CASAA’s Comment to OIRA Highlights Deeming Regulation’s Paperwork Burden

Editor’s Note: CASAA’s comments highlight a crucial aspect of the FDA’s deeming proprosal, the regulation’s inordinate burden on small American companies.

From: Tobacco Today

CASAA’s Comment to OMB/OIRA regarding Paperwork Reduction Act and FDA Deeming Regulation
To:      Office of Information and Regulatory Affairs
From:  Carl V Phillips, PhD
          Scientific Director
          The Consumer Advocates for Smoke-free Alternatives Association (CASAA)

26 May 2014
Re: The Food and Drug Administration Deems Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Regulations Restricting the Sale and Distribution of Tobacco Products and Required Warnings for Tobacco Product Packages and Advertisements.
          I am writing on behalf of the Consumer Advocates for Smoke-free Alternatives Association (CASAA) to comment on issues stemming from the FDA’s proposed deeming regulation of e-cigarettes and other products as tobacco products that are related to the Paperwork Reduction Act (PRA).  CASAA will comment later on other aspects of the proposed regulation. 
Imposing paperwork costs that are so great that they cannot possibly be complied with does not create zero paperwork cost.  And yet this is exactly what FDA is claiming.  The reported cost estimates assign no cost where there would not even be an attempt to comply.  This is inappropriate at two levels:  First, it is basically creating a hidden ban, using the paperwork burden to impose it.
          CASAA is a public health and education NGO, and is the leading representative of consumers who use or might in the future use smoke-free tobacco/nicotine products as an alternative to smoking.  CASAA is not an industry group and does not represent the interests of industry, and we realize that PRA issues are normally addressed by the regulated industry.  However, in this case most of the cost burden created by paperwork will fall upon consumers.  In particular, due to the paperwork burdens, hundreds of thousand of American consumers would lose access to the low-risk products that have allowed them to quit smoking and not return to it.
FDA is predicting that in the order of 99.99% of the e-cigarette products in the market will disappear without even an attempt to comply with the filing requirements that could let them stay on the market. 
          The spirit of the PRA and OIRA review of regulation includes an attempt to ensure that the mere paperwork burden – as opposed to beneficial substantive requirements – is not unduly burdensome.  We believe that the FDA is defying the spirit of the PRA and OIRA review in their proposed regulation documentation.  In particular, it appears that FDA is ignoring the greatest cost created by the paperwork burden:  Most manufacturers will find the paperwork burden to be so great that they will abandon products or (for the vast majority) their entire businesses without even attempting to deal with it.  This lowers the naively-measured burden of paperwork as reported by FDA – limited to the paperwork costs for products that are not driven from the market – by ignoring its greatest costs, the elimination of the products and the resulting loss of consumer surplus (as discussed in more detail below).  This is blatantly contrary to the goals of the PRA.
          FDA predicts that there will be no applications for e-cigarettes based on a product being equivalent to products on the market in February 2007.  This is consistent with the fact that either no such products existed in the U.S. market at that time or that the very few available products were extremely primitive, bearing little similarity to today’s products. (There is some disagreement about which of these is the case, but no doubt that one or the other is.)  FDA predicts that there will be only 25 new product premarket applications for e-cigarette products.  This means that manufacturers will file paperwork for only 25 products.  This contrasts with what we estimate are in the order of 100,000 e-cigarette products currently in the U.S. market, with new products being developed every day.
          Clearly FDA has not underestimated the number of products on the market by four orders of magnitude.  Rather, they realize that the vast majority of manufacturers cannot even attempt to comply with the enormous paperwork requirements they are imposing (and, indeed, FDA has basically stated as much).  Thus, their estimated costs of paperwork compliance for those 25 products grossly underestimates the true effect of the paperwork burden in a manner that perverts the intent of the PRA.  This burden is still substantial for the remaining 25 products; FDA predicts it would require over 5000 hours of work per product to just comply with the applications requirements.  But the burden imposed upon the other thousands of products is even greater: It is effectively infinite.
          It is important to note that the compliance requirements in question consist entirely of paperwork.  FDA is predicting that in the order of 99.99% of the e-cigarette products in the market will disappear without even an attempt to comply with the filing requirements that could let them stay on the market.  If the paperwork application burden were, say, 1 hour per SKU, we would predict that the vast majority of the products would see such an application.  Thus, 99.99% of the products will disappear at the time of the filing deadline because of the paperwork requirements per se.

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