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Everything you need to know about the FCTC COP8 junket

COP8

Understanding the FCTC Conference of the Parties.

The WHO Framework Convention on Tobacco Control’s (FCTC’s) 8th “Conference of the Parties” (COP8) gets underway on October 1. It is a bizarre meeting whose format results from FCTC technically being an international treaty. Thus, it theoretically requires serious formal meetings of national officials who have the authority to negotiate and make commitments on behalf of their governments. In reality, the idea of treating FCTC’s deluge of position statements and vague policy recommendations as the law of the land, as would be the case with a proper treaty, is laughable. Functionally FCTC is really just an overfunded special-interest lobbying organization, and a rather dysfunctional one. The COPs are exactly what you might expect based on that: gabfests in which delegations of unserious people (few of whom could actually commit their governments to anything) hold a cheerleading session and enshrine their flights-of-fancy in “official international treaty” documents.

 

The COPs are notorious for their paranoid exclusionary policies, including banning of reporters and other observers from many of their sessions. Consumers have no seat at the table, let alone industry, which FCTC declares itself to be diametric opposed to (and as a result, ironically grants industry control over their actions). Perhaps most notoriously, the international law-enforcement agency, Interpol, which plays a major role in fighting cigarette smuggling, was denied observer status because they engage in the obvious tactic of cooperating with companies that also work to stop smuggling. As much as these exclusions arouse ire, they would actually make perfect sense if FCTC were a proper treaty. Trade treaties are negotiated by states (via empowered serious officials who speak for their government, of course, not a gaggle of loons), without any direct participation by the stakeholders, and some steps in those negotiations are not possible without confidentiality. Military treaty negotiations are even more secretive, and ISIS and the Taliban are obviously not allowed to observe the meetings.

 

Paper policemen.

The problem is that FCTC is a treaty in name only, and the COPs do not resemble negotiations about a treaty. They feel like what they really are: political rallies. When a political rally excludes the press and stakeholder observers, we immediately suspect that they are up to something nefarious, which is certainly true in this case. Moreover, WHO’s rhetoric about why FCTC exists is that the “treaty” is designed to improve population health. That goal would be best served by including the actual stakeholders (consumers and industry), rather than having a group of non-stakeholders engage in uninformed discussions about top-down approaches. But health has become a mere pretense for the FCTC, and this was already true before the “treaty implementation”.

 

Instead of having a nuanced and complicated humanitarian goal, like improving health, the participants live in a fantasy world in which they are protagonists in a simplistic modern-style fairy-tale (think: Star Wars). They are at war against evil, facing an a enemy (a fictitious monolithic construct they call The Industry) with no discernible motivation other than to do evil. This means there is no room for mutually beneficial arrangements and no possible strategy other than total war (see above link for more of my analysis on that point). As a result, they act as if COP chattering sessions are a secret military conference, not realizing that it is they who are playing the role of The Empire, the Taliban, or ISIS (which, incidentally, was praised by some people who will be at COP8 for its anti-tobacco policies).

 

Has it ever been about health?

If FCTC were really about health, they would embrace low-risk alternatives to smoking. As anyone familiar with tobacco control knows, they do not. FCTC documents devote at least as much attention to attacking low-risk products as they do cigarettes. Much of the rhetoric targeting low risk products these days is about flavors and other features that supposedly attract young never-smokers. One might have some optimism about what COP8 will say about heat-not-burn based on this. HnB products are plain-old-cigarette flavored, are not sleek and sexy, and their use is not much easier to conceal from parents and teachers than regular cigarettes. They seem like the dream product for someone who genuinely wants to help smokers lower their risks without attracting many new young users.

 

The problem is that the focus on flavors and such is mostly just hollow rhetoric. A large portion of participants at COP8 are anti-tobacco extremists, a term I coined as follows: If someone had the choice between magically eliminating the harm from tobacco products, such that people could still enjoy all the benefits without health risk, or magically eliminating all tobacco products from existence, they would choose the latter. A substantial fraction of tobacco controllers would prefer to deny people the pleasure of tobacco use, regardless of whether there is health risk. Combine this with the fairytale opposition to “The Industry” (HnB being entirely a product of that great evil empire, “Big Tobacco”), and there is little hope for good news.

 

A few good men (or women.)

Of course, there will be non-extremists at COP8. There will be participants who really care about health, and even a few who actually care about people’s happiness. There will be those who understand how the world really works and recognize that their policies need to be realistic and will be useful only if there is stakeholder buy-in. But here is where the dysfunctional governance structure of FCTC comes into play. A real treaty negotiation would offer some possibility that the humanitarians and realists would prevail. Indeed, if delegations were comprised of real diplomats and other serious officials, there would at least be a bias in favor of realism. But instead the COPs function more like a student organization with a “there are no bad ideas” policy. It is a recipe for kakocracy, with the most extreme crazy people defining the agenda and policy positions. It might be that a majority of the “voting delegates” (again, since none of this is genuine public policy, neither membership nor voting really matters much) might think an extremist proposal is unrealistic or even loony, but they will not bother to vote against it, let alone speak out. What would be the point? In addition, they are (realistically) worried about being excommunicated from the club and losing access to the endless gravy train if they oppose extremist positions. Those with enough integrity to resist that pressure have already been excommunicated.

 

Anti-everything.

Thus, it is a safe bet that the “official” statements coming out of COP8 will be anti-HnB, anti-vape, and anti-snus. They will also find a little time to be anti-smoking, though worrying about smoking is just so 2005. Less snarkily, there is really not much for them to say about smoking that they have not already said. If FCTC were really a treaty, or even a policy analysis think tank, there would be a lot new to say about anti-smoking policies, particularly analyzing the actual nuts-and-bolts details. But FCTC does not do that. They offer flyover-level statements about what policies member states should implement, but without operationalizable details or program evaluation to assess whether they work (spoiler: almost none of them have any apparent effect).

 

Thinking again of a student-type organization, many of us can recall an experience from our youth of creating an organization and having twenty people show up and enthusiastically debate goals, philosophy, and language for weeks. After that is finished and it is time to start on practical tasks, only three of them ever show to do any real work. That is not a perfect analogy for the COPs (everyone goes home and does something to keep their lavish salaries flowing), but it is a pretty good metaphor (what they do is usually the functional equivalent of not showing up until the next political rally).

 

That is actually good news. There is a good chance that COP8 will issue some extremist condemnation of HnB, but this will be almost entirely cheap talk that has little impact. In only those few countries where WHO basically controls the health ministries (e.g., India), HnB might get banned as a result of a COP8 statement. In a few others where the loons have unfettered control independent of WHO influence (e.g., Australia, Finland), the same might happen, but it will not be because of COP8. The U.S. is a wild-card due to the unfettered power and arbitrary behavior of the FDA, but is not going to be influenced by FCTC. For most of the world’s countries, however, realism and humanity will probably prevail over COP8 statements, despite the signatures on the FCTC “treaty”.

 


 

Carl V Phillips PhD is a regular contributor on Heat Not Burn UK.

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Bad news: FCTC will declare war on heat not burn

FCTC

Bad news: FCTC will declare war on heat-not-burn (they just haven’t gotten organized yet.)

by Carl V Phillips, PhD.

The World Health Organization’s Framework Convention on Tobacco Control (WHO’s FCTC) is the most influential tobacco control enterprise in the world. Consumers in rich Western countries may not often notice FCTC’s impact because their dominant domestic tobacco control, such as the FDA in the US, are large and powerful enough to set their own agenda. But even in the West, FCTC’s agenda creates marching orders that a lot of tobacco control organizations follow. Thus, all heat-not-burn consumers should feel some trepidation about FCTC slowly getting organized to attack them. Their next attempt to attack heat not burn will be at the upcoming eighth session of the Conference of the Parties (better known as COP8) taking place in Geneva, Switzerland from 1st to 6th October 2018.

That “slowly” is the good news here. FCTC is a morass cheap-talk meetings, position statements, and bureaucracy (in the pejorative sense of the term). In theory it is an international treaty, but in practice it is a reactionary collection of people who would rather complain and make excuses for their failures than actually do the hard work needed to accomplish their goals.

The bad news is also embedded in that characterization, in “reactionary” and “their goals.” As I previously explored in detail, tobacco control in general, and FCTC in particular, is primarily concerned not about affecting consumers, let alone helping them, but with hurting what they call “the industry.” This mythical monolithic actor includes everyone who sells tobacco products, and if convenient for them, is expanded to include any consumer advocate or anyone else that questions their diktats. FCTC officially claims their goal is improving health, but this simply is not true, as evidenced by their active opposition to promoting the substitution of low-risk products for cigarettes.

They do not even recommend that policy interventions focus on cigarettes and other high-risk products. Instead, they explicitly insist that the same effort be devoted to discouraging all product use, regardless of risk. For example, they explicitly state that tax rates be the same on all products. While this is technically nonsense (what tax rate on a tin of snus or bottle of e-liquid is “the same” as a given tax on a pack of cigarettes?), the spirit of it is a clear lack of concern about health. One of the reasons so many Japanese switched to heat-not-burn is its favorable tax treatment (which might end).

FCTC declares their goals are diametrically opposed to those of industry, and spend as much energy focusing on attacking industry as on all anti-smoking policies combined. In some sense this is good news, because it slows them down a lot. But it makes them entirely reactionary, defining their policies in terms of industry actions: Whatever “the industry” tries to do, FCTC tries to interfere with. This is especially true for the major tobacco companies, which is to say, the companies that have introduced heat-not-burn devices. It does not matter to FCTC that people, not companies, want and use heat-not-burn; in their mind, attacking heat-not-burn use is attacking PMI and BAT. Consumers are an afterthought for them, at best.

One might hope that FCTC’s relative silence suggests they are not entirely opposed to a low-risk product that replaced almost 20% of the smoking in Japan and has made impressive inroads in other countries. But keep in mind that they did not get around to seriously attacking e-cigarettes until the last couple of years. They are slow, not flexible.

Amusingly, some of FCTC’s most emphatic policy recommendations focus on setting up research centers, what someone might call spy agencies, devoted to reporting on industry activities in a particular country or region. FCTC calls this “monitoring,” and the goal is to strangle innovations in their crib and be ready to “respond to myths created by the tobacco industry” (by which they mean “contradict anything said by industry, regardless of whether it is true or not”). The obvious subtext is “we blew it on e-cigarettes, and are only now managing to trick people into believing they are dangerous, so we have to get ahead of the next innovation.”

Of course, they already failed to do that with heat-not-burn. These are not good spy agencies. Their expensive monitoring efforts would have been more effective if they just had on staffer whose job it was to read Twitter.

Still, whatever industry wants to sell, FCTC will want to stop, and they will probably get organized about heat-not-burn over the next year. Their catch-up playbook is easy to predict based on what happened with e-cigarettes. It includes pressuring countries where the products are not yet popular to preemptively ban them, spreading disinformation about risks from the products, and demanding that all anti-cigarette efforts be expanded to cover the new product. Indeed, they will probably push for anti-cigarette efforts to be redirected to focus more on the low-risk product than on smoking.

The only policy area in which the FCTC agenda differentiates among tobacco products is smoking place bans, because the ostensible goal is trying to protect people from environmental smoke (never mind that their policies do not really protect people). They will inevitably lobby governments to include heat-not-burn products in all smoking place bans, even those that do not cover e-cigarettes.

To finish on a more optimistic note, regulators in many rich countries are much friendlier with big corporations than with their smaller competitors. FCTC hates PMI and BAT far more than they hate the independent vapor sector (though they are quite happy to destroy the latter also). US FDA, by contrast, has an institutional preference for dealing with big companies who can navigate the agency’s kafkaesque procedures. They would prefer to eliminate small vapor product companies (and are on a path to do so) and deal only with the majors.

FDA recently approved the sale of BAT’s current Eclipse heat-not-burn products, based on them being “substantially equivalent” to long-extant, though barely noticed, RJR products (as of last year, RJR is a wholly-owned subsidiary of BAT). They did not have to do this, and have denied “substantial equivalence” applications by smaller companies for reasons that could have been used in this case.

On the other hand, FDA is still sitting on PMI’s application to sell iQOS as a “modified risk tobacco product,” a more onerous approval process than “substantial equivalence.” They are already in violation of the legal deadline for responding to the application, and anything could happen. But the Eclipse approvals bode well. Positive outcomes can be expected in rich countries with self-confident regulators (and thus ignore FCTC pressure) who have a cozy relationship with big business. Unfortunately, most of the world’s smokers have little protection from the FCTC.


As passionate as we are about reduced risk products Heat Not Burn UK will campaign strongly for your own personal right to choose when it comes to harm reduction, as we believe the more options out there the better.

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What growth path can we expect for heat-not-burn in new markets?

Growth

The explosive growth of heat-not-burn products in Japan and Korea, which has taken a huge chunk out of the market for traditional cigarettes, has everyone wondering where else we might see that happen. No one knows the answer for sure, of course, but there are a few patterns that seem fairly safe to predict.

 

Modeling work I did about the uptake of e-cigarettes a few years ago (example) suggests that the uptake of a low-risk tobacco product will have two distinct periods of rapid growth. The first is caused by pent-up demand. Before the product was introduced, there were people who wanted it, though they did not know this yet, of course. As soon as it was introduced, and knowledge about it became widespread, they started buying it. This causes an initial uptick in consumption rather than steady growth along the lines of “X new consumers per week, every week, for a year.”

 

Of course, that increase might not stick. Japan Tobacco introduced an alternative product, Zero Style Mint, in 2010 which was superficially like an e-cigarette or heat-not-burn device. However it basically just consisted of inhaling room-temperature air through a tube past some processed tobacco. This delivered neither enough nicotine nor a sufficiently smoking-like experience to be appealing to smokers. Sales spiked (pent-up demand for an alternative to smoking) and then crashed (almost no one actually liked it). Heat-not-burn has cleared that hurdle. Lots of smokers in Japan and elsewhere really like it.

 

The perfect low-risk substitute for many smokers would be something that was exactly like a cigarette in all ways (aesthetics, appearance and other factors that contribute to cultural acceptability, delivery of nicotine and other psychoactive chemicals, price) except that it posed little health risk, and as a possible added bonus did not make such a mess. Heat-not-burn checks most of those boxes.

 

Of course some smokers actively embrace contrasts with cigarettes, such as the variety of flavors available for e-cigarettes. Some are not be willing to accept any variation on their beloved cigarettes in pursuit of lower risk. But for many, heat-not-burn is close enough (in terms of what they want) and enough lower risk to make that worthwhile.

 

After the initial spike and after the acceptability hurdle is cleared, we can expect a period of slower growth until a particular critical mass of consumers is reached. My modeling was built around the assumption (correct, I still believe) that the “cultural acceptability” hurdle is one of the largest. Someone’s culture, in this case, is a combination of the people who influence him the most (relatives, friends, patrons of the same pubs) and overall popularity in whatever he considers “his” population to be (everyone in the country, people in the region, people in his socioeconomic class). If someone has no friends who use a product and only a tiny portion of the population does, it takes greater determination and confidence for him to make a switch, and he might not even know about the product. If the new product seems just as normal as regular smoking in his culture, acceptability and knowledge are no longer barriers.

 

My modeling suggested that for almost any parameterization (i.e., input assumptions about the distribution of preferences and how people interact) there would come a point when slow growth hit a critical mass. The next few people who switched would be enough to raise the cultural acceptability enough to ensure that even more people quickly switched, and so on. This would feed-forward, creating a rapid rise until most of those who have not switched really do not want to.

 

I did this in the context of e-cigarettes, which had a rather larger cultural acceptability and knowledge hurdle than heat-not-burn. The better early generation products were sufficiently strange and challenging that the pent-up demand spike was modest. The easiest cigarette-like product were not very satisfying, so suffered the Zero Style Mint problem. For almost all smokers, this was not the alternative they were looking for, but just did not have yet. The second phase of growth in those models was much greater, as it seemed to be in real-life where vaping really took hold (particularly England).

 

Heat-not-burn will probably not play out the same way. The first growth phase ought to be a lot bigger for reasons already noted. That, however, means that it will comprise a larger portion of the total potential market, reducing the potential size of the second fast growth phase before everyone who is a good candidate for switching has switched.

 

So, how many is that? And what happens after the second period of rapid growth? Will it be indefinite continuing inroads into the smoking market, or a hard ceiling?

 

That depends. Indeed, that is the answer to every other quantitative question you might be asking here (e.g., How big is each period of high growth? How long between the various phases?) Unfortunately, to answer any of those requires having great precision in model inputs. It is fairly clear that those modeling the market for heat-not-burn have no idea, as evidenced by the irrational spike in PMI’s market capitalization due to the iQOS’s early success in Japan, followed by a crash when investors discovered that the initial growth phase does not continue forever (a bit more about that here).

 

Switching patterns can vary wildly. For example, it took decades before smokers Norway, which shares a great deal of cultural influence with Sweden, started to switch to snus in droves. Why the delay? Snus has been popular and mainstream in Sweden for almost half a century and has long been more popular than smoking. But Norway only saw a major shift a few years ago. Meanwhile, Finland and Denmark, where the influence might acted sooner, were hobbled by the European Union ban on snus (Sweden has an exemption and Norway is not in the EU), which is one of a whole different set of policy variables.

 

Still, it seems safe to draw a few conclusions. Japan was probably the best-case-scenario for pent-up demand for heat-not-burn. Smoking is popular among relatively well-educated and well-off people who are strong candidates for switching. Adding a bit of tech gadgetry to a stick is not exactly going to be seen as odd in such a tech-forward population. Meanwhile, e-cigarettes are banned and snus was always a cultural non-starter. In a population where e-cigarettes have already grown in popularity there is less pent-up demand. Some vapers might switch, of course, but most have settled in to what they do. Thus, we will probably not see as bit an initial growth phase for heat-not-burn sales in new markets.

 

However, it seems likely that there is a much higher ceiling for uptake compared to e-cigarettes, because heat-not-burn better checks all of the boxes. This is not based on any modeling, but rather is the type of observation that is needed as an input into the modeling. It is possible that a large fraction of smokers in some countries could switch over the course of five or ten years.

 

However, both heat-not-burn and e-cigarettes fail to check one of the boxes in most of the world: These tech products are only price competitive because of the high prices for cigarettes in rich countries (which include high taxes, which have usually been lower for low-risk products in markets where they took off). Cigarettes are a simple product whose price reflects the local cost-of-living like food prices do, and the same is true for smokeless tobacco. But high tech imports will have prices that reflect their higher real resource costs and the higher costs of doing business where they are made. Thus, the idea of migrating more than a small fraction of the world’s smokers to heat-not-burn seems like fantasy for the foreseeable future.