Wells Fargo 2013

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  • Smoking and nicotine use are forms of legal recreational drug use – along with alcohol and caffeine. We care as much as we do about smoking because of the harm caused by the drug delivery system – primarily tobacco smoke. Key point is that people smoke for the nicotine and dies from the tar. Nicotine is not totally safe but it is probably comparable with caffeine
  • Wesomtimesforgetthat people smoke for a reason, and whetheritis the functionaleffect of the drug or ‘addiction’ and relief fromwithdrawal or a bit of each, ithardlymatter if yousmoke– if you are a smokerthesethingsmatter to you.N Engl J Med. 2010 June 17; 362(24): 2295–2303.http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2928221/
  • Wesomtimesforgetthat people smoke for a reason, and whetheritis the functionaleffect of the drug or ‘addiction’ and relief fromwithdrawal or a bit of each, ithardlymatter if yousmoke– if you are a smokerthesethingsmatter to you.Neal Benowitzdescribes the nicotine reward and reinforcement system – thisis an extractfromhispaperN Engl J Med. 2010 June 17; 362(24): 2295–2303.http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2928221/
  • This looks at the choices faced by smokers – the first two represent the ‘quit or die’ proposition.The third is a new value proposition in which smokers can switch and get almost all of the benefits (and some new ones like personalisation) and almost none of the costs. This value proposition will get stronger with advancing innovation, as recreational experience matches that of smoking. But it does need regulators to enable this.
  • These are the kind of results everyone in public health should be coming to work for.Obviously this is only an anecdote, but there are thousands like this on forums and other social media.
  • The key breakthrough was probably battery technology – enough power and energy to heat vapour on demand and for long enough. Note batteries are quite a slow moving technology compared to other electrical / electronics.
  • WHO has a headline that one billion will die from smoking on current trends in the 21st Century
  • This is one view of how WHO saw the evolution of tobacco use in 2006… it thought tobacco control measure could pull the number of smokers down from 2.2 to 1.5 billion (remember there is a a lot of growth in the adult population over this period (about 2.6 billion extra over 15s accornding to UN figures.
  • One of the biggest drivers of the future for tobacco is population growth. This shows the adult population growing by over 2.6 billion by 2050. Smoking rates have been historically slow to change because it is cultural embedded – new smokers join because of the existing smokers setting the pattern in society (‘normalising’ smoking), so it is hard to get rapid changes as the ‘flow’ of new smokers is going to be proportional to the ‘stock’ of smokersHow much people smoke will depend on many things – population, growth of income, policy interventions, alternatives etc. At global level there are pressure upwards and downwards: will policy measures and better information prevail, or will Chinese women begin to smoke like Chinese men? The bottom line shows what happens if smoking sticks at 28% prevalence – rising from about 1.5 billion in 2010 to 2.2 billion in 2050. This is based on data from 2003 and projections made in the WHO Tobacco Atlas 2006 version
  • We can’t make predictions really – but we can think about how these numbers might vary. The chart shows the constant prevalence line from the previous chart (rescaled0. For this scenario we assume this is the worst case… in fact it could rise – this would set world smoking prevalence at the current EU level. The lower line look at what happens if smoking prevalence globally falls to 15% - more or less the best claimed smoking prevalence in the world and what WHO showed on its 2006 chart
  • Without taking too many liberties, we can redraw these as public health challenges… maybe this is what could be achieved using the traditional techniques of tobacco control (maybe)… this would be challenging requiring sustained 1.3% per annum decline in smoking prevalence (note not 1.3 percentage points).We characterise the top area as the contribution of tobacco control – getting prevalence to 15% world wide – no mean feat..!Below that is residual smoking – and this can be loosely characterised as aggregate ‘harm’ (in fact it is a little more complicated because harm depends on lifetime consumption for each individual).
  • We can also this of this as a market place – the bottom segment is the market for people who would carry on smoking – but in future this will be contested by new nicotine products far more strongly…These include smokeless tobacco, e-cigarettes and new nicotine products, and novel tobacco products – including ‘heat not burn’ tobacco products
  • Given that we don’t ask users of these products to quit using nicotine, the primary motivation for smoking, and these products like e-cigarettes have been growing very rapidly achieving widespread consumer acceptance, with numerous advantages to the user (health, wellbeing, cost, anti-social impacts) we might expect them to have a considerable impact. There is proof of concept: in Sweden for example about half of males tobacco use is through snus and it has less than half the smoking prevalence of the EU (13% compared to 28%). In some areas of Sweden smoking has fallen to very low levels. The green wedge is a scenario and ‘made up by me’… It is not a forecast… but I think it is a more likely and promising for an ‘end game’ for smoking than most of the other ideas.
  • Some people may object that there is no need for the green wedge, this can all be done with yellow. Maybe, but probably not. People do like nicotine – it is a long-standing, widely-used, legal recreational drug that has benefits to the user (mood stabilisation, stress relief, and may ease some psychiatric conditions) and does very little harm to the user. In any case, the health difference between being in the green wedge and the gold wedge isn’t that much and not something we should care that about from a public health perspective. Some people do care about the upper boundary – but it’s usually because they have an ideological concern about people taking any sort of drug – though they will often be indifferent to their own caffeine and alcohol use.
  • In this scenario, e-cigs overtake smoking in 2035Wells Fargo has a scenario for the US of this happening in 2023. So I’m allowing 12 extra year for this to be reached globally
  • We’ll start with this quote… it seems pretty reasonable … and it is by the new head of tobacco at the FDA – in fact writing in the Tobacco Control ‘end-game’ supplement mentioned earlier before he got the big job (http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3632976/)Just one alarm bell on this – the ‘cleanest and safest form’… really? What if no-one wants to use it? Is something 99% less dangerous than smoking okay, but something 97% unacceptable? What we need is high ‘participation’ – a large number switching to products much less dangerous than cigs without being too pedantic about comparison between 99% and 97% less.
  • Don’t worry if you aren’t mathematical… this is just codifying common sense….The simple idea is that a the impact of reduced risk alternative to cigarettes is the risk reduction per user multiplied by the number of users who switch. Both terms are important. The first term is really determined by toxic exposure arising from continued nicotine use – a product characteristic. For e-cigs and snus this is 95-99% - at least 20-fold improvement… The second term is why we don’t want to be too prescriptive and end up dissuading people from take the 95-99% reduction and carrying on with the greatest danger. That’s why alarm bells should ring when there are plans to restrict reduced risk only to the ‘cleanest and safest’ - or there are plans to ban things that might make these products attractive – like flavourings – or to have regulators control ingredients – or attempt to remove all residual toxins (some of which might be important for flavour)The consumer and mechanisms of market competition should be the primary driver of what makes these products attractive – not regulators who may insist they are safe at the expense of making them less attractive[The equation could be elaborated to have a second term… those that use the reduced risk products who would otherwise have stopped completely. Not shown here because the residual risk is so low – the reduced risk products are not that much difference to quitting completely].
  • This si my own conceptualisation of the risks – it my be a few points different in reality but there are two characteristics:A very low risk elative to cigarettesA residual risk that is not very large and probably within the normal range of things we accept without huge regulatory oversight (eg. Bacon, BBQs, cheese, coffee etc)
  • Don’t worry if you aren’t mathematical… this is just codifying common sense….The simple idea is that a the impact of reduced risk alternative to cigarettes is the risk reduction per user multiplied by the number of users who switch. Both terms are important. The first term is really determined by toxic exposure arising from continued nicotine use – a product characteristic. For e-cigs and snus this is 95-99% - at least 20-fold improvement… The second term is why we don’t want to be too prescriptive and end up dissuading people from take the 95-99% reduction and carrying on with the greatest danger. That’s why alarm bells should ring when there are plans to restrict reduced risk only to the ‘cleanest and safest’ - or there are plans to ban things that might make these products attractive – like flavourings – or to have regulators control ingredients – or attempt to remove all residual toxins (some of which might be important for flavour)The consumer and mechanisms of market competition should be the primary driver of what makes these products attractive – not regulators who may insist they are safe at the expense of making them less attractive[The equation could be elaborated to have a second term… those that use the reduced risk products who would otherwise have stopped completely. Not shown here because the residual risk is so low – the reduced risk products are not that much difference to quitting completely].
  • So my point is – that there are trade offs between reduced risk and number who switch… ie between ‘cleanest and safest’ and ‘attractiveness as an alternative to smoking’ … and that leads to the conclusions on the chart
  • It’s a simple idea, but If the regulator is tough on the competitor to cigarettes then he s being easy on the incumbent, easy on harm and hard on health
  • Don’t worry if you aren’t mathematical… this is just codifying common sense….The simple idea is that a the impact of reduced risk alternative to cigarettes is the risk reduction per user multiplied by the number of users who switch. Both terms are important. The first term is really determined by toxic exposure arising from continued nicotine use – a product characteristic. For e-cigs and snus this is 95-99% - at least 20-fold improvement… The second term is why we don’t want to be too prescriptive and end up dissuading people from take the 95-99% reduction and carrying on with the greatest danger. That’s why alarm bells should ring when there are plans to restrict reduced risk only to the ‘cleanest and safest’ - or there are plans to ban things that might make these products attractive – like flavourings – or to have regulators control ingredients – or attempt to remove all residual toxins (some of which might be important for flavour)The consumer and mechanisms of market competition should be the primary driver of what makes these products attractive – not regulators who may insist they are safe at the expense of making them less attractive[The equation could be elaborated to have a second term… those that use the reduced risk products who would otherwise have stopped completely. Not shown here because the residual risk is so low – the reduced risk products are not that much difference to quitting completely].
  • From CDC press release 5 September 2013: “E-cigarette use more than doubles among U.S. middle and high school students from 2011-2012”http://www.cdc.gov/media/releases/2013/p0905-ecigarette-use.html
  • Sources for data:Notes from the field: Electronic Cigarette Use Among Middle and High School Students — United States, 2011–2012 (6 September 2013)http://www.cdc.gov/mmwr/preview/mmwrhtml/mm6235a6.htm Tobacco Product Use Among Middle and High School Students — United States, 2011 and 2012 – 15 November 2013http://www.cdc.gov/mmwr/preview/mmwrhtml/mm6245a2.htm?s_cid=mm6245a2_w#tabWhat does use mean? It can mean ‘ever use’, ‘use in last 30 days’ or ‘daily use’ – these very different meanings. Among high school students, ever e-cigarette use increased from 4.7% to 10.0% during 2011–2012; current e-cigarette use increased from 1.5% to 2.8% - for every one that has tried it two no long use them. It experimentation.For high school kids in the CDC survey ‘current use’ (in last 30 days) of electronic cigarettes increased from 1.5% to 2.8% from 2011 to 2012. However, current smoking during the same period declined from 15.8% to 14.0% and current tobacco use fell from 24.3% to 23.3%E-cig sales roughly doubled…This survey can’t tell us anything about gateways, transition to smoking, whether advertising is to blame. Moreover, in 2012, an estimated 160,000 students who reported ever using e-cigarettes had never used conventional cigarettes. In 2012, among high school ever e-cigarette users, 7.2% reported never smoking conventional cigarettes; among high school current e-cigarette users, 80.5% reported current conventional cigarette smoking.About all you say is that it shows some interest and experimentation, and it is consistent with smokers giving it a try – it might therefore be beneficial.
  • Wells Fargo 2013

    1. 1. E-cigarettes and public health Counterfactual www.clivebates.com @clive_bates
    2. 2. Five talking points 1. The value proposition
    3. 3. Legal recreational drug
    4. 4. Nicotine rewards and reinforcement • Nicotine induces pleasure and reduces stress and anxiety. Smokers use it to modulate levels of arousal and to control mood. • Smoking improves concentration, reaction time, and performance of certain tasks. • Relief from withdrawal symptoms is probably the primary reason for this enhanced performance and heightened mood. • In addition, conditioning has an important role in the development of tobacco addiction. Source: Neal Benowitz, N Engl J Med. 2010 June 17; 362(24): 2295–2303.
    5. 5. Nicotine rewards and reinforcement • Nicotine induces pleasure and reduces stress and anxiety. Smokers use it to modulate levels of arousal and to control mood. • Smoking improves concentration, reaction time, and performance of certain tasks. • Relief from withdrawal symptoms is probably the primary reason for this enhanced performance and heightened mood. • In addition, conditioning has an important role in the development of tobacco addiction. Source: Neal Benowitz, N Engl J Med. 2010 June 17; 362(24): 2295–2303.
    6. 6. Value proposition: a smokers’ cost-benefit analysis Benefit: nicotine effects, ritual, brand-related 1. Keep smoking Cost: illness, money, social disapproval, addiction “Quit or die” Benefit: avoid smoking harm 2. Quit smoking Cost: withdrawal symptoms, sustained willpower, lost smoking benefits 3. Switch to e-cigs Benefit: most smoking benefits*, no/minor smoking harms, personalisation, buzz, cash saving Cost… addiction? * Full benefits – subject to continued innovation
    7. 7. I smoked for 45 years and tried every NRT product available, none of them worked. I continued to smoke even though my health was getting worse, resulting in emphysema and using oxygen daily. September 2011 I discovered e-cigarettes and they worked. It was like someone handed me a miracle. In less than a week I stopped using regular cigarettes. I haven’t had a tobacco cigarette since. Unsolicited comment left on www.clivebates.com
    8. 8. Why now? … battery development Source: ICCNExergy
    9. 9. Five talking points 1. The value proposition 2. The prize
    10. 10. WHO – 1 billion deaths
    11. 11. From WHO Tobacco Atlas 2006 edition
    12. 12. The Endgame? Billion adults > 15 years Projected global adult population growth 9.0 8.0 Adult population 7.0 6.0 5.0 4.0 3.0 Smoker population at constant prevalence 2.0 1.0 0.0 2010 2015 2020 2025 2030 2035 Smokers: WHO Tobacco Atlas 2006. Population: UN 2040 2045 2050
    13. 13. The endgame? Billion adults > 15 years Scenarios for future smoker population 2.5 Constant prevalence (28%) 2.0 1.5 Global smoking prevalence declines to 15% 1.0 0.5 0.0 2010 2015 2020 2025 2030 Scenario – 15% global prevalence by 2050 2035 2040 2045 2050
    14. 14. If all goes well Billion adults > 15 years Scenarios for future smoker population 2.5 Constant prevalence (28%) 2.0 Contested by tobacco control 1.5 Global smoking prevalence declines to 15% 1.0 HARM 0.5 0.0 2010 2015 2020 2025 2030 2035 2040 2045 2050
    15. 15. The endgame – a nicotine product contest? Billion adults > 15 years Scenarios for future nicotine markets 2.5 Constant prevalence (28%) 2.0 Contested by tobacco control 1.5 Global nicotine prevalence declines to 15% 1.0 Contested by nicotine products 0.5 0.0 2010 2015 2020 2025 2030 2035 2040 2045 2050
    16. 16. How far could low-risk nicotine products go? Billion adults > 15 years Scenarios for future nicotine markets 2.5 Constant prevalence (28%) 2.0 Contested by tobacco control 1.5 Global nicotine prevalence declines to 15% 1.0 Contested by low risk nicotine products Global smoking prevalence declines to 5% 0.5 Cigarettes and other combustible tobacco 0.0 2010 2015 2020 2025 2030 2035 2040 2045 2050
    17. 17. How far could low-risk nicotine products go? Billion adults > 15 years Scenarios for future nicotine markets 2.5 2.0 1.5 This boundary matters most for public health 1.0 0.5 0.0 2010 2015 2020 2025 2030 2035 2040 2045 2050
    18. 18. How far could low-risk nicotine products go? Billion adults > 15 years ‘Modified Herzog scenario’ for future nicotine markets 2.5 Constant prevalence (28%) 2.0 1.5 Global nicotine prevalence declines to 15% 1.0 Global smoking prevalence declines to 5% 0.5 0.0 2010 2015 2020 2025 2030 2035 2040 2045 Disclaimer: this is a Counterfactual scenario not a Wells Fargo Securities or Bonnie Herzog scenario 2050
    19. 19. Five talking points 1. The value proposition 2. The prize 3. Harm reduction equation
    20. 20. A regulator’s instinct Strategies should be pursued that encourage the use of the cleanest and safest form of nicotine delivery Mitch Zeller (now) Director of the Center for Tobacco Products FDA Source: Zeller M. Reflections on the endgame for tobacco: Tob Control. 2013 May; 22(Suppl 1): i40–i41.
    21. 21. Harm reduction equation Harm reduction = Reduced risk x Number who switch Product toxicity & other risks Product appeal Consumer preference
    22. 22. Harm reduction categories – risk estimates Crude estimate of risk – Cigs = 100 120 100 80 60 40 20 0 Cigarettes Smokeless E-cigs NRT
    23. 23. Focus on the right relative risk - illustration More regulation Lower risk regulated e-cig 0 10 0 e-cigarettes “unregulated” e-cig 100 100 cigarette
    24. 24. Five talking points 1. The value proposition 2. The prize 3. Harm reduction equation 4. Much safer, many dead
    25. 25. Harm reduction equation Harm reduction = Reduced risk x Number who switch Product toxicity & other risks Product attractiveness Consumer preference
    26. 26. Analysts We remain very bullish on the vast potential of e-cigs given the rapid pace of innovation. [We believe] that the benefits of e-cigs are becoming increasingly apparent to consumers, helping to drive trial and repeat purchases aided by stepped-up advertising and a lot of internet “buzz” Bonnie Herzog, Wells Fargo Securities
    27. 27. Regulation – the dead hand Fewer, duller innovations Boring branding & marketing Slower innovation pace Less personalisation Greatly reduced variety & niche products Increased cost Trusted brands & firms destroyed Reduced appeal Black market, DIY response
    28. 28. Harm reduction equation Harm reduction = Reduced risk x Number who switch Trade offs Conclusion 1. The perfectly risk free product that no-one wants is useless for public health Conclusion 2. A diverse range of products with substantially reduced risk lets each smoker decide which product is best
    29. 29. Much safer, many dead: regulatory triple negative Tough on e-cigarettes Tough on harm reduction Easy on harm
    30. 30. Five talking points 1. The value proposition 2. The prize 3. Harm reduction equation 4. Much safer, many dead 5. The desperate search …for a problem
    31. 31. FDA Pre-Market Tobacco Application FDA seeks evidence on population effects: • +/- quitters – The increased or decreased likelihood that existing users of tobacco products will stop using such products; and • +/- starters – The increased or decreased likelihood that those who do not use tobacco products will start using such products.
    32. 32. Harm reduction equation with population effects Harm reduction = Reduced risk x Number who switch - Extra smokers + Extra quitters Gateway to smoking Dual use Reduced quitting Normalising smoking Gateway exits Complete cessation Extra quitting Normalising non-smoking
    33. 33. Gateway effects For there to be net harm caused by e-cigs… Smoking followed e-cig use E-cig use caused the smoking Smoker does not revert to e-cigs or quit later … and e-cigs not displacing smoking elsewhere
    34. 34. CDC announcement 6 September 2013 “E-cigarette use more than doubles among U.S. middle and high school students from 2011-2012” CDC Press release "The increased use of e-cigarettes by teens is deeply troubling. Nicotine is a highly addictive drug. Many teens who start with e-cigarettes may be condemned to struggling with a lifelong addiction to nicotine and conventional cigarettes.” Tom Frieden, CDC Director “These data show a dramatic rise in usage of e-cigarettes by youth, and this is cause for great concern as we don’t yet understand the long-term effects of these novel tobacco products.” Mitch Zeller, Director of FDA Center for Tobacco Products CDC Press release 5 September 2013
    35. 35. Probing the CDC survey • High school use doubled? – Ever use from 4.7 to 10.0% – Current use (last 30 days) from 1.5% to 2.8% • High school cigarette smoking? – Decreased from15.8% to 14.0% • E-cigs use in adults? – About doubled • What would have happened had there been no e-cigs? – – – – – Can’t say, but… 80.5% of e-cig current-users are current smokers Zero evidence for a ‘gateway’ effect Zero evidence of ‘marketing to youth’ Data consistent with experimentation and e-cigs displacing smoking
    36. 36. Five talking points 1. The value proposition 2. The prize 3. Harm reduction equation 4. Much safer, many dead 5. The desperate search …for a problem
    37. 37. Conclusion • Be positive about the (vast) potential at individual and population level • Put the (minor and mostly implausible) risks in perspective • Regulate as though the 1 billion matter most
    38. 38. Thank you… Counterfactual www.clivebates.com @clive_bates

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