Jonathan Adler (Case Western), Roger Meiners (Texas A&M), Andrew Morriss (UT-Arlington) and Bruce Yandle (Clemson) have co-authored Baptists, Bootleggers & Electronic Cigarettes, which is forthcoming in the Yale Journal on Regulation and has already been previewed online here and elsewhere. As the title suggests, this article applies the “Baptists & Bootleggers” theory of regulation to the FDA’s recently finalized “deeming” rule, which extended the FDA’s oversight to e-cigarettes (as well as cigars, hookah tobacco, pipe tobacco, and other previously unregulated products). The “Bootleggers and Baptists” theory is an intriguing one, but in applying it to e-cigarette regulation, the authors let their theory get out ahead of the facts on the ground.
Bruce Yandle introduced the Baptists & Bootleggers theory more than 30 years ago and has applied it innumerable regulatory contexts since then, most recently in a 2014 book co-authored with Adam Smith (his grandson). The theory posits that a wide variety of regulatory actions can be explained by the alignment of well-meaning (though often misguided) public interest groups (“Baptists”) and economic interests with a stake in the proposed regulations (“bootleggers”). The public interest groups are typically the public face of the effort, while the economic interests work quietly behind the scenes to support measures that increase their profits, often by hampering potential competition. The theory is named for the Baptists and bootleggers who both pushed to limit (legal) alcohol sales, though for very different reasons, and not in explicit collaboration with one another.
The Baptists and Bootleggers theory does have some explanatory power in the context of tobacco regulation, and the Adler article reviews much of the relevant history. Though I don’t fully endorse the analysis, Yandle et al. have, with considerable justification, described the 1998 Master Settlement Agreement as the product of a convergence of interests between public health groups (Baptists) and the tobacco industry (bootleggers). Similarly, the 2009 Tobacco Control Act, which gave the FDA the authority to regulate tobacco, was in part the result of negotiations between the leading cigarette producer (Altria, the parent company of Philip Morris) and public health groups, both of whom thought that FDA regulation could further their respective interests. (Tobacco control groups wanted to reduce tobacco use, and Altria wanted to solidify its position as the market leader and increase barriers to entry for new competition.)
Adler et al. argue that the same dynamic is at work in the regulation of e-cigarettes. Tobacco control groups (mistakenly, in their view) see e-cigarettes as a potential threat to public health, and therefore want them to be strictly regulated. Tobacco companies, they argue, see e-cigarettes as potential competitive threat, and want them restricted for that reason. (Additionally, they suggest that the pharmaceutical companies that produce smoking cessation therapies could also be seen as “bootleggers” who have an interest in obstructing the growth of the e-cigarette industry.) The alignment of interests between these groups, they conclude, has pushed the FDA towards adopting what the authors view as draconian regulation of e-cigarettes.
That is an interesting hypothesis (or, to some, an interesting conspiracy theory), but as applied to this specific case, there’s limited evidence that this is what actually occurred. The specific regulation that the authors (and most e-cigarette advocates) are concerned about is the requirement for “premarket review” of new e-cigarette products. This provision requires manufacturers to demonstrate to the FDA that permitting the sale of their products would be “appropriate for the protection of public health,” and the concern is that most e-cigarette companies (with the glaring exception of e-cigarette companies owned by tobacco companies) lack the financial resources needed to provide the necessary scientific evidence to the FDA. While the merits of the premarket review requirement are worthy of discussion and debate, the fact is that when Congress included the premarket review requirement in the Tobacco Control Act (TCA) in 2009, no one (as far as I can tell) was thinking about its potential application to e-cigarettes. Indeed, as the TCA was being debated, the FDA was attempting to restrict the sale of e-cigarettes under its drug/device authority. It was only after the TCA was enacted that the D.C. Circuit – somewhat surprisingly – ruled in Sottera that if the FDA wanted to regulate e-cigarettes it would have to do so under the newly-enacted tobacco regulatory framework (rather than its drug/device authority). Thus, the Baptists and Bootleggers theory holds only at a higher level of abstraction – Altria, for obvious reasons, did indeed want to make it difficult for new tobacco products to enter the market; and public health groups, for good reason, wanted evidence that newly-introduced products would not add to the existing public health harms from tobacco. But e-cigarettes were not the target.
Since the law required the FDA to affirmatively issue a “deeming” rule before it could extend its regulatory authority to products other than cigarettes, smokeless tobacco, and roll-your-own tobacco, the FDA—at least in theory—had a choice after the Sottera decision as to whether or not to promulgate a “deeming” regulation that would cover e-cigarettes. But the way the TCA was written, the FDA had no choice as to whether or not to include the premarket review requirement – under the law, that provision would take effect automatically if the FDA issued a deeming rule. (In the final deeming rule, the FDA stated that it will provide a two-year grace period before premarket applications will be required, and up to an additional year before it will require products without authorization to be withdrawn from the market. Its authority to provide even this amount of flexibility is debatable.) Thus, the FDA was essentially left with an all or nothing choice. But given the widespread reports of dramatic increases in youth e-cigarette use, toxins and contaminants in e-liquids, rampant mislabeling of products, unverified and misleading health claims, youth nicotine poisonings, serious personal injuries caused by exploding e-cigarettes, and pressure from Congress, having no regulation whatsoever was not a realistic option. Moreover, in 2011, shortly after the Sotteradecision, the FDA—in justifying its decision not to appeal the D.C. Circuit’s decision—had already committed itself to issuing a deeming rule that would include e-cigarettes.
Unsurprisingly, public health groups used the deeming rule’s public comment period to urge the FDA to extend its authority to e-cigarettes. Other than comments relating to child safety regulations, I am not aware of any tobacco industry comments that were supportive of FDA regulation of e-cigarettes. (The parent company of R.J. Reynolds cynically urged the FDA to ban “open system,” refillable devices. At the time, RJR manufactured only “closed system” e-cigarettes.) Thus, the evidence that the FDA’s deeming rule was the product of a “Baptist and Bootleggers” phenomenon appears to be lacking.
Moreover, Adler’s article, and the application of the “Baptists and Bootleggers” framework, assumes that e-cigarettes function as a substitute for cigarettes. But the evidence for this proposition is, at this point, lacking (although here I wander into highly contested ground). This is not the place for a full review of the evidence, but it’s important to note that although e-cigarettes have helped some people to quit, the vast majority of current smokers who start using e-cigarettes continue to smoke (and, also troubling, there is emerging evidence that e-cigarette youth could be a pathway to smoking for adolescents). Most likely, Big Tobacco is investing in e-cigarettes not so that it can control a potential competitive threat, but because it plans for people to “vape to smoke and vape, not vape instead of smoking” (more on this here; and more on the tobacco industry lobbying against e-cigarette regulations here). If it’s true that expanded e-cigarette use may actually benefit the tobacco industry, then the Baptists and Bootleggers framing certainly does not make sense.
The Baptists and Bootleggers theory is an effective way of framing many regulatory actions in a negative light – as the product of well-meaning public interest groups being “used” or manipulated by greedy corporate interests. And in some situations it may be accurate, if oversimplified. In reality, it is likely that most policymaking is more complex – the product of history, happenstance, existing legal frameworks, and a wide-variety of competing (and sometimes converging) interests. Although this post has only scratched the surface, that complexity is what the case of e-cigarette regulation actually demonstrates.