(The following blog post is based on notes made for a meeting with parliamentary researcher Dr Gabrielle Samuel, who wanted to discuss the potential impact of medicalisation on the electronic cigarette industry.)
Obviously the potential health gain is the most important element of the medicalisation debate, and as we saw recently at the E Cigarette Summit scientists believe that millions of lives are at stake.
However, I have been asked to speak about the effect on the industry, so that’s what I am going to discuss here.
Current Problems with The Industry
i. Existing regulations are not being enforced coherently, and Trading Standards seem confused.
For example in Tower Hamlets Trading Standards stopped retailers from trading. They then reviewed their decision, decided they had got it wrong and actually the traders were selling Trading Standards compliant products.
So there is still lots of confusion about the regulations. Our industry body the Electronic Cigarette Industry Trading Association (ECITA) is trying to help by sending the information on required regulations to Trading Standards officers.
ii. In addition, ECITA’s industry standard of excellence, described as a code any industry would be proud to have by a trading standards officer, is only enforced on members.
Example of regulations enforced by ECITA include mandatory testing of eliquid to test for contamination and nicotine strength as well as age restrictions.
(This is not an attack on all non-members – ECITA membership is expensive and some traders who do not belong are making a good effort to apply some of the regulations. Of course, there are cowboys out there too!)
2. Effect on the Industry
We would fold, and estimate that the same would be for almost every other e-cigarette company not owned by a tobacco company. Decimate is the wrong word, as far more than 90% of thousands of small businesses would go bust.
ECITA estimate the cost of applying for medical licenses for some companies would be equivalent greater than the total turnover of the industry today. At the Ecigarette Summit this week, ECITA put this to Jeremy Mean but he told us he didn’t have enough information to comment..
Based on estimates provided by the Medicines and Healthcare products Regulatory Agency (MHRA), estimates of costs per licence are:
High estimate: a one-off cost of £390,000 + an annual cost of £249,000 per product
Low estimate: £252,000 and an annual cost of £65,000.
I’d like to point out that that these figures are basically a stab in the dark by the MHRA, who have admitted that they could be considerably higher, and haven’t even yet decided (after three years) what they will require in terms of studies.
Licenses required would include:
- One for each strength (we have five)
- One for each mixture
- Possibly one for each flavour? MHRA not yet able to confirm (we have 42)
- Each kit – we have four
- Each atomiser – we will shortly have seven types
- Batteries? – unknown (MHRA not yet able to confirm)
Based on the high estimates, assuming flavours needed testing, we believe the total initial cost for us would be well over thirty six million pounds, a turnover which even the larger e-cigarette companies do not yet have. It could be a lot more than that if we needed a licence for each combination of flavour, strength and mixture.
ECITA has run several models through the MHRA costing. They have had to produce different scenarios based on different costing estimates as the MHRA has not yet decided what will be required.
A single company with one device, one atomiser and three flavours would be looking at an initial cost of 1,176,093 with annual costs of £196,649.
For another company producing eliquid, under one scenario in which every flavour combination would require a MA (not yet confirmed by the MHRA) the cost would be over 22 billion, clearly beyond the realms of possibility.
You can see ECITA’s case studies on the ECITA blog here.
ii. No guarantee of success
One company spent four years and millions of pounds trying to build a product that would meet the requirements.
The MHRA kept sending them back to the drawing board until they finally gave up.
So you could spend millions on development, millions on applying for licenses and still fail.
Clearly, this would stop most companies from applying.
iii. Time taken to apply
ECITA estimates the process will take four years. That’s assuming that everything goes smoothly.
(But after three years the MHRA is still unable to provide accurate costings on the process, or provide detail on what is required, so we are sceptical things would go smoothly.)
As an example of the bureaucracy involved, Clive Bates, former director of Action on Smoking and Health (ASH) England, has pointed out that medical authorisation applications can run to 10,000 pages.
So even if we started to apply now, we would likely go out of business before the 2016 deadline.
We believe the first companies to apply will be guinea pigs (at their own considerable expense) until the MHRA decides what it requires – this could take years.
iv. How to ensure innovation and efficacy: competition v. regulation
At the moment innovation is fast paced. Companies typically upgrade their products several times a year. Devices are improving rapidly.
Regulation is likely to freeze this process because:
i. It takes several years to apply for an MA – by the time a company got an MA the technology would be obsolete.
ii. There is also the cost barrier which we have already mentioned.
iii. Concentration of e-cigarettes in a few hands due to huge barriers to entry, mostly the tobacco industry.
a. Are the tobacco industry motivated to help e-cigarettes when tobacco cigarettes are cheaper and easier to make AND when new research suggests ecigarettes are less addictive?
b. Tobacco industry has shown a failure to innovate in the past. Despite budgets of billions, tobacco cigarettes over the last hundred years are essentially the same – and they failed to come up with the e-cigarette, ignoring a patented design in the 1960’s. (See An Interview with The Inventor of The Electronic Cigarette.)
I note that Deborah Arnott from ASH England accepts smaller companies will be wiped out, but argues that consolidation would take place anyway.
I believe that this again demonstrates a misunderstands of vaping – while it is quite possible that larger companies will eventually dominate the increasingly less popular cigalike part of the industry, the wide variety of devices means that there will always be room for niche players.
iv. Do the MHRA understand the product?
The MHRA understand the electronic cigarette to be a nicotine delivery device similar to NRT.
In the ECigaretteSummit, Jeremy Mean from the MHRA argued that vapers don’t want the next new flavour, they just want a device which can deliver a droplet of nicotine to the lungs.
However, Dr Konstantinos alleges MHRA does not understand e-cigarettes. (Konstantinos has talked to us about this before, albeit in relation to the EU committee on ecigs, here.)
In our opionon, the electronic cigarette is much more than a medicine than to many users, which is why it has been so successful.
Are the MHRA the right people to control the direction ecigarettes go in, or is consumer choice through market forces a better way?
v. Black market
I’d just like to quote Dr J F Etter here, who said at the E Cigarette Summit:
“The ecigarette is a tsunami – you can not stop it with a law.”
Can you confiscate devices from several million people? (There are current estimates of 1.3 million, with some estimating there are two million users, there could be a lot more in 2016). In a survey we conducted, more than 80% of vapers have indicated that they are prepared to change their vote to protect their right to vape.
The MHRA claim that there will not be a black market, using the example of aspirin.
We think this shows a fundamental misunderstanding of the industry, and indeed if you look at the tobacco industry there is a huge problem with the black market. The electronic cigarette industry is characterised by a huge variety of devices and flavours that suits different users. If people can not get those devices legally they will get them illegally.
vi. Potential Conflict of interest.
i. 90% of MHRA’s funding comes from pharmaceutical companies.
ii. MHRA employees are sourced from pharmaceutical companies, and many continue to receive fees and salaries from the MHRA.
iii. The MHRA competes with other EU agencies for fee income from pharmaceutical companies
iv. Concerns about industry links have been highlighted by a parliamentary commission.
We note that while scientists at the ECigaretteSummit declared competing interests, the MHRA made no mention of their funding.
The pharmaceutical industry can benefit in two ways from medicalisation:
1. Damage to e-cigarette industry will help their nicotine industry.
2. With competiton removed, they will be able to enter the new medicinal e-cigarette market.
As a result, we believe it is possible there is a potential conflict of interest, and that the MHRA is not in a position to take part in the debate OR to regulate e-cigarettes.
ECITA has developed an industry standard of excellence which goes far beyond basic consumer safety.
We suggest the government work with ECITA to implement and if necessary further develop this industry standard of excellence as a framework of regulation which will ensure safety and quality without compromising competition and innovation and without raising barriers to entry.
Note: Various other issues were also discussed, including:
- the fact that medicalisation of e cigarettes is considered illegal by the EU legal committee
- that where medicalisation has been attempted by nation states, it has been ruled unlawful by courts
- whether e cigarettes could be a gateway to smoking
- whether e cigarettes ‘renormalise smoking’, and if so whether this is offset by the public health gain of saving millions of lives