Pharma & Dispute Resolution Hotline

The President of India has promulgated an ordinance on Prohibition of Electronic Cigarettes (production, manufacture, import, export, transport, sale, distribution, storage and advertisement) Ordinance, 2019 after the same was approved by the Union Cabinet (“Ordinance”).¹ On the other hand, the categorisation of Electronic Nicotine Delivery Systems (“ENDS”) as ‘drugs’ under the Drugs and Cosmetics Act, 1940 (“D&C Act”) remains an issue yet to be decided upon by various High Courts in India.

From a legal standpoint, ENDS find themselves in a regulatory limbo worldwide. Regulation varies across countries and even states, ranging from no regulation at all to blanket bans. In India, the regulatory status of ENDS has been in question since 2015, with regulators having taken opposing stands on the topic over time. An order by the High Court of Delhi² in March 2019, staying a communication (“Communication”) issued by the Director General of Health Services (“DGHS”)³ and a circular issued by Central Board of Indirect Taxes and Customs (“Circular”)⁴, banning ENDS, had previously brought the issue to the forefront.

What are ENDS?

Leading brands of ENDS commonly referred to as e-cigarettes, such as Vapor, Juul are poised to enter the Indian market. Whilst some recommend the use of ENDS owing to the supposed benefits of these products as healthier alternatives to cigarettes, others highlight the risks and herald them as threat to public health. According to statistics released by the Government, over 460 different ENDS brands have been introduced in the market, with over 7,700 flavor variations.⁵

A 2016 report⁶ by the World Health Organisation (“WHO”) defines ENDS as “products that heat a solution called an e-liquid, to create an aerosol which frequently contains flavourants, usually dissolved into Propylene Glycol or Glycerin.” It includes e-cigarettes, heat-not-burn devices, vape, e-sheesha, e-nicotine flavoured hookah and like products.⁷ ENDS do not burn tobacco leaves, but instead vaporize the e-liquid containing nicotine, which the user then inhales. Although all ENDS are generally considered to be in a single product class, they constitute a diverse group of products with substantial differences in the production of toxicants and delivery of nicotine.⁸ There is a separate class of products called Electronic Non- Nicotine Delivery Systems (“ENNDS”). Electronic cigarette under the Ordinance is defined similarly and covers both nicotine, non-nicotine and flavoured delivery systems.⁹ Products licensed under the D&C Act are excluded from scope of the Ordinance.

Regulatory position of ENDS in India

The Ministry of Health and Family Welfare issued a circular dated August 28, 2018¹⁰ (“Advisory”), advising all states and union territories to ensure ENDS enabling nicotine delivery are not sold (including online sale), manufactured, distributed, traded, imported or advertised in their jurisdictions, except for purposes approved under the D & C Act. The Advisory cited prohibition on nicotine under various laws and paucity of scientific evidence regarding the effectiveness of ENDS as a smoking cessation aid. It also stated that while the D&C Act permits the use of nicotine up to 2 mg and 4 mg in gums, lozenges and strips for use as Nicotine Replacement Therapy (“NRT”), such products must adhere to the provisions of Chapter IV of the D & C Act requiring they be manufactured under valid drug manufacturing and sales licenses.

Subsequently, Central Board of Indirect Taxes and Customs issued the Circular on November 27, 2018¹¹, stating that products must only be cleared by the drug controller if they are compliant with the Advisory and D & C Act or else face consequences of violating the Act. Further, DGHS issued the Communication on February 22, 2019 to State licensing authorities to ensure that ENDS are not sold (including online sale), manufactured, distributed, traded, imported or advertised in their jurisdictions, except for purposes and as may be approved under the D&C Act.¹²

16 states in India had banned ENDS since last year. News reports had suggested that the Ministry of Health and Family Welfare was likely to issue a notification banning ENDS under Section 26A¹³ of the D&C Act.¹⁴ In June 2019, the Drugs Consultative Committee (“DCC”), one of India’s apex drug advisory bodies, recommended that ENDs be considered as drugs and consequently be regulated under the D&C Act.¹⁵ However, it is interesting to note that when the issue was first deliberated by the DCC in July 2015, it recommended that e-cigarettes are not covered under the definition of the term ‘drug’ and therefore cannot be regulated the D&C Act.¹⁶ The Ordinance, stating that e-cigarettes are injurious to public health, has made the manufacture, production, import, export, storage, transport, sale, distribution and advertisement of e-cigarettes a cognizable offence.¹⁷ Storage includes storage for sale, distribution, transport, export and advertisement.¹⁸ Suo motu declaration of stocks is required to be made by owners or occupiers and relevant authorities are required to dispose of such stocks accordingly. Heavy criminal penalties have been contemplated for violations including imprisonment and fines or both.¹⁹

Challenge before the High Court of Delhi

The Communication and Circular were challenged in the Delhi High Court in March 2019 by a batch of petitions filed by manufacturers and importers of ENDS²⁰. The petitioners challenged the legality of the Communication and Circular by arguing that ENDS are substitutes to combustible cigarettes; are healthier alternatives to tobacco-based products as their use does not entail inhaling any tar; the Circular and Communication impinge upon the right of choice of consumers and ENDS do not fall within the definition of ‘Drugs’ as provided under Section 3(b) of the D & C Act.

The DGHS, respondent No. 1 in the case, countered the petitioners’ contentions by submitting that whether ENDS are safer than tobacco products is yet to be determined; that since ENDS are professed as devices that are safer alternatives to cigarettes, aid in cessation of tobacco addiction and are used as nicotine replacement therapy, they are covered within the definition of 'drugs'²¹ as provided under the D & C, Act; and that ENDS are akin to nicotine gum as defined under Schedule K Entry 33 of the D & C Act, i.e., ‘nicotine gum and lozenges containing up to 2 mg of nicotine’.

The Court disagreed with the contention of the DGHS, instead observing that ENDS are not sold as therapeutic devices, medicines for internal or external use in human beings or animals, nor used in the diagnosis and treatment of any disease. Further, the Court stated that ENDS do not have any medicinal value. The Court advanced a prima facie conclusion that ENDS are not drugs under the D & C Act and consequently granted a stay on the Communication and Circular stating that the DGHS did not have jurisdiction to issue the same. Reference was drawn to report of 48^th meeting of the DCC, which had stated that e-cigarettes containing nicotine are not within the purview of the D & C Act and could not be regulated under it.²² The stay is operative till date. Conclusive determination is yet to be arrived at by the Delhi High Court.

The Bombay High Court, in another matter relating to the Advisory, placed reliance upon decision of the Delhi High Court and passed an interim order directing the Maharashtra Food & Drug Authority to not take any action against the petitioner who is a manufacturer of e-cigarettes.²³

Regulation of ENDS in other countries

It is worth noting that in a study of the regulations of 68 countries, 57 categorised ENDS either as a new product or as tobacco-related product or tobacco (imitation).²⁴

1. United States of America

At federal level, the Food and Drug Administration (“FDA”) has stated that ENDS fall under the definition of “tobacco product” and are subject to the FDA’s tobacco control authorities.²⁵ Additionally, 16 states have classified ENDS as tobacco products.²⁶ Further, states also regulate the packaging, sale, public usage and levy taxes on such devices.

As an example, in the state of California e-cigarettes are defined as “tobacco products”.²⁷ It had also defined e-cigarettes separately under tax laws as “any device or delivery system sold in combination with nicotine which can be used to deliver to a person nicotine in aerosolized or vaporized form, including, but not limited to, an e-cigarette, e-cigar, e-pipe, vape pen, or e-hookah . . . (including) any component, part, or accessory of such a device that is used during the operation of the device when sold in combination with any liquid or substance containing nicotine (and also includes) any liquid or substance containing nicotine, whether sold separately or sold in combination with any device that could be used to deliver to a person nicotine in aerosolized or vaporized form.”²⁸ Furthermore, California levies special taxes on e-cigarettes equal to the cigarette distribution tax.²⁹ The retailers³⁰ and whole-sellers³¹ require license to sell ENDS, and cannot make sale to a person under 21 years.³² Further, the sale of the nicotine cartridges is supposed to be in child-proof or child-resistant packages.³³ There are areas where smoking and usage of e-cigarettes is prohibited.³⁴ New York has added ENDS to its Clean Indoor Act, like tobacco products, and has prohibited their consumption indoors everywhere where smoking tobacco products is prohibited in New York.³⁵

Recently, San Francisco city in California has imposed a broad ban on ENDS which awaits affirmation in the November city ballot.³⁶ The Trump administration is also cracking down on flavoured e-cigarettes as they make smoking attractive to the youth, as a reaction to certain events and reports that suggest increased use of ENDS by teens and youth.³⁷ Michigan has also imposed a ban on flavoured ENDS.³⁸

2. United Kingdom

UK enacted the Tobacco and Related Products Regulations of 2016 (“UK Regulation”), in pursuance of the Tobacco Products Directive 2014/40/EU (“TPD”), which is the directive of the European Union, laying down basic standards and model law for the member states, to regulate the manufacture, presentation and sale of tobacco and its related products.³⁹ The UK Regulation defined e-cigarettes as any product that “can be used for the consumption of nicotine-containing vapour via a mouth piece, or any component of that product, including a cartridge, a tank and the device without cartridge or tank (regardless of whether the product is disposable or refillable by means of a refill container and a tank, or rechargeable with single use cartridges)” and is not a medicinal product or medical device.⁴⁰ This definition mirrors the TPD.⁴¹

It also has strict regulations on the labelling and packaging of the “tobacco products” including, inter alia, health warning and the quit-smoking helpline website of the National Health Service.⁴² Producers and suppliers of e-cigarettes have to ensure an additional compliance with Part 6 of the Regulations, which proscribe among other things, addition of any flavour or vitamins,⁴³ limits the nicotine level in cartridges,⁴⁴ and the use of child-resistant packaging.⁴⁵ There are additional requirements on packaging including comprehensive indication e-cigarettes contain nicotine,⁴⁶ and clearly visible warning that these products are not for “young people and non-smokers”.⁴⁷ Restriction also apply to the advertisement of e-cigarettes.⁴⁸ The smoking age for e-cigarettes is consistent with that of regular cigarettes i.e. 18 years.

Further, Public Health England report states that vaping is 95% less harmful than smoking conventional cigarettes and is aiding its cessation. It also stated that nicotine is not as harmful. While recognising that it is imperative to prevent the use of ENDS by teens and youth, UK is regulating and licensing them to promote cessation of tobacco products.⁴⁹

Discourse around health concerns

Some studies suggest ENDS produce aerosols that often include a range of substances such as glycols, aldehydes, dicarbonyls and hydroxycarbonyls, many of which are toxicants with known health effects resulting in significant pathological changes.⁵⁰ Although the level of toxicants generated by ENDS is on average lower than in cigarette smoke, it can vary across different products and brands, and may reach higher levels than in the latter.⁵¹ It is also argued that, nicotine, the common element in ENDS and tobacco, beyond its addictive qualities⁵², may have other adverse effects such as cardiovascular diseases, malignant diseases and neurodegeneration.

The WHO report states that ENDS are unlikely to be harmless, however, the magnitude of these risks cannot be conclusively stated as there is not enough evidence to quantify the relative risk of ENDS over traditional combustible products.⁵³ Another report suggests that e-cigarettes are a low risk alternative to cigarettes, used by smokers as a pleasurable way of taking the relatively harmless recreational drug: nicotine.⁵⁴ Moreover, some reports suggest that ENDS are less harmful than combustible tobacco products as they expose users to fewer carcinogens.⁵⁵

Ordinance- executive overreach?

The Ordinance bans and more importantly criminalises the production, manufacture, import, export, transport, sale, distribution, storage and advertisement of ENDS. It requires declaration and deposit of existing stocks with the nearest police station. While restriction under the Ordinance appears to be on stocking for the purposes of sale, distribution or advertising only, it is unclear whether authorities would take action in cases of personal possession and consumption as well. Consequences of violation include imprisonment of up to one year or fine up to INR 1 lakh (USD 1400) or both for the first offence; and imprisonment of up to three years and fine up to INR 5 lakh (USD 7000) for a subsequent offence. Storage of electronic-cigarettes is also punishable with an imprisonment up to 6 months or fine up to INR 50,000 (USD 700) or both. The government has resorted to its ordinance making powers, citing extreme urgency. The issue in respect of regulation of ENDS, however, has been in the news for over a year now since the release of the Advisory by the Ministry of Health and Family Welfare.

The Delhi High Court had taken a preliminary view that ENDS do not fall under the scope of Section 3 (b) of the D&C Act, which provides the definition of what constitutes a ‘drug’ for the purposes of the D&C Act. Regulating ENDS as medication or drugs would imply that entire supply chain, from manufacture to sale, would constitute a licensed activity, and hence only those players who have been able to obtain a license from the drug regulator after submitting the relevant supporting documentation (safety and efficacy data in the case of manufacture) would be able to deal in ENDS. Unless a specific exemption is provided, regulated ENDS would only be able to be sold through a pharmacy, possibly on the basis of a prescription only (depending on the category that ENDs are classified under)⁵⁶. UK and France are countries which initially tried regulating e-cigarettes as medication, but eventually turned to regulating them as tobacco products.

Fundamental rights can only be interfered with in a reasonable, proportionate and procedurally sound manner.⁵⁷ Proportionality involves carrying out a proper study or assessing empirical material on the issue sought to be addressed. It has also held that proportionality involves exploring less invasive measures, particularly before resorting to a prohibition. The Ordinance imposes blanket prohibition without analysing any substantive evidence in respect of the harmful effects of ENDS. An outright ban on ENDS could therefore be arbitrary and violative of fundamental rights of consumers. Further, there seems to be no intelligible differentia in only banning ENDS and allowing the manufacture and sale of cigarettes, which are also proven to be harmful and are yet widely consumed across the country. Further, the Ordinance places reliance on India being a signatory to the World Health Organisation Framework Convention on ‘Tobacco Control’, 2005 to ban ENDS.

Takeaway

Tobacco use is highly prevalent in India, with 232.4 million adults using tobacco products on a daily basis⁵⁸. While numerous products have been introduced to help people quit, the numbers still remain high. ENDS, at least initially, were on track to take the tobacco industry by storm, with number of tobacco users jumping onto the ENDS bandwagon at an exponential rate. Undistinguished and unrestrained marketing practices unfortunately led to ENDS being used for purposes that were unintended-teens and non-users also took a liking for these products. Initial studies⁵⁹ did appear to demonstrate that the use of ENDS was a promising gateway to quitting tobacco, but somewhere down the line, ENDS became part of pop culture and eventually a global phenomenon. The question remains – is a product that could potentially be a tobacco cessation tool be banned, or regulated?

Proper regulation of the ENDS would mean that manufacturers only release quality products that are tested to be safe and efficacious, while also ensuring that its sale is controlled in a manner that the devices only end up in the right hands. There are many avenues that can be explored to control the devices. ENDS could have been added in Schedule I of the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003, to bring the product under its aegis. A new legislation specifically dealing with ENDS could have been enacted. However, as seen from the regulatory frameworks in US and UK, the regulation of ENDS and other tobacco products, especially cigarettes, is quite similar due to the basic similarities between the two i.e. they are methods of ingesting nicotine, and the risk they pose are also arguably similar, i.e. addiction to nicotine and possible risk of cancer.⁶⁰ Thus, a unified regime for regulating them seems more practical. To tackle the additional challenges of ENDS, specific provisions could be provided within the unified framework, such as additional warnings on ENDS packaging, as seen in UK. Further, as flavouring of cigarettes and ENDS arguably attract the youth towards these products,⁶¹ the use of flavouring in nicotine cartridges and other refill tanks may be banned to reduce youth attraction, in addition to imposition of heavy fines for selling these products to persons under the age of 18.

Challenges to the Ordinance are inevitable. It remains to be seen if they are upheld by the judiciary or the Ordinance is a road block which the ENDS industry is able to overcome. Further, it is imperative that any such decision or law, should be based on robust medical research on the impact and should necessarily take into account views from all the stakeholders.