Regulating Tobacco: How FDA Regulations Impact Public Health and the Economy

Photo by Kristaps Solims on Unsplash

Cigarettes trace their history back as early as the 1700s. By the twentieth century, cigarettes gained high popularity, followed by the rise of e-cigarettes or “vaping” devices. Specifically, e-cigarettes have been marketed as a way to help regular smokers quit smoking. Vaping has since captivated young people with its marketing for being safer than regular cigarettes and having different flavor varieties. The cigarette industry is regulated by The Federal Drug and Food Administration (FDA) primarily through the Tobacco Control Act and the Food, Drug, and Cosmetic Act, both of which are federal laws. Despite knowledge of the negative health ramifications of their use, these products have continued to be used by individuals in America and around the world. The enforcement of the FDA regulations has, in turn, influenced both the public healthcare system and the United States economy.  

Public health has benefitted as a result of tobacco regulations. Namely, it has worked to reduce access to tobacco consumption by young individuals, creating a minimum age requirement of twenty-one and putting restrictions on how tobacco products are marketed. The regulations also require ensuring product safety and control. Under the Tobacco Control Act, the FDA can set standards for levels of nicotine and ingredients that can be used in tobacco products and gives the FDA authorization to visit and inspect tobacco-producing facilities every two years. 

Tobacco regulations, while beneficial for public health, have also been met with criticism. As a consequence of working to ensure safety and quality control, tobacco-producing facilities incur an increased cost to maintain strict standards of compliance. This cost can then be pushed onto their consumers, who, rather than paying the price increase, can turn to black markets with no oversight for their tobacco products. 

Another criticism is whether these regulations should focus solely on reducing the harm of tobacco products or aim for their complete prohibition. Harm reduction identifies tobacco products, like e-cigarettes, as having benefits to help routine cigarette smokers reduce or stop their nicotine intake due to the controlled levels of nicotine in e-cigarette products. However, this can create a normalization of using e-cigarette products, specifically in younger individuals, due to marketing them as safer than traditional cigarettes. 

On the other side of the debate, the complete prohibition of tobacco products looks at the overall benefit to public health by removing tobacco products entirely from the market. The prohibition of tobacco has been a longstanding movement since 1954 when lung cancer was confirmed to be caused in some part by smoking tobacco. The detriment of this approach is the creation of black markets where unregulated tobacco products are bought and sold, which then creates an even greater health risk and removes the ability of users who are looking to reduce or stop their nicotine intake to do so. The debate ultimately turns on implementing regulations to protect public health without creating other unnecessary harms or risks. 

In addition to public health, FDA regulations on the tobacco industry also have economic implications. These regulations affect tobacco product facilities and manufacturers by increasing their costs to stay compliant, while smaller manufacturers also risk losing income by adhering to strict regulations while trying to remain competitive in the market. Like manufacturers, retailers are also affected by FDA regulations through increases in operational costs, such as ensuring that advertisements of tobacco products are in compliance and ensuring that they have the inventory from the manufacturers to maintain their business. 

With the increased costs to tobacco manufacturers and effects on retailers, consumers are also affected by the downstream effects of the regulations. Increased regulations impose expenses on manufacturers, which are then passed on to consumers. This ultimately could lead to the reduction of tobacco product sales more generally, affect the revenue earned by small retailers, and lead to an expansion in the black market for unregulated tobacco products. Moreover, consolidation of tobacco product retailers could lead to monopolization of the industry, which could lead to potential antitrust issues. 

The economic implications of the regulations also affect public health costs and government revenue. With the FDA regulations in place, there is the benefit of long-term savings in healthcare costs. If routine smokers are turning to e-cigarette or vaping products, the regulations in place can help to reduce smoking rates, leading to a decreased percentage of tobacco users who are diagnosed with cancer, respiratory, and other cardiovascular diseases that increase with tobacco usage. The regulations also contribute to minimizing exposure to toxic chemicals found in tobacco products. The United States government spent $240 billion in 2018 alone on healthcare costs. With a regulated tobacco and vaping market, it yields a healthier society and reduces the burden on healthcare systems. 

In addition to healthcare, government revenue is affected by FDA regulations through tax shifts and other economic trade-offs. The federal tax in 2024 for a pack of cigarettes was $1.01; however, state taxes on tobacco products vary nationwide. For example, states such as California, Nevada, Oregon, and Utah all tax based on an ad valorem system, which is designed to tax “manufacturer, wholesale, or retail price.” Differing from the previous system, states like Kansas, Louisiana, and Virginia tax ad quantum based on “volume or number of cartridges.” The changes in government revenue are attributed to these sin taxes, like tobacco and vaping taxes, which serve to counteract the negative effects caused by tobacco use by funding programs such as Medicare. 

In line with previous regulations, at the beginning of this year, the FDA announced a new proposed rule that would limit the amount of nicotine that could be used in tobacco products, capping the level at 0.7mg. Much like the Tobacco Control Act and Food, Drug, and Cosmetic Act, the new rule will also influence public health and the U.S. economy, likely impacting the tobacco industry in the coming years.

*The views expressed in this article do not represent the views of Santa Clara University.