Regulation of Nicotine Products: Necessity and Challenges

Question: One of the topics discussed at the first Eurasian Nicotine Forum was the technical regulations of nicotine-containing products. Why is separate regulation necessary?

Answer: The main objective of this document is to establish requirements for new categories of products that manufacturers and countries can understand. Technical regulations are necessary to prevent unscrupulous actors in the market from artificially increasing nicotine levels or creating overly vibrant packaging. As such, we have always advocated for the creation of unified and understandable rules for the industry and regulatory bodies, including what constitutes new types of tobacco and what nicotine levels are acceptable.

For example, Russia has already established the maximum level of nicotine in products containing nicotine, while Kazakhstan has not set such parameters. Belarus has also established them, but to a slightly different extent.

Question: So, does that mean someone will have to change the domestic laws that have already been established if a single standard is adopted?

Answer: Of course, some adjustments are necessary. This is because these things are not only important for the country, but also for consumers. Take the example of Russia's steam electronic cigarettes today. The nicotine content and the way information is conveyed to consumers differ. Some write the percentage of nicotine levels, while others write the milligrams per milliliter of liquid. Consumers feel confused and often cannot understand what this means. Inspection agencies also face difficulties because consumption taxes are paid based on the amount of nicotine liquid. If this parameter is not registered on the packaging, tax authorities find it difficult to calculate the tax base.

Question: Have the opinions of industry stakeholders been taken into consideration when formulating technical regulations? What is the current status of the document?

Answer: The regulations for this program require our participation in open discussions during the initial phase and drafting period. In my view, this is the correct approach because technical regulations are the most important documents for production. It allows us to explain to legislators which parameters can be measured, which cannot, how to achieve this, and what standards are necessary for this purpose.

The initial draft of the regulation has been written. It is currently being reviewed and finalized in a working group and will soon be available for public discussion.

Question: Russia has relatively strict anti-tobacco laws today. What is your view on the prospects of Russian regulation of nicotine-containing products?

Answer: Compared to some countries, Russia does have rather strict regulations. However, it has already categorized nicotine-containing products as a separate category. In other words, a clear distinction has been made between them and regular cigarettes, which is significant. Conversely, nicotine-containing products are subject to all restrictions and prohibitions applicable to cigarettes, including advertising and trade issues.

Of course, we are more aligned and better able to understand the government's position, which is based on the level of risk associated with such products and the results of scientific research indicating that the risks of these products are still far lower than smoking. Among other considerations, the UK Public Health Agency has referenced British studies confirming that products containing nicotine pose only 5% of the harm posed by traditional cigarettes. Building on this, the country's regulations are being developed such that UK companies have more opportunities to communicate information to consumers about these products.

Question: How many people have switched from cigarettes to smokeless products?

Answer: As of the end of 2021, the number of consumers of new nicotine products has exceeded 18 million worldwide. By 2030, we plan to increase this number to 50 million consumers, as publicly announced to both the public and investors.

If we are talking about Russian consumers of nicotine products, there are approximately 37 million people, of which only 7 million use new tobacco products. Yes, the majority of them still prefer traditional cigarettes. Here, we are proud of the results of our brand Glo, which is representative in the realm of heated tobacco.

Question: Will you continue to invest in promoting traditional cigarettes?

Answer: The majority of our group's investments around the world belong to the new tobacco category.

When it comes to global investment, the majority of funds are being directed towards the development of new tobacco products. All investments made in the scientific sphere are aimed at creating smoke-free products. These investments should be used to encourage smokers to transition to these new tobacco products.

Learn how we are increasing our investments: in 2021, it was approximately £500 million, and in just the first six months of 2022, we have already invested over $1 billion in nicotine products.

Question: Russia is currently developing labeling standards for electronic cigarettes and tobacco pods. What are your thoughts on this plan? Will it help reduce illegal trafficking?

Answer: This is the correct move as new types of tobacco products are booming. The situation in the vapor electronic cigarette industry is particularly challenging, with a large number of small players, among whom there are often unscrupulous manufacturers who can exploit legal loopholes. A significant portion of this market exists in a gray area, where players do not pay consumption taxes or do not fully pay them. As a result, tax revenue from this category is quite limited, not exceeding 1 billion rubles. However, if the entire market is brought out of the shadows, according to experts, this figure could reach around 10 billion rubles.

Of course, we support the use of labeling as a step towards restoring order and discipline. This is especially important given its implementation in the heated tobacco sector. We believe that instead of prohibiting new types of tobacco and turning a blind eye to underground transactions, it is beneficial to introduce control measures and keep this sector within the view of the government.

Question: The manufacturing company claims that their nicotine-containing products have lower health risks, citing research that they commissioned. However, skeptics argue that because the research was initiated by the company, it may be biased and subjective. What is your opinion on this?

Firstly, I believe that any discussion related to the level of risk associated with a product is a positive development. It signifies that we are moving in the right direction. It is entirely normal that some participants may not agree with certain research findings. This is the advantage of a science-based legislative approach, as science is objective and always based on facts.

In our conclusion, we mentioned independent data from several countries, among other things. However, we must disclose that we also conducted our own research in the UK. We had four groups of participants: traditional smokers, those who completely switched to our glo tobacco heating system, those receiving nicotine replacement therapy, and a group of never smokers. We measured certain biomarkers in their bodies in the first stage after 180 days, and again in the second stage after 360 days. The results showed that switching to the tobacco heating system did reduce the risk of harmful health effects. Furthermore, these data were published in a scientific journal, indicating that they underwent independent review. All of this information is available to the public.

It would be ideal if regulatory measures for products were based on objective and independent research to determine the level of risk involved. Coordination with the Ministry of Health and experts is crucial in order to implement this approach. With this foundation, further independent studies can be conducted. I believe that the risks associated with new nicotine categories will be lower. This is mainly due to the fact that most toxic substances are formed when cigarettes are combusted. If this does not exist, we would greatly reduce harm to smokers and others.

The World Health Organization (WHO) has taken a critical stance on e-cigarettes. According to their report, e-cigarettes attract children and adolescents with their enticing aroma and flavors, without reporting the risks of smoking. In turn, the WHO stated that adolescents who have tried e-cigarettes are three times more likely to consume tobacco products in the future. What do you think of these findings?

I believe that the World Health Organization's final stance on this topic has not yet taken shape, as its various documents contain different, sometimes even contradictory information. For example, one report states that the new category of consumption tax should not deprive smokers of the opportunity to switch to such products.

Furthermore, one of the fundamental principles of the World Health Organization's Framework Convention on Tobacco Control is harm reduction. However, unfortunately, we have seen in recent years that this issue has become highly politicized. The role of new categories of nicotine-containing products in achieving harm reduction goals is not always objectively presented.

What are your predictions for the development of the tobacco market in Russia over the next few years? How do you perceive it?

There are several prevailing trends in the tobacco industry. One that is often discussed at forums is the shift from traditional cigarettes to newer categories. This trend will likely continue, though its pace will depend largely on regulations. Another trend is the growth of illegal trade. This has traditionally been a problem in the cigarette market, mainly due to cross-border smuggling and large price differentials. It was sparked by a rapid increase in Russian consumption taxes a few years ago, and has also led to a proliferation of counterfeit products in the EAEU territory. Recently, the government has been actively combating this issue and there are signs of progress. According to official data, about one billion cigarettes were withdrawn from the market in 2021. However, the total proportion of illicit tobacco products remains high.

Further measures need to be taken, including regular retail inspections and confiscation of illegal products, as well as imposing administrative fines and criminal penalties on large-scale illegal businesses.

The further development of the market will depend on the trends of these two factors. Generally speaking, it is predicted that the number of smokers will decrease. It is believed that if the reduction in the number of smokers is not achieved through an increase in the consumption of illegal cigarettes, but rather by redirecting smokers towards consuming nicotine products with fewer health risks, this would be preferable for everyone.

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