Monday, 24 February 2020

Getting rid of the e-cigarette additives which make it easier for kids to get hooked

One of the key accusations against JUUL made in the lawsuits that were discussed here last week  is how that manufacturer used nicotine salts to increase the amount of nicotine absorbed from its e-cigarettes.

This blog and our recent fact sheet provide reasons to regulate the use of nicotine salts in e-cigarettes/vaping products.

Nicotine salts are recognized as a public health threat

As the lawyers for the state of New York put it: "nicotine salts, produce an easier-to-inhale aerosol that is not only more palatable than the smoke produced from a combustible cigarette, but also causes less throat irritation. Thus, a consumer ingests more nicotine from a JUUL pod with less discomfort than one would experience when smoking a combustible cigarette."

It's not only lawyers who are concerned when companies alter the nicotine molecule to make it easier to inhale. Last fall, the former head of the U.S. Food and Drug Administration, David Kessler, identified nicotine salts as one reason that e-cigarettes should not be permitted on the market in the USA. Researchers have identified this manufacturing technique as the start of a "nicotine arms race" that puts a generation of youth at risk by making e-cigarettes more palatable and  "vastly more addictive for never-smokers".

Last month the Council of Chief Medical Officers of Health identified controls on nicotine salts among measures that the federal government should consider.

Why nicotine salts are easier to inhale than freebase nicotine

Nicotine, as extracted from tobacco or created synthetically, is a base (pH greater than 7). In this form, it is sometimes called freebase nicotine. Freebase nicotine - like that found in the smoke of cigars  or pipes -  is harsh to the taste and hard to inhale.

Exposing freebase nicotine to an acid converts the nicotine to a salted form. (Chemically speaking, a salt is a substance that is produced by the reaction of an acid with a base.) The nicotine molecule picks up a hydrogen proton, making it similar to the protonated nicotine found in cigarette smoke. This form has lower pH and produces a smoother sensation when being inhaled. It is less bitter and more palatable.

E-cigarette companies treat nicotine with an organic acid to produce nicotine salts. JUUL uses benzoic acid; Vype uses lactic acid. Other brands use levulinic acid, or a combination of organic acids.

E-cigarettes that are not treated with organic acids to create nicotine salts would have a pH of about 7.5-8.0. Like cigars, they would be harsh to the taste and hard to inhale.

Slide courtesty of Dr. Arit Harvanko, UCSF
"It's about a billion lives" - January 31, 2020

No denying the purpose of nicotine salts is to facilitate inhalation and absorption

E-cigarette manufacturers have been open about the way that nicotine salts make it easier to inhale and absorb nicotine. In their patent application, JUUL's inventors identified that this formulation "facilitates adminsitration of nicotine to an organism (e.g., lung)". 

JTI-Macdonald informs Canadian customers that the nicotine salts in its Logic Compact uses "may make it easier to inhale the level of nicotine contained in the product than would be possible without it."

Regulating additives that increase addictiveness, attractiveness and palatability.

For many years, regulators have recognized the need to address the use of additives in tobacco products which increase the attractiveness and addictiveness of the products. Before e-cigarettes were a regulatory concern, governments which signed the global tobacco treaty (the Framework Convention on Tobacco Control) recommended that they should all “regulate, by prohibiting or restricting, ingredients that may be used to increase palatability in tobacco products.” In 2005, they identified the need to develop regulations to reduce the attractiveness and addictiveness of products, without yet agreeing on a way to do so.

The European Union set out to fill this void and appointed a panel of experts to report on the “Addictiveness and Attractiveness of Tobacco Additives.” Their 2010 report predated e-cigarettes, but concluded that “additives that facilitate deeper inhalation… may enhance the addictiveness of nicotine indirectly,” and that additives that increased attractiveness could result in “decreasing the harshness of the smoke, and inducing a pleasant experience of smoking.”.

When the European Union Directive on tobacco was revised in 2014 to include e-cigarettes, it required all EU governments to ban cigarette additives "that facilitate inhalation or nicotine uptake.”  Some governments have also banned such additives in e-cigarettes: France, for example, prohibits manufacturers of e-cigarettes using  “des additifs qui facilitent l’inhalation ou l’absorption de nicotine," and Iceland similarly bans e-cigarette "substances that facilitate the inhalation or uptake of nicotine." Such measures are also in place in Hungary

These laws, however, do not seem to have prevented the sale of nicotine salts. Salted nicotine liquids are sold through BAT's web-sites in France and Hungary.

Regulating e-cigarette additives in Canada

Canada takes a different approach towards additives than does the European Union. Where as the EU bans additives on the basis of their impact, Canada bans them on the basis of their chemical properties. 


Prohibited E-cigarette ingredients
Canadian Tobacco and Vaping Products Act
Currently, nine categories of ingredients are prohibited in Canadian e-cigarettes. These are: amino acids, Caffeine, colouring agents, essential fatty acids, glucuonolactone, probiotics, taurine, vitamins and mineral nutrients. 

Nicotine salts were introduced in Canada a few months after this law was passed. Before August 2018 (when JUUL began marketing in Canada) the other pod-based systems were selling freebase nicotine products with nicotine levels no greater than 18 mg/ml. 

Soon after, the other manufacturers of pod-systems followed suit. Imperial Tobacco changed its marketing plans and introduced a re-designed pod-system with nicotine salts in January 2019. Within weeks, each of the four large tobacco multinationals had JUUL or copy-cat products on the market. Sales of Imperial Brands Myblu were expanded across Canada in January and Japan Tobacco's Logic was introduced in February 2019.

In a matter of months, manufacturers changed the Canadian market place in ways which almost certainly have contributed to the increase in youth nicotine use.

A simple fix may be available to roll the clock back: By amending the list of prohibited ingredients to ban all acids, and not just amino acids, manufacturers would no longer be able to sell vaping liquids made with nicotine salts.

Thursday, 20 February 2020

Misinformation? Absolutely. That's why we complained to the Competition Bureau

For the past several weeks, Imperial Tobacco has been ramping up its "Facts not Fear" campaign.

Their clear message -- as shown in a display in a local Ottawa shopping mall -- is that vaping products are not as harmful as health scientists are claiming.

Well, we've been down this road before. In the 1950s through 2000s, the same companies refused to acknowledge that cigarettes caused harm.

The century may have changed. The product may look different, but the marketing goal has not fundamentally altered for 50 years:  "Doubt is our product."

Despite its familiarity, there are some surprising things about this campaign -- such as the apparent absence of a government response.

1) Tobacco company PR-campaigns to impede public knowledge of harms were recently denounced by Canadian courts. Oddly, consumer protection agencies are not involved.
In their rulings in favour of injured Quebec smokers, the Quebec Superior Court and the Quebec Court of Appeal ruled that campaigns aimed reducing concerns about the health effects from product use was a form of misleading advertising.

Consumer protection laws exist in each Canadian province -- and also at the federal level. The Quebec rulings not only make it obvious that they should step in to protect the public from such misrepresentation, but also make it easy for them to do so. The relevant case-law has already been assembled and is ready to present to other courts.

Yet none of them have made public any concerns with Imperial Tobacco's claim, although CBC news and others have reported that Health Canada and the Quebec health ministry were "investigating".  (This week we sent a reminder to the federal Commissioner that action was needed).

2) Imperial Tobacco is currently in insolvency protection, with strict limits on what it can spend its money on. Oddly, the provinces have not used their influence to stop tobacco companies from advertising.
Following the Quebec rulings cited above, each of the 3 large tobacco companies sought protection under the federal Companies' Creditors Arrangement Act (CCAA). This bought them some peace, as it suspended all of the provincial lawsuits they were fighting. But it also put them under strict conditions about how they could conduct their business during this period, with the provinces (as creditors) having significant say over the terms of their protective court order.

Yet none of the provinces has voiced objections about the firms being able to continue to advertise during this involvency period. There are a number of reasons why they might have been expected to object to the companies' being allowed to continue run promotional and political advertising campaigns during the insolvency period:
  • It was in large measure the promotional practices of the companies which were at the heart of the Quebec rulings which triggered the CCAA process.
  • There is no evidence that the companies have adjusted their marketing practices to reflect the rulings of the Quebec courts.
  • Consumers are currently prohibited from asking other courts for injunctive relief under consumer protection laws, and thus have little protection from any deceptive marketing practices of the applicants.
  • Restrictions on promotional expenditures will increase the revenue available to creditors in these proceedings. 
On Thursday the immunity given to Imperial Tobacco by the CCAA "stay of proceedings" was extended until September 30th, 2020. 

Monday, 17 February 2020

Using consumer protection laws to strengthen tobacco control

Last week two more U.S. states filed lawsuits against JUUL, alleging that the company has mislead consumers and asking their courts to do what their legislatures cannot -- force the company to suspend certain deceptive marketing activities. This week, Canadian governments will be facing the tobacco industry in insolvency court as a result of their lawsuits alleging similarly misleading behaviour.

This blog provides an update on these two sets of events.

States representing more than one-third of U.S. citizens have filed suits against JUUL

At least nine state-level governments have filed suits against JUUL: Arizona, California, Illinois, Massachussets, Minnesota, New York, North Carolina, Pennsylvania and Washington DC.

The state attorneys general which have filed these suits are using their powers and responsibilities under state-level consumer protection laws, other laws designed to address wrongful behaviour by organizations (i.e. Racketeer Influenced and Corrupt Organizations Act), or state level restrictions on tobacco sales.

Their lawsuits claim that JUUL broke these laws in multiple ways. These include the design of their products, the targetting of young people in advertising, the misrepresentation of the risks of their products including by understating the amount of nicotine, the failure to meet the special duty of their publicly stated corporate objectives, the sale of defective products, their negligence behaviour and by other means.

In addition to asking the courts to order JUUL to pay fines, the states are also asking for court orders to stop certain marketing practices. The specific requests vary by lawsuit, but include a request for a ban on the sale of JUUL devices, a maximum level of nicotine of 20 mg/ml, a ban on free distribution of products and the use of social media. Some lawsuits are asking that JUUL to be required to contribute to the costs of cleaning up the problems it has caused by contributing to cessation programming.

In short, courts in these states are being asked to do what state legislators are unable to do under the U.S. legal system -- curb the marketing of vaping devices. Faced with a problem that their federal government is not addressing, state governments are seeking alternative ways to protect the health of their young citizens by reaching out to another branch of government for help.

In filing the suits, these law officials have provided excellent and readable summaries of JUUL's practices over recent years. The Pennsylvania claim, for example, provides a concise but comprehensive review of concerns with those products, as well as a compilation of key documents.

Why single out JUUL?

While the sales of products by other companies was relatively stable over most of the decade, it was the accelerated marketing of JUUL after 2017 that is associated with the growth in the market and also the growth in youth use, as shown in a figure from the Pennsylvania claim.



Through its innovative design, its ability to deliver higher and faster doses of nicotine and its youth-oriented marketing, JUUL is considered by many to have precipitated the youth vaping crisis in the USA. Other companies are now copying JUUL in what has been described as a "nicotine arms race",  but JUUL is being singled out for corrective action.

In the U.S. the singling out of JUUL is more obvious than it might be in Canada, where the behaviour of JUUL-imitators (like VYPE, STLTH, LOGIC, BLU) are seemingly no less problematic.

Meanwhile, in Canada

There are historic examples of Canadian governments and citizens using consumer protection laws to challenge tobacco industry marketing practices.

Tobacco:

Following a forceful complaint by the Non-Smokers' Rights Association in 2003, the federal Competition Bureau took enforcement action against the three major cigarette manufacturers. This resulted in an agreement in 2006 that those companies would stop using the terms light and mild, and an agreement was reached the following year with smaller companies operating in Canada. In 2011, Health Canada put regulations into place under the federal Tobacco Act to prohibit the use of the terms light and mild.

A class action (Knight vs. Imperial Tobacco Ltd) was filed in B.C. courts in 2003, asking the court to consider that Imperial Tobacco had not met its duties under B.C.'s Business Practices and Consumer Protection Act, and seeking compensation for smokers who had been misled into thinking that light cigarettes were less harmful. Thaw lawsuit also asked the court for a permanent injunction against the use of these terms.

The Quebec tobacco class actions (L├ętourneau and Blais/CQTS) claimed that tobacco companies had not met their obligations under that province's Consumer Protection Act, and both the Quebec Superior Court and the Quebec Court of Appeal agreed. These rulings gave considerable guidance about what standard of behaviour is required from manufacturers of such products, some of which are pasted below. They ordered the companies to pay billions of dollars in compensation, but did not order them to change any current practices. (They were not asked to).

Vaping:

One class action has been filed against JUUL in  British Columbia, claiming that the company made false representations about the safety of their products and failed to warn about the risks of their products in ways that went against that province's Business Practices and Consumer Protection Act. In addition to asking for compensation for injuries, the class action is also asking the courts to require that JUUL change its marketing practices. (Other class actions may be in the works).

Class action against JUUL filed in B.C.

The Companies' Creditors Arrangement Act and its impact on vaping lawsuits

Currently, governments and consumers are able to file lawsuits against JUUL and BLU and minor brands of devices like STLTH and MYLE, but are not permitted to ask courts to block misleading marketing practices by prominent vaping marketers VYPE and LOGIC.

That's because the major tobacco companies that manufacture those brands have, since March of last year, been under insolvency protection using the federal Companies' Creditors Arrangement Act (CCAA). The court has ordered a "stay of proceedings" meaning that " no proceeding or enforcement process in any court or tribunal ... shall be commenced, continued or take place."  As long as this order is in place, the companies have a time-out on any further lawsuits against them.  (A background note on these proceedings can be found here).

The tobacco companies requested this protection to buy time to negotiate a settlement with the provincial governments that are suing them to recover the costs of treating tobacco-related diseases. These provincial claims are, like the Quebec class actions, largely based on the companies wrongful behaviour in failing to warn and misleading consumers about the harmfulness of their products. 

This Thursday (February 20th), the companies are seeking another 6 month extension on their protection from any legal actions against them. Each of the provinces, as well as representatives of injured smokers and other creditors, will have an opportunity to suggest to the court ways that the "stay of proceedings" could be reworded to ensure that governments have clear authority to use the courts to protect the public from the types of wrongful behaviour which put the companies into insolvency. They could also object to the companies' ability to spend hundreds of millions to promote their products (including on ads which oppose government regulation) during the CCAA proceedings.

So far, none of them have indicated they will do so.

--------------------------------------------------------------------

Guidance from Quebec Courts on tobacco manufacturers' duties to warn and on misleading tobacco advertising

From Justice Riordan's ruling:

Misleading and non-misleading ads

[534]         A good example of a "neutral" ad is Exhibit 40480.  It simply shows the packages of the three sub-brands of Macdonald Select cigarettes, with a short message aimed at "those who select their pleasures with care".  There are other ads of this sort and none of them constitute violations of section 219 CPA.  They, however, are the exception. 

[535]         As a general rule, the ads contain a theme and sub-message of elegance, adventure, independence, romance or sport.  As well, they use attractive, healthy-looking models and healthy-looking environments, as seen in the following exhibits ... [incl. 40479]

[536]         From the viewpoint of a "credulous and inexperienced" consumer, ads such as these would give the general impression that, at the very least, smoking is not harmful to health.  In this manner, the Companies failed to fulfil one of the obligations imposed by Title II of the CPA.


Left: Neutral and not misleading ad (Ex. 40480)
Right: Misleading ad (Ex 40479) 


Duty to warn

[227] Our review of the case law and doctrine applicable in Quebec leads us to the following conclusions as to the scope of a manufacturer's duty to warn in the context of article 1468 and following:

A. The duty to warn "serves to correct the knowledge imbalance between manufacturers and consumers by alerting consumers to any dangers and allowing them to make informed decisions concerning the safe use of the product;

B. A manufacturer knows or is presumed to know the risks and dangers created by its product, as well as any manufacturing defects from which it may suffer;

C. The manufacturer is presumed to know more about the risks of using its products than is the consumer; 


D. The consumer relies on the manufacturer for information about safety defects; 


E. It is not enough for a manufacturer to respect regulations governing information in the case of a dangerous product; 


F. The intensity of the duty to inform varies according to the circumstances, the nature of the product and the level of knowledge of the purchaser and the degree of danger in a product's use; the graver the danger the higher the duty to inform; 


G. Manufacturers of products to be ingested or consumed in the human body have a higher duty to inform; 


H. Where the ordinary use of a product brings a risk of danger, a general warning is not sufficient; the warning must be sufficiently detailed to give the consumer a full indication of each of the specific dangers arising from the use of the product; 


I. The manufacturer's knowledge that its product has caused bodily damage in other cases triggers the principle of precaution whereby it should warn of that possibility; 


J. The obligation to inform includes the duty not to give false information; in this area, both acts and omissions may amount to fault; and


K. The obligation to inform includes the duty to provide instructions as to how to use the product so as to avoid or minimize risk.


Thursday, 6 February 2020

Are concerns about vaping driving people back to cigarettes? Investors are told "no"

In recent months vaping companies have been warning that regulations aimed at reducing vaping will "drive people to cigarettes."

The recent "facts not fear" campaign run by Imperial Tobacco Canada, for example, predicts that regulations to protect young people from pro-vaping advertising will be "forcing consumers to go back to cigarettes."

Even some public health authorities - like Public Health England - expressed concerns that news reports about EVALI would turn nicotine users back to the cigarette market and that more would "die as a result".

Were these fears well founded?

More data is available to help answer that question. From the corporate reports on the U.S. market, it would appear that people are indeed buying fewer vaping products, but are not buying more cigarettes as a result. Cigarette volumes in other countries do not appear to have been affected.

Vaping sales are down.

Over the last weeks, two of the major stakeholders in vaping products have reported to shareholders that the vaping market has shrunk in the United States and also in other countries.

Last week, Altria told investment analysts that in the last three months of the year, overall sales of electronic nicotine products in the USA had fallen by 8%. Most of the decline in the U.S. market was experienced by JUUL, of which Altria is a one-third owner. (Altria does not sell cigarettes outside of the United States.)

Slide from Altria 2019 Earnings Conference Call

This week, Imperial Brands told investors that declining sales ("weaker than expected consumer demand for vapour") were causing it to predict a 10% drop in earnings. Imperial Brands sells BLU e-cigarettes across Europe and North America through its subsidiary Fontem Ventures.

These official statements to investors confirm estimates by commercial market analysts that vaping sales had dropped following warnings by the US Centers for Disease Control last fall.

Tobacco sales are not up. They too are down. 

Altria's other caution to investors last week was that in the USA tobacco sales were also declining at a faster rate than in previous years - a reduction of 5.5% over 2019, with the decline in the last three months similar to that in previous years.

Slide from Altria 2019 Earnings Conference Call

Imperial Brands also reported last fall that other categories of nicotine products (oral snus, e-cigarettes, cigars, etc) were responsible for about one-quarter of the fall in cigarette use (1.3% of 5.6% fall in cigarette sales). When asked whether restrictions on e-cigarette flavours were driving up cigarette sales, their US director said probably not. ("We still think that our assumption of an FMC market decline of between 5% and 6%, probably slightly closer to 6% than 5%, still remains correct.)

This week two more of the four large international tobacco companies updated investors on their sales over 2019 - including the fall period after concerns about vaping products were widely reported.

On February 6, Philip Morris International (which does not sell cigarettes in the United States) reported that the total cigarette market in the European Region "decreased by 0.6%" in the fourth quarter - a greater decrease than the annual fall of 0.4%.

A day earlier, Japan Tobacco International reported that industry-wide cigarette sales were down overall, and made particular reference to their decline in France, Germany and the United Kingdom. (Industry sales increased in the last half of the year in Japan, where vaping products are not permitted, but where heat-not-burn cigarettes have one-quarter of the market share.) JTI's 154 page report on 2019 earnings curiously made little reference to the sales of their Logic Compact vaping device, which is available for sale in 25 countries.

The last of the tobacco multinationals, British American Tobacco, will make its sales data public on February 27. The company has previously said that reductions in the vaping market were not affecting cigarette sales. Last November, when discussing its sales over the summer and early fall, analysts asked management if cigarette sales would be effected. BAT's Chief Financial Officer Tadeu Marroco was quoted as saying“we are not anticipating a significant fall back to cigarettes”.  

These corporate reports confirm the opinion of market analysts, like Bloomberg that "smokers haven't gone back to cigarettes."

Yes, but ....

The fact that cigarette sales are falling does not necessarily mean that vapers are not switching back to combustible forms of tobacco use. It could be that cigarette sales would have fallen faster in the fourth quarter had there not been additional regulatory controls and more discouragement of using vaping products.

Like a high school calculus problem, we must simultaneously consider several different rates of change. Some smokers are dying, some are quitting or cutting down, some young people are starting to smoke, some dual users are buying more cigarettes than before and some less, some are returning from vaping to cigarettes and some are switching from vaping to cigarettes, heat not burn or oral tobacco.

The population-level impact, including overall cigarette consumption, will reflect these many shifting smoking patterns. The helpful illustration shown below of the messy paths of consumer use of nicotine was provided by British American Tobacco.

In this context, what is particularly relevant to the question of whether vapers would return to cigarettes if people became more concerned about the risks of vaping is whether the companies did better than they expected after this years' events, or whether they have changed their predictions of cigarette sales as a result.

They have not.