As the price of smoking rises again from tomorrow, an electronic cigarette company has started selling an alternative nicotine hit, in defiance of a "virtual ban" by the medicines control agency.

The price of cheaper cigarette brands is expected to rise from around $14.60 for a packet of 25 to more than $16.

This is because on top of the annual, inflation-based tax rise, smokers are being hit by the second of three excise tax rises of 10 per cent. The first of these, in May, was in addition to a one-off tax increase of 14 per cent on loose tobacco.

The tax increases are intended to reduce smoking by hitting smokers in the wallet. Price increases are considered the most effective way of cutting tobacco consumption and the smoking rate. Around one in five adults smoke.

Some public health researchers want smokers given easier access to safer forms of nicotine than smoking, such as rechargeable battery-powered e-cigarettes, which deliver the addictive drug in a vapour, without the harmful components of tobacco smoke. E-cigarettes can also operate with flavoured, non-nicotine cartridges.

Nicotine cartridges were sold in New Zealand until April, when Medsafe issued a warning to the Dunedin outlet because it had made a therapeutic claim, promoting them as a quit-smoking aid.

Users would subsequently have had to import their own, although one website with a New Zealand web address is now understood to arrange deliveries from Britain for New Zealand customers.

Separately, Auckland-based AFP International said yesterday it had starting selling nicotine e-cigarettes in New Zealand in October. The products were available at 150 outlets, including dairies, convenience stores, liquor stores, petrol stations and some restaurants. Around 5000 had been sold. The company was not making any therapeutic claims for the device, nor advertising it at all.

It was not expecting any difficulties with Medsafe, because the agency had said in an email in 2008 that in respect of e-cigarettes as a tobacco product, it had "no direct interest in regulation of cigarettes as such".

Yesterday, however, Medsafe issued a new warning when told about the resumption of nicotine cartridge sales.

"Nicotine is a deadly poison and when intended for administration to humans it is a scheduled medicine," said group manager Dr Stewart Jessamine. "Even without claims or advertising the company is supplying their nicotine-containing inserts for e-cigs in breach of the Medicines Act and risk prosecution."

Dr Murray Laugesen and fellow trustees of the End Smoking NZ Trust say in an article on their website that despite Medsafe's "virtual ban", based on the assertion that nicotine e-cigarettes are a medicine, they are in fact "primarily recreational nicotine alternatives to smoking".

"We argue they already qualify as tobacco products under the Smoke-free Environments Act ... All that ... distributors would have to do is strictly refrain from making therapeutic claims, and abide by current and future regulations of the ... act."

THE LEGAL STATUS

* Medsafe: Nicotine cartridges for electronic cigarettes contain a medicine, which must be licensed under the Medicines Act before they can legally be sold.

* End Smoking NZ Trust: Sales can be allowed as a non-medicinal, recreational tobacco product under the Smoke-free Environments Act, which makes no mention of electronic cigarettes.