigarettes impairs the normal functioning of the lungs and reduces the function of the lungs.
  • Experimental studies have shown that the use of electronic cigarettes can contribute to the development of cardiovascular changes.
  • cigarette liquids and vapors contain a number of harmful substances, such as PAH and VOC (volatile organic compounds). Some of the compounds are the same, carcinogenic compounds, as in tobacco smoke, but generally in smaller amounts.
  • Silica and metal particles and drug residues have been found in some e-cigarette liquids.
  • Some e-cigarette fluids have caused toxic effects on cells in laboratory tests.

Finland monitors of youth and adult tobacco use on an annual basis.
Finland’s public health monitoring includes annual surveys of school health behaviours, and adult smoking behaviours.

Finland imposes a tax on e-cigarettes (at about one-tenth of that on cigarettes).
Finland's tax on e-cigarettes is EUR 0.30 per ml of liquid. The tax on a typical 2 ml/200 puff pod of nicotine fluid is thus about EUR 0.60 or CAD $0.80. This is equivalent ot the Finnish tax on 2 cigarettes (EUR 0.27 or CAD 0.40 per cigarette).

This information - and references - are available in a downloadable fact sheet.

Monday, 28 October 2019

"The JUUL design seems like a play out of the tobacco industry's playbook" - David Kessler, US FDA Commissioner 1990-1997

Dr. Kessler, former Commissioner of the U.S. Food and Drug Administration was talking to the media this week about the problems with the JUUL vaping product. He predicted that JUUL and other similarly designed vaping products are unlikely to be approved by the FDA. (After May 2020, the FDA will be reviewing each e-cigarette design to decide whether there is a public health benefit to allowing it on the market. There is no such review planned for Canada).

JUUL has been much criticized for its appeal to young people. and has been the subject of repeated hearings by the U.S. Congress. As part of those hearings, Dr. Kessler wrote a letter to Congress officials to describe how the very design of JUUL ensnares youth. 

"The unique design of JUUL may facilitate initiation by young people"
In his analysis, Dr. Kessler reached back into tobacco industry files to find that, as early as 1954, the tobacco industry was experimenting with organic acids to produce nicotine salts which had the effect of lowering the pH of cigarettes, thereby reducing harshness, creating a "smooth" smoke and making tobacco smoke easier to inhale.

He explains how JUUL has revived this organic acid technology with the use of benzoic acid, fullfilling a prediction made by the industry in 1985 that “product design changes which make cigarettes more palatable, easier to smoke, or more addictive are also likely to encourage greater uptake of smoking.”

There are no built-in “speed bumps”
Dr. Kessler compared cigarette initiation to a journey with speed bumps.  A cigarette might last for 10 or 15 puffs, then it must be extinguished before lighting another. As a result, it might take a new teenage smoker days or weeks to to consume the 200 or so puffs in his first pack of cigarettes, slowly traversing the "speed bumps" of lighting another and another along the way.

Today, the new teenage smoker is on a superhighway to addiction. There are no speed bumps to slow him or her down. The JUUL pod contains about 200 puffs and a neophyte smoker might consume the whole thing in just a day or two. Becoming addicted to nicotine, a process that for some would take months or years, can now be accomplished in just days  or weeks.

Dr. Kessler also pointed to other design features which facilitate youth uptake:
  • an increase in nicotine concentration from 1 or 2.4% to a more addictive 5% was made possible because the organic salts made the experience less harsh. 
  • use of flavours like tobacco, mint, fruit and dessert, which mask the off notes and appeal to children with sweetness. (Even though JUUL stopped using some flavours in the USA recently, they have adopted no such policy in Canada.)
  • limited visible vapour emission (to avoid detection).
A important design feature not mentioned by Dr. Kessler is the very shape of JUUL.  It is designed to look like a USB key and to be recharged via the USB port on a portable computer.  USB keys and portable computers are friendly to today's wired generation.

JUUL has spawned copycat designs by other manufacturers - similar look, similar flavours, similar high levels of salted nicotine.  Among the imitation brands sold across Canada are Vype, Logic Compact, STLTH, Myle, MyBlu, and others.

The last word goes to Dr. Kessler (and Addison Yeoman):
"The words Addison Yeoman, the general counsel of the tobacco company, Brown & Williamson wrote in 1963 are equally applicable today, 'we are, then in the business of selling nicotine, an addictive drug...'  A long and tragic history has taught us the nicotine addiction begins as a pediatric disease."

Friday, 25 October 2019

Alberta budget: "The government intends to implement a tax on vaping products."

Yesterday Alberta became the first province to say that it intends to put a tax on vaping products. The measure was announced in the province's annual budget.

What took so long? Why are other governments not taking action?

By any number of criteria, health-oriented taxes and price controls are needed on vaping products, just as they are on alcohol, tobacco, cannabis and other products which cause harm.

E-cigarettes are unhealthily cheap in Canada

Vaping companies currently charge from $9 to $45 for their devices, and from $5 to $6.50 for a dose of nicotine equivalent to a pack of cigarettes. (A list of major products and their prices on the Canadian market can be found here).  Vaping products are cheaper in Canada than in other countries -- for example, BAT charges its U.K. customers $33.40 for an e-pod device that costs $19.99 in Canada (The recommended selling price is $44 in Germany and $50 in the USA - all prices in $Cdn).

Taxes can increase the price of vaping devices, making it less likely that children will try them.

High prices are a barrier to impulsive and planned purchases. Children who might be tempted to buy a vaping product are more likely to do so when they are affordable. Most vaping devices currently market for about $20 Canadian dollars -- roughly the same as a pizza.

Taxes are one way of applying the polluter pay principle to harmful consumer goods.

In Canada, vaping manufacturers and retailers are currently being given a free ride by the same governments that are struggling to manage a crises in youth vaping. Manufacturers and retailers contribute nothing to the significant regulatory costs that their harmful products require - not the costs of oversight (research, enforcement) and not the current and future costs of treating the illnesses caused by their business practices.

Many other countries and U.S. states are taxing e-cigarettes

At least 26 countries and 17 U.S. states have applied taxes to vaping products or nicotine liquids. Information on these is conveniently assembled on the web-site, and has been tabulated on a PSC fact sheet. If Canadian provinces taxed nicotine as Minnesotta and Vermont do, the price of a cartridge would increase from $5 to about $8.50.

The World Bank has some advice:

In a paper on e-cigarette taxes released earlier this year, researchers at the World Bank looked at the impact of price differences on youth e-cigarette use, and concluded that they would likely be effective at dissuading many youth from trying these products. The World Bank has researched and championed the use of excise taxes on tobacco products for decades, and this paper concludes that the same benefits could be expected from e-cigarette taxes.

The bank recommends that taxes be applied to three e-cigarette components: the amount of nicotine in the product; the volume of usable liquid product, and the devices or disposable e-cigarettes.

The price of e-cigarettes can be increased significantly and still be lower than cigarettes.

Alberta raised the price of cigarettes by $5 a carton last night, but still has the third cheapest cigarettes in Canada. (Quebec has bizarrely not raised taxes in 5 years). According to Altria, Cigarettes in Canada are among the most affordable in the world.

Even at these low cigarette tax rates, the price of vaping products could be doubled before there was a disincentive for smokers to switch to them. A better option yet would be to impose a significant increase on taxes and to implement standardized pricing to prevent price-promotions.