David R. Henderson  

The Ugly Ugly FDA's Cartel Enforcement

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E-cigarettes do not contain tobacco. They contain nicotine, a chemical derived from tobacco and other plants.

Plain English was never a deterrent, though, to regulators on an empire-expanding mission. The Food and Drug Administration this week rolled out new regulations on e-cigarettes based on a 2009 law giving the agency power over products that "contain tobacco."


This is from a first-rate editorial by Holman Jenkins in today's Wall Street Journal, "The FDA's Misguided Nicotine Crusade." There's not a wasted paragraph, and were I to quote the best paragraphs, I would be quoting the whole thing.

Here's one other key paragraph though:

E-cigarettes, let's remember, operate by heating a solution containing nicotine, rather than burning tobacco. These small operators are unlikely to afford the estimated million-dollar cost of submitting each and every existing product and product variation for retroactive consideration by the FDA, as required by the law. Their trade group, the Smoke-Free Alternatives Trade Association, estimates that 99% of existing products therefore will exit the market during the two-year phase-in of the prohibitory new rules.

Jenkins's article could easily have been titled, with no exaggeration, "The FDA's Nasty Pro-Tobacco Crusade."

It's hard for me to believe that a well-funded public interest firm--Institute for Justice, maybe--could not have a good case against this regulation. When the Congress gives the FDA power to regulate tobacco, and the FDA uses this power to regulate something that contains zero tobacco, one would think the case against the FDA would be slam-dunk.


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COMMENTS (12 to date)
James writes:

The case against the FDA would be a slam dunk if the law were taken to mean what it says but even then the the FDA would just be told to knock it off. That wouldn't solve the root problem: Officials face no penalty for making rules outside the scope of their delegated authority.

Has it ever happened that some legislator or regulator faced fines or prison for making laws or rules which were later found by a court to be beyond the scope of their previously delegated authority?

A writes:

Another disturbing aspect is that there are E-Cig specific areas of concern. We don't know if there are wattage thresholds where common base liquids (VG and PG) show adverse effects. We don't have good guidelines on wicking and coiling productions in terms of materials under a wide range of energy and duration of use conditions. There is low hanging fruit for regulators and researchers.

My ungenerous take on the clumsy "tobacco" semantics is that the previous generation of activists and regulators are trying to crowd out more relevant agents. Why update crusty skills when you can play bureaucratic games?

Blackbeard writes:

I am starting to think that the increasingly post-modern world we live in can best be understood in religious terms. Tobacco, for example, is evil, unclean, impure, and anything associated with tobacco, such as people or companies or e- cigarettes, acquire that impurity. Thus our protectors are quite right to protect us from such impurity legal niceties notwithstanding. We see the same logic at work with other ritually unclean substances such as CO2.

Brad D writes:

For once, I'd like to see coordinated civil disobedience by small operators. It seems they have little to lose, and the FDA couldn't surely go after all of them.

If you believe the FDA is wrong and you don't have the resources to comply with the new rules, then it seems like standing up against a bully agency is a viable option. Strength in numbers, right?

Milton Churchill writes:

In this case, it must be acknowledged, and it is certainly possible, that there are harmful health effects to users. Under the current structure of limited corporate liability, however, companies are encouraged to manufacture and distribute products without proper testing. Owners can risk very little capital relative to the potential legal liability of harming the users of their products. Under a regime of unlimited shareholder liability and management negligence, enforceable through a governmental or private adjudication system, it would behoove the providers of E-cigs to address any product safety concerns up front by doing plenty of research and determining any harmful side effects prior to distribution. Under this type of system, the need for the FDA, and all other "regulators" would be deemed superfluous. This, of course, would accrue an incredible savings of resources now re-directed from the private to the government sector, not to mention a vast improvement in quality and safety of the products available.

David R. Henderson writes:

@Milton Churchill,
Under the current structure of limited corporate liability, however, companies are encouraged to manufacture and distribute products without proper testing.
Not if customers know, as most seem to, that corporate liability is limited.

Milton Churchill writes:

@David R Henderson

If I am mugged, beaten and robbed while walking to work or jogging in an area of town that is known for having higher than average crime rates, does that limit the liability of the mugger?

David R. Henderson writes:

@Milton Churchill,
If I am mugged, beaten and robbed while walking to work or jogging in an area of town that is known for having higher than average crime rates, does that limit the liability of the mugger?
That’s irrelevant to this discussion--think about the key difference, Milton--but no.

Milton Churchill writes:

@David R Henderson

Why don't you clarify exactly what your position is and I would be happy to respond.

Peter Gerdes writes:

I'm not sure arguing that the e-cigs aren't "toboacco products" would be helpgul.

Remember, the FDA generally has power to regulate foods and drugs. The FDA previously tried to regulate cigarettes and other tobacco products but the Supreme court ruled in FDA v. Brown & Williamson Tobacco Corp that the general grant of regulatory authority over drugs given to the FDA didn't include toboacco products. So quite possibly if e-cigs weren't a tobacco product they would be subject to even more regulation.

Indeed, this press release seems to strongly suggest that the e-cig lobby had to sue in order to claim the status of a tobacco product to avoid even more encompassing regulatory oversight as a drug.

So yes, it appears this issue has been extensively litigated and (while it seems like a bad idea) the FDA is probably on pretty firm legal ground.

Roxie Rorapaugh Lovell writes:

E-cigs do introduce users to a very addictive substance. One wonders if the price goes up for e-cigs, how many users would start smoking because of their new addiction. These products are marketed to young people, I know my 18 year old niece, who is not the most savvy young person, was proud of herself for shifting to 'safe' e-cigarette instead of smoking. But I wonder, at her age wouldn't it be better if she concentrated on not being addicted to nicotine at all?

One also wonders if all of those e-cigs are safe, burning some mysterious fluid in a metal tube and breathing the results does seem dangerous. Why not let the FDA regulate this new market closely, so that it does not get out of hand. Haven't we learned from the actions of the tobacco industry that you can not trust the sellers of such an addictive substance to protect their customers?

David R. Henderson writes:

@Milton Churchill,
Why don't you clarify exactly what your position is and I would be happy to respond.
Whenever I’m tempted to give the answer, I remember the guidance I was given when I first started blogging for Econlog: this is an economics education site. So, just as I don’t always answer people in class by telling them an important distinction rather than drawing it out of them, the same here. So back to my question: do you see an important difference between a mugging and a voluntary transaction?

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