Grand Forks targets e-cigs: New ordinance gets early approval from city committee

By Charly Haley, Grand Forks Herald
Electronic cigarettes may soon be more regulated in Grand Forks if a recommendation for a new city ordinance is approved by City Council next week.
An ordinance prohibiting possession of e-cigarettes by minors and prohibiting vending machines that sell e-cigarettes was proposed to the City Council Service/Safety Committee by council member Bret WeberTuesday. The committee voted unanimously to support the ordinance, which will go to the full City Council next week for final approval.
E-cigarettes are not technically a “tobacco product,” which is why they aren’t regulated under existing city ordinances, Weber said.
But they are a vehicle for nicotine in a vapor form, which is still damaging to health, he said.
According to Food and Drug Administration reports, e-cigarettes can increase nicotine addiction and may lead people to try regular cigarettes, which are known to cause disease.
The proposed Grand Forks ordinance states that e-cigarettes will have the same regulations as other tobacco products.
Haley Thorson, a Grand Forks Public Health nurse, said there are only two e-cigarette shops that she knows of in Grand Forks: SnG Vapor and Vapor Stars. Some convenience stores also sell simple e-cigarettes, she said.
A big part of the problem, Weber said, is that e-cigarettes are often marketed toward youths. “There are ‘Hello Kitty,’ e-cigarettes,” he said.
Members of the Red River High School Student Council and the Grand Forks City Youth Commission attended the Service/Safety Committee meeting to support Weber’s proposal of the ordinance.
E-cigarette use among youth in North Dakota has almost tripled from 2011 to 2013, according to a report provided by the Grand Forks Public Health Department. The trend is growing nationally as well, according to the report.
In Minnesota, it is illegal by state law for minors to buy e-cigarettes, Weber said. At least eight communities in North Dakota have passed or are currently discussing ordinances that regulate sales of e-cigarettes to minors, according to the Public Health report.
http://www.grandforksherald.com/content/grand-forks-targets-e-cigs-new-ordinance-gets-early-approval-city-committee

Health Insurance Surcharge Has Vapers Fuming

By  via GOOD MORNING AMERICA

Under the Affordable Care Act, insurance companies can charge smokers and other tobacco users up to 50 percent more than non-smokers for a health insurance policy. But where do e-smokers fit in?

E-cigarettes are battery-operated nicotine inhalers that consist of a rechargeable lithium battery, a cartridge called a cartomizer and an LED that lights up during each puff. Although they contain no tobacco, the U.S. Food and Drug Administration plans on regulating them like cigarettes and cigars. This, it turns out, is complicating things for insurance companies.

While the ACA allows insurance companies to charge higher premiums to smokers and other tobacco users, the definition of a “smoker” is unclear under the law.

One way insurance companies could deal with e-cigarettes is to lump them in with tobacco products – a move that would subject so-called vapers to the same higher premiums as cigarette smokers. The companies could also swing the other way and decide to cover the cost of e-cigarettes as a means to help people quit smoking, despite a lack of evidence that the devices work as well as a patch. Insurers could also choose to ignore e-cigs altogether.

”The Affordable Care Act does not specify e-cigarette use for purposes of cessation coverage or tobacco surcharge application,” the American Cancer Society said in a statement to ABC News. “The lack of clarity may allow health plans to try to add the surcharge for e-cigarettes.”

If and when the FDA regulation of e-cigarettes goes into effect, insurance companies could change any of their current policies to reflect the agency’s direction. In the meantime, most companies claim they have too little experience with the devices to have a position, according to an informal poll by the National Association of Health Underwriters.

Carrie McLean, director of customer care for the online health insurance brokerage eHealth, said some insurers are telling their agents to add a smoking surcharge for those who vape.

“If a consumer indicates they use e-cigarettes, the carriers are expecting them to be uprated just as if they are a smoker,” she said, noting that consumers aren’t actually asked about the type of tobacco products they use during the health insurance application process – just whether they use them at all.

America’s Health Insurance Plans, an association which represents most of the country’s large health insurance companies, recommends that agents ask about regular tobacco use in the last six months and the most recent use. However, if a consumer were to ask for clarification about whether or not e-cigarettes count as tobacco use, then an agent is obliged to add the surcharge, McLean said.

“The problem arises because most people fill out their applications online and, as of now, most applications don’t ask specifically about e-cigarettes,” McLean said. “Consumers are left to decide on their own whether or not they consider themselves a tobacco user.”

It’s an important question to settle, as the price differential can be significant.

For example, a plan for a 40-year-old non-smoker with a $35,000 income that costs $3,857 a year minus a $532 tax credit would rise to $5,254 for someone labeled a smoker, according to the Kaiser Family Foundation’s exchange subsidy calculator. In some cases, the rate increase might even be larger than the 50 percent increase the ACA allows because government tax credits only apply to the base premium and not the tobacco surcharge.

Not surprisingly, e-cigarette advocates are fired up about vaping being likened to smoking by insurance companies. Cynthia Cabrera, executive director of the e-cigarette industry organization Smoke Free Alternatives Trade Association, said that e-cigarettes and other vaping products are a healthier lifestyle choice than combustible tobacco cigarettes, and argued that it seems inconsistent to apply the same higher insurance rates to vapers.

“The SFATA does not agree with any policy that positions users of electronic cigarettes and other vapor products in the same category as smokers,” she said. “These products do not emit smoke and do not contain tobacco, tar or any of the many carcinogens known to exist in combustible cigarettes.”

But the phenomenon of vaping is so new that experts say there’s insufficient science to determine whether e-cigarettes really are a healthier alternative to traditional tobacco products.

Dr. Ravi Ram, the chief medical officer for Blue Shield of Northeastern New York, said that although New York has chosen to eliminate rate increases for e-smokers, he suspects most plans would place e-cigarettes on par with cigarettes in terms of their health risk.

“Until you have some long term data and some actuarial differences to health outcomes such as lung cancer, emphysema, heart disease and other conditions which are significantly impacted by smoking, and likely to be impacted by e-cigarettes as well, you have to rate them the same,” he said.

http://abcnews.go.com/Health/health-insurance-surcharge-vapers-fuming/story?id=23628060

 

House panel moves to block Navy proposal to ban tobacco sales on bases, ships

FoxNews.com
House lawmakers approved a measure this week that would protect tobacco sales on military bases and ships and effectively block the Navy’s plans to drop the products in a bid to get servicemembers to stop smoking.
The House Armed Services Committee added language to a fiscal 2015 defense authorization bill that bans defense officials from enacting “any new policy that would limit, restrict, or ban the sale of any legal consumer product category” on military installations, the Navy Times reported.
The Pentagon said last month that no final decision has been made about banning sales to troops, but Defense Secretary Chuck Hagel said he asked for a review to address the “astounding” health care costs associated with tobacco-related illness.
A March 14 Defense Department memo issued guidance to all service chiefs:
“Although we stopped distributing cigarettes to our Service members as part of their rations, we continue to permit, if not encourage, tobacco use. The prominence of tobacco products in retail outlets and permission for smoking breaks while on duty sustain the perception that we are not serious about reducing the use of tobacco.”
Rep. Duncan Hunter, R-Calif., who sponsored the amendment prohibiting the Navy’s plans, said the move amounts to a hand-holding of troops who are responsible adults and should be able to make their own life choices, the Navy Times reported.
“Just because you joined the service doesn’t mean you can’t live comfortably,” said Hunter, a Marine veteran of Iraq and Afghanistan. “If your goal is to make the military healthy, let’s outlaw war. That’s as unhealthy as you can get.”
The measure passed by a 53-9 vote on Wednesday, with some Democrats objecting to limits on the military’s efforts to promote health and fitness. In order for the regulation to become law, the  Senate would have to adopt the House measure.
Rep. Susan Davis, D-Calif., objected to the proposal, arguing that promoting good health is just as important as military readiness, The Washington Times reported.
“This is not telling people that they can’t use tobacco, clearly people can go across the street almost wherever they are and purchase that,” Davis said. “But we are sending a kind of double message, I think, by not saying that we recognize tobacco can cause damage, not only to a sailor, but also to their family, second hand smoke we know is a concern.”
The Navy Times reported that measure covers any product legal in the U.S. as of Jan. 1, including alcohol and sugary drinks. The measure does not cover marijuana.
Fox News’ Jennifer Griffin contributed to this report.
http://www.foxnews.com/politics/2014/05/09/house-panel-moves-to-block-navy-proposal-to-ban-tobacco-sales-on-bases-ships/

Should this be legal? Dickinson commissioners consider anti-hookah ordinance, but say more information is needed

By Nadya Faulx, The Dickinson Press

City Commission members are weighing options for a possible hookah bar in Dickinson, but the idea could be up in smoke before it even starts.
City Administrator Shawn Kessel told commissioners Monday that he has been getting requests for hookah bars to be built in town, but wanted to gauge members’ “desires as they relate to hookah bars.”
“Is that a business model you’d like to see in the community?” he asked.
An unnamed caller reached out to Kessel on Monday afternoon asking for information about how to open the city’s first hookah bar, where patrons could gather to smoke from the water pipes that originated in the Middle East but have become popular throughout the world — just not North Dakota.
“A hookah bar is an interesting term,” Kessel told the commission. “It goes back a long ways, and it has its roots in the Orient. And I had to look this up online, because I wasn’t exactly sure.”
The state’s first and only hookah bar, Dreas Hookah Lounge in Grand Forks, closed last month as a result of the 2012 ban on smoking in worksites and public spaces.
Any hookah bar in Dickinson would be able to serve only herbal products in lieu of the traditional shisha, or flavored tobacco.
Aside from the state smoking law, there are no other legal barriers to opening a hookah bar in the city.
“We can’t deny them,” Kessel said. “And if it’s in the interest of the City Commission to do so, I’m here to tell you that the city staff does not have that ability.”
The only way to put the kibosh on hookah would be to draft an ordinance to block the practice and hold a public hearing with input from community members.
“To get the process going, you either have to have an ordinance saying we’re going to allow these and the conditions we’re going to allow them on,” Mayor Dennis Johnson said Monday, “or you could draft an ordinance saying we’re not going to allow them, and then you get whole public comment and discussion.”
He added that he hasn’t “thought a whole lot about hookah bars.”
In an interview, Johnson said he “didn’t get the sense that anyone at the commission table knows a whole lot about the issue.”
He added: “We would rather get much better educated on it.”
Commission member Klayton Oltmanns said in an interview that there weren’t strong feelings among the commission either for or against a hookah bar, but that more information is needed before a decision is made.
“It is new to each of us as commissioners,” he said. “Just to get ahead of the game, we’re going to issue an ordinance. We’ll be able to gauge the community’s response — pro or con — and make a good informed decision based on what the community says.”
At least one community member would support the ban: Jennifer Schaeffer, tobacco prevention coordinator at Southwest District Health, said hookah smokers face numerous health risks, whether the pipes are packed with tobacco or herbs.
“Anytime you smoke something into your lungs, you’re putting your lungs and heart at risk,” she said. “We’re concerned about that.”
Hookah smoke contains nicotine, tar and carbon monoxide like cigarette smoke, and is at least as toxic, according to the Center for Disease Control.
Schaeffer said she would support the City Commission if it issued an ordinance banning the practice in Dickinson.
“As a health unit, as a tobacco prevention program, we wouldn’t be in support of having hookah bars,” she said.
But talks about the potential hookah bar are in their earliest stages, and Oltmanns said there is “still too little info” to take any definite stance yet.
City Attorney Matthew Kolling and city administration would first have to draft the ordinance, at which point it would go through a first reading and public comment. Oltmanns said the topic is expected to come up again in a June commission meeting.
“Any ordinance in its initial reading isn’t necessarily how it ends beyond that,” Oltmanns said, adding the city wants to hear a response from residents and businesses before it makes a decision.
http://www.thedickinsonpress.com/content/should-be-legal-dickinson-commissioners-consider-anti-hookah-ordinance-say-more-information

Forum editorial: Prohibit smoking in all parks

Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.
—–
All metro area communities, large and small, should follow the lead of Dilworth and Moorhead and ban smoking in public parks. Dilworth took the smart step last week. Moorhead parks have been smoke-free since 2011. The Fargo Park District has a limited ban that allows smoking 25 feet away from playgrounds. West Fargo allows smoking in parks.
Parks primarily are venues for families and children. Moreover, park officials champion healthy lifestyles. The sports activities that take place on park fields comport with fitness and health. Smoking should be anathema.
In addition to bans and partial bans in the metro, nearby cities that ban smoking in parks include Mayville, Kindred, Valley City, Cooperstown and Wahpeton, all in North Dakota. Dozens of Minnesota cities have bans in place.
While some smokers might see the closing off of more public spaces as a violation of their rights, that argument is nonsense. There remains a plethora of places where smokers can indulge their habit, as long as it does not threaten the health of others. The many voter-approved bans in place reflect recognition that smoking and secondhand smoke are health issues, not rights issues. Some smokers will debate that unassailable premise until they cough their lungs out, but as a matter of public policy the debate is over.
Therefore, the Fargo Park District should extend its limited ban to every square foot of park land, and West Fargo should ban smoking in every one of its beautiful, allegedly family-friendly parks.
http://www.inforum.com/event/article/id/433907/

E-Cigarette Makers Going After Youth, Report Finds

BY MAGGIE FOX, NBC News

E-cigarette makers may say they welcome regulation and don’t want to sell to teenage nonsmokers, but their advertising dollars paint a very different picture, according to a report released Thursday.

E-cigarette makers spent $39 million on ads from June through November 2013, much of it on programming targeting youth, the anti-tobacco organization Legacy found.

“Overall, these research findings indicate that, despite their publicly stated intentions, some e-cigarette companies are reaching youth with their advertising,” Legacy says in its report.

“Moreover, the only national brand owned by a major tobacco company, blu, is reaching a significant portion of young Americans with its advertising. The effects of this are apparent, with nearly all young people aware of these products and use among young people rising rapidly.”

Health officials from several major U.S. cities say that’s why federal regulators need to act. They can restrict sales and limit where people may smoke or “vape,” but they cannot restrict national ads.

“There are some areas where our hands are tied and that particularly is in marketing,” said New York City health commissioner Dr. Mary Travis Bassett.

“They need to do more to protect kids from the effects of TV,” added Los Angeles County health commissioner Dr. Jonathan Fielding.

The fear is a whole new generation of people will become addicted to nicotine before federal regulations can be written, let alone take hold, the health commissioners told a news conference. New York, Chicago, Boston and Los Angeles County are among the big city areas that have restricted sales and use of e-cigarettes.

Even some public health experts say e-cigarettes may be a useful alternative to burned tobacco cigarettes for smokers. But they also agree that it would be bad to encourage or even allow non-smoking children to become addicted to the nicotine in e-cigarettes.

Legacy was set up in 1999 as part of the Master Settlement Agreement when major tobacco companies agreed to pay more than $200 billion to states and territories. The states wanted some of the money to be used for an organization dedicated to studying and providing public education about the impact of tobacco.

Just last week, the U.S. Food and Drug Administration said it would seek to regulate e-cigarettes, because they contain nicotine, the addictive substance in tobacco. Most e-cigarette makers said they’d welcome some regulation.

Legacy did two studies looking at the marketing of e-cigarettes, and asking teens and young adults what they knew about them. It found e-cigarette TV ads reached 29.3 million teens and young adults from January through November 2013, including 58 percent of 12- to 17-year-olds.

Taken together, the two reports show e-cigarette makers using tactics that have long been banned for regular cigarettes, the report says.

E-cigarette makers dispute this. “The products are being advertised to adults,” said Cynthia Cabrera, executive director of the Smoke Free Alternatives Trade Association. “If children are watching during that time, it’s possible, but they are being marketed to adult consumers, to adult smokers.”

Public health experts say 90 percent of smokers start by the age of 20. They worry that e-cigarettes sold in flavors such as bubble gum and Gummi bear are targeted mainly to younger teens.

“While cigarette advertising is prohibited on television, it is currently fair game to use television to promote electronic cigarettes. Using broadcast and online advertising has allowed the e-cigarette industry to promote its products in a way that has broad reach and is largely unregulated,” Legacy says.

“Every day that industry is growing very, very rapidly,” LA’s Fielding said. “And you can be sure that big tobacco is going to wind up in the driver’s seat with respect to marketing. Don’t let them undo decades of efforts to de-glamorize smoking.”

http://www.nbcnews.com/health/kids-health/e-cigarette-makers-going-after-youth-report-finds-n94166

Dr. Nancy Snyderman: E-cigarette issue ‘is a big fight’

Today Show:  NBC News’ chief medical editor discusses what new FDA regulations could mean for e-cigarette consumers.

To view video:  http://www.today.com/video/today/55025322#55025308

Proposal would ban e-cigarette sales to minors, allow advertising

By: Reuters, INFORUM
WASHINGTON – The U.S. Food and Drug Administration proposed rules on Thursday that would ban the sale of e-cigarettes to anyone under 18, but would not restrict flavored products, online sales or advertising, which public health advocates say attract children.
The long-awaited proposal, which would subject the $2 billion industry to federal regulation for the first time, is not as restrictive as some companies had feared and will likely take years to become fully effective.
Bonnie Herzog, an analyst at Wells Fargo, said the proposal is “positive for industry.”
But public health advocates lamented the fact that the proposal does not take aim at e-cigarette advertising or sweetly-flavored products, which they say risk introducing a new generation of young people to conventional cigarettes when little is known about the long-term health impact of the electronic devices.
“It’s very disappointing because they don’t do anything to rein in the wild-west marketing that is targeting kids,” said Stanton Glantz, a professor at the Center of Tobacco Control Research and Education at the University of California, San Francisco.
FDA Commissioner Margaret Hamburg said at a briefing on Wednesday that the proposal represented the first “foundational” step toward broader restrictions if scientific evidence shows they are needed to protect public health.
That declaration worries some companies.
“The window is still open for a more draconian approach,” said Jason Healy, president of Lorillard Inc’s blu eCigs unit, which holds roughly 48 percent of the market. “I think the proposal shows a good science-based reaction here from the FDA, but there is a lot we have to go through during the public comment period.”
Lorillard, together with privately-held NJOY and Logic Technology account for an estimated 80 percent of the market. Other big tobacco companies, including Altria Group Inc and Reynolds American Inc, are also entering the market.
E-cigarette advocates welcomed the FDA’s light touch.
Dr. Michael Siegel, a professor of community health sciences at Boston University, said a ban on flavorings would have “devastated the industry, as the flavors are a key aspect of what makes these products competitive with tobacco cigarettes.”
Similarly, a ban on all e-cigarette advertising “would have given tobacco cigarettes an unfair advantage in the marketplace,” he said.
NO FREE SAMPLES
A law passed in 2009 gave the FDA authority to regulate cigarettes, smokeless tobacco and roll-your-own tobacco and stipulated the agency could extend its jurisdiction to other nicotine products after issuing a rule to that effect. E-cigarettes use battery-powered cartridges to produce a nicotine-laced inhalable vapor.
In the short term, the new rules would prohibit companies from distributing free e-cigarette samples, forbid vending machine sales except in adult-only venues and prohibit sales to minors.
Companies would also be required to warn consumers that nicotine is addictive, but no other health warnings would be required. The addiction warning would have to be added no later than two years after the rule is set and the e-cigarette companies would not be allowed to make health claims in any advertising.
The proposal is subject to a public-comment period of 75 days.
Vince Willmore, a spokesman for the Campaign for Tobacco Free Kids, said the proposal “by no means does everything we think needs to be done, but it starts the process. What is critical now is that they finalize this rule and then move quickly to fill the gaps.”
He said the FDA should aim to establish the rule within a year, but many are skeptical the agency will act that quickly.
“The reality of these things is that every step takes years,” said UCSF’s Glantz. “By not addressing the youth-directed marketing it means it won’t be addressed for a very long time.”
Some e-cigarette companies that sell primarily through convenience stores were surprised at the lack of restrictions on online sales, since it can be difficult to verify a customer’s age over the Internet.
“The Internet thing is very surprising to me,” said Miguel Martin, president of Logic Technology. “It reduces the visibility of the sales of the products and the type of products that the government has awareness of.”
The new rules would also require companies to submit new and existing products to the FDA for approval. They would have two years to submit applications from the time the rule goes into effect. Companies may continue selling their products and introducing new products pending the FDA’s review.
In the meantime, e-cigarette companies would be required to register with the FDA and list the ingredients in their products. They would not be required to adhere immediately to specific product or quality control standards. That could come later, Hamburg said.
THE “VAPING” INDUSTRY
E-cigarettes and other “vaping” devices generate roughly $2 billion a year in the United States, and some industry analysts expect their sales to outpace the $85 billion conventional-cigarette industry within a decade.
Advocates of e-cigarettes claim they are a safer alternative to conventional cigarettes, since they do not produce lung-destroying tar, though long-term safety data is thin.
The FDA’s proposal leaves many questions unanswered about how new products would be regulated over the long run. One key question relates to how products are approved.
Under current law, new tobacco products can be approved if they are “substantially equivalent” to a product that was on the market before Feb. 15, 2007. It is unclear whether any e-cigarettes were on sale before then, to be used as a benchmark.
Mitch Zeller, head of the FDA’s tobacco division, said at a briefing that the agency would be seeking more information during the public-comment period on whether the “substantial equivalence” pathway is even valid for e-cigarettes.
If it is not, e-cigarette companies would have to use a different process, which would require them to prove their products are appropriate for public health, a higher hurdle to clear.
Also up in the air is the regulatory fate of some cigars. The current proposal would include e-vaping products and other tobacco products, but premium cigars may be excluded.
The FDA said it would seek public comment on whether all cigars should be regulated equally. One option proposed by the agency is to regulate them all. The other is to define a category of premium cigars that would not be subject to the FDA’s authority.
Physicians said the possible exemption of premium cigars from regulation was troubling.
“Any exemption for any kind of tobacco product proven to cause lung and heart disease and cancer is unacceptable,” said Harold Wimmer, chief executive of the American Lung Association.
Cigar companies, backed by some members of Congress, had lobbied heavily for a regulatory carve-out for premium cigars. In a December 2013 letter to Hamburg and Sylvia Mathews Burwell, director of the White House’s Office of Management and Budget, 24 Republican lawmakers asked that premium cigars be exempt.
“As you know,” they wrote, “premium cigars are a niche product with an adult consumer base, much like fine wines. The majority of people who enjoy a cigar do so occasionally, often in social or celebratory settings.”
Under the proposed rule, premium cigars are considered those wrapped in whole tobacco leaf, made manually by combining the wrapper, filler and binder, have no characterizing flavor, have no filter, tip or non-tobacco mouthpiece and are relatively expensive.
http://www.inforum.com/event/article/id/432967/group/homepage/

FDA Moves to Regulate E-Cigarettes

By Krista Harju, KFYR-TV

FDA E-cig Regulations

The American Lung Association is calling it an important step forward for public health. The Food and Drug Administration’s Center for Tobacco Products issued a long-awaited proposal to regulate electronic cigarettes and other tobacco products.
Many tobacco smokers are making the switch to e-cigarettes. For some it’s about kicking the habit.
“After the first couple weeks, I don’t crave them as much. I still do, but I don’t think that will ever go away,” says smoker Shawn Deanna Barnes.
Some believe the smoking alternative is safer than traditional cigarettes. But the FDA isn’t ready to make that claim.
“They’ve analyzed three different e-cigarette cartridges and all three tested differently,” says Alison Harrington a respiratory therapist and certified tobacco treatment specialist.”With each puff there was one that had 26 micrograms of nicotine, and the other one had 43 micrograms of nicotine. And they were all labeled the same.”
Harrington says other carcinogens that weren’t mentioned on labels have been found, including diethylene glycol which is toxic to humans.
The proposed regulation would require manufacturers to register all products and ingredients with the FDA. And new products could only be marketed after an FDA review.
Barnes says she thinks it’s important to know what she’s ingesting.
“I don’t know if I’ll smoke them after I read whatever else is in them. We’ll see,” says Barnes.
The proposed rules also call for regulation of cigars, pipe tobacco, nicotine gels, water pipe tobacco and hookahs. Right now, only cigarettes and smokeless tobacco fall under the FDA’s regulatory authority.
The proposed regulation would also establish a nationwide minimum age for the legal purchase of tobacco. The age limit is expected to be at least 18, but individual states could choose to set it higher.
http://www.kfyrtv.com/story/25333937/fda-moves-to-regulate-e-cigarettes#.U1mtEbb4Lo8.facebook

Are Electronic Cigarettes A Public Good Or A Health Hazard?

BY MICHAEL BLANDING, Forbes

When electronic cigarettes first appeared a little over a decade ago, they were hailed by public health advocates-as well as some smokers-as a godsend: a tool to help smokers quit while mitigating the most harmful effects of tobacco. “The [e-cigarette] market is producing, at no cost to the taxpayer, an emerging triumph of public health,” one health advocate said.

Consisting of a small barrel-shaped design that mimics an actual cigarette, the devices vaporize a liquid nicotine solution, which is then inhaled without the tar and carcinogens found in smoke. Powered by a battery and controlled with a microchip, users can adjust the amount of nicotine they inhale, gradually weaning themselves off of their addiction if they choose.
“The value proposition of e-cigarettes is clear,” saysJohn A. Quelch, Charles Edward Wilson Professor of Business Administration at Harvard Business School. “They provide the dubious pleasure of nicotine without all the cancer-inducing toxins associated with tobacco.”
Very quickly, however, enthusiasm faded, when some public health advocates began worrying that the cure was worse than the disease.
The very fact users could control the amount of nicotine they ingested led to worry that e-cigarettes would cause smokers to take in more nicotine, rather than less. Even more worrisome, “eCigs” could provide a gateway for young people to start smoking tobacco cigarettes, or even lure ex-smokers back to the habit.

Electronic Cigarette Smoking(Photo credit: planetc1) 

This has created a dilemma for health regulators, says Quelch. Do they regulate e-cigarettes in order to decrease the number of new smokers who may pick up the habit, or do they apply a light hand in order to increase the number of existing smokers who will quit.
“Put crudely,” says Quelch, “how many nicotine addicts is it worth the risk of creating to have one tobacco smoker quit?”

That is one of the many dilemmas Quelch explores in the HBS case, E-Cigarettes: Marketing Versus Public Health, written with HBS Research Associate Margaret L. Rodriguez. It examines the consequences of the products as they have become more popular — and as the big tobacco companies have gotten in on the game. Quelch, who holds a joint appointment at HBS and Harvard School of Public Health, wrote the case for a new course debuting next year called “Consumers, Corporations, and Public Health,” which will enroll both MBA and MPH students to consider the intersections of business and health.
“One of the themes in the course is the tension that exists, quite understandably, between regulators and commercial interests,” says Quelch. “Most people are used to hearing about that in the context of financial regulation, but similar issues apply in other sectors of the economy including health care.”
In the case of electronic cigarettes, existing evidence indicates that they have led to a net decrease in smoking. Of the 43.8 million smokers in the United States in 2012, 3.5 million converted to eCigs; during the same period only 1.3 million eCig smokers converted to tobacco. That means a net decrease of cigarette smokers of 2.2 million, or 5%.
At the same time, 2.8 million nonsmokers converted to electronic smokes. But even that doesn’t tell the whole story, says Quelch, since it leaves out the number of smokers who would have taken up smoking tobacco if e-cigarettes didn’t exist, as well as the number of smokers who would have quit cold turkey without the availability of electronic products. “To really determine the public health impact of e-cigarettes requires a lot of sophisticated market research and analysis,” says Quelch.
A Smoking Market

Uncertainty over health data hasn’t hurt the product’s popularity. In 2013, electronic cigarettes tripled in sales in the U.S. to approximately $3 billion. (The overall tobacco retail market in the US is valued at around $100 billion.) Almost 10% of high school students have tried them, according to the Centers for Disease Control, and a growing percentage of middle school students are joining the parade. In 2012, Goldman Sachs declared electronic cigarettes one of the top 10 disruptive technologies to watch.
Like most disruptive technologies, electronic cigarettes were developed by small entrepreneurs with brand names like Logic eCig (founded 2010), Blu (2009) and NJOY (2006). By 2013, according to the case study, the e-cigarette category featured more than 200 brands and their growth was threatening sales of tobacco cigarettes.
“If I am a tobacco manufacturer seeing my sales cannibalized by e-cigarettes, I have two choices: develop my own e-cigarette brand or buy an e-cigarette company,” says Quelch.
Number three tobacco company Lorillard LO -2.47%was the first to blink, buying up Blu in 2012 for $135 million and aggressively pushing them at convenience store counters. “Distribution of Blu immediately increased by a factor of three,” says Quelch. Other top manufacturers Phillip Morris and Altria followed suit, acquiring their own brands and using their shelf-space clout to increase visibility of the alternative products.
The growing sales of electronic cigarettes also caught the attention of regulators. The products had been completely unregulated–they could be advertised on TV and sold to buyers of any age on the Internet. But once the major tobacco brands began acquiring e-cigarette makers and displaying those products alongside their mainstay cigarettes, regulators took particular notice.
Public health advocates and parents alike worried about the variety of flavors, including cotton candy, that might make “vapes” attractive to children. Some states and cities responded with restrictions on sales and advertising, and, in April, the Financial Times reported that the World Health Organization will call for e-cigarettes to be regulated just like tobacco cigarettes. The US Food and Drug Administration, under mounting pressure to act, plans to offer marketing and product regulations for electronic cigarettes in the near future.
Ironically, if regulation does go forward, it might help the major tobacco companies, by limiting the marketing playbook of the competitors that were cannibalizing sales of their products.
“Altria or Phillip Morris know how to deal with regulators,” says Quelch, “but with all those entrepreneurs coming out with flavors and advertising, they would no longer be able to get traction in their business.”

Tobacco Companies Take Control 
Quelch predicts the big three tobacco companies will gain control of the eCigs market and then undermarket their electronic products in order to retain market share for their more profitable tobacco cigarettes. “Cigarette companies will manage the marketing of e-cigarette brands to maximize profitability for their shareholders,” says Quelch. “Meaning they’ll be able to manipulate prices in order to control the speed with which tobacco users migrate to e-cigarette brands.”
That means that electronic cigarettes, which are now significantly cheaper on a smoke-per-smoke basis than heavily taxed tobacco competitors, will probably start climbing in price and eventually become equal to tobacco brands. That could create an even bigger windfall for Phillip Morris, Altria, and Lorillard. Even if eCigs are regulated like regular cigarettes, they probably won’t be taxed like regular cigarettes, since the tax is on tobacco, not nicotine (and doesn’t apply, for example, to nicotine gum or nicotine patches)-and any new taxes are a nonstarter these days in Congress.
By pricing electronic and tobacco cigarettes to sell similarly at retail, the tobacco companies could reap enormous profits, concludes Quelch-at the same time giving them cover against criticism by allowing them to point to “healthier alternatives” in their product portfolios.
When entrepreneurs first created e-cigarettes and marketed them as a way to quit smoking, they probably didn’t intend to eventually pad the bottom line of mainstream big tobacco companies. But playing out the scenario to the end, that is exactly what may happen-and all in the absence of any definitive data showing whether e-cigarettes are more or less harmful to public health than tobacco smokes.
By pointing out such dichotomies and unintended consequences, Quelch hopes he can motivate MBA students to think more deeply about the public health impacts of business decisions-as well as getting MPH students to think about the business forces that shape public health. Only then will decisions be made that properly balance the greatest good of the public with the ability for entrepreneurs to turn a profit.