Letter to Director Donovan, Administrator Shelanski, Commissioner Hamburg, and Director Zeller - Reassessing Inappropriate Use of Pleasure Factor in Tobacco Regulation

Letter

Dear Director Donovan, Administrator Shelanski, Commissioner Hamburg, and Director Zeller:

We write to express our grave concern about a preliminary regulatory impact analysis conducted by the Food and Drug Administration (FDA) of the proposed "deeming rule," which would extend the FDA's regulatory authority to electronic cigarettes, cigars, pipe tobacco, and other novel tobacco products. The FDA, supported by the Office of Information and Regulatory Affairs (OIRA), applied an unprecedentedly large lost pleasure discount, 70 percent, to the benefits of this proposed rule. The FDA's calculations assume that individuals who stop using these tobacco products lose so much enjoyment that they, in effect, experience only three years of benefit for every ten years of life gained. We reject the premise of this analysis, which significantly underestimates the benefits of the deeming rule. We urge the FDA and OIRA to remove this exaggerated discount and to consider whether an accurate assessment of the public benefits from smoking cessation justifies a more robust rule.

Congress enacted the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) to empower the FDA to reduce the serious risks that tobacco and nicotine addiction pose to public health and the health of adolescents and teens. The law requires the FDA to issue rules that would lower the high health costs of addiction to tobacco and nicotine products. The FDA's recently proposed deeming regulations were issued pursuant to this important law. We are disappointed that when entrusted to take action to protect the public's health, FDA and OIRA appear instead to be employing analytical tools that vastly understate regulatory benefits.

The FDA's decision to discount the benefits of the deeming rule by 70 percent is inconsistent with Congress's effort to reduce smoking and ignores empirical evidence on when consumer surplus theory can validly be applied. The analysis relies on the premise that the benefits of longer life and improved health should be offset by 70 percent because tobacco users have lost "consumer surplus," pleasure that comes from consuming a harmful product. When public policy successfully encourages individuals to give up a harmful habit, those individuals mot only live longer, they enjoy a higher quality of life. Indeed, smokers might actually experience increased pleasure as a result of quitting. For example, studies have found that higher cigarette taxes are associated with higher levels of reported well-being among smokers. Moreover, more than nine out of ten current smokers now wish they had never started and nearly seven out of ten report that they now want to quit.

The FDA's approach is particularly troublesome when applied to the regulation of addictive products. Consumer surplus calculations are grounded in the assumption that consumer behavior is fully-informed and rational. However, a strong body of empirical evidence shows that neither of these assumptions holds in the context of addiction. The regulatory analysis ignores FDA's own conclusion that nicotine rewires the brain, creating a biological barrier to the exercise of self-control that is an essential element of the model of rational decision-making on which consumer surplus analysis is based. In addition, the regulatory analysis ignores the fact that nearly nine out of ten smokers tried their first cigarette by the age of eighteen. Given the quick transition among adolescents from experimentation to addiction, these smokers cannot accurately be characterized as rationally choosing a lifetime of smoking. More than anyone else, teenagers are the most likely to have trouble making fully-informed, forward-looking decisions, and they severely underestimate the probability of addiction.

Furthermore, the leading economic research on addiction suggests that all individuals have "time-inconsistent preferences" when it comes to addiction. This means that although they would like to quit smoking, their impatience causes them to reach for the cigarette today and put off quitting until tomorrow. The problem is that tomorrow becomes the next "today," and rather than quitting, the process repeats. The diet that starts tomorrow never really starts. The leading research suggests that smokers would like "commitment devices" to help them quit and this would increase, rather than decrease, their consumer surplus. Thus, any decrease in tobacco use resulting from the regulation should be counted as an increase in consumer surplus.

The FDA and OIRA's analysis has the potential to undermine public health regulations in a variety of areas, not just tobacco and nicotine. According to the FDA's reasoning, a morbidly obese child who reduces his intake of fatty foods and thus adds ten years to his life expectancy should be seen as effectively gaining only an additional three years of benefit. The benefits that flow from improving nutrition, controlling alcohol abuse, and reducing the overuse of other dangerous products may all be underestimated.

We strongly oppose the use of the FDA's misapplied methodology. A number of economists, some quoted in the appended news article critiquing the FDA's approach, do as well. The FDA's analysis artificially diminishes the benefits of a rule that is necessary to reduce the serious harm caused by tobacco and nicotine product consumption. Addiction is a costly and painful condition for individuals and society at large, and sensible legislation like the Tobacco Control Act was enacted to address this condition. Moreover, we are concerned about the expansion of such a dubious principle to other areas in which the sound approach taken by Congress may be compromised. We urge the FDA to finalize a health-protective deeming rule, and the FDA and OIRA to stop applying unwarranted discounts.

Sincerely,

U.S. Senator Richard Blumenthal
U.S. Senator Richard Durbin
U.S. Representative Henry A. Waxman

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