Economist Bruce Yandle defined the theory of the “Bootlegger-Baptist” coalition. This theory is an economic term used to refer to the analysis and observation of specific regulatory actions supported by groups who advocate such a policy and others that could profit from undermining said policy. Utilizing the examples of prohibition from the 1920s and 1930s, the theory comments on how morally differentiated classes of individuals and organizations can find common interests in the most bizarre ways.
“Such a coalition makes it easier for politicians to favor both groups. … [T]he Baptists lower the costs of favor-seeking for the bootleggers because politicians can pose as being motivated purely by the public interest even while they promote the interests of well-funded businesses. … [Baptists] take the moral high ground, while the bootleggers persuade the politicians quietly, behind closed doors,” Yandle wrote in 2001 with colleague Stuart Buck.
Applying this case of “saints” and “demons” (my interpretation of the theory) as represented by the “bootleggers” and the “Baptists,” we can quickly draw a comparison to what is happening today in the debate of e-cigarettes and general tobacco harm reduction.
“The bootlegger-Baptist story is not necessarily a story about any kind of regulation,” Yandle told me in a phone call. “It’s a story that explains why we get particular forms of regulation. By way of bootleggers and Baptists, you get command and control regulation in order to cartelize [an industry] to the benefit of the bootleggers directly.”
This command and control approach is precisely what’s occurring within industries that challenge vested powers, in my opinion. As we see with the growth of alternative nicotine products, there has been a direct market challenge to traditional cigarette manufacturers. Such a result has ended with big tobacco companies funding efforts against products like e-cigarettes or diversifying to stay competitive. Much of this is a result of a “public health industrial complex” of funding and influence.
The U.S. Department of Health and Human Services (HHS) is the cabinet-level department within the federal government’s executive branch that address all concerns of public health, disease outbreak, health welfare, most general assistance programs related to health, and the regulation of drugs and most foodstuffs. Under the purview of Secretary Alex Azar, many of the agencies under the HHS banner are involved in the resulting regulatory battle over e-cigarettes.
According to my research, this regulatory battle meets the criteria of Yandle’s Bootlegger-Baptist coalition on the grounds that tobacco control advocacy groups, large pharmaceutical and tobacco companies, government agencies, regulatory leaders, and lawmakers are involved. Such an alliance stems across several agencies and private organizations.
The trickle-down effect
To further understand the concepts that I’m presenting, we need to consider some basic ideas. Within the appropriations process the U.S. government follows, money and influence can easily impact policy and regulation. Competitive Enterprise Institute senior fellow Michelle Minton, the author of “Fear Profiteers” (a white paper that analyzes this very idea that I’ve cited several times) told me that this “coalition” of competitive but interested parties is directly responsible for the current state of the e-cigarette market in the United States.
“Advocates (whether governmental or otherwise) provide a service for which they get paid (by government funding, grants, or private donations),” Minton wrote to me in an email. “They compete with many other causes in need of addressing. This includes government agencies, which compete with one another for their slice of the federal budget.”
Minton, in our conversation, used the Centers for Disease Control and Prevention (CDC) as an example of this trickle-down effect. CDC, being an agency of the U.S. federal government, is subject to federal appropriations like most of the other agencies. While HHS competes for its chunk of the federal budget to fund the entire department, CDC too also competes within the ranks of HHS to score the best possible “slice of the pie.”
Organizations under the CDC follow a similar process as the agency shells out the funding to the centers under the primary umbrella. One of these centers would be the National Center for Chronic Disease Prevention and Health Promotion (NCCDPHP) under the CDC’s Office of Noncommunicable Diseases, Injury, and Environmental Health (ONDIEH). ONDIEH, for example, receives $2 billion for operation and then funnels a portion of it to the NCCDPHP, which in turn, funds the center’s Office on Smoking and Health (OSH).
Further down the rabbit hole, OSH sends federal grants down to state health departments and local public health agencies that additionally send off the funds for research and educational initiatives run by organizations like the American Cancer Society, American Lung Association, or the Campaign for Smoke Free Kids. These organizations than utilize this funding to educate the public and lobby lawmakers and regulatory agencies to adopt specific policy positions.
Under the bootleggers and Baptists metaphor, the bootleggers (CDC, etc.) in this case are funding the Baptists (public health advocacy groups) to take the “moral high ground” by lobbying for the adoption of command and control policies.
“This is just one way that advocates use e-cigarette scaremongering to siphon money away from other issues,” Minton added. “It doesn’t include things like the millions the National Institutes of Health (NIH)/CDC/HHS hand out directly to advocacy groups.”
The Food and Drug Administration (FDA) and several other agencies involved in the roles of regulating tobacco and nicotine products follow a similar process. For the case of the FDA’s Center for Tobacco Products (CTP), the subagency is funded almost entirely by user fees the agency collects from regulatory actions, civil fines, and other revenue actions with very little appropriation from the federal government’s general fund. CTP additionally finances research and grants among NIH organizations and public health groups with a so-called mission to promote a fully informed regulatory body.
The men that make it all happen
HHS, as I mentioned before, is headed by a man named Alex Azar, a former lobbyist for the pharmaceutical industry. President Donald Trump appointed Azar and supported his confirmation to the position of Secretary of Health and Human Services after the previous position holder, Tom Price, was ousted by an ethics scandal involving a gross misuse of tax dollars to fund a private jet. While the administration has remained adamant that it is doing everything in its power to alleviate the regulatory burden on private businesses, Azar has spoken a different tune and its showing.
According to a New York Times piece from May of 2018, Azar is on record for advocating for regulatory controls when he served as a lobbyist for pharmaceutical giant Eli Lilly, a company known for the anti-depressant Prozac or fluoxetine (this drug has been used to treat depression associated with withdrawal among legacy smokers undergoing a smoking cessation program). Upon his ascension to the position, he received praise from The White House for his “aggressive regulatory approach” to “keep turning up the pressure” on pharmaceutical companies to comply with the administration’s lower drug price agenda.
While the Times piece covers a specific aspect of Azar’s approach to drug pricing, much of what is presented can justify a heavy-handed approach to products like e-cigarettes or even Swedish snus. About around the same time when the Times piece was published, Azar told reporters during a press conference that his position has a degree of immense power.
“The Secretary of [HHS] is invested with incredible authority to regulate, to modify programs, to do demonstrations, to experiment, and we intend to use the full scope of the power contained in this pen on any of these rather than sitting back and waiting for Congress,” he said during this press conference. If we examine how Azar has responded to the FDA’s crackdown on flavors and marketing restrictions for e-cigarettes in recent months, Azar is just serving his purpose as the country’s point man on health regulation.
A case can also be made that FDA Commissioner Scott Gottlieb is merely following mandates in federal law under these justifications. The Family Smoking Prevention and Tobacco Control Act of 2009, as amended, mandated the creation of the Center for Tobacco Products and empowered the FDA to control the approval of new products that are defined as tobacco products under the law. In a sense, the law grants Gottlieb the ability to wield a blunt regulatory object under the additional elements of “immense power” agencies at HHS have. But, the issue here is the lack of clean-cut regulatory rules established or yet to be created under the tenure of men like Azar, Gottlieb, and, in a lesser capacity, Surgeon General Jerome Adams of the Commissioned Corps of the United States Public Health Service, or director Robert R. Redfield of the CDC.
In preparation for this piece, many of my sources associated with the HHS and its constituent agencies all indicate that Trump has shown support for the actions taken against tobacco harm reduction and alternative nicotine products behind closed doors. I do admit that while I don’t have substantive confirmation of this, it wouldn’t be surprising. FDA and HHS media relations representatives refused to comment or did not provide a response to an inquiry I sent regarding these claims. If this is true, Trump has gone against his word on supporting an administration-wide deregulation agenda.
Consumer Choice Center senior fellow Jeff Stier said virtually the same thing to a Washington Post reporter late last year.
“The administration promised less regulation — without sacrificing protections,” said Stier, in response to Gottlieb’s release of the 2018 tobacco blueprint. “So if the FDA fails to meet both objectives — by announcing a heavy-handed regulatory plan — President Trump should realize that the current leadership at the FDA is not equipped to implement the administration’s policy agenda,” he added, alluding to the FDA’s push to heavily regulate the vaping industry as means to protect the public interest from the ostensible youth vaping epidemic.
After Gottlieb’s November 2018 announcement of new regulatory proposals, Azar announced his support in an unwavering fashion. And, as a result, Trump is also on record for previously calling Gottlieb a rising star among a “great leadership team” at FDA. I digress, nonetheless. The takeaway from this section of the editorial is to demonstrate a leadership structure that does advocate provisions that could curtail access to e-cigarettes and other related products.
Further applying the bootlegger-Baptist metaphor is also notable here, too. Azar and Gottlieb, in this case, are both political appointees subject to confirmation by the Senate. In fact, many of the leaders of the HHS are subject to Senate confirmation. But, despite the roles of these positions, the department is still staffed by career public servants who have grown accustomed to a command and control approach at the behest of external actors. During my conversation with Yandle, he said that while many of the regulators in the civil service are bright, experienced, and passionate professionals, they don’t necessarily value the input of industry as the leading voice in regulatory rulemaking.
Fact over conjecture is required
To conclude, this piece was overdue for me. While policy wonks, researchers like myself, and industry advocates know these inner workings like the back of our hands, the layperson — the average legacy smoker who is considering e-cigarettes as a cessation method, for example — won’t. I value the work of the Department of Health and Human Services and its constituent agencies. There is a valid mission at HHS, FDA, CDC, and other related entities.
But, while we continue to extrapolate with the issues facing e-cigarettes, alternative nicotine products, and tobacco harm reduction as a field, we must continue to request fact over conjecture.
The fact is that e-cigarettes are viable products for smoking cessation and that there is a disputed field of study that continues to critique the claim that there is a “gateway” effect associated with them.
The fact is that data collected by these agencies that illustrates a vaping epidemic among youth is built on flawed datasets and hysteria.
The fact is that these agencies are directly influenced by organizations that continue to flood the debate with one-sided opinions that further marginalize the conclusive findings of tobacco harm reduction research.
By examining these regulatory and leadership structures, there is justification to be concerned for the life of an innovative technology industry and the rights of people seeking information and access to less harmful products.
I want to leave it off with what I wrote recently for Real Clear Policy: “If we allow for the regulatory regimes of national governments to force the misguided sentiment that certain alternative nicotine products are just as harmful as combustible tobacco, then there is a net-negative risk to public health.”