The U.S. Senate on Thursday struck the most devastating legislative blow in history to Big Tobacco, giving the Food and Drug Administration (FDA) authority over the industry. The new bill, which passed in the House in April, includes tough new restrictions on advertising like allowing only black-and-white text ads in magazines with substantial youth readerships, mandates that manufacturers prove or stop using claims like "light" and "low tar," bans flavored cigarettes (except menthol) and makes provisions for large, graphic warning labels. So why, then, is tobacco giant Philip Morris, unlike its industry brethren, celebrating the unprecedented oversight?
When Senator John McCain introduced FDA regulatory legislation in 1998, the company spent a reported $100 million successfully fighting it. But since then, Philip Morris has had a crucial realization. With 50% of the U.S. tobacco market already safely in the company's pocket and more than 50% of 18- to 25-year-old smokers loyal to its top brand, Marlboro restrictive legislation will effectively lock in its market dominance, preventing any competitors from taking a bite out of Philip Morris' very lucrative business.
The company's main rival, R.J. Reynolds, manufacturer of Camel cigarettes, is still in dismay over Philip Morris' reversal from regulation opponent to champion, and the third largest cigarette manufacturer, Lorillard, has labeled the legislation the Marlboro Monopoly Act. Both argue that as the new restrictions cut off most remaining avenues available for advertising and ban marketing stunts like free-sample cigarette giveaways, the companies' ability to "communicate" (i.e., gain market share) with potential and existing smokers about their products will be blocked. In addition, the administrative costs of complying with FDA regulations favor large manufacturers over smaller ones.
But there's another key reason Philip Morris lobbied hard for FDA regulation, aligning itself with strange bedfellows like the Campaign for Smoke-Free Kids, the American Lung Association and longtime antismoking crusaders Senator Ted Kennedy and Representative Henry Waxman. "Philip Morris wants the public-health community to join them in finding the holy grail: the safe cigarette," says Gregory Connolly, a tobacco expert and professor at the Harvard School of Public Health. Simply put, figuring out how to produce a less harmful tobacco product and getting an FDA seal of approval could open up a whole new, potentially huge consumer market.
There is nothing in the FDA legislation that expressly favors Philip Morris when it comes to innovation and new product development, but the company has far deeper pockets, putting it at a distinct advantage over its competitors. In 2007, the same year that nearly identical FDA legislation was introduced in Congress, Philip Morris opened a 450,000-sq.-ft. (42,000 sq m) research facility in Richmond, Va. The complex is filled with hundreds of employees, including scientists studying new tobacco technologies that Philip Morris is hoping to get through the new FDA approval process.
"Working on products that are potentially less harmful is something we've been working on for some time," says company spokesman William Phelps. A June 10 market-research report from the firm Fitch Ratings says Philip Morris spent $232 million on tobacco research and "reduced-harm products" in 2008. And just in case the FDA agrees with Big Tobacco (and some scientists) that chewing instead of smoking the leaf is "safer," Philip Morris and R.J. Reynolds have acquired the largest and second largest chewing-tobacco companies, respectively, in the past four years.
This support of increased government oversight, which Philip Morris first endorsed in 2001, has given even some backers of the bill pause. "It is a concern that the tobacco industry is involved" in the legislation, admits David Burns, a leading tobacco researcher who has testified in court that "light" cigarettes are no less harmful than regular ones and has conducted studies for the World Health Organization and U.S. government. Big Tobacco "has a very dark and aggressive history of trying to change both science and public policy to its economic favor," he says. Still, like the vast majority in the public-health community, Burns is in favor of FDA regulation that will hold tobacco companies responsible for the claims they make. (The tobacco industry will have nonvoting seats on a new FDA scientific-advisory board for tobacco issues to be created under the legislation.)
Waxman, chairman of the House Energy and Commerce Committee and a champion of the new legislation, says while "there is no such thing as a safe cigarette," the FDA regulatory structure will allow for research into how to reduce the harm of tobacco. "It's unusual to be on the same side as Philip Morris," he admits. "But their reasons are not our reasons. The bill is a good bill. If they happened to support it, that's fine with me."
But the notion that it's even possible to "reduce the harm" of tobacco is making some public-health officials bristle, even as tobacco executives' mouths are watering. "If we get someone to quit, it's far better than giving someone something with lower levels of toxins. You may delay it, but you're still going to die," says Connolly. (Despite his concerns, Connolly supports the new regulatory bill.) Critics also worry that having an implied stamp of approval on tobacco products from the FDA which has traditionally governed the manufacture and sale of things like cosmetics, food and pharmaceuticals deemed safe could give the misleading impression that cigarettes aren't health hazards.
Still, after all the negative publicity and revelations about Big Tobacco over the past two decades, it's hard to imagine there's a whole untapped market of Americans who will jump at the chance to enjoy supposedly "harm-reduced" tobacco and nicotine. But when the alternative is fighting a (money-) losing battle against regulation, it's a gamble Philip Morris is happy to take.