What the E-Cigarette Black Market Will Look Like if FDA Stomps Industry

Danger and death expected if vaping is driven underground.

By Steven Nelson

(USNews.com)

Innovation soon will grind to a halt and after two years nearly all existing e-cigarettes and nicotine-laced liquids will be yanked off store shelves, advocates of the products fear after the Food and Drug Administration on Thursday finalized stringent regulations.

But with hundreds of thousands – perhaps millions – of Americans already ditching combustible tobacco for the devices that heat a nicotine-laced liquid, there’s a significant potential for a continued black market if the fears come true.

The new FDA rules were proposed in April 2014 and debated at length before Thursday’s abrupt announcement. They include uncontroversial bans on sales to minors and sales from vending machines, but they also contain a heavy compliance cost and opaque review process.

The barriers to continued legal access are twofold: Companies must within two years submit premarket tobacco application papers with the FDA, which will take on average 1,500 hours to process with an additional 213 hours for related environmental review, at an estimated cost of more than $1 million for each flavor, nicotine strength and device – a prohibitive barrier to smaller firms. And once applications are submitted, there’s no guarantee the FDA will give a green light.

An active black market is far from theoretical, and users likely would buy vats of the base liquids vegetable glycerine or propylene glycol, bottles of commercial food flavoring, and then add drips of highly concentrated nicotine purchased from overseas vendors, though soaking tobacco leaves to extract nicotine is another option for people who would rather not return to smoking cigarettes or quit their addiction.

Earlier this week, British anti-smoking advocate Clive Bates, a supporter of legal access to e-cigarettes, posted on his blog about how he successfully ordered from China an inexpensive and professionally packaged bottle labeled 99 percent pure nicotine, circumventing a European Union restriction on the strength of liquids. “People have more imagination and determination than regulators can ever give them credit for,” he says. “I think when they announce new regulations, they basically launch an arms race of ingenuity, and the consumers and Chinese suppliers will basically always win.” Bates says he does not personally use e-cigarettes and that he has no financial interest in the industry. He formerly led Action on Smoking and Health in the U.K., which he compares to the U.S. Campaign for Tobacco-Free Kids. He and British public health authorities have welcomed e-cigarettes as a potential health boon, whereas in the U.S. health campaigners largely have expressed alarm that they may expand nicotine addiction, while agreeing preliminary research suggests they likely are less hazardous than smoked tobacco.

“This type of regulation [from the FDA] just degrades the value proposition of the alternative to cigarettes, so more people continue to smoke,” Bates says. “But people who are committed to it [will] look for workaround. They say, ‘Well, this is something that’s important to me, I like it, it keeps me from smoking, it’s integral to my health and well-being, I’m not going to take it lying down.’”

Bates’ experience in acquiring highly concentrated nicotine elicited feedback from blog readers saying they already were stocking up. One person wrote they had 20 years’ worth in their freezer. Another said they’re stocked for 11 years.

“The social media around this is so strong you will actually get user recommendations for various suppliers,” he says. “It’s not convenient, you’re taking risks with unfamiliar suppliers, you might be getting stuff that’s very toxic. It’s not going to be for everyone, but it’s certainly going to be for someone.”

The strength of the online vaping community is undeniable. One highly popular website, the E-Cigarette Forum, claims 1.9 million monthly unique visitors, 70 percent of them from the U.S., while the subreddit r/electronic_cigarette has more than 120,000 subscribers, more than 1,200 of whom were on that forum Thursday afternoon.

The E-Cigarette Forum surveyed 10,000 of its users in 2014 and found 79 percent would turn to the black market in response to product bans.

“Spend five minutes on the Internet and you’ll find it: pure nicotine, and you can make huge volumes of e-liquid from it,” says E-Cigarette Forum co-founder and managing director Oliver Kershaw.

“People will absolutely be buying this stuff, and it’s so cheap they won’t mind losing a few shipments in customs,” he says. “The black market is going to be absolutely huge on this. There are going to be lots of enterprising people selling to their fellow vapers in bars and pubs.”

Kershaw says he’s aware of just one instance of an e-liquid-related death, of a child in New York from cardiac arrhythmia after he drank in late 2014 a commercially available e-liquid, but says “you can imagine a future scenario where people are importing 99 percent nicotine and absolutely – it’s Murphy’s law – you will see this all over the place.”

“If all these flavors get taken off the market, consumers are going to just make it themselves and it’s going to be a total disaster,” he says.

Kershaw says the rest of the world may continue to improve high-quality e-cigarette devices, but that within 90 days no new products can be sold in the U.S., putting a large damper on an ongoing rapid cycle of innovation.

“In 90 days, everything’s ossified,” he says.

Arnaud Dumas de Rauly, president of the large France-based e-liquid manufacturer Gaiatrend and a board member of the Vapor Technology Association industry group, says his company, with tens of millions of dollars in annual revenue from retail partnerships and direct consumer sales, will be able to put some products through the FDA process.

“We’re a big company, but it’s going to put 99 percent of the other companies out of business,” he says. “It’s more than a million dollars per [product]. The problem is when you have the liquid and you have three different nicotine levels, that’s three [products] even if it’s the same flavor. Imagine a company that has 100 flavors.”

“We’re putting on the [U.S.] market 15 flavors with five nicotine levels,” he says. “So 75 times $1 million, we’re going to have a hard time coping with that,” he says, noting the outcome of FDA review isn’t certain.

“There are jobs at stake, it’s a public health matter, and it seems the FDA does not care,” he says, agreeing a black market is inevitable if legal businesses are shuttered.

Though it’s possible to soak tobacco leaves or raw tobacco from cigarettes to extract nicotine, Kershaw says he doesn’t believe many people to do that, as “it would be more expensive and it wouldn’t be very nice.”

“The story that needs to be told is what an egregious failing of public science this has been,” he says. “This narrative has emerged that e-cigarettes are somehow an evil tobacco industry ploy that has been concocted to hook a new generation of children. Nothing could be further from the truth, and yet this myth persists.”

Though a sizable minority of high school students self-report having tried e-cigarettes, surprising 2015 results from the annual Monitoring the Future survey found 60 percent of students who use them vape nicotine- and drug-free liquid, – good news or evidence of a nefarious business model, depending on whom you ask. Youth use featured prominently in the FDA’s Thursday announcement.

Gregory Conley, president of the American Vaping Association trade group, says he is cautiously optimistic that Congress or the court system will push the FDA’s predicate date back from 2007, the cause of the potential industrywide calamity.

“If the predicate date is not changed there’s going to be a huge and thriving black market,” Conley says. “This industry attracts rebels. … There are companies where if things go poorly three or four years from now, they’ll be operating on the dark net selling products directly to consumers with bitcoin.”

“This is America. Prohibition hasn’t worked out well here,” he adds, echoing political arguments against banning alcohol and marijuana, both policies widely ignored.

The congressional effort afoot features a bill passed by the House Appropriations Committee in April that would push back the predicate date. But it’s unclear when the ultimate package will pass Congress and whether legislative processes will kill the committee-passed amendment. House Republican leaders in 2014 urged the FDA to move back the date, to no avail, but that leadership team headed by cigarette smoker and then-House Speaker John Bohener, R-Ohio, has lost two members.

In addition to potential congressional action, businesses are considering a lawsuit in a bid to kill or at least delay the regulation, attorney Azim Chowdhury says.

“We’re going to try to use this sad bout of momentum to try to urge the affected businessowners and consumers to contact their congressmen about how devastating this regulation will be,” Conley says. “From now, we have 90 days where new products can be introduced before the market supposedly freezes, then the market goes away.”

The premarket approval process being applied to e-cigarettes was established by the Tobacco Control Act of 2009. Conventional cigarettes, generally accepted as more hazardous to users’ health than e-cigarettes, were grandfathered into the regulatory framework and did not undergo premarket vetting.

If the 2007 date somehow is moved forward, all existing e-liquid flavors and devices as of that date would be allowed, and companies would face a much lower standard for FDA approval, a substantial equivalency application, showing that similar flavors are already on the market – though the FDA last year blocked proposed cigarette varieties that would appear quite similar to existing varieties.

Though not saying specifically that the FDA expects to approve some e-cigarette products, FDA spokesman Michael Felberbaum said in a statement the agency “will act as expeditiously as possible with respect to all new applications” and that “the submission of high quality and complete applications will help the agency with its review.”

Mitch Zeller, director of the FDA’s Center for Tobacco Products, tells U.S. News it’s impossible to say if any e-cigarette product will be approved.

“I can’t answer that question, I can’t prejudice the application process,” he says. “I can’t predict what’s going to happen with e-cigarettes. There’s a viable pathway, but we would make a decision on whether an individual product should be authorized on a case-by-case basis based on the evidence that’s submitted and whether it meets the public health standard in the law.”

Zeller says there may be an opportunity for e-cigarette companies to pursue less-strenuous substantial equivalency applications. “There may be one product out there,” he says, but “that doesn’t prove that product is a valid predicate.”

Zeller brushes off claims that squeezing the industry would necessarily jeopardize public health, saying “it’s more complicated than saying, ‘This technology is less harmful,’” citing statistics about e-cigarette users also smoking cigarettes and the matter of “what can be done to reduce the number of kids that use these cigarettes.”

It’s unclear, the FDA official says, if marijuana “vape pens” that look and function like e-cigarettes would be covered by the new regulations. “The FDA does not have regulatory authority over products to be used in conjunction with marijuana,” he says. “If it doesn’t meet the [‘made or derived from tobacco’] statutory definition of ‘tobacco product’ we would not have that authority. If it meets the definition of a tobacco product, we have authority to regulate it only as a tobacco product.”

He brushes off concern about black market sales.

“We have a very effective office of compliance and enforcement that will be monitoring and conducting surveillance to detect any kind of illegal activity in the marketplace,” he says. “I have no idea what the likelihood is for a black market, but if that happens we’ll find it and those products, if they haven’t received marketing authorization from FDA, would be in violation of the law.”

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2 responses to “What the E-Cigarette Black Market Will Look Like if FDA Stomps Industry

  1. Pingback: What the E-Cigarette Black Market Will Look Like if FDA Stomps Industry | Ecigvaporsonline·

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