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_________________________________ OPINION _________________________________


1. We have been asked by ECITA (EU) Limited to provide a legal opinion on two questions relating to the European Commission’s proposals for the repeal of Directive 2001/37/EC concerning the manufacture, presentation and sale of tobacco products (“the TPD”), and its replacement by a new Directive (“the revised TPD”). The revised TPD, in the form published by the Commission on 19 December 2012, contains specific provisions applicable to nicotine-containing products (“NCPs”) including electronic cigarettes. In particular, Article 18(1) provides that any such products with a nicotine level or nicotine concentration above certain specified levels may only be placed on the market if they have been authorised pursuant to Directive 2001/83/EC on the Community code relating to medicinal products for human use (“the MPD”).

2. The questions are as follows:

(1) Is there a valid legal basis for adopting the revised TPD at EU level?

(2) To what extent can electronic cigarettes be deemed to fall within the definition of medicinal products by function pursuant to Directive 2001/83/EC?


3. In addition to addressing these questions, we have also been asked whether there are any other pertinent issues to consider in relation to the validity or the application of the revised TPD. In this context we have raised the further question whether Article 18(1) of the revised TPD is potentially invalid by reason of a failure to comply with the general EU law principles of proportionality and/or non-discrimination.

Executive summary

4. For the reasons explained below, our conclusions in summary are that:

(1) The revised TPD can validly be adopted on the basis of Article 114 TFEU, because (like the current TPD) it purports to have as its main objective the elimination of barriers to inter-state trade, and there are no grounds for seeking to go behind that claim.

(2) Whether a particular product falls within the definition of a medicinal product by function is a matter for the competent authorities of the Member States to determine on a case-by-case basis. There can be no fixed rules in this area other than the broad statements of principle issued by the Court of Justice in relation to different types of products. As far as we are aware, those (few) national courts that have addressed this issue to date have held that, on the facts of the cases before them, electronic cigarettes are not medicinal devices. One can infer from this that under current circumstances electronic cigarettes are unlikely to be eligible for regulation as medicinal products under the MPD. (3) To the extent that electronic cigarettes are indeed ineligible for authorisation under the MPD, Article 18(1) of the revised TPD would have the draconian effect of excluding them from the EU market altogether. In our view this is an unreasonable measure which is liable to be annulled as being contrary to the principle of proportionality and/or the principle of non-discrimination.


Question 1. Is there a valid legal basis for adopting the revised TPD at EU level? 5. According to the Commission’s proposal for the revised TPD 1at paragraph 3.9, the revised TPD has (like the original TPD) been drawn up on the basis of Article 114(1) TFEU. That Article provides that: “The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.” 6. With respect to NCPs in particular, the proposal notes at paragraph 3.7 that: “NCPs fall outside the scope of Directive 2001/37/EC and Member States have taken different regulatory approaches to these products, including regulating them as medicinal products, applying certain provisions that are used for tobacco products or having no specific legislation… The proposal removes current legislative divergence between Member States and the differential treatment between Nicotine Replacement Therapies and Nicotine Containing Products, increases legal certainty and consolidates the on-going development in Member States. It also encourages research and innovation in smoking cessation with the aim of maximising health gains. Given the novelty and rapid increase of the NCP market as well as their addictive and toxic character there is an urgency to act, before more people – unaware of the content and effects of these products – inadvertently develop a nicotine addiction.” 7. Turning to the revised TPD itself, the aims of the legislation, as set out in the Recitals, include the following: (4) [T]here are still substantial differences between the Member States’ laws, regulations and administrative provisions on the manufacture, presentation and sale of tobacco and related products which impede the functioning of the internal market. In the light of scientific, market and international developments these discrepancies are expected to increase. This applies in particular to nicotine containing products… Those barriers should be eliminated and, to this end, the rules relating to the manufacture, presentation and sale of tobacco and related products should be further approximated.



COM(2012) 788


(33) Nicotine-containing products are sold on the Union market. The different regulatory approaches taken by Member States to address health and safety concerns associated with these products have a negative impact on the functioning of the internal market in particular considering that these products are subject to significant cross-border distance sales including via the internet. 8. It is clear from these statements that the revised TPD has (or purports to have) as one of its main purposes the elimination of barriers to inter-state trade caused by differences in regulatory approaches to NCPs. It appears from the report carried out by RAND for DG SANCO in 2010 that those differences do genuinely exist: see for example the table at pages 118-120.

9. In Case C-491/01 R v. Secretary of State for Health, ex p. British American Tobacco [2002] ECR I-11453, the English High Court referred to the Court of Justice a number of questions relating to the validity of the original TPD, including in particular whether Article 95 EC (now Article 114 TFEU) was a valid legal basis for the Directive. The Court of Justice identified the applicable principles as follows: 61. [W]hile recourse to [Article 114 TFEU] as a legal basis is possible if the aim is to prevent the emergence of future obstacles to trade resulting from multifarious development of national laws, the emergence of such obstacles must be likely and the measure in question must be designed to prevent them… [P]rovided that the conditions for recourse to [Article 114 TFEU] are fulfilled, the Community legislature cannot be prevented from relying on that legal basis on the ground that public health protection is a decisive factor in the choices to be made… Moreover, the first subparagraph of [Article 168(1) TFEU] provides that a high level of human health protection is to be ensured in the definition and implementation of all Community policies and activities, and [Article 114(3)] explicitly requires that, in achieving harmonisation, a high level of protection of human health should be guaranteed.


10. Applying those principles, the Court held that it was inherently likely that obstacles to trade in tobacco products would arise by reason of the adoption by the Member States of new rules intended to protect public health (paragraph 67). It also observed that this was supported by the recitals to the Directive which referred to various differences between the existing or contemplated tobacco legislation in the Member States


(paragraphs 68-70). The Court therefore concluded that the TPD could properly be adopted on the basis of Article 114 TFEU.

11. It is true that, in the situation we are addressing, the public health aims of regulating trade in NCPs have been given particular prominence in the proposal and in the terms of the revised TPD itself. Nevertheless, we do not consider that the emphasis given to these health objectives makes it possible to say that the legislation amounts to a disguised public health measure which is not genuinely designed to eliminate barriers to trade. To contend otherwise would in effect be to argue that the Commission had abused its powers, which, as the Court emphasised in British American Tobacco, involves a high threshold and requires “objective, relevant and consistent evidence” (paragraph 189). We have not seen any evidence, let alone substantial and cogent evidence of this kind, to suggest that the Commission’s statements that the primary purpose of the legislation is to harmonise national laws and promote inter-state trade are not to be taken at face value.

12. In this regard, we have read the Draft Opinion of the Committee on Legal Affairs dated 29 April 2013 which argues that “the true aim of these measures is the achievement of a higher level of health protection”. However, that statement is really no more than an assertion, which is not supported by any actual evidence, nor in our view clearly borne out by the text of the legislation. It is not sufficient in itself to enable a court to go behind the Commission’s express statement that the revised TPD is primarily intended to improve the functioning of the internal market. 13. The fact that the revised TPD would (for the reasons explained below) be likely to result in a de facto prohibition of many electronic cigarettes is also not in itself incompatible with the choice of Article 114 as the legal basis for the legislation: see Case C-434/02 Arnold André [2004] ECR I-11825, where the Court of Justice dismissed a challenge to the ban on oral tobacco imposed by Article 8 of the TPD.2


Paragraph 35: “Depending on the circumstances, those appropriate measures [adopted under Article 114 TFEU] may consist in requiring all the Member States to authorise the marketing of the product or products concerned, subjecting such an obligation of authorisation to certain conditions, or even provisionally or definitively prohibiting the marketing of a product or products...”


14. Accordingly, we are of the view that the revised TPD, including Article 18 relating to NCPs, can in principle be lawfully adopted on the basis of Article 114(1) TFEU.

15. However, the mere fact that the proposed measure pursues a legitimate aim within Article 114, and therefore has a valid legal basis, does not mean that its provisions are automatically immune from any legal challenge. The revised TPD will still be liable to be struck down (either in whole or in part) if it contravenes another principle of EU law such as the principle of proportionality or the principle of non-discrimination. Whether it does contravene these principles is considered below.

Question 2. To what extent can electronic cigarettes be deemed to fall within the definition of medicinal products by function pursuant to Directive 2001/83/EC? 16. Article 2 of the MPD defines a medicinal product by function as “Any substance or combination of substances which may be administered to human beings with a view to making a medical diagnosis or to restoring, correcting or modifying physiological functions”. This definition has been elaborated in a number of decisions of the Court of Justice, most of which concern the distinction between medicinal products and food products.

17. In particular, in Joined Cases C-211/03 etc HLH Warenbetrieb [2005] ECR I-5141, the Court stated that: For the purposes of determining whether a product must be classified as a medicinal product or as a foodstuff within the meaning of the Community regulations, the competent national authority must decide on a case-by-case basis, taking account of all the characteristics of the product, in particular its composition, its pharmacological properties, to the extent to which they can be established in the present state of scientific knowledge, the manner in which it is used, the extent of its distribution, its familiarity to consumers and the risks which its use may entail… 3 18. The only other decision to which it is necessary to refer is Case C-319/05 Commission v. Germany [2007] ECR I-9811, where the Court made clear that to qualify as a medicinal product “it is not sufficient that [the] product has properties beneficial to


Paragraph 30.


health in general, but it must strictly speaking have the function of treating or preventing disease” (paragraph 64).

19. It is clear from the HLH Warenbetrieb judgment cited above that a decision as to whether or not to classify a product as medicinal has to be made on a case-by-case basis, such that it is not possible to say in the abstract with respect to an entire category of products that they either do or do not fall within the scope of the MPD. It cannot, for example, be assumed without evidence that all brands of electronic cigarettes are necessarily similar in terms of their pharmacological properties, distribution, familiarity to consumers or health risks.

20. Nevertheless, where national courts have considered this issue in relation to specific products, they have (so far as we are aware) invariably concluded that the relevant national authorities have not sufficiently demonstrated that the products under consideration are medicinal. For example:4

(1) In United Tobacco v. Netherlands (Case No. 414117, 13 March 2012) the sGravenhage Court in the Netherlands rejected the State’s argument that electronic cigarettes had pharmacological properties which justified their classification as medicines, ruling that the State had failed to supply any scientific evidence to substantiate this view.

(2) In Case No. 7 K 3169/11 (11 March 2012), the Administrative Court of Cologne, after a detailed analysis of the products in question and the evidence relating to their use, held that the competent authority had not established that electronic cigarettes were properly to be regarded as a drug for the treatment of nicotine addiction.

(3) In Case No. 3 M 129/12, the Supreme Court of Sachsen-Anhalt overturned a decision of the City of Magdeburg to regulate electronic cigarettes as medicinal products. The Court held that (in contrast to nicotine patches for smoking

Other than the Estonian decision referred to at paragraph 19(4), we have not seen English translations of the full texts of these decisions but only the extracts published on ECITA’s website: 13.pdf.


cessation) nicotine in the form of electronic cigarettes lacked a therapeutic purpose and was primarily intended simply to satisfy the user’s desire for nicotine.

(4) In Case No. 3-12-2345 (March 2013), the Tartu Administrative Court in Estonia held that the national authority had been wrong to classify a brand of electronic cigarette known as E-Lites as a medicinal product under the MPD. As the Court explained: It is not clear why the pharmacological effects of the manufactured liquid nicotine on the body are different from the effect of the nicotine in a normal cigarette or whether any pharmacological effect manifests itself in a normal cigarette… In the contested decision, there is no answer to the claim raised by the complainant that there is no science-based evidence and examples of why particularly E-Lites products or their properties negatively affect public health and influence human physiology more than do conventional cigarettes… If the effects produced by E-Lites cigarettes are unique to medicinal products only, then the question arises as to why the normal cigarettes do not have the same effect unique to a medicinal product. In this case, the desired nicotine is received from an e-cigarette instead of a tobacco cigarette; nicotine addiction is satisfied, not cured. (Paragraph 27.) The court is of the opinion that [an E-Lite] is a feel-good substance with the intention of replacing tobacco cigarette and allows the consumption of nicotine without the harmful effect of tobacco smoke and tar. Upon the definition of the product as a medicinal product within the meaning of Directive 2001/83/EC should be taken into account all the characteristics of the product… The court agrees with the complainant that the respondent has not taken into account all these circumstances in the decision of definition of the product as a medicinal product, or has done so inadequately. (Paragraph 32.) 21. We also note in passing that the same view has been taken in the United States. In Smoking Everywhere v. FDA 680 F. Supp. 2d 62 (2010), the District Court for the District of Columbia held that certain brands of electronic cigarettes were not subject to regulation under the Food, Drug and Cosmetic Act. While the legislative context in that case was of course different, it is apparent from the judgment that the Court found it impossible, on the facts, to draw any rational distinction between tobacco cigarettes and electronic cigarettes which would bring the latter within the scope of the Act while leaving the former outside it.5 As set out above, this is a point which has

See in particular p.21: “Because plaintiffs sell their electronic cigarette products for customary recreational use, those products (just like traditional cigarettes) are properly excluded from the meaning of drug or device under the FDCA.”


troubled a number of courts in the EU and led them to conclude that electronic cigarettes ought not to be deemed to be medicinal products.

22. That having been said, it nevertheless appears to be the case that a number of Member States continue to regulate electronic cigarettes at least to some extent as medicinal products under the MPD. In the UK, the MHRA has recently announced that it intends to subject electronic cigarettes to this kind of regulation by 2016.6 In these circumstances, and given the fact-sensitive nature of the analysis as emphasised by the Court of Justice in HLH Warenbetrieb, we cannot say that it is impossible for a national authority to regulate any electronic cigarettes under the MPD, or that it will never be appropriate to do so in the future. It could, for example, be appropriate in a case where there is strong evidence that the product under consideration has a physiological effect that is materially different from that of conventional cigarettes, or that it is genuinely used for the treatment of nicotine addiction and not merely for recreational purposes. Absent such evidence, however, we would expect future decisions to follow the clear trend of the existing case law, which excludes them from the definition of medicinal products by function on the basis that they are effectively a substitute, not a cure, for conventional smoking.

Does the revised TPD infringe the principle of proportionality or non-discrimination?

23. Before addressing this question it is necessary to clarify a point of interpretation of the revised TPD, namely whether Article 18(1) is intended to render electronic cigarettes automatically eligible for regulation as medicinal products under the MPD (at least to raise a presumption that they are so eligible). In our view it would be wrong to read the revised TPD in that way, for a number of reasons.

(1) First, there is no explicit suggestion in the revised TPD or the accompanying materials that the legislation is intended to have that effect. Article 18(1) simply distinguishes between NCPs that have been authorised under the MPD and those which have not: it therefore appears to be intended that whether any particular


Public Summary Report: The Regulation of Nicotine Containing Products (NCPs), 12 June 2013.


NCP falls within the definition of a medicinal product should continue to be dealt with under the MPD itself.

(2) Secondly, the decision as to whether a product should be classified as medicinal has been specifically entrusted under the MPD to the competent authorities of the Member States. It would not be lawful for the EU institutions to appropriate that right with respect to electronic cigarettes, at any rate without an express legislative basis for doing do.

(3) Thirdly, as already noted, the test for determining whether the MPD applies to a particular product requires an intense focus on the characteristics of the product itself, the uses to which it is put, its perception by consumers and so on. The Commission is not in a position to make any generalised assumption that all electronic cigarettes will, on a proper analysis, fulfil the definition of a medicinal product.

(4) Fourthly, the materials on which the revised TPD is based do not provide strong support for the view that electronic cigarettes generally meet the definition of medicinal products in the MPD, as interpreted by the Court of Justice. In particular, the RAND paper indicates that “overall the evidence has been considered insufficient to conclude that [electronic cigarettes] could be used as smoking cessation aids” and in fact warns that “more widespread use of [electronic cigarettes] may undermine the smoking cessation policies by creating a new source of nicotine addiction” (page 121). There is therefore no clear evidential basis on which the Commission could properly conclude that electronic cigarettes “have the function of treating or preventing disease” (cf Commission v. Germany, above).

24. On the basis that the revised TPD is not intended to affect the status of NCPs under the MPD, it is seriously questionable in our view whether Article 18(1) is compatible with the EU law principle of proportionality. As the Court of Justice reiterated in British American Tobacco (paragraph 122), this principle requires that measures implemented through EU law should be appropriate for attaining the objective pursued and must not go beyond what is necessary to achieve it. The Court has also 10

emphasised that, where there is a choice between several appropriate measures, recourse must be had to the least onerous (see e.g. Case C-157/96 National Farmers’ Union [1998] ECR I-2211, paragraph 60).

25. Given that those national courts which have considered the matter to date have concluded that electronic cigarettes are not eligible for regulation under the MPD, it seems likely that at least a substantial proportion of electronic cigarettes currently on the EU market will continue to be ineligible for authorisation as medicinal products following the adoption of the revised TPD. In these circumstances, it seems to us that a measure which would subject a category of products to a system of authorisation for which such products are ineligible from the start cannot possibly be an appropriate way of regulating trade in those products. 26. Furthermore, the effect of requiring NCPs to be authorised under the MPD, insofar as they are deemed not to be medicinal products and so to be ineligible for authorisation, will – intentionally or otherwise – be to exclude these products from the EU market altogether. It is difficult to see how this could be said to be the “least onerous” way of eliminating barriers to trade in NCPs. Indeed, it would lead to a situation in which electronic cigarettes were significantly more constrained in terms of their ability to access the EU market than tobacco cigarettes. This is obviously excessive and illogical, and thus disproportionate. 27. In addition, and separately from the question of proportionality, to subject NCPs to stricter regulation than tobacco cigarettes also in our view amounts to discrimination against the manufactures of NCPs. Such discrimination cannot be justified unless there are reasonable grounds for regarding electronic cigarettes as more harmful than tobacco cigarettes. Unsurprisingly, the Commission has not sought to suggest that this is the case. 28. In this regard, we are not persuaded by the Commission’s argument, made in paragraph 3.7 of its proposal document, that subjecting NCPs to regulation under the MPD would have the beneficial effect of removing the current differential treatment between NCPs and Nicotine Replacement Therapies (“NRTs”). It is inherent in the scheme of the MPD that products which are marketed as having therapeutic properties


(such as NRTs) must be authorised as medicinal products by claim, even if they are pharmacologically similar to other products which do not make medicinal claims and are therefore not subject to regulation. This makes sense, because it would be wrong to allow products to be marketed as having health benefits, and thereby to gain a commercial advantage, without those claims being subject to proper scrutiny and without verifying that such products are safe. The same considerations do not apply to products which do not claim to have any health benefits. Any differential treatment between these two categories of products is therefore objectively justified by reference to the aims of the MPD and does not need to be eliminated. 29. For all these reasons, while we do not overlook the fact that this an area in which any system of regulation involves complex political, economic and social choices, and where the EU legislature therefore enjoys a relatively broad margin of discretion,7 we are of the opinion that by effectively excluding a significant proportion of electronic cigarettes from the EU market Article 18(1) is manifestly inappropriate to the objective of removing barriers to intra-state trade and thus contrary to the principle of proportionality, and is also unjustifiably discriminatory towards manufacturers of electronic cigarettes by comparison with manufacturers of tobacco cigarettes. This provision of the revised TPD would therefore be likely to be invalidated by the Court of Justice on a reference under Article 267 TFEU.


8 July 2013

Fountain Court Chambers Fountain Court Temple London EC4Y 9DH


See British American Tobacco (above), paragraph 123.