2015 Article-ECigarettes (final).PDF

RGA Group Insurance INSIGHT
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1st Quarter 2015
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Welcome to the Vaporium: An overview of electronic cigarettes
The small business down the road from where I live, open since July 2014, was occupied by a couple
of its regular customers when I arrived on that Saturday afternoon. At the counter were 50 to 60
different juice flavors for patrons to sample, allowing them to select just the right product that would
please their taste buds. Was this a tavern I sauntered into, or perhaps a juice and smoothie bar? Not
even close. This is one of the approximately 6,000 "vape" shops in the U.S. selling atomizers, "e-juice"
and related accessories, all part of the fast-growing electronic cigarette, or e-cigarette (EC), industry.
With sales projected into the billions and studies producing conflicting results on their health effects, it is
difficult to see through the vapors and determine e-cigarette fact from fiction. This industry is still in its
infancy, and now is the time for insurers to learn all they can about it. In this article I attempt to blow
some of the smoke away and increase your understanding of this growing trend.
E-Cigarette: Background
An EC is a battery-powered vaporizer containing a heating element that draws liquid solution (nicotine
liquid or "e-juice") and converts it into an aerosol (atomization process), which is referred to as "vapor."
The liquid solution is typically a mixture of nicotine, vegetable glycerin, propylene glycol and flavoring.
E-cigarette users are sometimes referred to as "vapers."
The EC was invented in 2001 by Chinese
pharmacist Hon Lik, who was driven to create
an alternative to traditional smoking after losing
his father to lung cancer and attempting to
break his own pack-a-day habit. Most
vaporizers and nicotine liquids are produced in
China.
People attempting to quit smoking traditional
cigarettes or other tobacco products,
experimenters and young people are the main
users of ECs. The two customers I met credited
ECs with allowing them to quit using snuff. They
are not alone: A 2014 survey of people trying to
quit smoking indicated that a majority of them
are relying on ECs as opposed to FDA-
approved smoking cessation prescriptions such
as nicotine gum and patches.
U.S. EC sales exceeded $2.5 billion in 2014
and are expected to top $3.5 billion in 2015,

with more than 500 brands, 7,700 flavors and a
variety of nicotine levels. The three largest
tobacco companies – Philip Morris USA,
Reynolds American, Inc., and Lorillard – have
invested in ECs. Lorillard owns "blu," the EC
industry's leading brand.
Scrutiny of these devices from the medical
establishment and state and local governments is growing nearly as rapidly as EC sales. ECs are
currently not regulated by the U.S. Food and Drug Administration (FDA), but the agency is pursuing the
enactment of laws because of the presence of nicotine in the product. In part because of this absence
of federal regulations, many U.S. states and cities have adopted their own EC regulations, with the
most common being a law making it illegal to sell ECs to minors.
E-Cigarettes versus Traditional Smoking
Most studies on ECs conclude that they are a safer alternative to traditional cigarettes, in which the
smoke has been found to contain more than 4,000 chemicals, including 400 toxins and 43 known
carcinogens. A 2014 research study performed by the Roswell Park Cancer Institute analyzed 12 EC
products and found that toxicant levels were 9 to 450 times lower than in traditional cigarette smoke. As
a practical matter, doctors typically emphasize to their patients the importance of discontinuing the use
of traditional cigarettes and nicotine entirely. Though the FDA has not approved EC as a smoking
cessation device, some studies have determined that ECs are just as effective as nicotine gum and
patches (both obtained via prescription) as a method to quit or reduce smoking. In many cases, the
transition from traditional cigarettes to ECs results in users relying on both products for a period of time.
The widely held opinion that ECs are a viable alternative to
traditional cigarettes does not absolve this product from being a risk
to one's health.

Health Risks
The widely held opinion that ECs are a viable alternative to traditional cigarettes does not absolve this
product from being a risk to one's health. The delivery of nicotine is the main reason smokers begin
using and then relying on ECs. The use of nicotine, a toxic substance, has been proven to constrict
heart vessels which can lead to heart disease. Nicotine delivered via an EC is readily absorbed through
the airway, skin, mucous membranes and gastrointestinal tract. Acute exposure to inhaled nicotine may
cause dizziness, nausea or vomiting. In more bad news for ECs, FDA testing indicated that the amount
of nicotine listed on an EC cartridge label may not match the actual amount in the cartridge.
Additionally, there is no standardization and quality control, so cartridges under the same manufacturing
label may release different levels of nicotine. The same FDA studies also concluded that the nicotine-
free EC cartridges actually contain a low dose of nicotine, contrary to the manufacturer's claim.
A separate 2014 study at the Center for Tobacco Control Research and Education at the University of
California, San Francisco analyzed EC vapors and determined that the devices produce a high level of
nanoparticles that can cause inflammation and that are linked to diabetes, asthma, strokes and heart
disease.
Scientists at Portland State University addressed a study of ECs by increasing the voltage of the device
to a high level (creating more vapor), which produced formaldehyde (a carcinogen) amounts 15 times
greater than a traditional cigarette. Those study results seem dramatic at first glance, but it should be
noted that most sensible EC users would not operate their devices at such a high voltage level. One of
the patrons in my local vape shop commented when we were discussing the study, "No one in their
right mind would do that. It would taste awful." Also, in the same study formaldehyde was not detected
when the voltage was set at a low level in the EC.
Another health risk was highlighted in a December 2014 New York Times article claiming that tin, zinc,
carcinogens and heavy metals have been detected in EC devices, most of which originate in China.
Some believe that the absence of FDA involvement and the lack of meaningful Chinese government
regulations have created an environment where poor-quality manufacturing practices are the norm.
Compounding the problem in China is that some ECs are also being produced by counterfeiters in
addition to legitimate operations.
E-Cigarettes and Young People
Just as every generation has its own music, fashion and culture, each typically has its own illegal and
unhealthy activities as well. Young people today are using ECs at an alarming rate. A 2014 national
high school survey found that in the past 30 days U.S. 12th graders used ECs more than traditional
cigarettes, 17% versus 14%. Peer pressure, the need to experiment, numerous appealing flavors and
target marketing are the main reasons young people latch on to ECs.
The biggest concern with young people becoming addicted to ECs is that this product could serve as a
gateway drug, with the vaper moving on to traditional cigarettes. The term "gateway drug" is used
frequently by anti-drug groups, but most of us do not have a complete understanding of its history. The
gateway hypothesis was developed in 1975 by Columbia University's Denise B. Kandel, Ph.D., and it
involved epidemiologic analysis, biologic testing of mice and observations of young people. The study
revealed that drug use develops in stages and sequences, starting with a legal drug, proceeding to
less-lethal illegal drugs such as marijuana and then to stronger illegal drugs like heroin and cocaine.
Professor Kandel's opinion is that nicotine acts as a gateway drug on the brain, and this effect is likely
to occur whether the exposure is from smoking tobacco, secondhand tobacco smoke or ECs. (Note:
ECs were analyzed as part of a 2014 follow-up study by Kandel.)
Regulations, or Lack Thereof
At this time the FDA only regulates the following tobacco products: cigarettes, cigarette tobacco, roll-
your-own tobacco and smokeless tobacco (e.g., snuff). The agency has proposed a rule that would

extend its authority to cover products that satisfy the legal definition of a tobacco product, such as ECs.
Given the rapid growth of the industry, it may be necessary for the FDA to consider enacting
regulations of ECs in an expedited manner. It is currently legal to sell ECs to people under the age of
18 in 14 U.S. states, and existing regulations are weak and full of loopholes in many other states. The
manufacturers of EC devices and nicotine liquid are not required to disclose how they are made or the
chemical components of the product because federal regulations are not in place. It is not likely that the
EC manufacturers will be transparent and submit accurate data on their products to the FDA on their
own, especially when the outcome of the decision on this proposed rule could impact their sales.
Summary : The Lesser of Two Evils?
The day after visiting my local EC store I informed my sister of this outing. She told me that her
husband recently purchased an EC in an effort to quit smoking traditional cigarettes. She went on to
affectionately refer to him as an "idiot" who is "switching the use of one poison for another." Is this a
short-sighted observation by my sibling or an accurate label? On one hand, yes, ECs do contain toxic
chemicals that could gravely affect my brother-in-law's health. Counterpoint though, he could
conceivably start using an EC with the e-juice at a high nicotine level and then wean himself off of this
addiction by gradually lowering the amount of nicotine in the e-juice. Not until the regulators and the
manufacturers address comprehensive, scientific-based studies on ECs will we truly understand the
health consequences of vaping. And until such time, insurers will be dealing with the emerging mortality
and morbidity effects in real time and left to their own devices to manage this risk.
ABOUT THE AUTHOR - Richard D. Becchetti
Richard D. Becchetti, Senior Risk Management Analyst at RGA Reinsurance,
has over ten years of exposure management and catastrophe modeling
experience along with a Certified Catastrophe Risk Analyst (CCRA)
designation.
RGA Group Insurance Insight is published by the Group Reinsurance Teams of RGA Reinsurance. This publication’s mission is to provide
news and information to group insurance professionals and to support the group insurance market. The information contained in the
articles represents the opinion of the authors and does not necessarily imply or represent the position of the editors or RGA Reinsurance
Company. Articles are not intended to provide legal, consulting or any other form of advice. Any legal or other questions you have
regarding your business should be referred to your attorney or other appropriate advisor.
Copyright ©2015 RGA Reinsurance Company. All rights reserved. No portion of this publication may be reproduced without permission
from the publisher.
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