Dr. Scott Gottlieb, the head of the Food and Drug Administration, has announced plans to reduce to non-addictive levels the level of nicotine in cigarettes sold in the United States. The hope is that without the chemical that produces the pleasure of smoking, these cigarettes will appeal to fewer people, and therefore fewer people will smoke.
It is a terrible idea for a variety of reasons, not the least of which is that it deprives adults of the choice to use tobacco as they see fit. But there are other unintended consequences to this policy that must be seriously considered, perhaps most importantly the effect on cigarette smuggling in the United Sates.
Cigarette Smuggling Today Is Domestic
There is a vibrant illegal cigarette smuggling market in the United Sates, but it is almost entirely domestic. The market is driven by the disparity in taxation from state to state. A typical operation would be for someone to buy cartons of cigarettes in Virginia for $5-$6 a pack and sell them in New York City for $8-$10 a pack, which is $5 less than they cost legally under New York’s tax regime. As long as the gap in taxation is wide enough, there is always room for the supplier to make a profit and the buyer to save money.
According to Eric Proshansky of the New York City Law Department, who has prosecuted illicit tobacco cases, illegal tobacco sales are not a major priority for law enforcement. One can see why: it is a relatively harmless crime, and though there are sometimes ties to organized crime, and even allegedly domestic terror cells, overall domestic smuggling doesn’t create any major immediate threats.
But another thing domestic smuggling operations do is close the market off to foreign competition. So long as actual brand-name cigarettes are available in some states at low prices, there is no practical reason to engage in international smuggling. If the FDA plan to render cigarettes ineffective goes through, all of that changes.
The Dangers of International Smuggling
Although international smuggling is not a major issue in the United Sates, it is in many parts of the world, including Western Europe. Both China and Russia have robust counterfeit and smuggled cigarette producers. These cigarettes, referred to in the industry as “duty not paid,” or DNP, products, can come with dangerous additives, as some are not produced under any regulatory system. They also dump billions of dollars into the international criminal and black markets, which terror organizations use.
In 2016 the fact checker PolitiFact looked into claims by Pennsylvania State Rep. Rick Saccone (yes, that Rick Saccone) that illegal cigarette sales in the United States are funding terror. PolitiFact found the claim mostly true. Thus far, those cases have been thankfully rare. In other parts of the world, such cases are extremely common. For the above-mentioned reasons that keep international smuggling from being profitable in the United Sates, we aren’t bleeding enormous amounts of money to terrorist organizations. If we make effective cigarettes illegal, it is almost certain that we will, and spend millions trying not to.
Staunching the flow of illegal cigarettes that results from this regulatory policy will require extraordinary resources from those who patrol our borders. If Gottleib hasn’t noticed, those people already have their hands full keeping out heroin, cocaine, smuggled human beings, and terrorists. How many resources does he want to pull from those efforts to track down cartons of Camels?
The FDA Is Contradicting Itself
Just last month Gottleib was railing against e-cigs on Twitter. In 2016 the FDA denied Swedish Match, a snus (oral tobacco delivery system) company, a designation called Modified Risk Tobacco Product, which allows a product to be marketed as a less harmful option to smoking. The FDA, which is considering another MRTP request from Philip Morris for the IQOS heat not burn product, has never approved the designation for any tobacco product.
At the same time the FDA argues informing people that alternative products are less harmful than smoking is too dangerous, they are enacting a policy in which a huge portion of those who will quit smoking will do so by switching to those very same products. The FDA has decided that instead of just using regulatory power and tax policy recommendations to help people choose to switch to non-combustible products, they must engage in an expensive, onerous, and dangerous regulatory regime that wipes out an entire industry with myriad effects down the retail line.
This is absolutely crazy. If the goal is to move people from combustible cigarettes to non-combustible alternatives, and according to the underlying research it is, then there are much better ways to do it. One of the world’s leading experts on the issue, Dr. Konstantinos Farsalinos, told me at a conference this fall that he thinks there should be no, or almost no, taxes on these alternatives,to encourage switching. Certainly it makes more sense to at least try that kind of approach before going nuclear and denying Americans the legal right to smoke cigarettes.