The regulatory backlash against vaping brand Juul in the United States has directly impacted the broader tobacco sector, with merger talks between Philip Morris International and Altria collapsing in the wake of a slew of e-cigarette-linked deaths which have undercut one of the industry’s selling points: that its products represent a safer alternative to traditional cigarettes.
The Trump administration has vowed to remove all flavoured e-cigarettes from store shelves in response to a rapid rise in teen consumption: it’s estimated that use among this age group has doubled in the last two years, with federal data suggesting that more than a quarter of high school students have tried an e-cigarette. US health officials are also investigating a spate of serious lung illnesses as well as nine deaths that have been linked to vaping. Market leader Juul announced in late October they would suspend the sale of their flavoured pods while the regulators assess their safety.
Tobacco giant Altria Group Inc owns a 35 percent stake in Juul Labs. But with the brand now facing a US ban on some of its products, PMI and Altria have ended their $187 billion merger talks, saying they have switched their focus to the joint launch of tobacco-heating product iQOS.
Tobacco goes hand-in-hand with vaping
The fact that Altria owns such a significant holding in Juul also demonstrates the deep ties between traditional and supposedly ‘alternative’ smoking products. The e-cigarette was originally seen as the smart, low-risk option for persistent smokers, with Juul’s presenting it as a trendy San Francisco start-up apparently a million miles removed from the corporate face of Big Tobacco. And yet, as merger rumours swirled and the popularity of vaping seemed to re-cast e-cigarettes in the role of potential saviour of the tobacco industry, the company became increasingly allied to the industry it set out to subvert.
For instance, despite framing itself as part of a more enlightened industry, Juul has already demonstrated its willingness to employ strategies from the Big Tobacco playbook by lobbying Washington for pre-emptive measures designed to prevent the introduction of more stringent civic e-cigarette controls. By taking power away from individual cities and placing it instead into the hands of state legislatures – as with the recent ‘Tobacco 21 Law’ in Arkansas – pre-emption prevents the introduction of harsher e-cigarette regulations: good news if you’re looking to circumvent local campaigns at grassroots level.
Ultimately, Juul was embraced by traditional tobacco makers as the answer to flipping the long-term decline in smoking habits. In fact, forecasts that e-cigarettes would maintain annual growth rates of between 15 and 20 percent persuaded Altria – maker of Marlboro cigarettes in the US – to invest $13 billion in the company last year, with the aim of pushing a brand which already enjoyed a 70 percent stake of the US vaping market. No wonder that Trump’s ban on flavoured vaping – which represents 80 percent of Juul’s business – swiftly nixed the planned Altria/PMI deal.
A smoking gun?
While some sectors of the healthcare community were already aware of the potential dangers of vaping – a recent global report by the WHO stresses that the health impact of these products has not been fully established – others, like the UK’s NHS, have been overenthusiastic in embracing e-cigarettes as an avenue for so-called ‘harm reduction’, possibly supporting misguided general thinking that e-cigarettes are safe.
In a recent review, Public Health England – a body similar to US agency CDC – suggested that vaping was 95 percent less dangerous than smoking, while a British anti-tobacco charity even called for e-cigarettes to be provided free to smokers trying to quit. In the US, public health officials have been less keen to regulate e-cigarettes, with the explosion in teen vaping causing particular alarm. Importantly, the WHO has found that, far from being used as a way of weaning smokers off cigarettes, e-cigarettes are often consumed alongside them, ‘with little to no beneficial impact on health risk and effects’.
Playing into the hands of Big Tobacco
This willingness to reserve judgement on the dangers of vaping speaks to a wider trend in Europe, where governments and the EU have been too keen to give the tobacco industry the benefit of the doubt. Europe’s approach to WHO-mandated track-and-trace systems, for example, has been to hand over key elements to entities linked to the tobacco industry, violating the spirit of the WHO’s treaties for tobacco control.
The EU’s T&T system has attracted widespread criticism, with MEPs claiming that WHO protocol provisions specifically designed to exclude tobacco industry involvement in the system are being breached by entrusting key processes to Big Tobacco. Tobacco industry partners have been involved with the implementation of industry traceability systems over the years, most notably Codentify, which was created by PMI and later licensed—at no cost—to its three main competitors.
While PMI claims the system is completely distinct from the tobacco industry after it was spun off to supposedly independent company Inexto, the WHO has confirmed that the system still simply isn’t compliant with its regulations. And, with the Commission’s December 2018 decision to forego a competitive tender and instead directly appoint Dentsu– a business with close ties to Japan’s tobacco industry – to manage the EU system’s data storage, the objectivity of the EU’s T&T implementation hasn’t been improved. The Commission may not have had much choice but to pick Dentsu—despite the fact that it had acquired Codentify implementor Blue Infinity—given that the other potential competitor, Atos/Worldline, had also helped implement Codentify and had already been directly selected by the tobacco industry for data storage and anti-tampering devices.
Having already ceded ground to the tobacco industry on critical regulatory issues, will European governments now allow the e-cigarette industry to write its own rules? By the time Europe experiences its own ‘vaping sickness’, it may well be a case of too little, too late.