1. Current situation and options
Summary of the situation
1. The Parliament rejected medicines regulation – recognising that creating great costs, burdens, restrictions and barriers to entry plays straight into the hand of the tobacco industry and would effectively destroy most firms and remove most products from the market. This would greatly reduce choice, annoy users, possibly turning some back to smoking and causing others never to switch. It would leave the e-cigarette industry dominated by the tobacco industry – a view shared by the investment analyst community, and exactly the opposite effect intended by those supporting medicines regulation.
2. The Parliament devised a compromise amendment (170). This is a very significant improvement on mandatory medicines regulation, it has a number of features that would limit progress in this market and/or unreasonably favour the tobacco industry, and may be unlawful. These include a fairly broad advertising ban, which favours companies with established distribution and retail presence (ie tobacco companies); and arbitrary nicotine density limit of 30mg/ml thus limiting the products that appeal to the most heavily addicted smokers. In addition, there is scope for other improvements: warnings that are disproportionate to risk; unjustified limits on internet sales and some unnecessary red tape that works against internal market principles would all justify improvement. The amendment also does not include some things that would desirable – such as product standards, accountability arrangements and schedules and mechanisms for banning ingredients if these appear to be harmful (none does at present).
3. The Commission proposal and Council General Approach favour mandatory medicines regulation with minor differences in thresholds set at a level that is so low as to be irrelevant for >95% of the market. Because applying or not applying medicines regulation is a binary choice it will be difficult to find a middle ground between this and the Parliament’s position. There are no limits, targets or objectives to adjust or qualify through negotiation. To start negotiating on the Parliament’s position, the Council would need to open up a 28-way discussion on alternatives to medicines regulation. It may find this hard to do well in the time available.
There are roughly four choices…
1. Try to push through medicines regulation – see the Parliament’s position as an obstacle to overcome and go back and try again. It’s hard to see how that can succeed or what the Council could offer the Parliament to change its mind.
2. Accept and improve amendment 170 to make it more evidence-based, proportionate and pro-health by removing some of the excessive restrictions and, as discussed above. If all parties could agree on this and changes made were consistent with good law, internal market and more commercial freedom, this would be a viable route.
3. Sabotage amendment 170 to make it unworkable by making it ‘tougher’ but impossible for the e-cigarette vendors to comply with, and so default to medicines regulation. This would put the whole directive at risk as it went back to the Parliament, cause a new backlash and is likely end in failure in court.
4. Seek a new proposal. Emphasise active application and enforcement of the existing body of safety and consumer protection legislation (see Annex) and seek a new legislative proposal from the Commission post May 2014, with a view to rapid adoption and taking advantage of the 36-month lead in that was envisaged for .
Advantage of a new proposal (option 4)
1. Good tobacco policy. Allows the rest of the tobacco products directive to proceed to a satisfactory and rapid conclusion without being derailed by conflict over e-cigarettes.
2. Good policy. Allows for purpose built regulation designed to fit the product – not medicines or tobacco. Some suggestions for how this might look are given below in section 2.
4. Good politics. This could command support from all sides – uniting public health lobby and vapers – and remove an unnecessary and potentially heated controversy prior to the May elections. It would avert the risk of producing regulation that unintentionally plays into the hands of the tobacco industry and avoids potential for Big Tobacco or the pharmaceutical derail the TPD.
5. Good law. There were already doubts about classifying e-cigarettes as medicines – adverse decisions in five courts in EU member states, the Parliament’s Legal Affairs Committee and legal opinions for two trade associations represent a real legal vulnerability. Aspects of the amendment may also be vulnerable – it is not clear how banning the advertising of a relatively low-risk product is consistent with the internal market.
2. What would appropriate regulation for E-cigarettes look like?
Note that there is a not a ready made framework for e-cigarettes – they are not tobacco, medicines, food or food supplements or cosmetics. However, it is perfectly possible to regulate them effectively using a combination of directives that are already in force and by applying and enforcing these more purposefully (see list below Annex 1). In addition some specific product standards or processes, which can be established without medicines regulation, could be developed. With existing regulation the Commission can issue ‘decisions’ that turn general commitments to specific standards or obligations.
Note this standard-setting approach was what the Commission actually proposed when it consulted on including e-cigarettes in the directive in 2010. It consulted on this:
An extension of the scope of the Directive could be envisaged to include novel forms of oral tobacco, herbal cigarettes, and electronic nicotine delivery systems, insofar as they are not already covered by other EU legislation (food, pharmaceutical). Specific safety and quality requirements would be developed for ENDS. (emphasis added)
In overview, elements of good regulation might include:
1. Advertising. Limits on advertising roughly comparable to controls on alcohol advertising – not a complete ban – with appropriate role to member states.
2. Age. A ban on sales to persons under age of 18
3. Product standards – purity. Limits to contaminants or purity standards for e-liquids (eg covering carbonyls, volatile organic compounds, nitrosamines and heavy metals), with requirements to use pharmaceutical grade excipients and nicotine – this would be an alternative to setting a nicotine density threshold for example.
4. Product standards – ingredients. A negative list of prohibited flavours (to be kept to an evidence-based minimum) and other additives set out in a schedule with a mechanism to update in the light of advancing knowledge (ie does not have to be complete on day one)
5. Labelling. Warnings and other communication proportionate to risk and recognising potential benefits to smokers
6. Disclosure and notification regime – this is the requirement in Article 17 of the revised tobacco products directive for low risk nicotine products containing tobacco. It should not be more difficult to place a product on the market if it does not contain tobacco than if it does.
7. Accountability arrangements – the Cosmetics regulation requires designation of a responsible person to discharge regulatory obligations
8. Product file – a dossier on the product characteristics, tests done etc – this is a requirement of cosmetics regulation
9. Safety assessment to be done – again a requirement of cosmetics regulation
10. Device standards – evolution of CEN/ISO standards for vaping devices with CE markings for consumer information
12. Specific standards from general regulation – more detailed guidance or specific decisions on application of existing regulations – packing, warnings etc
13. Technical committee – advisory machinery as appropriate
14. Rapid implementation – aiming to have this in force as soon after 2017 as possible – it does not all have to be complete out the outset if there are powers to amend
This is not intended as an exhaustive list – the purpose of having a new proposal would be
The approach taken to regulating cosmetics provides some useful lessons for e-cigarettes, though of course e-cigarettes are not cosmetics. Cosmetics regulation does show that is is possible to design regulation that is specific and fit for purpose. Given the potential for these products to take on one of the greatest public health challenges of our age, proper purpose built regulation should be the aspiration for e-cigarettes. See discussion: Because you’re worth it – lessons from cosmetics regulation for e-cigarettes.
3. Why not to support medicines regulation
- Creates significant anti-competitive barriers to entry at the firm and product level – will favour mostly tobacco industry subsidiaries
- Creates a de facto ban on most products currently on the market and used successfully and without complaint by millions of citiziens in the EU
- Burdensome application process and information requirements – 10,000 page application
- Disproportionate and unnecessary costs of achieving pharmaceutical Good Manufacturing Practice – which would destroy the existing supply chain and put many small firms in the EU out of business
- Excessive costs and burdens of the medicines quality management regime – far beyond what is needed in a competitor to cigarettes
- Unclear purpose of tests required for a license application – too much regulatory second guessing of the consumer’s choices and power of markets
- Severe impact of licensing restrictions on the range of products available – e-cigs come in 1000s of variants, medicines don’t.
- Severe dampening effect on innovation and creativity – yet this is key to developing better product that would displace more smoking
- Negative implications for specialist high street retailers
- Excessive and counter-productive restrictions on marketing
- Discriminatory and unnecessary risk management and surveillance obligations – burdens that do not fall on the cigarette industry
- Unintended consequences – home production, internet sales and black market
- Probably unlawful and likely to be overturned subsequently – the products are not medicines and the law protects their vendors from disproportionate costs and burdens arising from misclassification
Some views of analysts suggesting how the proposal to regulate these products as medicines would tend to benefit the tobacco industry
Regulation can change everything: Medical regulation of e-cigs could fundamentally change the category. We believe many current suppliers would struggle to meet medical standards, and for the UK they may have to by 2016. Big players with deeper pockets would survive and prices could rise – a hugely preferable outcome for Tobacco.
Further regulation or demand for scientific studies could make it easier for the tobacco companies to bridge the gap – thanks to their deep pockets and experience of dealing with a highly regulated trading environment. Tougher regulation, as well as providing a relative advantage to their e-cigarette divisions, would result in higher prices for e-cigarettes – which could also benefit tobacco companies by limiting their attraction for smokers and slowing the decline in tobacco sales.
Annex 1: Directives that apply to e-cigarettes already
General Product Safety Directive 2001/95/EC
The RAPEX system – notification and alerts of dangerous products
Technical Standardisation under Regulation 1025/2012 and related legislation (an option not so far used, but could be used to set performance or design standards)
Packaging and labelling
Dangerous Substances Directive 67/548/EEC
Dangerous Preparations Directive 99/45/EC
Classification, Labelling and Packaging of Substances and Mixtures – the CLP Regulation 1272/2008 applies from 2015.
Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation (EC) 1907/2006
Low Voltage Directive 2006/95/EC
Electro-Magnetic Compatibility Directive 2004/108/EC
Restriction of Hazardous Substances (RoHS) Directive 2011/65/EU (where appropriate)
Waste Electrical and Electronic Equipment (WEEE) Directive 2012/19/EU
Batteries Directive 2006/66/EC
Weights and measures
Making-up by weight or by volume of certain prepackaged products – Directive 76/211/EEC
Nominal Quantities for Prepacked Products Directive 2007/45/EC
Sale of consumer goods and associated guarantees 99/44/EC
Distance Selling Directive 97/7/EC
Directive on Electronic Commerce 2000/31/EC
Misleading and Comparative Advertising Directive 2006/114/EC
Unfair Commercial Practices Directive 2005/29/EC
Protection of Personal Data – Directive 95/46/EC