E-cigarette update

Draft bills to implement the EU Tobacco Products Directive – Comprehensive regulation of e-cigarettes with and without nicotine content.

In November, Germany’s Federal Ministry of Food and Agriculture circulated new draft bills for legislation and a regulation to implement the new EU Tobacco Products Directive (Directive 2014/40/EU) as well as an initial amending law and an initial amending regulation. If these bills were to become law in their current form, manufacturers of e-cigarettes – including nicotine-free products – would be faced with enormous amounts of regulation. This regulation also provides for an almost complete ban on advertising the products concerned.

This article gives a brief update on e-cigarette issues. Firstly, the article will examine the issue of the legal classification of e-cigarettes, which has now been decided by the higher courts. Next, the article will outline the future applicable legal framework under the EU Tobacco Products Directive or the current German draft bills for products which are currently deemed pure consumer products and are not subject to any specific regulation based on the relevant identification criteria established by the courts.

Legal classification of e-cigarettes

Until the decision of Germany’s Federal Administrative Court on 20 November 2014, it had not been settled as to whether nicotine-containing e-cigarettes and their related e-liquids are simple consumer products (not currently subject to any specific regulation) or whether nicotine-containing e-liquids should be viewed as pharmaceutical products due to their alleged pharmacological effect and the e-cigarette itself as a medicinal product.

Since the Federal Administrative Court’s decision, it is now clear that these are fundamentally not pharmaceutical products or medicinal products. As justification, the Federal Administrative Court explained that e-liquids containing nicotine are not to be considered a functional pharmaceutical product, because while nicotine does notably influence human physiological functions via a pharmacological effect (which would have been sufficient under the usual definition of the term pharmaceutical product), there is, however, an absence of any therapeutic effectiveness as required according to the intent of the relevant statutory provisions. According to the Federal Administrative Court, most consumers do not ascribe any intended medicinal purpose to the nicotine-containing e-liquids, but instead view them as stimulants.

However, even after the decision by the Federal Administrative Court, there is still the possibility of classifying e-cigarettes and e-liquids as medicinal products or pharmaceuticals if the products in the particular case are marketed (“presented”) as products for curing, alleviating or preventing diseases. In these cases, the concept of a pharmaceutical product by presentation would exist, and this is subject to the rules of pharmaceutical products legislation just like a functional pharmaceutical product. This applies in particular to the cases in which an e-cigarette and its e-liquids are advertised as an aid to smoking cessation. If this is the case, the legal requirements for pharmaceutical products or medicinal products must be adhered to; these take precedence over the new tobacco legislation standards for e-cigarettes described below. The following explanations are of no relevance to such functional medicinal products, as both the EU Tobacco Products Directive and the draft bills explicitly exclude both pharmaceutical products and medicinal products from their scope of application.

Regulation of e-cigarettes according to the draft bills

The Federal Ministry of Food and Agriculture decided, due to the deadline of 20 May 2016 for implementing the EU Tobacco Products Directive, to first implement the requirements of the EU Tobacco Products Directive via two draft bills consisting of a “Draft of a Law to Implement the Directive on Tobacco Products and Related Products” and a draft of a supplementary “Regulation for Implementing the Directive on Tobacco Products and Related Products”. Only in a second step does the Ministry want to integrate the parts of the German drafts which go beyond the requirements of the Directive by way of an amendment to the Tobacco Products Act or the Tobacco Products Regulation – so as not to risk missing the deadline. Considerable resistance from the industry is likely with regard to this surplus content. While the Directive itself only covers nicotine-containing products (e-cigarettes and refill containers) the draft bills go beyond this by intending the regulatory and advertising-law standards to be applied equally to products containing nicotine and nicotine-free products. Specifically, compared to the current legal situation, the following new features are planned:

• The drafts contain – as stipulated by the Directive (especially Article 20) – legal provisions for e-cigarettes with regard to their ingredients, product safety, packaging design and specific obligations of the manufacturers, importers and traders (such as with regard to recall management).
• Annex 2 of the first draft regulation to amend the Tobacco Products Regulation includes an extensive list of ingredients prohibited in electronic cigarettes and refill containers. This applies, for example, to components, extracts and oils from various plants such as camomile, sage, peppermint, incense etc. Also prohibited are caffeine, taurine or other additives and stimulant mixtures associated with energy and vitality, e.g. components, extracts and oils of the coffee plant, guarana plant or yerba mate.
• According to the new standards, electronic cigarettes and refill containers may be marketed only if they are childproof and tamper-proof as well as unbreakable and leakproof and have a mechanism for refilling without leaks.
• In addition, as stipulated by the Directive, the drafts define requirements for the design of packages and external packaging as well as for the content of the compulsory package insert. Electronic cigarettes and refill containers which contain nicotine must also display a health warning.
• Finally, the drafts contain – also in line with the Directive – comprehensive obligations to notify the authorities, especially a duty to notify the competent authority of comprehensive product information at the latest 6 months before the intended placing on the market (for electronic cigarettes and refill containers already on sale before 20 May 2016, this notification should take place within 6 months of this date).
• The drafts ultimately also provide for far-reaching limitation of the admissibility of advertising for these products. To date, tobacco products have already been subject to comprehensive advertising restrictions regarding advertising on the radio, in the press and other print publications, online and in other audiovisual commercial communication. These advertising bans will now be extended to e-cigarettes (whether containing nicotine or not). Other advertising bans will also be introduced with the draft bill to amend the Tobacco Products Act, specifically a ban on outdoor advertising, giving free samples of the products to consumers and offering such products as competition prizes. The draft also provides for restrictions on cinema advertising. Cinema advertising will not be completely prohibited, but only permitted in connection with films given an 18 certificate by the highest regional authority or a voluntary self-regulation organisation in the procedure under Section 14(6) Children and Youth Protection Act. Virtually the only remaining advertising space will then be the point of sale.

It remains to be seen whether the draft bills detailed here actually become law in this form – especially those parts of the drafts which go beyond the standards of the Directive. While the first round of drafts, specifically the Draft of a Law to Implement the Directive on Tobacco Products and Related Products and a draft of a supplementary Regulation for Implementing the Directive on Tobacco Products and Related Products should pass through the legislative procedure without any major problems since they only implement the provisions of the Directive anyway, there is likely to be considerable resistance from the industry regarding the subsequently planned amendments to the Tobacco Products Act or Tobacco Products Regulation.