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Ep 17 - John Coogan, Lucy/TBPN/Founders Fund - The Insane State of Nicotine Regulation in the US
84 Plays27 days ago
On this episode of the Sphere Podcast, Pascal-Emmanuel Gobry, Publisher of Sphere Media, talks to John Coogan. John is the founder of Lucy, a non-tobacco nicotine products company, and TBPN, and an Entrepreneur-in-Residence at Founders Fund.
John and PEG discuss the irrationality of the way nicotine is regulated in the US and how that makes life harder for entrepreneurs and, more importantly, makes it harder to get people to quit smoking.
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Transcript
Introduction and Guest Welcome
00:00:00
John Coogan
You
00:00:00
Pascal-Emmanuel Gobry
Hello, everyone, and welcome to the Low Production Values Fear podcast, which is shot from my terrorist hideout in the unrecognized nation of the Western Sahara. ah I have a very good guest today ah whose name is John Coogan, and he runs a company called Lucy. I'm just going to let you – very good, very good. I'm just going to let you explain what the company is and what it does.
Introduction to Lucy and Nicotine Industry
00:00:25
John Coogan
Sure. So we are a tobacco-free nicotine company, meaning that we sell ah pouches, nicotine gums. We also sold li nicotine lozenges for a long time. So products that do not contain tobacco, but they do contain nicotine.
00:00:40
John Coogan
We started the company in 2016 and have been building it for the last going on nine years now, ah mostly based in the United States, ah sell on e-commerce and in retail stores um and products. have been working with the FDA to get our products authorized. And I'm sure we'll talk about everything involved with that ah over the next hour, however long we talk.
00:01:02
John Coogan
Thanks for having me
00:01:03
Pascal-Emmanuel Gobry
Yeah, very cool. ah As I was saying before the show, as a Frenchman, I'm obviously a fan of all things nicotine. I'm also a fan of all things ah tobacco, but those are two different things, which is important for people to understand.
00:01:17
John Coogan
me. Yes.
00:01:19
Pascal-Emmanuel Gobry
um And so, well, okay. So let's start with a sort of broad overview of the landscape.
00:01:30
John Coogan
Sure.
00:01:31
Pascal-Emmanuel Gobry
Because this ah this is the key thing, the the the sort of the law or the regulatory landscape or whatever hasn't caught up to the fact that not everything that contains nicotine is a cigarette.
Challenges and Historical Context of Nicotine Regulations
00:01:46
John Coogan
yes
00:01:46
Pascal-Emmanuel Gobry
and And so that creates a problem if you want to bring a new nicotine product to the market.
00:01:52
John Coogan
yes
00:01:53
Pascal-Emmanuel Gobry
um So how how does that work exactly? And then we'll get we'll get into the weeds, but at the sort of high level, you know i'm I'm Jim, I wanna start a new company making pouches, you know what do I do?
00:02:05
John Coogan
Mm-hmm.
00:02:08
Pascal-Emmanuel Gobry
how How many people in the government do I need to talk to before I can get a product in front of consumers?
00:02:14
John Coogan
Yeah, I mean, it depends heavily on what country you're operating in and what kind of consumer you're you' targeting.
00:02:18
Pascal-Emmanuel Gobry
Yeah, i in the United States.
00:02:20
John Coogan
But in the United States, i mean, the U.S. has a fraught relationship with nicotine and tobacco. ah Humans have consumed nicotine and tobacco for thousands of years, typically ah actually originally used orally, just putting the tobacco leaves in their mouths, ah burial rituals for various different things.
00:02:40
John Coogan
Like very ancient civilizations used tobacco in all sorts of spiritual rituals. Then ah turn of the century, the cigarette rolling machine is popularized. And all of a sudden, cigarettes become very, very cheap.
00:02:53
John Coogan
And they become something that people can smoke 20 of in a day. And you get the rise of the pack-a-day smoker ah through industrialization. It becomes very easy to ah chain smoke all day long.
00:03:04
John Coogan
and those And those products led to very high rates of lung cancer. So something like 50% of ah daily smokers over their entire lifetime will have smoking be directly responsible for their demise ultimately. And it takes something like 10 years off of a person's life if they're smoking cigarettes every single day constantly.
00:03:24
John Coogan
And so ah the U.S. knew that this was a problem. The Surgeon General report goes out. Eventually, there's a master settlement agreement. There is a relationship between ah a settlement between the U.S. government and all the big tobacco companies saying, hey, we know this is a problem.
00:03:39
John Coogan
And in order to get a ah you know, in basically in order to internalize the negative externality, which is the cost on the health system um of all these people going into the hospital system and racking up fees and bills for their lung cancer uh big tobacco would have to pay and so in the 90s the master settlement ah agreement is uh is finalized um but then in the early to mid two thousand s 2010, there's a rise of a new class of product, e-cigarettes, vapor products, also tobacco-free nicotine pouches.
00:04:16
John Coogan
And so ah there is a push in 2008 by the Obama administration to pass the ah Tobacco Control Act. And this gives the FDA proper authority over tobacco-containing products, which they didn't have before.
00:04:29
John Coogan
And so if you think back to the history of tobacco regulation, a lot of it was done through the FTC though or the FCC, the Federal Communications Commission. And so when they'd slap the big tobacco companies hands, they would so they wouldn't say your products are unapproved drugs. This is an FDA issue.
00:04:45
John Coogan
They would say this is an FCC issue. This is an advertising issue. You've been going around saying nine out of 10 doctors recommend smoking Marlboros or whatever. You can't say that anymore. No more advertising to kids.
00:04:57
John Coogan
No more advertising on TV. No more billboards. They used to have a ah ah camel ah smoking a cigarette in Times Square, New York, in Manhattan. And it would it would puff vapor. they had it was like a smokestack that would smoke. And there were tons of these ads that were encouraging people to smoke.
00:05:13
John Coogan
They said, look, you guys can keep selling these.
00:05:15
Pascal-Emmanuel Gobry
Marlboro Man, iconic.
00:05:16
John Coogan
The Marlboro Man. Exactly. You guys can keep selling them, but you basically can't advertise. You can't advertise anywhere where there are kids. Sure, you can put up, you know, display units in in in gas stations and tobacco stores, but we're not going to let you run Super Bowl ads. We're not going to let you advertise on kids cartoons anymore.
00:05:34
John Coogan
ah No more ads from you guys. was FCC issue. That wasn't enough because a lot of people were flooding the market with new products. that didn't quite conform to the definition of a cigarette, things like e-cigarettes.
00:05:45
John Coogan
So they would be free to run ads. And so the it actually made more sense for the government to look at this as a as a drug or a nutritional supplement, something like the way energy drinks are regulated or alcohol is regulated or ah stimulants and you know all sorts of ozempic, all these things that are regulated by the FDA.
00:06:04
John Coogan
And so the Food and Drug Administration gets regulatory authority in 2008. And it takes them a while to spin up this new organization. Now, the FDA is a very large organization. They oversee something like five or six different groups of products. So one would be drugs like cancer drugs, Ozempic, Adderall. All of these are drugs that the FDA oversees.
00:06:23
John Coogan
Now, there's nutritional supplements, that protein powder. You can kind of say anything. It's very loose regulation there. you don't have to get them approved. It's not like you need a new double-blinded trial to bring a new protein shake to market.
00:06:34
John Coogan
um Then there's foods, there's veterinary medicine, there's ah medical devices. So the the machine that actually tests your blood for the level of testosterone or cholesterol, that's a machine that's approved by the FDA. And so they have a a whole bunch of different governing bodies within the FDA. yeah They set up a new one, the the Center for Tobacco Products, CTP.
00:06:52
John Coogan
CTP takes some time. Eventually, they come out what's cut with what's called the deeming rule. And it goes into effect on August 8th, 2016. There's no coincidence that our company was started shortly before August
FDA Regulatory Process and Challenges
00:07:04
John Coogan
8th, 2016. And the reason is because before the deeming rule went into into effect, you could launch products and then essentially keep marketing the product, keep growing the product, keep selling the product until the FDA gave you the thumbs up or the thumbs down.
00:07:19
John Coogan
But if you came to market after August 8th, 2016, you would have to wait for an affirmative authorization from the FDA to say, you're good.
00:07:28
Pascal-Emmanuel Gobry
Oh.
00:07:29
John Coogan
You can sell this product. And so to answer your question, if you want to start a new company in the United States that sells a tobacco-containing product, or now just a nicotine-containing product, in theory, if you are abiding by the law, you should...
00:07:44
John Coogan
Start by formulating your product in a lab, you know making sure that the ingredients are high quality, making sure that the ah customer experience is as you intend it. Get the flavor right, get the texture right, get all the ingredients right.
00:07:57
John Coogan
And then you take that and you start doing studies on it. And you figure out how does it affect the consumer. ah is the Is the material hazardous to the environment? What happens if you leave this in the trunk of your car for two years?
00:08:09
John Coogan
Is it gonna go bad?
00:08:09
Pascal-Emmanuel Gobry
Yes.
00:08:10
John Coogan
Is it just gonna be ineffective? Or is it gonna hurt the person, right? We wanna know, is it gonna cause problems? Is it gonna cause cancer? And so nicotine, while certainly addictive, is nottting nicotine is not a carcinogen.
00:08:22
John Coogan
And so what that means is that if you're consuming pure nicotine, the most aggressive example of this would be Nicorat, you are unlikely to get cancer from Nicorat, for example.
00:08:23
Pascal-Emmanuel Gobry
yes
00:08:31
John Coogan
Uh, but there are plenty of other substances that you could put in ah nicotine gum that could cause cancer, uh, that aren't nicotine. You could add back tobacco, right? And then that you would be adding back cancer. so And so that's what the FDA is testing for.
00:08:44
John Coogan
And so they want to make sure that your product is doing more harm than good. They are in the harm reduction business and their mandate is, is this product suitable for the protection of public health? The FDA is mandated to protect the the public health of Americans.
00:08:59
John Coogan
And so after you formulate your product, you do a bunch of studies, you write down all the ingredients, all the suppliers, how it's made, all these different things. You put that together into what's called a PMTA application, the pre-market tobacco application.
00:09:13
John Coogan
Thousands of pages, sometimes hundreds of thousands of pages. Some companies, big tobacco companies, have spent hundreds of millions of dollars on these applications. It is akin to getting a cancer drug approved in some cases.
00:09:20
Pascal-Emmanuel Gobry
Right.
00:09:24
John Coogan
You can also do it cheaper. there are There are different ways to to build out that application. You turn that into the FDA. They review it. ah Some of these products have been in review for...
00:09:35
John Coogan
almost a decade. Some of them might get approved quickly. We don't really know. ah Not many have been approved.
00:09:39
Pascal-Emmanuel Gobry
right
00:09:40
John Coogan
ah But, you know, you look at the case of Zinn, which is owned by developed by Swedish Match that came to the market in 2016, actually 2014, took a decade to get approved. um And now now it is authorized.
00:09:53
John Coogan
And so you in theory should do all that work File your PMTA, wait for the FDA to give you the thumbs up, authorize your product. And once they do, then you can go and sell the first unit in in America.
00:10:07
Pascal-Emmanuel Gobry
Okay, so there's i mean there's a million things I want to go into in there.
00:10:11
John Coogan
Please.
00:10:12
Pascal-Emmanuel Gobry
so just But just to get the highlights, it took 10 years for a Swedish company.
00:10:15
John Coogan
Yep.
00:10:20
Pascal-Emmanuel Gobry
So ah the nicotine pouches are basically a Swedish invention, or if they didn't invent it, they popularized it.
00:10:23
John Coogan
Yes.
00:10:26
John Coogan
Totally.
00:10:26
Pascal-Emmanuel Gobry
So this was like an established company ah from you know as a serious country, and you know not Zimbabwe, a country where they have serious...
00:10:29
John Coogan
Yep. Totally.
00:10:36
John Coogan
Just to ground it, they were doing $2 billion dollars in revenue and they were purchased for $16 billion. So you can think about this like, ah you know, a $16 billion dollars company has thousands of employees, tons of PhDs, tons of scientists, tons of people in Washington. They had offices in Washington, D.C.
00:10:52
John Coogan
specifically just to say, hey, FDA, you want to meet with us? We'll send over our guy. Hey, there's a cocktail hour with some senator over there. Let's send over our guy to put in a good word. That type of stuff was going on for a long time.
00:11:02
Pascal-Emmanuel Gobry
Yeah. Yeah.
00:11:02
John Coogan
And it still took a decade.
00:11:03
Pascal-Emmanuel Gobry
yeah
00:11:04
John Coogan
And the reason was because at first it was a very, it wasn't a super popular product. So it wasn't high priority. The FDA was dealing with COVID. The FDA was dealing with Juul. and ah And then they got to Zin.
00:11:16
John Coogan
um And then also, ah they really want to get the science right. So to kind of steel man the FDA go moving slowly, they they so they think about it as, you know, we really, really, really want to make sure that these new products are actually suitable for the protection of public health, and they're not causing a new health crisis.
00:11:34
John Coogan
So that's why it takes so long.
00:11:34
Pascal-Emmanuel Gobry
Yeah. Yeah. So, but just, just wanted to get out there on the record, how onerous this process is.
00:11:40
John Coogan
Yeah.
00:11:44
Pascal-Emmanuel Gobry
Okay. So you described the deeming rule. Can you explain what that is?
00:11:48
John Coogan
Yes. So ah when the FDA got regulatory authority, there were a lot of products that had been on the market for a long time. Case in point, Marlboro. Marlboro has been sold for 70 years as in its current incarnation, essentially.
00:12:04
John Coogan
It was originally a ah woman's cigarette, actually. And then they went to ah ah Madison Avenue, kind of literally like Mad Men. If you've seen Mad Men, the show, they went to some of those guys.
00:12:14
Pascal-Emmanuel Gobry
Yeah.
00:12:16
John Coogan
ah And they And they decided, hey, we have this filtered cigarette technology. We think that men might like this. What can we do to make this a more masculine cigarette?
00:12:27
John Coogan
We have this thing. It's called Marlboro. It had a GH at the end. ah let's Let's rebrand it and relaunch it as the man's cigarette. And Leo Burnett, the the marketer on the project, the the outside marketing agency, the the Don Draper of the era, said, umm what's what's masculine?
00:12:45
John Coogan
And he said, it's a cowboy. And he took a picture of a cowboy and he put Marlboro country over it. And he was so excited that he printed it out and he walked up and down the office and said, isn't this the greatest thing I've ever created?
00:12:58
John Coogan
This is the greatest thing. This is going to be amazing.
00:13:01
Pascal-Emmanuel Gobry
ah
00:13:02
John Coogan
And he was 100% right. And it's hilarious because it does not seem that complicated to me. Maybe that's just her historical back.
00:13:09
Pascal-Emmanuel Gobry
That's just, I mean, that's just genius. That's just, you can't.
00:13:12
John Coogan
So simple, right? So simple, but it really did work. And men picked up Marlboro in droves. And so Marlboro is currently the number one cigarette in America. And it's a, what, $50 billion dollar asset, maybe? I don't know. they I think they sell, I mean, they sell billions of dollars worth of Marlboros every year, still like clockwork.
00:13:32
John Coogan
Altria is a massive company because of it. It's their cash cow product. And ah and and And all of that marketing like drove massive adoption.
00:13:43
John Coogan
Then the question was, okay, the FDA has regulatory authority over Marlboro. how what are we going to do with Marlboro? Like, we're not just going to ban it because that was the deal that was struck during the master settlement agreement. It was don't ban us and we'll pay you.
00:13:58
John Coogan
We'll pay states and local governments for the damage that we're doing. um And so what they said was we need to we need to create a cutoff date. um the Essentially, like if your product was on the market before, I believe it was like 1996, you would never have to submit a PMTA. yeah You were just default approved.
00:14:18
Pascal-Emmanuel Gobry
Oh.
00:14:20
John Coogan
And so that put all of the old cigarettes in there. Now, it's still technically complicated because Marlboro does make small changes to like the paper and the filter and they and and they redo their supply chain every couple of years. And like there are small tweaks that no one would ever notice. But legally, from an FDA perspective, there's a question of do they need to submit a new PMTA? But essentially, there's a deeming rule and it said we have deemed that these products are
Innovation and Competition in Nicotine Market
00:14:44
John Coogan
they're on the market already. We're not going to do anything about them.
00:14:46
John Coogan
We're just going to kind of leave them untouched. We've educated people. There's been billboards all over the world that say smoking kills. So people know that they're dangerous. We're not going to touch them. We're not going to ban But what about the new stuff?
00:14:57
John Coogan
What about the jewel? What about the blue? What about the n enjoy? What about the Zen? ah Well, those they're going to be deemed as well. but they're going to be deemed in the sense that they were on the market before August 8, 2016, which means they're not good forever.
00:15:10
John Coogan
They still need to submit the PMTA, but we're not going to take them off the market. We're not going to shut them down unless we can prove that they're harmful. And so... They have the chance to prove to us.
00:15:21
John Coogan
And so what did they all do? They all came and they put they did a bunch of research studies. They they they they did blood tests and and analytical biology and chemistry. And they they they they show you a mass spec of every single ingredient of what's in these things.
00:15:34
John Coogan
Send that into the FDA. yeah The FDA, for en Enjoy, they said, looks good. You're approved. For Juul, they said, you're denied. But then they eventually rescinded that and gave Juul kind of a do-over. It's a more complicated situation that we can get into.
00:15:47
John Coogan
And then for Zin, they just took a long time. And then eventually they said, Zin's good to go. And they authorized Zin. But it took years, right? And so the deeming rule is basically the the the creating the bucket of what is deemed to be a pre-proclaimed deeming rule product, which is allowed to be sold.
00:16:02
Pascal-Emmanuel Gobry
Right, right, right.
00:16:04
John Coogan
then so then if you're an entrepreneur and you just decide, hey, I want to start a company here, I'm just going to jump in.
00:16:04
Pascal-Emmanuel Gobry
right
00:16:09
John Coogan
You don't have a deemed product. And in theory, the FDA should shut you down or could shut you down. And they have for a lot of products that haven't been deemed or came to the market after August 8th, 2016 through a loophole or maybe just through skirting the law entirely.
00:16:24
John Coogan
And there's been lots of stories about fly-by-night vape companies, fly-by-night you know companies internationally, shipping products in, ignoring the FDA regulations. And because they are not deemed, because they not they cannot prove that their products were sold before August 8th, 2016, the FDA has the ability to ban them from imports, send them marketing letters, fine them, do all these things that they have authority to do.
00:16:48
Pascal-Emmanuel Gobry
All right. ah That was very clear. All right. Now let's talk about PMTAs. So what's a PMTA and how much is it going to cost me?
00:16:54
John Coogan
Yes.
00:17:00
John Coogan
Yeah. PMTAs are the pre-market tobacco application. And so what you are trying to do is you are trying to meet the criteria set forth by the FDA that your product is suitable for the protection of public health.
00:17:16
John Coogan
And what that means is that we have a cigarette epidemic. We have a smoking crisis. A lot of people smoke cigarettes. And products that can get people to switch from cigarettes to alternatives that are less harmful, they have a net good. You take someone who's smoking in a pack a day and you move them to a less harmful product like a vapor product or a tobacco-free nicotine product.
00:17:39
John Coogan
In theory, you can extend their life and improve their health outcomes and reduce the risk of lung cancer. ah But there is a risk because you could wind up converting no smokers, helping no smokers quit, and only getting children to use nicotine.
00:17:57
John Coogan
And we know that that that children who use nicotine... become much more addicted to nicotine and they stay addicted much longer. And if you talk to people who use nicotine and they started when they were 30, they will often tell you, and there's some data that supports this, they will often tell you that, yeah, i use it and I use it a lot, but you know when I go on a vacation and I don't bring it with me, it's actually pretty easy to kind of quit cold turkey or I can take breaks.
00:18:23
John Coogan
But when you talk to somebody who was like, yeah, I picked up smoking when I was 15, was smoking and vaping constantly, It's much harder because your brain's still developing. And when your brain's developing, you get used to the patterns of of things. People worry about this gambling.
00:18:37
John Coogan
You play a lot of, ah you know, ah slot machine games as a kid, some video game that has loot boxes. You become a gambler. And then later in life, you struggle with a gambling addiction. And so...
00:18:48
John Coogan
The FDA is trying to look at how much good are you doing? Essentially, how much how many people are you keeping from smoking, getting them to stop smoking? How much are you doing to help the health of people versus how many kids are you initiating? How many people are having bad health outcomes?
00:19:05
John Coogan
and And there's other things like, you know, it's totally possible to formulate a product that while it just has pure nicotine, it has some other chemical that hurts your lungs. We we we we kind of got a scare of this with like the popcorn lung ah E vitamin E acetate E-Voli scandal that happened in 2018-ish.
00:19:23
John Coogan
ah And during that, there were, this wasn't nicotine vapes. This was actually cannabis vapes, but they had a chemical in there that would cause acute lung injury. And so if you look at the difference between, well, Cigarettes cause chronic lung injury. Do I really want to trade that for acute lung injury? Probably not. That shouldn't be on the table.
00:19:40
John Coogan
And so the FDA moved very quickly. And actually, the the CDC and a lot of other organizations worked on that as well to to to stop those harmful products from being on the market. um And so the PMTA is your chance as a founder or a business owner to prove to the FDA to send all the data to show that your product is not harmful acutely or chronically.
00:20:01
John Coogan
and is actually a net benefit for society and will make Americans healthier on net. it is a It is an evaluation of the net benefit and the harm reduction that you're bringing to bear. and when you look at a When you look at a company like NJOY or ZIN, which have both been authorized, it's pretty clear that what the FDA is saying is that on the whole, these products, they might be abused by certain people. They might have some negative drawbacks.
00:20:31
John Coogan
But they have more they do more good than harm. And so the FDA has said they are suitable for the protection of public health. They can be sold legally. Now, that doesn't mean that they can sell to anyone or they don't have to ah abide by marketing regulations or they don't have to ah age verify people. They still have to do all that.
00:20:48
John Coogan
But they can legally sell their products.
00:20:52
Pascal-Emmanuel Gobry
Okay, so, ah I mean, and just just to clarify for people listening, the P in PMTA stands for pre-market.
00:20:57
John Coogan
Sure.
00:21:00
Pascal-Emmanuel Gobry
So this is stuff you you have to do before you have a product in front of, ah unless, yeah.
00:21:04
John Coogan
Unless you're a deemed product, which all the major products have been deemed so far, but moving forward now, if there is a new product, so, and realistically, this will be probably just the domain of big tobacco from now on because it's so cost prohibitive and so time intensive.
00:21:09
Pascal-Emmanuel Gobry
Right, right, right.
00:21:12
Pascal-Emmanuel Gobry
Right.
00:21:21
John Coogan
It will be very hard for new companies to, to go through that process because it could take years, millions of dollars. How do you justify that to investors before you can, so you can show traction in the, in the, in the world?
00:21:35
John Coogan
So if you're going to build a competitor to Zin, you know, you're going to say, hey, I got a better Zin. Trust me. It'll just be five years until we can start selling this thing. And it's like after you get approved, well, then you still got to go beat Zin.
00:21:47
John Coogan
Like that's really hard.
00:21:47
Pascal-Emmanuel Gobry
Right, right, right, right.
00:21:48
John Coogan
And there's a whole bunch of other companies that it's a very crowded market already. so ah So the pre-market, it's it's more of like a vision towards the future because of this deeming rule.
00:21:59
John Coogan
um But yes, it it is it that is technically what it stands for.
00:22:04
Pascal-Emmanuel Gobry
So just just to be, so ah I'm just trying to get a sense of how onerous and how ah sort of niggling it is.
00:22:18
Pascal-Emmanuel Gobry
ah the the The amount of data you have to provide, the the number of hoops you have to jump through.
00:22:22
John Coogan
Yep.
00:22:27
Pascal-Emmanuel Gobry
Like I remember reading some somewhere, like you have to get like the color approved, or did I make that up?
00:22:32
John Coogan
Oh yeah. Everything. Yeah. Yeah. I mean, everything. I mean, the, I don't know if this is a rumor or if this was reported, but I think Juul when, when they were denied, ah the, the denial was based on something around, uh, a machine that is used to make part of the Juul.
00:22:51
John Coogan
They didn't give the model number for the machine that makes that piece of the product. And they had the number, but they didn't give it to the FDA in the application.
00:23:02
John Coogan
And of course, the dual folks were upset because they were like, wait, we we would have happily told you that if you asked us. And so a lot of it hasn't necessarily been that the FDA has has been historically i like asking for too much information. I think it's actually great that they can make an informed decision with a ton of data and they should have all the data.
00:23:22
John Coogan
The problem is is that the PMTA is not a form that you fill out. Right. It's not like there are some guidance, there's some guidance, but it's very opaque because anytime the FDA says we, this is exactly what we want.
00:23:32
Pascal-Emmanuel Gobry
Oh.
00:23:35
John Coogan
If you give them that and then they make a mistake, then they're open to lawsuits. And so there's all these like odd back channel communications. And, and i mean, even the whole process for,
00:23:48
John Coogan
for proposing new rules. ah The FDA has something called the ANPRM, which is the advanced notice of proposed rulemaking. So if they want to change a rule, an FDA law or rule, they they don't just propose the rule.
00:24:05
John Coogan
They issue an advanced notice saying we are going to propose a new rule. So then people can chime in and say, if you do this, you're going to destroy my business, which will have a billion dollar impact and I will sue you for destroying my business.
00:24:17
Pascal-Emmanuel Gobry
Right, right.
00:24:21
John Coogan
So get ready to fight or, hey, that's actually reasonable. We're fine. Most of the time it's the former from, you know, the big guys. ah But yeah, it's ah it it is onerous. There's a lot that you have to put in. You have to turn over any data that you generate around your products. You have to share. um a lot of that is good. It's really just the the speed and the and the the fact that the FDA has been historically somewhat opaque about what they want that's made it very difficult for companies to build their PMTAs.
00:24:50
John Coogan
um it's it it It would be a lot easier if they had put out a playbook for how to... build a PMTA that is ironclad, but instead there's a lot of like technical jargon that can easily be misconstrued. And because they're so overwhelmed from COVID, so overwhelmed from the vape crisis, ah there's been a lot of incentive internally to find technicalities to just cull the herd because they got millions of these applications.
00:25:19
John Coogan
they they They have a lot of people working there, but not that many. And so anything that they can do to kick back an application is, is, you know, in their favor and buys them more time.
00:25:30
Pascal-Emmanuel Gobry
Right, right, right.
00:25:31
John Coogan
Now they are ranking applications by, by market penetration. And so with, with vaping, they did Juul first. Obviously Juul was the biggest product and with pouches, Zinn was the first one that they authorized.
00:25:45
John Coogan
Um, and that makes sense because Zinn is the 800 pound gorilla in the category. Uh, and so they've made some reasonable decisions, but it's all been very slow. And I think, I think what frustrates a lot of people in the industry is that the the FDA was able to approve the COVID vaccines in something like three to nine months. like It was pretty fast between but Pfizer, Moderna, and Johnson & Johnson developing the vaccines to them being approved, at least with an emergency use authorization in EUA.
00:26:15
John Coogan
um but and and And if they can, and and the vaccine's like, it's more complicated than then throwing some tobacco-free nicotine in a pouch.
00:26:21
Pascal-Emmanuel Gobry
it's a lot more complicated.
00:26:22
John Coogan
And so when I look at vaccines a year, ZIN 10 years, I'm like, this isn't quite right. Like, you know, scientists should all agree that it's easier to evaluate the the the the potential benefit or harm of vaccines.
00:26:30
Pascal-Emmanuel Gobry
Yeah. Yes.
00:26:35
John Coogan
of tobacco-free nicotine thrown in a pouch. It's been used in Sweden for like 40 years. you know This is not like entirely new technology. It's not some new mechanism. We've studied the nicotinic receptor and how nicotine affects humans for generations now.
00:26:43
Pascal-Emmanuel Gobry
yes
00:26:47
John Coogan
There's tons of studies about it. ah this is not This is not rocket science. And so it should move faster. And there was a little bit of, for the last a couple years, it was very political. And if you did sign off on the dotted line and said, I approve this product, and then it wound up being bad, you're going to lose your job.
00:27:02
John Coogan
So it became it became highly political.
00:27:03
Pascal-Emmanuel Gobry
Right.
00:27:05
John Coogan
But hopefully we're in a new era and ah the FDA but will will move quicker, which is I think what everyone in the industry is hoping for.
00:27:12
Pascal-Emmanuel Gobry
Yeah, I mean, it's kind of like I don't know if you've seen that meme, you know, we're getting close to a tax season where it's like the IRS says, you owe me money. And then the guy says, how much? And then they say, guess.
00:27:22
John Coogan
I don't know. Guess. Yeah.
00:27:24
Pascal-Emmanuel Gobry
And it's such a funny meme.
00:27:25
John Coogan
It's like, what if I get it wrong? You go to jail. Yep.
00:27:27
Pascal-Emmanuel Gobry
And so it's basically like, you know, what, you know, what do I need to tell you to get my product to market? Guess.
00:27:33
John Coogan
Yep, yep, yep. I mean, ah yeah, in general, yeah.
00:27:34
Pascal-Emmanuel Gobry
That's crazy. And just to be clear, is there like a back and forth or
00:27:39
John Coogan
Yeah, there's a little bit of back and forth. It depends on how big your company is. Obviously, if you're ah you know a $200 billion dollars company and you have a whole office in D.C., you're going to be able to pay more lobbyists. You're going to be able to get more face time. And that also makes sense. like Like time is scarce at the FDA. But ah there isn't that there isn't as much back and forth as I think people expect.
00:27:58
John Coogan
I think in general, like if you've ever been to the DMV and you've seen how the DMV operates, it's a pretty reliable business. it's a pretty reliable extrapolation to assume that every government organization works basically similarly.
00:28:12
Pascal-Emmanuel Gobry
Right.
00:28:13
John Coogan
And so, uh, yeah, it's not exactly like NASA on the moon mission over there.
00:28:18
Pascal-Emmanuel Gobry
OK. ah Well, that I mean, thank you for confirming some stereotypes about the government.
00:28:23
Pascal-Emmanuel Gobry
ah It's interesting because I talked to a bunch of people in pharma, and they were actually, ah ah and not not not big pharma companies, even smaller ones, they were actually appreciative of the FDA.
00:28:23
John Coogan
Yeah.
00:28:33
John Coogan
Yeah.
00:28:35
Pascal-Emmanuel Gobry
They said the big problem is the NIH. So it's ah it's interesting to get those perspectives.
00:28:38
John Coogan
Yep.
00:28:40
Pascal-Emmanuel Gobry
I mean, there's so many directions I could go. I guess the first one is the economics, which is basically everything you've told. It is basically like it's one on one of how to create a cartel and how to essentially like create rents for big companies and and make it impossible.
00:29:01
Pascal-Emmanuel Gobry
for small companies and entrepreneurs to compete.
00:29:04
John Coogan
yep
00:29:04
Pascal-Emmanuel Gobry
um There was this study on tobacco done not long ago that basically showed that when you ban tobacco advertising in a country or whatever, ah the market shares stopped moving.
00:29:19
John Coogan
course.
00:29:19
Pascal-Emmanuel Gobry
And when you think about it, it makes perfect sense, right?
00:29:22
Pascal-Emmanuel Gobry
Because how do you compete in the marketplace by advertising, right?
00:29:22
John Coogan
Yep.
00:29:27
John Coogan
Yep.
00:29:28
Pascal-Emmanuel Gobry
And so you know going back to Marlboro, it if you If you're Altria, it's actually maybe not such a bad proposition to to have advertising banned and to have all of that stuff because you you essentially like have a rent.
00:29:42
Pascal-Emmanuel Gobry
Like Marlboro is the Nike or the whatever, the IBM of cigarettes and is going to remain that way forever.
00:29:42
John Coogan
Yeah.
00:29:47
John Coogan
Yeah.
00:29:50
Pascal-Emmanuel Gobry
Yeah.
00:29:52
John Coogan
Yeah, I mean, there's a reason why the ah the master settlement agreement was agreed to by Big Tobacco. It was negotiated by Big Tobacco, and they gave on the things that would eventually benefit them, for sure.
00:30:03
John Coogan
And there are a number of drivers of power law outcomes in the category. ah Marketing is not one of them anymore. Regulation is becoming one. um But distribution monopolies exist, and then also just brand monopolies.
00:30:18
John Coogan
Like to your point, Marlboro is still the the dominant cigarette.
Nicotine's Properties, Benefits, and Public Perception
00:30:21
John Coogan
And when ah filmmaker, ah even though it's illegal to pay for product placement in movies, when a filmmaker wants to ah characterize a so a character as a smoker, because what what that says about them, maybe they're the gritty detective and they smoke cigarettes, ah they're still going to pick Marlboro because it would be weird if they picked something generic. It would just it would just be jarring for the viewer.
00:30:47
John Coogan
And so these monopolies exist for a very, very long time.
00:30:50
Pascal-Emmanuel Gobry
Yeah. And ah ah well, that's just that's just the way it works. I mean, I i also i mean, you know, when you said, oh, you know, we want to find out if we're doing more bad than good, you know, this could have this negative effect, this positive effect.
00:31:09
Pascal-Emmanuel Gobry
But that that's impossible to prove. That's impossible to know with certainty over, you know, over 20 years, over millions of consumers.
00:31:17
John Coogan
I mean, i i I would somewhat disagree with that um because tobacco-free nicotine has been used for 60 years.
00:31:21
Pascal-Emmanuel Gobry
Okay, well, good.
00:31:26
John Coogan
Like we have data from Nicorette. People have been, Nicorette was introduced as a tobacco-free nicotine product to help people quit smoking. And while the label recommends that you use Nicorette for two weeks or a few months and then wind down and never consume nicotine ever again.
00:31:45
John Coogan
There is a sizable cohort of humans who quit smoking, use Nicorette and never stopped using Nicorette. And so I run into people all the time who said older guys who say, oh yeah, i smoked in college back in the sixties or seventies.
00:32:01
John Coogan
I quit using Nicorette. Now I chew Nicorette every single day. And so we can look at that data and see the effect that long-term nicotine use has, pure nicotine, tobacco-free nicotine, and we can bridge that data from that to nicotine pouches and other nicotine gum products.
00:32:16
John Coogan
And so I do think that there is a some sort of scientific ground truth that you can get to with these products. And I think the FDA agrees on that. I think the entire industry agrees on that. That's maybe the one thing that everyone agrees on.
00:32:27
Pascal-Emmanuel Gobry
Right. Okay. So that's okay. That's a very good observation. I had no idea that Nicorette was so old.
00:32:35
John Coogan
Oh yeah. Totally.
00:32:35
Pascal-Emmanuel Gobry
Uh, okay. Well, can you, can you talk a bit about, about that?
00:32:38
John Coogan
yeah
00:32:40
Pascal-Emmanuel Gobry
Like what, what the long run studies of, you know, non-tobacco nicotine use shows?
00:32:44
John Coogan
totally
00:32:47
John Coogan
Yeah. Yeah. I mean, so, so nicotine, uh, the, it's important to understand kind of the evolution of how nicotine is perceived because cigarettes were so harmful that people were, I mean, 500,000 people died in the United States of smoking during COVID.
00:33:07
John Coogan
COVID killed 460,000 people at the peak. Cigarettes still killed more people. 8 million people a year globally die from cigarettes. Like it was, it was so bad. it made sense to hit it with the biggest hammer possible.
00:33:20
John Coogan
And that, and that hammer was everything about cigarettes is bad. Right. And that's very logical. It makes sense. And, and so did they throw the baby with out with the bathwater by kind of demonizing nicotine as well?
00:33:33
John Coogan
Yes. But the impact was that less people smoked. And so it was probably worth doing. Now people are going back and looking at, okay, well, Can we do rat studies on the carcinogenicity of nicotine? Can we can we see if we dose rats with nicotine over their entire lifespan?
00:33:52
John Coogan
Will they get cancer? No. What about this Nicorette study? If we look at people who have been consuming non-tobacco nicotine for their entire life. What does their health outcome look like relative to somebody who smokes cigarettes? Well, they don't get cancer.
00:34:06
John Coogan
And so or or they don't get cancer at elevated rates over just your average person, right? There's no there's no increase ah off a baseline. Now, there are other factors that go into long-term nicotine use. Things like people worry about blood pressure, people worry about just the addiction and the fact that you're using it so long. That has an economic cost, of course. If you become addicted to something and you're using it constantly, that has an economic cost.
00:34:28
John Coogan
um But the main thing that changed culturally over the past decade has probably been that nicotine is now known by more people, not everyone, to not be a carcinogen.
00:34:43
John Coogan
And that has been recognized by not only the FDA, but also the state of California. They have ah propositions, is it Proposition 65? Which even when you walk into a Starbucks for a while, it would say, this coffee is has chemicals that are known by the state of California to cause carcinogens.
00:34:59
John Coogan
cancer and birth defects.
00:35:00
Pascal-Emmanuel Gobry
Ha ha ha.
00:35:01
John Coogan
And you see the gas stations, Prop 65 warning, hey, there's chemicals here. And nicotine is not on the pop Prop 65 list because the evidence is so overwhelming that nicotine is not a carcinogen. And so just just getting that out, you know but it's so delicate to message that from a scientific communication perspective.
00:35:18
John Coogan
Um, Andrew Huberman had a long hour long podcast all about nicotine breaking down the science. And he, uh, certainly popularized, I think a million people watch that video and more people have kind of repurposed it. So the, the information is getting out there, but it's very hard because as soon as you say, as soon as you put up a billboard that says nicotine is not a carcinogen, people are going to immediately think, oh, well I can start smoking cigarettes again.
00:35:40
John Coogan
And that's not true at all. That's not true at all. Like cigarettes are super carcinogenic. Like you do not want to smoke cigarettes. Um, And so that that kind of nuanced information is super, super hard to relay to the public en masse, whether you're a nonprofit or you're the government or you're a company.
00:36:00
John Coogan
It's a very nuanced take to say cigarettes are bad, but nicotine isn't a carcinogenic, but nicotine is addictive. And so if you took the nicotine out of cigarettes, the cigarettes wouldn't be addictive, but they would be carcinogenic. It's like it's too many things to hold in a slogan.
00:36:14
John Coogan
And so that's why it's still somewhat demonized and still somewhat like ah controversial.
00:36:22
Pascal-Emmanuel Gobry
Yeah, I mean, i i think it's I think it's a question of time because I frankly hadn't realized it until very recently, and I follow this stuff.
00:36:35
John Coogan
Yeah.
00:36:36
Pascal-Emmanuel Gobry
I mean, i don't know I don't follow it, but you know i'm a
00:36:39
John Coogan
Yeah.
00:36:42
Pascal-Emmanuel Gobry
I'm interested. um Let's talk, ah if you can, let's talk about the benefits of nicotine because I know people have opinions about that.
00:36:48
John Coogan
yeah
00:36:54
Pascal-Emmanuel Gobry
ah I think that it's it's a sort of natural antidepressant, natural mild stimulant.
00:37:02
John Coogan
yeah
00:37:03
Pascal-Emmanuel Gobry
I have a friend who has, ah he's a he's a very good statistician and he sort of, says it as a joke, but also the numbers do work.
00:37:14
Pascal-Emmanuel Gobry
It's just there's so much statistical noise doesn't mean much. But basically, he correlates the rise of obesity to the reduction in smoking.
00:37:24
John Coogan
Yeah, yeah, I've seen that. I've seen that correlation before. There's a lot of different things going on there with things in the food system and hyper-processed foods and just the cost of food going down.
00:37:30
Pascal-Emmanuel Gobry
Yeah, yeah, yeah. that It's not a scientific proof, right? You can't take, you know, 60 years of of social change and like plug two lines and be like, there you go.
00:37:34
John Coogan
Yeah. yeah
00:37:40
John Coogan
Exactly. Yeah, there's like a million other things going on.
00:37:40
Pascal-Emmanuel Gobry
that That's not how social science works, but it's still a pretty funny graph.
00:37:44
John Coogan
Yeah. And there's also the studies on ah Alzheimer's and Parkinson's and there's some ah like early data that maybe says it's neuroprotective, but ah I think there might be other ways to protect against those that ah might be commercialized. But I mean, at the most basic, like like nicotine is a mild stimulant, ah somewhat at the level of caffeine, certainly not at the level of any ah controlled substances like Adderall. And anyone who tries to tell you that ah nicotine is the limitless pill and it'll make you a genius, like they're trying to sell you something. I got a bridge to sell you if you're hearing that.
00:38:21
John Coogan
But it is a mild stimulant. It's been used for for generations by that.
00:38:23
Pascal-Emmanuel Gobry
Damn it. Damn it.
00:38:25
John Coogan
Yeah. i It's been used ah for generations for that exact purpose. um And you can go back through through history, you know soldiers in war, they just need something to kind of keep them alert in the trenches and they and they pick up a smoking habit and they smoke for the nicotine.
00:38:36
Pascal-Emmanuel Gobry
Yes.
00:38:40
John Coogan
Like that is why they smoke.
00:38:42
Pascal-Emmanuel Gobry
Yes.
00:38:42
John Coogan
ah There's this interesting thing where if you ask someone, you know, why do people smoke? They will often tell you because it's cool. And then if you say, but why did they start?
00:38:53
John Coogan
They'll say, um or or they'll say because they're addicted. And then if they and they say, why did they start? They'll say because it's because it's cool. And those two things are true. Like cigarettes culturally for generations were very cool and they were advertised very heavily and they were made cool by marketing agencies and by filmmakers.
00:39:11
John Coogan
um and And they are very addictive. But the reason that that tobacco became adopted by humans over smoking, I don't know, pine needles or something and so or anything else you could. so yeah I mean, you could smoke, you know, tomato leaves or eggplant or whatever.
00:39:28
John Coogan
um But the reason that we choose to smoke or use or extract nicotine from alcoholism from tobacco leaves is because it is a stimulant. and And the effect of that is you know mildly more alertness, less sleepy.
00:39:42
John Coogan
That's the main thing of what a stimulant does. And so ah there are obviously diminishing marginal returns. If you use a lot of it, you won't be as stimulated. It also has an interesting effect where the half-life is much shorter than caffeine.
00:39:54
John Coogan
So the half-life for caffeine might be six hours, eight hours, something like that. And so a lot of people say that, ah you know, if I have a coffee ah at 4 p.m., it'll throw off my sleep schedule.
00:39:59
Pascal-Emmanuel Gobry
I believe that's true, yeah.
00:40:06
John Coogan
I won't be able to fall asleep at nine. um
00:40:08
Pascal-Emmanuel Gobry
Yes.
00:40:09
John Coogan
That's not the case with nicotine because the half-life of nicotine is more like 45 minutes.
00:40:09
Pascal-Emmanuel Gobry
That's me.
00:40:13
John Coogan
And so some, you know, the like the biohacker community has occasionally ah recommended nicotine as an alternative to caffeine in the afternoon.
00:40:14
Pascal-Emmanuel Gobry
Oh.
00:40:22
John Coogan
Now, Realistically, naked like the drawback here is that nicotine is way more addictive than caffeine. And so it's much harder to manage effectively. Like you really, really have to use a lot of willpower to not just be using the product endlessly and actually get a stimulative benefit. Because if you're using it every single day,
00:40:40
John Coogan
much like caffeine, ah you'll be in the mode like, don't talk to me before I've had my coffee, right?
00:40:44
Pascal-Emmanuel Gobry
Right, right, right.
00:40:45
John Coogan
And so when you when when you're using caffeine, 400 milligrams every single day, all of a sudden you're not some superhuman. You're just you're just not delivering and not stimulated unless you have your stimulation.
00:40:56
Pascal-Emmanuel Gobry
Yes, yes, it's it's a treadmill.
00:40:58
John Coogan
ah And so, yeah, it's a treadmill. And so there are some benefits, but yeah some drawbacks and though need those need to be weighed. I think the most exciting thing in the category remains ah just caffeine.
00:41:10
John Coogan
getting smokers to switch to alternative products.
00:41:14
Pascal-Emmanuel Gobry
Yeah. I mean, I, so this is, this is the time when we can get into this sort of broader philosophy, which is, about, about public health.
00:41:26
Pascal-Emmanuel Gobry
Like I've often had, you know, like many people, I've thought a lot of about this stuff during COVID.
00:41:31
John Coogan
Yeah.
00:41:31
Pascal-Emmanuel Gobry
And one of the conclusions I came to, ah as a smoker back then, I've quit since then, is,
00:41:37
John Coogan
Mm-hmm.
00:41:39
Pascal-Emmanuel Gobry
is that smoking or the public health response to smoking sort of broke the minds of everybody in public health.
00:41:49
Pascal-Emmanuel Gobry
Because if you think about it, you had the science.
00:41:49
John Coogan
Yep.
00:41:50
John Coogan
Mm-hmm.
00:41:53
Pascal-Emmanuel Gobry
The science was really, really good.
00:41:55
John Coogan
yeah
00:41:56
Pascal-Emmanuel Gobry
um ah both in terms in terms of the quality of the studies and what it showed, and then you had this sort of whole-of-society effort. ah You kind of bullied people, actually. ah You sort of lectured them morally. ah You used all this sort of coercive, but sort of passive-aggressive apparatus to sort of get them to quit smoking.
00:42:21
Pascal-Emmanuel Gobry
It was actually an enormous success, like, Smoking is way down from what it was in the 60s. It's a huge drop-off, and millions of lives were saved.
00:42:34
John Coogan
Yep.
00:42:34
Pascal-Emmanuel Gobry
And it was a huge success, but it sort of created this template in people's minds that they try to then fit to everything ah because they want to replicate a success like that.
00:42:36
John Coogan
Yep.
00:42:43
John Coogan
Yes.
00:42:46
Pascal-Emmanuel Gobry
and so But you know maybe your science on the thing you want to ban isn't that good, you know if you think of...
00:42:46
John Coogan
Yep.
00:42:53
Pascal-Emmanuel Gobry
the war against fat right and nutrition and maybe you know you can bully people and they'll be okay with it if it's obviously bad and it gives them cancer but maybe they're not going to be okay with it and maybe they're not going to be okay with a moral lecture from their government if if the benefits are less clear
00:42:53
John Coogan
Yep. Yep.
00:42:53
John Coogan
Yeah. yep
00:43:10
John Coogan
yeah
00:43:14
John Coogan
Yeah. I mean, a lot of it comes down to the people involved.
00:43:14
Pascal-Emmanuel Gobry
um
00:43:16
John Coogan
Like if you were a crusader against smoking in the eighties or nineties, um, you had become victorious by 2010, you're 20, 30 years in your career.
00:43:33
John Coogan
What are you going to do Just hang up.
00:43:35
Pascal-Emmanuel Gobry
right Yes,
00:43:35
John Coogan
the towel and go home and retire? No, like these are organizations. Like there are people with jobs and careers.
00:43:42
Pascal-Emmanuel Gobry
that too.
00:43:42
John Coogan
And so, yeah, they have to continue and they have to keep working on something. And so they, i think correctly, ah went after the, uh, the E-Voli, the acute lung injury that was happening from vitamin E acetate in cannabis
Economic and Regulatory Implications in Tobacco Market
00:43:57
John Coogan
tapes.
00:43:57
John Coogan
Um, and then in some ways they turned their sights on, on Zen during, uh, 2023, 2024 to less success. But there's been ah number of different campaigns and some of them have been more successful. But ah it is it is tricky because ah it's hard to just say, hey, mission accomplished.
00:44:18
John Coogan
ah most Most companies, most careers do not have a finite end. you want to just continue. you know If you're Apple, you want to just continue to sell more iPhones. And once you know everyone has an iPhone, you launch the you know but iPad and then you launch the the VR headset and you're going to continue. They're not just going to say, our mission's done. Everyone has a nice phone. Okay, we're going hang it up and go home.
00:44:39
John Coogan
You're not just going to shut down the company. And so it's the same thing for if you're advocating for people to stop smoking and you win and no one's smoking anymore. Not entirely true because people still smoke. like It's still a $100 billion dollar industry in the united States.
00:44:51
Pascal-Emmanuel Gobry
Yeah, yeah, yeah, but it's way down from the peak.
00:44:51
John Coogan
ah
00:44:52
John Coogan
but ah So I think there's still a lot more work to do. um but But it's a lot, like the the easy gains are not there anymore because- Less and less, fewer and fewer kids are picking up smoking. And so the the majority of the market is driven by fewer and fewer smokers who are just paying higher and higher prices.
00:45:11
John Coogan
ah That's kind of the the financial secret in big tobacco is that They have a declining customer base because people are getting older, people are dying, um and new people are not starting to smoke.
00:45:23
John Coogan
And they are happy with that because they don't want to kill anyone anymore. Like they're they're over that. They want to move on to new products and new form factors, but they need to keep their businesses going. And so what they're doing is they're just as people smoke less, they are raising their prices and their revenues are flat and their profits are increasing.
00:45:43
John Coogan
because of that, even though they have a smaller customer base. And I was joking online a long time ago that if you extrapolate it out in 30 years, there will be exactly one smoker who pays $50 billion dollars a year on cigarettes.
00:45:56
John Coogan
ah Because they will just continue to do this as as they lose 2% of the customers and they raise prices 2%. They lose 2% the customers, they raise prices 2%. They just keep doing it. But now they're under pressure because people are really, really switching in droves to new products.
00:46:07
Pascal-Emmanuel Gobry
Thank you.
00:46:10
John Coogan
And so that's why every single big tobacco company, they have a vapor product. They have a pouch product. They're getting into other alternatives. They're doing lots of different things to kind of protect their downside as their market shrinks.
00:46:22
Pascal-Emmanuel Gobry
Well, makes sense. I mean, the other thing about this is so in in politics, there's this saying, which is who whom, which is actually a quote from Lenin.
00:46:34
Pascal-Emmanuel Gobry
ah And the idea behind that is, you know, when you make a political argument, you're always sort of appealing to these grand principles. You're sort of, you know, you're talking and in the abstract, but really much of the time, let's not say all of the time, but much of the time, you know, really you have like, there's one group of people who are in your camp you who you're trying to help. And then there's another group of people who you don't like you're trying to hurt.
00:47:00
Pascal-Emmanuel Gobry
And many times, if you look at the sort of public health approach around ah smoking slash nicotine, it really feels like you're trying You know, people think that smokers are bad people.
00:47:15
John Coogan
Yeah, totally.
00:47:16
Pascal-Emmanuel Gobry
And there's there's two there's two evidences of that to my mind.
00:47:17
John Coogan
hear saying.
00:47:22
Pascal-Emmanuel Gobry
The first one is smoking pot, which in terms of burning leaves and in inhaling the smoke into your lungs is just as bad as smoking tobacco. And there's even some evidence that it's worse.
00:47:34
John Coogan
Yeah.
00:47:35
Pascal-Emmanuel Gobry
um And the second one was the reaction to vape, and especially vapes, but generally non-tobacco nicotine products. which but It seems that if you're trying to get people to quit smoking, it's obviously a good idea.
00:47:50
Pascal-Emmanuel Gobry
But if actually you think, well, people who smoke are bad people, so they should be punished for their dirty, immoral behavior.
00:47:55
John Coogan
Yeah.
00:47:59
John Coogan
Yeah.
00:47:59
Pascal-Emmanuel Gobry
And so I'm not going to let them enjoy a product.
00:48:03
John Coogan
Yep.
00:48:03
Pascal-Emmanuel Gobry
um actually it makes a lot of sense um and so I don't know i do you get that sense?
00:48:11
John Coogan
Yeah, I definitely hear what you're saying. Especially nowadays, there's there's a lot of ah you know, oh, this is about personal responsibility for cigarettes. Like the information's out there. You should make an educated decision.
00:48:24
John Coogan
i mean, it's tough because like a consumer consumer habits are very sticky. They're very habitual. And ah the smoker is not only addicted to the nicotine, but they are also addicted to the experience of the oral fixation of the cigarette and what it means.
00:48:38
John Coogan
And, oh, I just like getting out of my office and just taking a break.
00:48:39
Pascal-Emmanuel Gobry
Yes. Yes.
00:48:41
John Coogan
And yeah, maybe vape doesn't do that for me or maybe pouches don't do that for me.
00:48:42
Pascal-Emmanuel Gobry
yeah
00:48:45
John Coogan
ah But I mean, I think it's super important that we continue to have empathy for these folks and and view them more as as victims of a broken system that ran wild during the 20th century and less as ah like the bad boy who's making the devil may care decision. At the same time, i know some smokers who who want that aesthetic.
00:49:06
John Coogan
Like they want to be seen as the person that is making the bad decision.
00:49:10
Pascal-Emmanuel Gobry
Oh, for sure.
00:49:12
John Coogan
and And yeah, I mean, I don't know. There's also like the libertarian argument. You should let people do what they want. But obviously they were misinformed for decades. Now you can make more of a ah case for people know the truth and they they know they know more of the facts that they can make more of an educated decision.
00:49:27
John Coogan
It's all very complicated. But um I do think the most important takeaway politically or or or in terms of legislation or regulation is that I just don't want an uneven playing field that benefits cigarettes.
00:49:41
Pascal-Emmanuel Gobry
Right, right.
00:49:42
John Coogan
And so when I hear during the ah political campaigns here in the United States, there was a big debate over ah Tim Walls ah what presided over a state legislature that ah approved a 50% tax on pouches, non non-tobacco products, right?
00:50:02
John Coogan
ah So Zinn, the price increased.
00:50:04
Pascal-Emmanuel Gobry
ah specifically on non-tobacco products.
00:50:06
John Coogan
Exactly. Specifically on non-tobacco products.
FDA Approval System and Recommended Improvements
00:50:09
John Coogan
And everyone was like, this is terrible. This is our favorite product. You're so bad. and and i And I get it. Like, obviously, like, I would love the playing field to be tilted economically towards let's make the non-tobacco product cheaper than the tobacco product.
00:50:24
John Coogan
Because I hate that you can go and get, for a long time, you can go and get ah like a pack of Marlboros and be cheaper than Nicorette. Like Nicorette should be the FDA approved product should be, ah you know, one 10th of the price, right? It should be way cheaper because then people will make a rational economic decision eventually.
00:50:43
John Coogan
And so I didn't love the idea of.
00:50:43
Pascal-Emmanuel Gobry
Right. And and there there is data to show that like when whenever you increase taxes on cigarettes, particularly from Europe, there is a small but like very noticeable and clear drop in the number of people who smoke.
00:50:52
John Coogan
Yep.
00:50:55
John Coogan
Yeah, it it's the worst of all products because it's ah it's addictive.
00:50:57
Pascal-Emmanuel Gobry
So that does...
00:51:01
John Coogan
And so generally, if you raise prices, back when the cigarettes were the only game in town, you could put any tax on it and people were so addicted, they'd pay it. ah Now people will switch somewhat. um So the main my main takeaway was like, I just don't want an unlevel playing field where non-tobacco nicotine products are getting increasingly taxed to the point where they are more expensive and cigarettes haven't been increased in tax at all.
00:51:24
John Coogan
like i like I would rather have a situation where, hey, look, we're raising the taxes on everything. Everyone's going to get a 50% tax increase. And that's acceptable. like But what I really hate is the situation where they say, hey, look, Marlboro, they don't have to submit a PMTA. Right?
00:51:40
John Coogan
But ah all the pouch products, they have to spend $50 million dollars on their PMTIs.
00:51:42
Pascal-Emmanuel Gobry
Yes.
00:51:45
John Coogan
Oh, Marlboro, their taxes are the same. Their taxes went up by 3% this year. ah But pouches, they went up by 50% this year. Like, how is that fair? That doesn't make sense to me at all. You should either increase the taxes, everyone equally, or you should maybe increase the taxes on the cigarettes more because we know that they're so bad, especially now that the FDA has actually done some authorization on on vapor products and they've done some authorization on and they've actually the fda we didn't get into this but there is a a step above the pmta process essentially it's called the mrtp process so i like to think about it this is a very generalization i'm generalizing here but i like to think about it as like if you're trying to get nicotine the fda has three pathways that you could get nicotine in a product level one
00:52:31
John Coogan
is the PMTA. And they don't view it this way. This is just my mental model. So level one would be a PMTA. This is what Zinn has. This what Enjoy has. ah This is what Juul's going for, we're going for, every company's going for in the non-tobacco category, not cigarettes.
00:52:45
John Coogan
And that just lets you sell the product. All you can do is just sell it. You can't say it's better for you. you All you can sell, it you just sell it. And you say, warning, this product contains nicotine. Nicotine is ah is an addictive chemical. That's the label that you have to put on there.
00:52:58
John Coogan
Now, level one higher, level two is MRTP, the but the Modified Risk Tobacco Product Application. You file that. Now you're not trying to just say this is suitable for the protection of the health, public health. You're trying to say this is better than cigarettes.
00:53:13
John Coogan
This is better for you than cigarettes. And at that point, you can say this is
00:53:16
Pascal-Emmanuel Gobry
Oh, you you you have to go through ah an entire second thing just to say that.
00:53:20
John Coogan
a second application and the FDA has approved general snooze, which is another Swedish match product owned by the same company that owns Zinn and Zinn, uh, Zinn took 10 years to get their PMTA.
00:53:27
Pascal-Emmanuel Gobry
Yes.
00:53:31
John Coogan
Very crazy to me. Uh, they got their MR, they got their PMTA done for general snooze, which does contain tobacco and, but will give you mouth cancer if you use it enough. it's um It's a more harmful product than Zinn, in my opinion.
00:53:44
John Coogan
This is just me talking, but ah I think it's a more harmful product because it has tobacco in it. ah They got that PMTA approved in like less than a year.
00:53:50
Pascal-Emmanuel Gobry
Snus is like huge in Sweden.
00:53:52
John Coogan
And then they also got the m MRTP approved, which I think is correct. I think that if if I had a smoker if i have a friend who was a smoker and they were like, look, I can't do Nicorette, I can't do Zen, I can't do Lucy, ah like what do you what what do you got for me? I'd say at least move to General Snus because the FDA has evaluated that and said that it is a modified risk tobacco product. There are still risks, but the risks are less than smoking.
00:54:16
John Coogan
And so the FDA has this like kind of level two category. And then level three, it's not it's a completely different pathway, but that's what Nicorette went through. That is the drug authorization pathway.
00:54:27
John Coogan
And that lets you say, this product, this Nicorette product, it is approved by the FDA to help you quit smoking.
00:54:28
Pascal-Emmanuel Gobry
Right. Right.
00:54:33
John Coogan
It's not just so just better for you than smoking.
00:54:34
Pascal-Emmanuel Gobry
right
00:54:35
John Coogan
It'll help you quit smoking. And so these three, they kind of bleed together. They're not really in these tier systems. But... um In general, and this is actually, there is a little bit of good news, which is that some states have taxes on on PMTA products that might be 50%.
00:54:51
John Coogan
And then on MRTP products, they might go down to 25%. And so that's the type of progressive taxation that I would 100% advocate for because I love the idea of of tilting the playing field in favor of healthier products that are less harmful.
00:55:06
Pascal-Emmanuel Gobry
Got it.
00:55:07
John Coogan
Tax the cigarettes the most, then tax the stuff, the the the cigars, the tobacco leaf stuff, the the chewing tobacco that is not as bad as cigarettes, but still not great. And then Nicorette and the stuff that has no tobacco, the tobacco-free pouches,
00:55:22
John Coogan
the ah the the vapes that have really been studied, let's get those to the lowest taxation rate. You can still tax it all. You know you can still tax it all. It's a great product to tax. I'm fine with that. But let's let's let's tilt the playing field in the right direction so we're incentivizing consumers of nicotine to choose the the best product.
00:55:35
Pascal-Emmanuel Gobry
got it
00:55:41
Pascal-Emmanuel Gobry
Yeah, ah we're we're getting close to the end of the hour. So if you had one sort of, you know, magic, I mean, I don't like the term magic wand, but one suggestion to sort of at the federal level ah to sort of streamline either, you know, some reform to the FDA or something like that, like the one thing that you would think would be healthy.
00:55:44
John Coogan
No worries.
00:55:54
John Coogan
Yeah. Yep. Yep.
00:56:00
John Coogan
yeah yep yeah I mean, the easiest thing is just more transparency. Just let the companies know where they're in the queue, when they're expected to be reviewed, what they are looking for in terms of review. That's probably the easiest and biggest thing. ah The industry generally is looking for product standards as well.
00:56:20
John Coogan
Something that would allow custom companies to make slight changes within a known bound. So for example, we sell, i have a four milligram product and an eight milligram product.
00:56:31
John Coogan
we're both where both of these have PMTAs submitted and they're accepted for review, theyre the FDA is reviewing them. um Assuming the FDA authorizes both of these, I would love to be able to do a five milligram product, a six milligram product, a seven milligram product, a two milligram product. I want a one milligram product, right? Like I should be able to do those because it's such a slight change. You've already studied all this stuff.
00:56:51
John Coogan
help me get my products out faster, right? And I'm not talking about putting in a new ingredient.
00:56:54
Pascal-Emmanuel Gobry
Right. Right.
00:56:56
John Coogan
I'm just talking about ah adjusting the dose, even downward, right? ah If I have a four milligram product, why should I have to do a whole new application for a two milligram product?
00:57:01
Pascal-Emmanuel Gobry
i hate
00:57:05
John Coogan
I mean, I should have to turn in something to prove that it's actually half as strong and all of that, but like, that should be quick, right? Because you've already studied everything else about it.
00:57:12
Pascal-Emmanuel Gobry
right
00:57:12
John Coogan
You've studied the packaging, you studied the ingredients, You studied the formula. You studied the the tin that this is in. you you know You've looked at all of our stuff. You've toured our facilities. You know we're good to go.
00:57:24
John Coogan
And now we're just saying, hey, we're we're we're just tweaking this one little thing. That should be quick. and And that's something that currently is not quick. Currently, it's start over from scratch. Same onerous, ah you know same huge application. And yeah, there's some economies of scale. you know, we can run some of the lab work again for cheaper and stuff. But again, it's like, how long will it take you to approve it?
00:57:46
John Coogan
It could be years, who knows? Like, and and how do I underwrite that as a business person?
00:57:47
Pascal-Emmanuel Gobry
Right, right, right.
00:57:49
John Coogan
You know, okay. I turned in my application for a two milligram pouch. ah If it's going to be 10 years, Like, and it costs me 5 million to get this application in or even 1 million. It's like, well, now I got to think, how am I going to, what am I going to do with that million for the next five years versus, Hey, it's going to come back in three months.
00:58:06
John Coogan
And I know it's going to come back in three months. So I'm happy to pay the million now because I'm going to be able to get this on shelves and start making money in three months. And that could be really good. And so, uh, I think it's transparency and then product standards.
00:58:19
Pascal-Emmanuel Gobry
Very good answer. And we have one final question that we ask every guest on the show.
00:58:25
John Coogan
right
00:58:25
Pascal-Emmanuel Gobry
ah Please recommend a book. can be any book, fiction, nonfiction, old, new, that's not related to your area of expertise.
00:58:31
John Coogan
Yeah.
00:58:34
John Coogan
That's funny. i was good I had a million that were related. ah
00:58:36
Pascal-Emmanuel Gobry
Yeah, yeah, that's why we catch people.
00:58:37
John Coogan
Not related. i would recommend this book by Alex Karp. It's called The Technological Republic, Hard Power, Soft Belief in the Future of the West. Alex Karp is the founder of Palantir and the CEO of Palantir.
00:58:49
John Coogan
ah They're a company here in America that makes ah software for the government, but they also make software for enterprises They do data analytics. They're very popular because the AI boom. But he has a very interesting thesis on ah how geopolitics will evolve over the coming decades.
00:59:06
John Coogan
And he also tells just a fantastic story of building a business that's worth now over $200 billion dollars and has really done some incredible things in technology and artificial intelligence. And so highly recommend picking that up.
00:59:20
Pascal-Emmanuel Gobry
that's ah That's a very good answer. It's been on my list, ah well, I guess since since it came out.
00:59:25
John Coogan
Yeah.
00:59:25
Pascal-Emmanuel Gobry
ah All right. Oh, my God. We're doing almost exactly one hour. that that's just That's just talent right there.
00:59:31
John Coogan
Perfect.
00:59:35
John Coogan
Here we go.
00:59:35
Pascal-Emmanuel Gobry
All right. John Coogan, thank you very much. This was very interesting.
00:59:38
John Coogan
Thanks for having me.
00:59:39
Pascal-Emmanuel Gobry
And good luck to you. And good luck to everybody who loves nicotine.
00:59:43
John Coogan
Good luck to you too, Pascal. It was great talking to you.
00:59:46
Pascal-Emmanuel Gobry
Bye.