Posted on 03/15/2004 8:39:43 AM PST by SheLion
War looms over FDA regulation of tobacco
Philip Morris argues federal oversight is needed for a buyout to pass in Congress
By David Rice JOURNAL RALEIGH BUREAU
As tobacco-state congressmen prepare to push a buyout of tobacco quotas that does not include regulation of cigarettes by the Food and Drug Administration, the nation's largest tobacco company says that a buyout must be combined with FDA regulation to succeed.
"We believe those issues are inextricably linked," Steve Parrish, a senior vice president at Altria Group Inc., the parent of Philip Morris USA, said in a meeting last week with editors at the Winston-Salem Journal.
"For a buyout to have any chance of success, it needs to be done in a way that can actually pass the Congress," Parrish said. "If you look at the issue of the buyout, it really has very little support outside the tobacco-growing regions of the United States."
So congressmen from Missouri, Minnesota or Massachusetts need to be able to assure their constituents that in return for a generous buyout of the federal licenses to grow tobacco, they will win new benefits for public health, Parrish said.
Because tobacco companies face deep distrust, "I think the public wants a very significant oversight of the tobacco industry at the federal level in order to deal with some of these issues of mistrust," Parrish said.
Negotiations on a bill in the U.S. Senate to allow FDA regulation of the tobacco industry appeared to unravel last fall, but the Philip Morris executives say they still believe that a combined buyout-FDA bill can be created.
Meanwhile, a group of House members from tobacco-growing states is preparing a bill for introduction this week or next that would dedicate 5 cents from the existing 39-cent-a-pack excise tax on cigarettes to pay for a buyout over seven years - without including FDA regulation. As he campaigns for the U.S. Senate, Rep. Richard Burr, R-5th, has told tobacco farmers that House leaders don't want the FDA to regulate tobacco products, and that such an effort could hurt chances for passage of a buyout.
"The House leadership says no bill will come to the floor with FDA regulation," Burr told a group of farmers in Pitt County recently. "Every member of the House knows that no bill will come out of the House with FDA. We'll work that out with the Senate when we pass two pieces of legislation," he said.
But executives from Philip Morris - which controls about half the domestic cigarette market - say that both the use of the existing tax and the absence of FDA regulation ultimately hurt a buyout's chances.
Diverting part of a cigarette-excise tax that currently flows into the federal budget will not be a popular choice, Parrish said. "It has no chance to pass at a time when we have a $400 billion deficit, and concerns about terrorism and troops in Iraq," he said. "We just don't see that as politically realistic."
Philip Morris supports an assessment on cigarette-makers to pay for a buyout.
A Senate buyout bill that failed to win passage last year relied on such assessments to raise at least $13 billion for a quota buyout. Under such a plan, the cigarette-makers could decide whether to pass those assessments along to customers.
Unlike Philip Morris, R.J. Reynolds Tobacco Co. and other cigarette-makers opposed that approach, saying they viewed the assessments as a new tax.
But John Scruggs, the vice president for government affairs at Altria, said that it would be difficult to pass a buyout without both a new source of money to pay for it and FDA regulation to satisfy members from nontobacco states.
"Given that there aren't 218 tobacco-state members in the House of Representatives, we don't see how that could pass unless there is an effort to marry these two issues and move it forward," he said.
Reynolds and other tobacco companies have adamantly opposed FDA regulation of cigarettes, saying that new restrictions on advertising could help Philip Morris lock in its position as industry leader.
A spokesman for Lorillard Tobacco Co. has even labeled the effort to let FDA regulate tobacco as the "Marlboro Monopoly Act," referring to Philip Morris' industry-leading brand.
But Parrish said that Philip Morris is not trying to use FDA regulation to protect its market share.
"That is not what this is about," he said, noting that Sen. Ted Kennedy, D-Mass., will have a significant role in shaping FDA legislation.
"The notion that he would do something to benefit a tobacco company at the expense of others to me is not believable," Parrish said.
Even if it does win power to regulate tobacco products, the FDA could not limit tobacco companies' constitutional rights to advertise their products, Parrish said.
Though the FDA might want to impose new requirements on cigarette companies' labeling, manufacturing and reporting, "I don't see how anyone could make a good argument that that has anything to do with market share," he said.
So with Burr saying that a buyout bill won't clear the House with FDA regulation and Sen. Elizabeth Dole, R-N.C., saying that a buyout won't clear the Senate without FDA oversight, what happens in the end?
Larry Wooten, the president of N.C. Farm Bureau, has lobbied on Capitol Hill for a buyout, and he said that farmers don't really care whether FDA regulation is part of the package.
"The FDA is not our issue. The buyout is our issue. We'll take a buyout with FDA or we'll take a buyout without FDA," Wooten said. "This program is under such stress that it cannot withstand another year under that pressure, so something needs to be done."
But in part because of the delicate partisan balance in the U.S. Senate, Wooten says that FDA regulation probably has to be included.
"I personally believe that FDA oversight is going to be a part of the final solution, because of the political balance and because of the interests of the public-health community," Wooten said.
But despite their efforts to piece together a coalition to pass both a buyout and FDA regulation, even Philip Morris executives say that it's a long shot.
"To be honest, I think it's going to be extraordinarily difficult this year. But that's not to say it can't happen," Scruggs said. "It's going to take leadership."
o David Rice can be reached in Raleigh at (919) 833-9056 or at drice@wsjournal.com
I can't believe the farmers are all for this. This regulation could greatly reduce their production of tobacco.
An earlier link:
U.S. Senators offer bill regulating tobacco by FDA
"Lorillard Tobacco Company is prepared to fully support reasonable federal regulation of the tobacco industry. But Senator Kennedy's bill to allow the FDA to regulate cigarettes is neither reasonable nor intended to advance these efforts.
"In fact, Lorillard believes that this kind of regulation will unfairly favor Philip Morris, the largest tobacco manufacturer, who will be better equipped to deal with the draconian rules that would extend from the farm to the retail store. In this sense, it would constitute the 'Marlboro Monopoly Act' and virtually eliminate any communication and marketing of our products to adult consumers. We interpret this proposed legislation as a thinly-veiled attempt to grant authority to an agency that by the terms of its existing mandate, must find cigarettes are not and can never be made safe and effective, and therefore would have no choice but to eventually ban the product.
"The stated focus of Senator Kennedy's bill is to serve as a way to combat youth smoking, an issue we at Lorillard take very seriously. We are encouraged by recent reports that show teen smoking rates have declined by more than 20 percent in just the past several years. And while we believe that there is still much more that must be done, Lorillard remains 100 percent committed to the nationwide effort to reduce youth smoking. We do not believe the kind of pervasive federal regulation proposed today would have any greater effect on this issue than the efforts that are already successfully underway.
"At Lorillard, we believe that reasonable regulation can bring about less confrontation and litigation, while enhancing our combined efforts to resolve the many issues facing the tobacco industry."
"Philip Morris U.S.A. is glad that Senator Kennedy's bill sensibly creates a new chapter of the Food, Drug & Cosmetic Act that responds to the unique regulatory challenges posed by tobacco products," said Michael Pfeil, Vice President, Communications and Public Affairs, Philip Morris U.S.A. "As such, we believe that its introduction is a positive step that should help move the process forward towards ultimate passage of an FDA tobacco bill."
Any chance of "regulating" how many cheeseburgers and martini's Kennedy is indulging?
What is wrong with this picture?
Let's see if we can pick out the conservative and pick out the political hack that was foisted upon the good people of the state of North Carolina as 'conservative'...
I hold no high regard for PM. I'm very suspicious of them, and I think you hit upon something here.
I know there is a reason that PM is working for regulation, but I haven't been able to put my finger on it.
But my gut feeling tells me that they will come out the winner in all of this.
(I can't stand Phillip Morris. I roll my own!)
Something very suspicious when a corporation talks out of both sides of their mouths! What hypocrites!
PM reaps a lot of money from selling tobacco products, yet they have that ad on TV telling smokers they have to quit! And they want FDA Regulation???? If they are so dead set against cigarettes and smoking, why the hell don't they stop selling tobacco products????
Mr Parrish, why couldn't the FDA limit ads? The government already limits the tobacco companies' Constitutional rights to advertise. I haven't seen any TV ads for tobacco products in probably 30 years.
Well, actually, the smokers who pay taxes on cigarettes are paying for the Tobacco Settlement 100%. Not the Government and NOT Big Tobacco. The smokers.
The initial payments were made by nasty Big Tobacco until the state taxes kicked in and BT was still required to make the anti-smoking commercials by the settlement which was the point.
But allow me to correct my statement:
Now it appears smokers and the cig companies are going to get screwed anyway even after paying the states and feds a gazillion dollars in blackmail tax.
It's all shown in your second cartoon. Time to buy seeds, soil and a grow light for the basement.
I'm just thankful I learned how to roll my own. Been doing that for three years now. It's great!
We only have 3 growing days in northern Maine, so I won't even attempt the growing part. heh! :)
The second cartoon shows that the government reaps a lot of money from the taxes on cigarettes that smokers pay, yet the government wants to cut off the head of tobacco. What will it be? Yes or no???
I just shake my head. I think there is a lot worse to worry over today then smoking and tobacco products. The anti's are starting to look like bully's in the school yard.
FDA regulation will be a death knell to the tobacco industry........and that is exactly what Philip Morris wants. FDA regulation will kill any and all research into the low-smoke and non-smoke cigarettes being worked upon by other companies, something PM is not publicly doing. FDA regulation will kill any and all reasearch into a possible "safer" cigarette.
As bad as we all know the MSA was to smokers and new business........FDA regulation will make the MSA look like child's play.
Philip Morris supports an assessment on cigarette-makers to pay for a buyout.
Of course they are - for 2 reasons:
1. They will immediately pass it on to their customers, just like with the MSA;
2. The newer companies that are undercutting PM in sales will be forced to do the same thing.
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