FDA tobacco bill

[Oscar Wilde]

WSJ

WASHINGTON -- The Senate overwhelmingly passed historic legislation Thursday that puts the tobacco industry under the regulation of the Food and Drug Administration.

Companies are weighing the impact of the bill, which they say also puts severe, perhaps unconstitutional, restrictions on advertising and packaging. Those limits, they worry, could undo business plans based on smokeless tobacco products, which they have been developing in anticipation of this day -- even as they were fighting to derail the legislation.

Former FDA Commissioner David Kessler, who spearheaded the original effort to treat the nicotine in tobacco as a drug, hailed the Senate vote of 79-17. "It's as strong a bill as we could have ever imagined," he said.

The Senate voted Thursday to tighten rules on tobacco marketing and giving the FDA regulatory authority, a move that is likely to bring on First Amendment lawsuits and lobbying to limit the FDA's actions. WSJ Reporter Alicia Mundy explains.

He said the industry fees mandated by the bill to pay for FDA regulation will enable the regulator to strictly enforce new rules, such as a ban on candy- and fruit-flavored cigarettes. "With $600 [million] to $700 million from industry to support it, I think the administration can set it up."

The House passed a similar bill in April. The Senate version likely will be approved by the House on Friday and sent to President Barack Obama for signing.

Critics said the bill will establish a new federal bureaucracy and unfairly benefit Philip Morris USA, a unit of Altria Group Inc., which dominates U.S. cigarette sales. Sen. Richard Burr (R., N.C.) said restrictions in the bill will hinder smaller companies from introducing products.

Altria praised the legislation overall, saying it will require all tobacco makers to operate "at the same high standards." The company said, however, that it has First Amendment concerns about some advertising curbs. Industry officials said lawsuits could tie the legislation down.

Since 1998, the industry has spent nearly $308 million in lobbying to block the bill. Cigarette makers have seen sales shrink in the past decade. They have been operating under some advertising restrictions that were part of their 1999 settlement with 46 states, led by Mississippi, which sued the companies for costs from tobacco-related deaths and illnesses.

One key question is whether the bill's advertising restrictions will undo industry efforts to compensate for declining cigarette sales by moving aggressively into smokeless products. Several companies have begun developing snus -- spit-free smokeless tobacco in pouches -- and dissolvable tobacco pellets. Reynolds American Inc. is marketing Camel Snus nationwide, using the name of one of its best brands, and testing its Camel Orbs -- dissolvable tobacco pellets -- in limited markets.

Philip Morris USA recently spent $10.3 billion to acquire the largest smokeless tobacco maker, UST Inc., known for brands like Copenhagen and Skoal. And, after some disappointing results with some early versions of snus and moist tobacco products, the company has introduced a new Marlboro Snus in limited markets.

While controversial, some research shows that smokeless tobacco products may be less harmful because they generally contain fewer carcinogens than cigarettes and don't enter the lungs.

Companies had hoped the bill would make it easier to advertise the lower risk of the smokeless products. But the new regulations still don't allow smokeless-tobacco makers to say their products are healthier unless they can prove that to the FDA.

The regulations also require makers to pull from the market products that were introduced after February 2007, which could hurt some dissolvable tobacco pellets and strips. Some snus products will likely be exempt because similar pouches were on sale before that date.

This bill "could significantly chill the introduction or commercialization of new tobacco products that have significantly lower risks than cigarettes," said Tommy Payne, a Reynolds spokesman.

The new ban on candy- and fruit-flavored cigarettes isn't expected to have a big financial impact. Menthol cigarettes are initially exempt from the ban because of demands from the Congressional Black Caucus. About 75% of African-American smokers buy menthol brands.

The FDA is required to set up an advisory panel that will report within a year on whether menthol should be banned.

The FDA must name the head of the new tobacco division. One potential candidate is Deputy Secretary for Health and Human Services Bill Corr, who was previously the lobbyist for the Campaign for Tobacco-Free Kids.

The bill's lead sponsor, Sen. Edward Kennedy (D., Mass.), is seriously ill and couldn't come to the Senate to vote.

[Mr Bean]

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