Meanwhile, the FDA on Thursday began collecting millions in fees from the nation's tobacco companies to help fund the agency's newly granted authority to regulate the industry. The user fees, which will be collected quarterly, are based on each [image-nocss] company's share of the U.S. tobacco market.
R.J. Reynolds Tobacco Co., maker of Camel cigarettes, and Lorillard Inc., which sells the Newport menthol brand, filed the federal lawsuit with several other tobacco companies in August to block those marketing restrictions, claiming the provisions violate their right to free speech and restrict their ability to communicate with consumers. (Click here for previous CSP Daily News coverage.)
It is the first major challenge of the legislation passed and enacted in June. The lawsuit, which named the FDA, the government and individual officials as defendants, does not challenge the decision to give the FDA authority over tobacco products.
The government gave a full-throated defense of the public health interest in the regulations. "The health risks associated with tobacco use and nicotine addiction are overwhelming and incontrovertible," the government wrote in its response. "Tobacco use is not only deadly but also addictive."
Eleven public health and consumer advocacy groups on Wednesday also asked the federal court to reject the lawsuit, saying the provisions are narrowly tailored to satisfy First Amendment constitutional requirements and is designed to end "decades of false health claims that have misled millions of smokers."
The law that started to take effect last month gives the FDA authority over tobacco for the first time and lets the agency reduce nicotine in tobacco products, ban candy flavorings and block labels such "low tar" and "light." Tobacco companies also must put large graphic warnings over any carton images.
The companies said in their lawsuit that the law, which takes full effect in three years, prohibits them from using "color lettering, trademarks, logos or any other imagery in most advertisements, including virtually all point-of-sale and direct-mail advertisements." The complaint also says the law prohibits tobacco companies from "making truthful statements about their products in scientific, public policy and political debates."
The tobacco makers say the new mandated health warnings for cigarettes would relegate the companies' branding to the bottom half of the cigarette packaging, making it "difficult, if not impossible, to see."
Joining in the suit filed in U.S. District Court in Bowling Green, Ky., are National Tobacco Co., Discount Tobacco City & Lottery Inc., and Kentucky-based Commonwealth Brands, which is owned by Britain's Imperial Tobacco Group PLC.
Richmond, Va.-based Altria Group Inc., parent company of the nation's largest tobacco maker, Philip Morris USA, supported the bill and has not joined the lawsuit. Altria's chief rivalsNo. 2 Reynolds American Inc., parent company of R.J. Reynolds, and No. 3 Lorillard, both based in North Carolinaopposed the bill, saying FDA restrictions on new products would lock in Altria's share of the market. Altria's brands include Marlboro, the top-selling brand in the U.S.
Concerning the new fees, the FDA will collect about $23 million for fiscal 2009. That will rise to $235 million in 2010 and grow to $712 million by 2019. The FDA would not disclose the assessments for specific companies.
Stifel, Nicolaus & Co. analyst Christopher Growe said in a note to investors cited by AP that Altria Group Inc., owner of market-leading Philip Morris USA, would be responsible for about 50% of the fees.
FDA spokesperson Kathleen Quinn told the news agency that the fees will be used to fund the Center for Tobacco Products, the agency's group tasked with regulating tobacco. The fees will pay for staffing, offices, systems that will be used to register products and outside contractors.
Click here for previous coverage.
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