Science vs. Politics

Reynolds American, others ready to challenge restrictions in pending tobacco bill

Steve Holtz, Editor in Chief, CSP Daily News

WINSTON-SALEM, N.C. -- As the legislation that will bestow the Food& Drug Administration (FDA) with unprecedented authority to regulate cigarettes and other tobacco products awaits President Obama's signature, Congress can expect a volley of litigation from the bill in at least one area: marketing and advertising restrictions.

"The marketing and advertising restrictions...will be subject to various forms of litigation by various parties," said Tommy Payne, executive vice president of public affairs for Reynolds American Inc. (RAI),during a Credit Suisse tobacco regulation [image-nocss] conference call yesterday. "I'm aware that the Association of National Advertisers, the ACLU and the Washington Legal Foundation all intend to file their version of that litigation in fairly short order after signature by the president."

And don't count out RAI itself, either. "It is our intent to challenge some of those provisions," Payne said. "But we're also looking at, Are there other provisions in the bill that may be subject to legitimate litigation claims? We have not come to a conclusion on that yet."

The new rules, which Obama has said he will sign soon, include bans on giveaways of nontobacco items with the purchase of tobacco products and on outdoor tobacco ads within 1,000 feet of schools and playgrounds.

For groups such as the Association of National Advertisers, significant actions in the bill include new limits on magazine advertising, one of the last outposts of tobacco advertising, according to a report in the Wall Street Journal.

Tobacco advertising has been declining since the 1970s, when TV and radio commercials for cigarettes were banned. The industry cut back heavily on magazine ads in 2000, under pressure after placing ads in magazines with many young readers, the report states.

Last year, tobacco companies spent $78.4 million on ads in the United States, with $69.3 million of that in magazines, mostly male-oriented publications including Maxim, Playboy, Men's Journal and Field & Stream, according TNS Media Intelligence, an ad-tracking firm.

Any further loss of revenue, even the relatively small amount flowing from tobacco, would hit at a particularly hard time for the magazine industry, which saw ad spending drop 21% in the first quarter of 2009 from a year earlier, according to TNS, as cited by WSJ.

The ad industry opposes the legislation, arguing that it violates free speech.

Meanwhile at the retail level, Payne of Winston-Salem, N.C.-based RAI, which has fought against the bill and previous versions for years, said there are few specifics in the bill.

"The bill only speaks to retail in a couple of small ways," he said. "It prohibits the agency from requiring a prescription to purchase tobacco products... It does apply the rules to retail outlets on Native American reservations. [And] it says that the rules for age-restricted tobacco retailers have to be the same for those retailers that are non-age restricted."

In other words, if text-only, black-and-white advertising is all that is allowed in a convenience store, the same regulation must also apply to a tobacco shops.

Payne adds, however, that a large part of what actually comes out of the bill will come down to whether the future regulations to be established by the FDA are derived based on science or politics.

"If you were to listen to the debate [in Congress] or some of the desires of the proponents of the legislation over the last several years, it really goes to [product] placement in the store: non-self service, everything behind the counter, potentially under the bar, not even [on the] back bar," he said. "But the bill doesn't give any direction; it just says [the FDA] has authority to issue regulation over the retail component of tobacco products."

In the meantime, as the new branch of the FDA is created and its regulations developed, RAI will stand at the ready to voice its opinions and, it hopes, shape the policy.

"The agency will give the opportunity and will solicit comments from a variety of interested parties both in and outside of the industry," Payne said. "So to the extent that we have an opinion about a regulation, we'll file comments and work with others with similar positions or opinions and see where those regulations come out."

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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