Special Report: Tobacco on Fire Pt. 4

FDA regulation the other shoe to drop, though alternative plans emerging

Mitch Morrison, Vice President of Retailer Relations

[Editor's Note: This is the final installment of a four-part CSP Daily News series on how the industry is reacting to the federal excise tax on tobacco that begins in April.]

WASHINGTON, D.C. -- Last summer, more than two-thirds of the U.S. House of Representatives voted to empower the Food & Drug Administration (FDA) to regulate tobacco products. The bill died when then-President Bush lobbied a veto threat.

Now, with a new president and larger Democratic majorities in both Houses, the measure (H.R. 1256)--known as The Family Smoking Prevention & [image-nocss] Tobacco Control Act--is revived and passage is all but certain. (Click here for the full text of H.R. 1256.)

Unlike the recently passed federal-excise-tax (FET) increase on tobacco, two major players are not opposing this bill: Philip Morris USA and NACS. Asked about the resuscitated bill, NACS' senior vice president of government relations Lyle Beckwith reiterated the group's position that it would not oppose the bill-nor support it-as long as certain key provisions are maintained.

"Assuming all the provisions we negotiated last Congress are fully incorporated into the bill, we will maintain our position of non-opposition," Beckwith told CSP Daily News in an email. "We will continue to oppose the Senate bill unless it includes all of the House provisions we negotiated. Our successful negotiations in the House were aimed at minimizing any adverse affects this legislation would have on retailers."

Among those items key to NACS is maintaining a level playing field so that Internet and Native American merchants will be regulated and required to comply with the same restrictions. Additionally, the bill offers retailers certain liability protections concerning warning labels on packs of cigarettes and smokeless products.

Philip Morris, meanwhile, backs the measure, putting itself against the majority of cigarette and other-tobacco manufacturers. Of course, with Marlboro and UST's Copenhagen and Skoal tucked in its portfolio, Philip Morris controls more than half of the domestic tobacco market.

Another key backer of the House bill introduced by Rep. Henry Waxman (D-Calif.), who chairs the Energy & Commerce Committee, is the Campaign for Tobacco-Free Kids, a nonprofit organization that has lobbied actively for more than a decade for FDA empowerment.

For Tobacco-Free Kids, the political environment on Capitol Hill is, for health advocates, controlled giddiness. After eight years of steady defeats, the anti-tobacco crusader is about to celebrate its biggest victory right on the heels of the SCHIP law, which raised federal taxes on almost all tobacco products to fund the State Children's Health Insurance Program.

"Our hope is the bill will sharply reduce smoking and overall tobacco use," said Eric Lindblom, the group's director of policy research. Yet, he said, neither his organization nor the Waxman bill seeks to eliminate the legal sale of tobacco products, which he acknowledges could spur a black market. "We don't see this as meaning the end of cigarettes or the right to smoke. But we do see this helping to further educate the public about the inherent risks of consuming tobacco products."

Critics Back Another Bill

Not everyone is happy with the Waxman bill, including some surprise adversaries. Indeed, a fascinating loosely knit coalition is emerging, combining some tobacco companies, tobacco-selling retail associations and, perhaps the most surprising interest, anti-tobacco, anti-FDA activists.

Bill Godshall, executive director of Smokefree Pennsylvania, is lobbying on behalf of an alternative proposal, H.R. 1261, pushed by Reps. Steve Buyer (R-Ind.) and Mike McIntyre (D-N.C.) that in place of FDA, would create a new agency within the Department of Health & Human Services (HHS) to regulate tobacco products. (Click here for the full text of H.R. 1261.)

Buyer's proposal, considered a longshot from the outset, was soundly defeated in committee but is expected to receive a floor vote in the House. Unlike Waxman's FDA move, this measure seeks to create a new body within the HHS called the Tobacco Harm Reduction Center, whose primary purpose would be to "reduce death and disease associated with tobacco use and prevent the use of tobacco products by minors."

Aides to Sen. Richard M. Burr (R-N.C.) said he plans to introduce a similar bill in the Senate that would put regulation within the HHS. According to an Associated Press report, he and Sen. Kay Hagan (D-N.C.) are introducing a compromise bill that also would ban tobacco advertising in magazines and newspapers and prohibit the words "light," "mild," "ultra-light," "medium" and "low" from being used as descriptors of tobacco products.

Godshall said one of the major weaknesses about the Waxman bill is a component that was actually key to Waxman securing neutrality from NACS and winning support from Philip Morris, the equal playing field. "The Waxman bill simply keeps the same playing field. It keeps Philip Morris and Marlboro dominant," he said. By lumping all tobacco products in one stroke, the legislation, he contends, equates the dangers of cigarettes and smokeless tobacco products."

"Our goal is to push smokeless," he said. "It is proven to be less harmful than cigarettes and the public needs to know it. Waxman's bill treats all tobacco as if they're equally bad, and that's just not the case."

Also endorsing the Buyer-McIntyre measure is R.J. Reynolds Tobacco Co., which, in a PowerPoint presentation obtained by CSP Daily News, said that the proposal "encourages development of new tobacco products that have potential to reduce health risks (leading to ongoing demand for tobacco leaf)...(and includes) more reasonable regulation of advertising and merchandising of tobacco products."

Equal Isn't Fair

It is not surprising that the National Association of Tobacco Outlets (NATO) opposes FDA oversight. What is interesting, however, is the strength of its opposition is rooted in the very reason NACS has withdrawn opposition: treating all retailers alike.

"I understand why NACS wanted all retailers to be treated equally," NATO head Tom Briant told CSP Daily News. "But you're trying to treat different kinds of stores similarly. In a c-store, where they sell gum, soda, candy, you could argue in favor of requiring that tobacco products be put behind the counter. But our stores are adult-only. We're a different animal. For premium cigars, people want to touch them, smell them, taste them. This bill is devastating for our businesses."

Another major concern, Briant said, is the Waxman bill explicitly permits municipalities, counties and states to ban the sale of tobacco products. "This has previously been an assumed power," he said. "Having this literally stated in this bill can embolden local municipalities as we're already seeing. This could be patterned after dry cities and dry towns."

Countering Waxman's opponents, Tobacco-Free Kids suggests the Waxman bill could offer an upside to tobacco companies, especially those invested in smoke-free and spit-free products.

"Right now tobacco companies are afraid to produce less-risk products because they are not allowed to market them that way," said Lindblom. "The FDA can set very clear and reasonable standards that let you market products as reduced risk if it proves to reduce harm to the individual user. Our goal is to have a product that is legal but not marketed in an irresponsible way that hooks a new generation of consumer."

Key Pieces of the H.R. 1256

The Family Smoking Prevention & Tobacco Control Act, which is awaiting a vote by the full House, amends the Federal Food, Drug & Cosmetic Act to grant the FDA authority to regulate the manufacturing, marketing and sale of tobacco products. Its features include:
Restrictions on marketing and sales to youth, including a ban on all outdoor tobacco advertising within 1,000 feet of schools and playgrounds, and limits to advertising in print publications. Requiring tobacco companies to submit to the FDA ingredients in each existing tobacco product by brand. Empowering the FDA to direct changes in tobacco products, including product formulation. Strictly regulating "reduced harm" products and prohibiting the use of such descriptors as "light," "mild" and "low" to characterize a product on labels or in advertising. Bigger health warnings, with the original House bill requiring warnings to cover the top 30% of the front and rear panels of the package. Funding FDA activity through a user fee on manufacturers of cigarettes, cigarette tobacco and smokeless tobacco, allocated by market share. For more about SCHIP and its impact on c-stores, see the April issue of CSP magazine.

Mitch Morrison Winsight CSP By Mitch Morrison, Vice President of Retailer Relations
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