electronic cigarette regulation: when less is more

8/13/2019 Electronic Cigarette Regulation: When Less is More

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Regulation: when less is more

Counterfactual

www.clivebates.com@clive_bates


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WHO1 billion deaths


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I smoked for 45 years and tried every NRT

product available, none of them worked. Icontinued to smoke even though my health

was getting worse, resulting in COPD and usingoxygen daily.

September 2011 I discovered e-cigarettes and

they worked. It was like someone handed me a

miracle. In less than a week I stopped using

regular cigarettes. I havent had a tobacco

cigarette since.

Unsolicited comment left on www.clivebates.com


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From WHO Tobacco Atlas 2006 edition


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The Endgame?Projected global adult population growth

years

9.0

>

15

8.0 Adult

populationadults

7.0

Billion

6.0

5.0

4.0

3.0

2.0

1.0

0.02010 2015 2020 2025 2030 2035 2040 2045 2050

Smokers: WHO Tobacco Atlas 2006. Population: UN


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The Endgame?Projected global adult population growth

years

9.0

>

15

8.0 Adult

populationadults

7.0

Billion

6.0

5.0

4.0

3.0Smoker

2.0 population atconstantprevalence

1.0

0.02010 2015 2020 2025 2030 2035 2040 2045 2050

Smokers: WHO Tobacco Atlas 2006. Population: UN


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The endgame?Scenarios for future smoker population

years

2.5

>

15

Constantprevalence

Billionadults

2.0 (28%)

1.5

1.0

0.5

0.02010 2015 2020 2025 2030 2035 2040 2045 2050

Scenario15% global prevalence by 2050


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The endgame?Scenarios for future smoker population

years

2.5

>

15

Constantprevalence

Billionadults

2.0 (28%)

1.5Global smokingprevalencedeclines to 15%

1.0

0.5

0.02010 2015 2020 2025 2030 2035 2040 2045 2050

Scenario15% global prevalence by 2050


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If all goes wellScenarios for future smoker population

ye

ars

2.5

>

15

Constantprevalence

Billionadults

2.0 (28%)

1.5Contested by tobacco control

Global smokingprevalencedeclines to 15%

1.0

0.5

HARM0.0

2010 2015 2020 2025 2030 2035 2040 2045 2050


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The endgamea nicotine product contest?Scenarios for future nicotine markets

ye

ars

2.5

>

15

Constantprevalence

Billionadults

2.0 (28%)


Global nicotineprevalencedeclines to 15%

1.0

Contested by nicotine products0.5

0.02010 2015 2020 2025 2030 2035 2040 2045 2050


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How far could low-risk nicotine products go?Scenarios for future nicotine markets

ye

ars

2.5

>

15

Constantprevalence

Billionadults

2.0 (28%)


Global nicotineprevalencedeclines to 15%

1.0 Contested by low risk nicotine products

0.5 Global smokingprevalence

Cigarettes and other combustible tobaccodeclines to 5%

0.02010 2015 2020 2025 2030 2035 2040 2045 2050


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The endgame: analyst view

Consumption of e-cigs may overtake traditional

cigarettes in the next decade and theyll only

evolve and improve as time goes forward.

Bonnie Herzog, Wells Fargo Securities, 2013


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The endgame: analyst view

Consumption of e-cigs may overtake traditional

cigarettes in the next decade and theyll only

evolve and improve as time goes forward.

Bonnie Herzog, Wells Fargo Securities, 2013


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50:50 by 2030Modified Herzog scenario" for future nicotine markets

ye

ars

2.5

>

15

Constantprevalence

Billionadults

2.0 (28%)

1.5Global nicotineprevalencedeclines to 15%

1.0"E-cigarettes overtakecigarettes by 2030"

0.5Global smokingprevalencedeclines to 5%

0.02010 2015 2020 2025 2030 2035 2040 2045 2050


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Who is this?

Mitch Zeller(now) Director of the Center for Tobacco

Products FDA


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Harm reduction equation

Harm reduction =Reduced risk xNumber who switch

Product toxicity & Product attractivenessother risks

Consumer preference


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Harm reduction categoriesrisk estimates

Crudeestimateofrisk

Cigs=100

120

100

80

60

40

20

0 Cigarettes Heat not burn Smokeless E-cigs NRT


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Focus on the right relative risk

More regulationLower risk

regulated e-cig unregulated e-cig

0 10 100

0 100

e-cigarettes cigarette


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Product toxicity & Product attractivenessother risks

Consumer preference


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Analysts

We remain very bullish on the vast potential of e-cigs given the

rapid pace of innovation. [We believe] that the benefits of e-cigsare becoming increasingly apparent to consumers, helping

to drive trial and repeat purchases aided by stepped-up

advertisingand a lot of internet buzz

Wells Fargo


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Regulation comes at a price

Lesspersonalisation BoringFewer, duller branding &

innovationsmarketing

Slowerinnovation

pace

Greatlyreduced

variety & nicheproducts

ReducedIncreased cost

appeal

Trusted brands& firms

destroyed

Oligopoly &reduced

competition

Black market,DIY

H d i i


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Trade offs

Conclusion 1. The perfectly risk free product that no-one

wants scores badly in the harm reduction equation

Conclusion 2. A diverse range of products with substantiallyreduced risk lets each smoker decide which product is best


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T i l ti


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Triple negative

Tough on harm reduction

S i li d di i l


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Specialised medicines language

Consistent drug dosing

Quality Treats or prevents diseaseAdverse drug reactions

EfficacySafety

Getting tough on harm reduction?


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Getting tough on harm reduction?

Counter-productive Harm reducing

Safety Safest possible Safe enoughQuality Control processes (eg. GMP) Proportionate standards

Efficacy Regulator decides Consumer decides

Labelling Warns of danger Encourages switching

Marketing Like medicines Like consumer products

Bans on use Fear of renormalisation Normalise harm reduction

Retail Pharmacies / as tobacco General sales

Age restrictions Adults Makes little real difference

Taxation Like tobacco Fiscal incentive to switch

What do analysts think ?


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What do analysts think?

We believe many current suppliers would struggle to meet

medical standards, and for the UK they may have to by 2016. Bigplayers with deeper pockets would survive and prices could rise a hugely preferable outcome for Tobacco.BNP Paribas

Tougher regulation, as well as providing a relative advantage

to their e-cigarette divisions, would result in higher prices for

e-cigaretteswhich could also benefit tobacco companies by

limiting their attraction for smokers and slowing the decline in

tobacco sales.Fitch


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European Parliament amendment 170


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European Parliamentamendment 170

Requires medicines regulation if claim made Requires Article 17 notification regime otherwise Emphasises general safety requirement Applies Article 16cross border distance sales Applies advertising directive 2003/33/EC and audiovisual services 2010/13/EU Information leaflet Warning this product is intended for use by existing smokers. It

containsnicotine which is a highly addictive substance Warning size - 30% or 40% (Council =30%) and specification from Article 10 30mg/ml thresholdare not placed on the market (?medicine) Age restriction (no less than 18) Restriction on additivesapplication of Article 6.4 (vitamins etc) No tobacco branding Allows flavourings Requires sales allowed outside pharmacies Review


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Purpose built regulation for e-cigs / NCPs


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Purpose built regulation for e cigs / NCPs

1. Accountabilitiesresponsible person2. Disclosure and notification regime3. Labeling and consumer information4. Safety assessment and product file5. Contaminants / purity6. Prohibited ingredients7. Specific standards for vaping devices CEN/ISO8. Updating: review & technical committee9. Marketing (like alcohol?)mostly member state10. Retail sales age restrictionmember states11. public vaping?

Harm reduction equation with population effects


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Harm reduction equation with population effects


- Extra smokers+ Extra quitters

Gateway to smoking Gateway exitsDual use Complete cessation

Reduced quitting Extra quittingNormalising smoking Normalising non-smoking

Conclusion


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Conclusion

Be positive about the (vast) potential Put the (minor) risks in perspective Regulate as though the 1 billion matter most


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Thank you

Counterfactual

www.clivebates.com

@clive_bates


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Summary of the E-

Cigarette Summit

For more information about the E-Cigarette

Summit, a full review of the event, and

more presentations,read this article.Visit

the E-Cigarette Summit's website here:

http://e-cigarette-summit.com/
http://ecigarettereviewed.com/e-cigarette-summit-london-summaryhttp://ecigarettereviewed.com/e-cigarette-summit-london-summaryhttp://ecigarettereviewed.com/e-cigarette-summit-london-summaryhttp://e-cigarette-summit.com/http://e-cigarette-summit.com/http://e-cigarette-summit.com/http://ecigarettereviewed.com/e-cigarette-summit-london-summary

electronic cigarette regulation: when less is more

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