Counterfactual
What would good regulation look like?
Global Forum on Nicotine
Warsaw
18 June 2016
www.clivebates.com
@clive_bates
1. Policy intent
2. Unintended consequences
3. Regulating vape tech
Be clear on policy objective
? Reduce disease
? Reduce smoking
? Reduce tobacco use
? Reduce nicotine use
? Reduce uptake by teenagers
? Reduce exposure to bystanders
? Defeat the tobacco industry
Policy objective
 Reduce disease
✘ Reduce smoking
✘ Reduce tobacco use
✘ Reduce nicotine use
✘ Reduce uptake by teenagers
✘ Reduce exposure to bystanders
✘ Defeat the tobacco industry
Exploring the underlying ethics
The only purpose for which power
can be rightfully exercised over any
member of a civilized community,
against his will, is to prevent harm
to others.
His own good, either physical or
moral, is not sufficient warrant.
John Stuart Mill
On Liberty, 1859
Discuss
Maximise informed choice?
1. Policy intent
2. Unintended consequences
3. Regulating vape tech
Relative risk is the key concept
“….the available data suggest that they are
unlikely to exceed 5% of those associated
with smoked tobacco products, and may well
be substantially lower than this figure.”
Regulatory double negative
Tough on harm reduction
Tough on e-cigarettes
Easy on harm
Most important paragraph in RCP report
“A risk-averse, precautionary approach to e-
cigarette regulation can be proposed […]
However, if this approach also makes e-
cigarettes less easily accessible, less palatable
or acceptable, more expensive, less consumer
friendly or pharmacologically less effective, or
inhibits innovation and development of new
and improved products, then it causes harm
by perpetuating smoking. (12.10)
Abstract
…Regression analyses consider how state bans on e-cigarette sales to
minors influence smoking rates among 12 to 17 year olds. Such bans
yield a statistically significant 0.9 percentage point increase in recent
smoking in this age group, relative to states without such bans.
UK Department of Health - a confession
Source: Department of Health, MHRA, Tobacco Products Directive, Impact Assessment,18 April 2016. [link]
117. [...] There may also be potential negative health implications if the restrictions
on advertising reduce the number of consumers switching from tobacco
products to e-cigarettes. [...]
207. There is a risk that due to the potential price increase and reduction of choice
of e-cigarettes, people will choose to switch back to smoking, thus harming
their health.
208. There is a risk that a black market will develop with potentially harmful e-
cigarette products, due to consumers no longer having the same degree of
choice in the legal market.
The case of flavours
Role of flavours in quitting
About three-
quarters relied
fully or partially
on flavours
Choice of flavours by adults
Less than a
quarter currently
mostly use
tobacco flavours
Did anyone ask the kids?
Shiffman S, Sembower MA, Pillitteri JL, Gerlach KK, Gitchell JG. The impact of flavor descriptors on nonsmoking teens’ and
adult smokers' interest in electronic cigarettes. Nicotine Tob Res 2015
Participants indicated their interest (0-10 scale) in e-cigarettes paired with various flavor descriptors
Innovation
Diminishing and negative returns to regulation
Net
benefit
Net
harm
Valuetosociety
Regulatory costs,
burdens and
restrictions
Builds
confidence
Destroys viable firms
and products
Compromises design
& consumer appeal
Sweet Spot
Policy impact assessment
Regulatory concept
Possible unintended
consequence?
Ban e-cigarette use in public places ?
Ban advertising, promotion and sponsorship ?
Product design restrictions and requirements ?
Ban flavours ?
Ban flavours that appeal to kids ?
Ban open systems because they may be used for drugs ?
Impose large scary health warnings ?
Ban e-cigarette sales to under-18s ?
Prohibit health claims ?
Raise taxes on e-cigarettes ?
• Policy intent
• Unintended consequences
• Regulating vape tech
4 Ps of marketing
Promotion Price
Place Product
Marketing
Promotion Price
Place Product
MarketingPrice
"The art of taxation consists in so
plucking the goose as to obtain the
largest amount of feathers with the
least possible amount of hissing”
Jean-Baptiste Colbert
1619-1683
Promotion Price
Place Product
Marketing
European Finance Council (ECOFIN)
Conclusions 9 March 2016
12. [any e-cigarette tax] needs to be practical
and foresighted, and strike the right balance
between the revenue, expenses of tax
administration and public health objectives.
Promotion Price
Place Product
Marketing
Tax level
compared to
cigarettes
Basis for
equivalence
Tax base
Tax point
Promotion Price
Place Product
Marketing
Promotion Price
Place Product
MarketingStandards for devices
Mechanical risks
Thermal risks
Chemical risks
Information
Standards for liquids
Promotion Price
Place Product
Marketing
Liquid standards
Containers
Information
Testing protocol
Electrical safety - AFNOR
Promotion Price
Place Product
Marketing
• NF EN 60335-1:2013, Household and similar electrical appliances — Safety — Part 1:
General requirements.
• NF EN 61558-1:2006+A1:2009, Safety of power transformers, power supply units and
similar — Part 1: General requirements and tests.
• NF EN 62133:2013, Secondary cells and batteries containing alkaline or other non-acid
electrolytes — Safety requirements for portable sealed secondary cells, and for batteries
made from them, for use in portable applications.
• NF EN 62680-3:2014, Universal serial bus interfaces for data and power — Part 3: USB
battery charging specifications, revision 1.2.
Uses existing standards
Intimidating consumers
Promotion Price
Place Product
Marketing
This product contains
nicotine which is a highly
addictive substance. It is
not recommended for use
by non-smokers
Informing consumers
Promotion Price
Place Product
Marketing
This product is likely to
be at least 95% safer
than smoking cigarettes
Promotion Price
Place Product
Marketing
Thousands of micro-decisions
Promotion Price
Place Product
Marketing
1. A bar wants to have a vape night every Thursday
2. A bar wants to dedicate one room where vaping is permitted
3. In a town with three bars, one decides it will cater for vapers, two decide they will not allow vaping
4. A bar manager decides on balance that his vaping customers prefer it and his other clientele are not
that bothered – he’d do better allowing it
5. A hotel wants to allow vaping in its rooms and in its bar, but not in its restaurant, spa, and lobby
6. An office workplace decides to allow vaping breaks near the coffee machine to save on wasted smoking
break time and encourage smokers to quit by switching
7. A care home wants to allow an indoor vaping area to encourage its smoking elderly residents to switch
during the coming winter instead of going out in the cold
8. A vape shop is trying to help people switch from smoking and wants to demo products in the shop…
9. A shelter for homeless people allows it to make its clients welcome
10.A day centre for refugees allows it instead of smoking
Promotion Price
Place Product
Marketing
Exploring the underlying ethics
The only purpose for which power
can be rightfully exercised over any
member of a civilized community,
against his will, is to prevent harm
to others.
His own good, either physical or
moral, is not sufficient warrant.
John Stuart Mill
On Liberty, 1859
Promotion Price
Place Product
Marketing
Promotion Price
Place Product
Marketing
 Ensure your ads are socially responsible
 Don’t target or feature children, or include content which is
likely to appeal particularly to children
 Don’t confuse e-cigarettes with tobacco products
 Don’t make health or safety claims
 Don’t make smoking cessation claims
 Ensure you don’t mislead about product ingredients
 Don’t mislead about where products may be used
Promotion Price
Place Product
Marketing
Unjustified EU advertising ban
Promotion Price
Place Product
Marketing
What would good e-cigarette regulation look like
• “Do nothing” is superior to every regulatory scheme so far
• Regulation is there to benefit consumers not to please activists
• Regulators should be haunted by unintended consequences
• Regulation should focus on disease risk not ideological objectives
• Regulation should promote informed choice and innovation
• Proportionate and justifiable standards can help shape the market
• Regulators should mostly get out of the way – the market is working
www.clivebates.com
@clive_bates
Thank you… questions…

Global Forum on Nicotine 2016: What would good regulation look like

  • 1.
    Counterfactual What would goodregulation look like? Global Forum on Nicotine Warsaw 18 June 2016 www.clivebates.com @clive_bates
  • 2.
    1. Policy intent 2.Unintended consequences 3. Regulating vape tech
  • 3.
    Be clear onpolicy objective ? Reduce disease ? Reduce smoking ? Reduce tobacco use ? Reduce nicotine use ? Reduce uptake by teenagers ? Reduce exposure to bystanders ? Defeat the tobacco industry
  • 4.
    Policy objective  Reducedisease ✘ Reduce smoking ✘ Reduce tobacco use ✘ Reduce nicotine use ✘ Reduce uptake by teenagers ✘ Reduce exposure to bystanders ✘ Defeat the tobacco industry
  • 5.
    Exploring the underlyingethics The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not sufficient warrant. John Stuart Mill On Liberty, 1859
  • 6.
  • 7.
    1. Policy intent 2.Unintended consequences 3. Regulating vape tech
  • 8.
    Relative risk isthe key concept “….the available data suggest that they are unlikely to exceed 5% of those associated with smoked tobacco products, and may well be substantially lower than this figure.”
  • 10.
    Regulatory double negative Toughon harm reduction Tough on e-cigarettes Easy on harm
  • 11.
    Most important paragraphin RCP report “A risk-averse, precautionary approach to e- cigarette regulation can be proposed […] However, if this approach also makes e- cigarettes less easily accessible, less palatable or acceptable, more expensive, less consumer friendly or pharmacologically less effective, or inhibits innovation and development of new and improved products, then it causes harm by perpetuating smoking. (12.10)
  • 12.
    Abstract …Regression analyses considerhow state bans on e-cigarette sales to minors influence smoking rates among 12 to 17 year olds. Such bans yield a statistically significant 0.9 percentage point increase in recent smoking in this age group, relative to states without such bans.
  • 13.
    UK Department ofHealth - a confession Source: Department of Health, MHRA, Tobacco Products Directive, Impact Assessment,18 April 2016. [link] 117. [...] There may also be potential negative health implications if the restrictions on advertising reduce the number of consumers switching from tobacco products to e-cigarettes. [...] 207. There is a risk that due to the potential price increase and reduction of choice of e-cigarettes, people will choose to switch back to smoking, thus harming their health. 208. There is a risk that a black market will develop with potentially harmful e- cigarette products, due to consumers no longer having the same degree of choice in the legal market.
  • 14.
    The case offlavours
  • 15.
    Role of flavoursin quitting About three- quarters relied fully or partially on flavours
  • 16.
    Choice of flavoursby adults Less than a quarter currently mostly use tobacco flavours
  • 17.
    Did anyone askthe kids? Shiffman S, Sembower MA, Pillitteri JL, Gerlach KK, Gitchell JG. The impact of flavor descriptors on nonsmoking teens’ and adult smokers' interest in electronic cigarettes. Nicotine Tob Res 2015 Participants indicated their interest (0-10 scale) in e-cigarettes paired with various flavor descriptors
  • 18.
  • 19.
    Diminishing and negativereturns to regulation Net benefit Net harm Valuetosociety Regulatory costs, burdens and restrictions Builds confidence Destroys viable firms and products Compromises design & consumer appeal Sweet Spot
  • 20.
    Policy impact assessment Regulatoryconcept Possible unintended consequence? Ban e-cigarette use in public places ? Ban advertising, promotion and sponsorship ? Product design restrictions and requirements ? Ban flavours ? Ban flavours that appeal to kids ? Ban open systems because they may be used for drugs ? Impose large scary health warnings ? Ban e-cigarette sales to under-18s ? Prohibit health claims ? Raise taxes on e-cigarettes ?
  • 21.
    • Policy intent •Unintended consequences • Regulating vape tech
  • 22.
    4 Ps ofmarketing Promotion Price Place Product Marketing
  • 23.
  • 24.
    "The art oftaxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing” Jean-Baptiste Colbert 1619-1683 Promotion Price Place Product Marketing
  • 25.
    European Finance Council(ECOFIN) Conclusions 9 March 2016 12. [any e-cigarette tax] needs to be practical and foresighted, and strike the right balance between the revenue, expenses of tax administration and public health objectives. Promotion Price Place Product Marketing
  • 26.
    Tax level compared to cigarettes Basisfor equivalence Tax base Tax point Promotion Price Place Product Marketing
  • 27.
    Promotion Price Place Product MarketingStandardsfor devices Mechanical risks Thermal risks Chemical risks Information
  • 28.
    Standards for liquids PromotionPrice Place Product Marketing Liquid standards Containers Information Testing protocol
  • 29.
    Electrical safety -AFNOR Promotion Price Place Product Marketing • NF EN 60335-1:2013, Household and similar electrical appliances — Safety — Part 1: General requirements. • NF EN 61558-1:2006+A1:2009, Safety of power transformers, power supply units and similar — Part 1: General requirements and tests. • NF EN 62133:2013, Secondary cells and batteries containing alkaline or other non-acid electrolytes — Safety requirements for portable sealed secondary cells, and for batteries made from them, for use in portable applications. • NF EN 62680-3:2014, Universal serial bus interfaces for data and power — Part 3: USB battery charging specifications, revision 1.2. Uses existing standards
  • 30.
    Intimidating consumers Promotion Price PlaceProduct Marketing This product contains nicotine which is a highly addictive substance. It is not recommended for use by non-smokers
  • 31.
    Informing consumers Promotion Price PlaceProduct Marketing This product is likely to be at least 95% safer than smoking cigarettes
  • 32.
  • 33.
    Thousands of micro-decisions PromotionPrice Place Product Marketing 1. A bar wants to have a vape night every Thursday 2. A bar wants to dedicate one room where vaping is permitted 3. In a town with three bars, one decides it will cater for vapers, two decide they will not allow vaping 4. A bar manager decides on balance that his vaping customers prefer it and his other clientele are not that bothered – he’d do better allowing it 5. A hotel wants to allow vaping in its rooms and in its bar, but not in its restaurant, spa, and lobby 6. An office workplace decides to allow vaping breaks near the coffee machine to save on wasted smoking break time and encourage smokers to quit by switching 7. A care home wants to allow an indoor vaping area to encourage its smoking elderly residents to switch during the coming winter instead of going out in the cold 8. A vape shop is trying to help people switch from smoking and wants to demo products in the shop… 9. A shelter for homeless people allows it to make its clients welcome 10.A day centre for refugees allows it instead of smoking
  • 34.
  • 35.
    Exploring the underlyingethics The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not sufficient warrant. John Stuart Mill On Liberty, 1859
  • 36.
  • 37.
  • 38.
     Ensure yourads are socially responsible  Don’t target or feature children, or include content which is likely to appeal particularly to children  Don’t confuse e-cigarettes with tobacco products  Don’t make health or safety claims  Don’t make smoking cessation claims  Ensure you don’t mislead about product ingredients  Don’t mislead about where products may be used Promotion Price Place Product Marketing
  • 39.
    Unjustified EU advertisingban Promotion Price Place Product Marketing
  • 40.
    What would goode-cigarette regulation look like • “Do nothing” is superior to every regulatory scheme so far • Regulation is there to benefit consumers not to please activists • Regulators should be haunted by unintended consequences • Regulation should focus on disease risk not ideological objectives • Regulation should promote informed choice and innovation • Proportionate and justifiable standards can help shape the market • Regulators should mostly get out of the way – the market is working
  • 41.

Editor's Notes

  • #11 It’s a simple idea, but If the regulator is tough on the competitor to cigarettes then he s being easy on the incumbent, easy on harm and hard on health
  • #15 This is the first of four examples on perverse consequences of regulation: banning flavours may damage the appeal of vaping to some users and either send them back to smoking or mean they never move in the first place. A ban may stimulate a black market or DIY which would be more dangerous than the risks that a ban is supposed to mitigate. There is no evidence these products cause teenage vaping, and even if there was, it might actually be beneficial if displacing smoking.