Emerging from the smoke – Vaping as disruptive innovation
by Megan Stagman on 15 May 2018
In a modern world that is churning out technological innovations in sectors that did not even exist 20 years ago, many people will have common conceptions of what constitutes ‘disruptive technology’: the rise of robots, smart cities and self-driving cars. And yet, equally disruptive are the technologies that are developing within sectors that have prospered for centuries.
For hundreds of years, smoking has been omnipresent throughout popular culture, and yet statistics showed last year that its prevalence among young UK adults had declined by a staggering quarter since 2010. Rising exponentially in its place has been the uptake of new e-cigarette technology. First patented in China only 15 years ago, there are now 2.9 million users in the UK, accounting for a third of the country’s approximately 9 million smokers. The scale of this drastic transformation in such a established industry certainly seems to be disruptive indeed.
How vaping has been regulated to date
As some background to the technology itself, electronic cigarettes, or e-cigarettes, are handheld electronic devices that heat a liquid composed of nicotine, propylene glycol, glycerine and flavourings, thereby creating a vapour to be inhaled. The escalation in their use in the UK has been at least in part the result of national and local initiatives to reduce smoking, based on Public Health England’s oft-cited review, which concluded that e-cigarettes are 95% less harmful to health than normal cigarettes. Anti-smoking campaigners Action on Smoking and Health (ASH) estimate that over half (52%) of e-cigarette users are ex-cigarette smokers.
This rapid increase in prevalence has been met with mixed reactions in terms of regulation. On the one hand, in 2015 the World Health Organisation reported that over 90% of countries had no national legislation regulating e-cigarettes. Conversely, while there is a broad common framework across the European Union, individual Member States have implemented the rules in quite different ways, leading to some regulations that threaten to suffocate the sector entirely. For example, the Italian Government's concerns about diminishing tobacco tax revenues led to a series of tax changes on e-cigarettes, resulting in a huge drop in requests for new business licences in the sector (ANAFE, 2014) and e-cigarette companies like Ovale experiencing as much as a 50% fall in annual sales.
The UK has thus far taken a more gradual approach to regulating the sector, adopting the EU’s Tobacco Products Directive in the form of the UK Tobacco and Related Products Regulations in 2016, and later a Tobacco Control Plan for England in July 2017. The former puts in place minimum standards for the safety and quality of products themselves, as well as restricting advertising. The latter commits the UK Government to “evidence-based policy making” when reducing smoking rates, meaning the UK is not inherently averse to the introduction of innovative smoking technologies if it can be shown to reduce the risk of harm. It also commits Public Health England to update its evidence review on e-cigarettes annually until 2022.
In this context, the House of Commons’ Science and Technology Committee launched an inquiry last year into the suitability of national regulation for the sector, as well as the numerous ethical questions that it poses. With their collection of evidence concluded as of last week (9 May 2018), they will now be producing a report outlining policy recommendations for the Government. While it will certainly be interesting to see the specifics of what they publish, it is already apparent that there are certain areas particularly likely to be targeted.
Brexit as a catalyst for change
As with most policy areas in 2018, the repercussions of Brexit are animating new conversations about regulatory change. Interestingly, while most sectors are concerned with continued consistency with the EU after March 2019, the e-cigarette sector seems poised to veer in the opposite direction. The Government’s Tobacco Control Plan states that following the UK’s departure from the EU, “we will look to identify where we can sensibly deregulate without harming public health”. This was reinforced last month by Jeremy Hunt, Secretary of State for Health and Social Care, who said that, following Brexit, the Government was “committed to looking closely at the legislation on tobacco control, including on e-cigarettes”.
There is certainly support for new approaches to regulation amongst industry, think tanks, online vaping user groups, and even anti-smoking campaigners. Chris Snowdon, Head of Lifestyle Economics at the Institute of Economic Affairs, argued that “in any list of unnecessary and counter-productive EU regulation, the recent laws on e-cigarettes must be near the top… If we don’t repeal low hanging fruit like this after Brexit, we won’t repeal anything”.
The pros and cons of medicinal licensing
In addition to anticipating potential divergence from EU-wide legislation, there are a number of national changes that the industry will be seeking to influence. One of these is the Medicines and Healthcare products Regulatory Agency’s (MHRA) promotion of medicinal licensing of e-cigarettes, as opposed to the currently universally used notification scheme.
A medicinal licence has distinct advantages for companies, including greater size/dosage allowances, the ability to make health claims about the product in marketing material, and availability via prescription, which is zero-rated for VAT. Public Health England has also stated their own preference for companies to use the medicinal licensing route, as prescription from medical professionals would provide a stronger message on the safety of e-cigarettes.
And yet, at present, no companies have taken this route all the way through to market. There appear to be numerous reasons why this remains the case, with potentially the most problematic being the fact that medical licensing is proving too slow to keep up with the developments in the e-cigarette market. It can take up to 210 days for the MHRA to review a request for a licence, which means the entire process is likely to take over a year at the very least. This problem was summarised by Dr Ian Jones from Japan Tobacco Company when giving evidence to the House of Commons Science and Technology Committee: he highlighted that companies have to freeze development of a product for the duration of the licensing process, meaning that by that time authorisation is received, “other products have evolved so fast that your product is out of date”.
The MHRA has been working with trade associations to establish where they see hurdles, provide advice to individual companies, and deliver ‘myth-busting’ guidance. With pressure for change coming from all sides of the smoking debate, a new approach to medicinal licensing for vaping products may be on the cards. The MHRA will however be very aware of the risk of the unintended consequences of creating ‘fast track’ authorisations for one particular class of product.
Can e-cigarettes get around the tobacco advertising ban?
At present, advertisements for nicotine products that are not medicinally licensed are prohibited on broadcast media, on-demand television, newspapers, magazines, internet displays, emails and/or text message. In addition, promotion of any design or logo associated with a tobacco brand is also strictly forbidden. This has particular significance given that the makers of many e-cigarettes products are often existing tobacco companies.
This too is an area where regulation may begin to catch up with technological innovation. One of the stipulations made by the Advertising Standards Authority (ASA) is that advertisements must not contain health or medicinal claims. Yet a consultation held in 2017 on whether to relax this rule in some way and allow marketers to make health claims that they can empirically substantiate, has gained widespread support. Although the ASA’s evaluation of the consultation is still ongoing, it seems likely that changes will soon be adopted in relation to vaping products. Rob Morrison, Senior Regulatory Policy Executive at the ASA, confirmed that “the majority of voices, in numerical terms, are making the strong, forceful public health arguments” in favour of such a change.
New regulations to solve the problems of existing regulations
The issue of short fill e-liquids, or ‘short fills’, has also increasingly come onto the radar of regulators. Short fill technologies have substantially risen in popularity since the Tobacco Product Directive’s restrictions in 2016, leading users frustrated with the 2ml tank limit and 10ml bottle limit to find a way around the regulations.
Concerns stem primarily from the fact that the short fill liquids are themselves nicotine-free, and therefore go untested, with the idea being that the user can add their required strength of nicotine as a shot in the top of the bottle. With no testing scheme, these liquids can contain banned substances and thus pose unregulated health risks.
While at present the MHRA has no strict position on this, Dr Ian Hudson, Chief Executive of the regulatory authority, commented this month that they would have to “take a view at some point in the future on whether this is a growing trend that requires some action”. In addition to this, the UK Vaping Industry Association has been working to introduce a voluntary registration scheme as a form of market self-regulation.
Regional differences around the UK
In the UK local authorities are on the frontline of public health provision, where these technologies are believed to have a huge role to play in cutting down smoking. Programmes to promote e-cigarettes to smokers are decided upon by individual local authorities rather than by national policy.
Leicester City Council is one example of a local authority that has championed e-cigarettes in their smoking cessation services, reporting positive results that may encourage others to follow suit. Statistics from Cancer Research UK seem to show that this approach is gaining momentum, with 75% of local authorities promoting e-cigarettes as a method of stopping smoking.
However, the use of e-cigarettes for public health remains patchy due to the lack of coherent policy across the NHS. For example, a third of mental health institutions have banned them entirely. Former Minister of State for Care and Support at the Department of Health, Norman Lamb MP, summarised this current lack of consistency as “a bit of postcode lottery for people with mental ill health”, but as the health service is in practice devolved to regional bodies, there is no likelihood of a transition being imposed from top-down.
It is important to note that the movement on regulation is not all in one direction; the Welsh Assembly recently debated new restrictions on vaping in public places. While these restrictions were ultimately voted down in the Assembly, some politicians remain concerned about other issues, such as flavouring of vape products that may prove attractive to children.
Regulating and deregulating for innovative businesses
At a time when much of the political debate is focused on how to regulate innovative technology, such as search engines and social media, the overall direction of travel in the UK's heavily regulated tobacco market is one of deregulation in response to innovation.
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Written by Megan Stagman
Megan provides political analysis and monitoring clients with a focus on the data economy and the future of work.