Tobacco faces new FDA marketing restrictions

By MOLLY PETERSON Copyright 2010

March 19, 2010

 Tobacco companies led by Altria Group Inc. and Reynolds American Inc. were banned from marketing to young people under the U.S. Food and Drug Administration's first moves in a decade to regulate the $80 billion industry.

The FDA restrictions, issued today and scheduled to take effect June 22, bar tobacco sales to people younger than age 18. The agency also prohibited cigarette makers from distributing branded merchandise such as T-shirts and sponsoring sporting or entertainment events. The FDA invited comment on whether to restrict some forms of outdoor advertising for tobacco.

“Every day, nearly 4,000 kids under 18 try their first cigarette and 1,000 kids under 18 become daily smokers,” Health and Human Services Secretary Kathleen Sebelius, whose department includes the FDA, said today in Washington. The rules will “help our kids stay healthy by making it harder for tobacco companies to target them with harmful and addictive products.”

FDA's regulations, required under a law signed by President Barack Obama last June, are similar to tobacco restrictions the agency issued in 1996 that were struck down four years later by the U.S. Supreme Court. The high court ruled in 2000 that the FDA couldn't regulate tobacco unless Congress gave it that power. The House and Senate agreed on legislation last year after a half dozen previous attempts failed.

The regulations are an “important step forward in curtailing tobacco industry marketing,” said Matthew Myers, president of the nonprofit Campaign for Tobacco-Free Kids in Washington.

State Settlement

The bans on event sponsorships and branded T-shirts are similar to restrictions that were part of a 1998 settlement that 46 states reached with the biggest tobacco companies. The U.S. rules will create uniform national standards and enforcement, Howard Koh, HHS's assistant secretary for health, said today at a press briefing.

Altria's Philip Morris USA, the nation's biggest cigarette maker, broke with rivals Reynolds and Lorillard Tobacco Co. to back the legislation as a way to standardize manufacturing requirements and spur the development of less-harmful tobacco products. Cigarette advertising is “not nearly as widespread” as it was before the 1998 settlement, Bill Phelps, an Altria spokesman, said today in an interview.

“We are reviewing the notice that was released by the FDA today and we remain hopeful that the FDA will engage with the industry to resolve issues as this process continues to unfold,” he said.

Court Ruling

The FDA said it will appeal a U.S. court ruling that overturned part of the law. In January, a federal judge in Kentucky ruled that some provisions violated advertisers' free- speech rights by barring tobacco companies from using color and graphics to market their products. The agency cited First Amendment concerns today in seeking comment on outdoor advertising.

More than 20 percent of adults in the U.S., or 46 million people, smoke cigarettes, according to the Centers for Disease Control and Prevention in Atlanta. Smoking is the nation's biggest cause of preventable death, killing about 443,000 people a year, according to the CDC.

Obama's tobacco law required the FDA create the Center for Tobacco Products and the 12-member Tobacco Products Scientific Advisory Committee, which is scheduled to hold its first meeting on March 30. Tobacco companies must pay fees to the FDA to fund the regulation and product reviews.

Flavored Cigarettes

The law also bars the sale of fruit- or candy-flavored cigarettes or smokeless tobacco. FDA Commissioner Margaret Hamburg said her agency will start enforcing the ban June 22.

The federal rules will overlap with advertising and marketing restrictions that Altria, Reynolds, Lorillard and Brown & Williamson Tobacco agreed to in the 1998 settlement, the National Association of Attorneys General told the FDA in a Dec. 9 letter.

Reynolds bought Brown & Williamson's U.S. operations in 2004. Florida, Minnesota, Mississippi and Texas reached separate agreements and weren't part of the multistate settlement.

The FDA will form partnerships with states to enforce the U.S. rules, said Lawrence Deyton, director of the agency's tobacco center. FDA officials will inspect retail stores to ensure they aren't selling cigarettes or smokeless tobacco to minors or offering banned products, he said.

“Violations of these rules could engender warning letters, civil money penalties, seizure, injunctions or even criminal penalties,” Deyton said.

Industry Split

Winston Salem-based Reynolds, the second-largest U.S. cigarette maker, and third-biggest Lorillard Tobacco Co., based in Greensboro, North Carolina, opposed the legislation, saying restrictions will cement Philip Morris's market dominance. Richmond, Virginia-based Philip Morris makes half the cigarettes sold in the U.S., led by Marlboro.

“Virtually everything codified in the announcement today is already in place, or at least in place with this company,” David Howard, a Reynolds spokesman, said in an interview. “We will work with the FDA on this and other matters of interest moving forward because we believe that cooperation and open dialogue is the best approach to developing an effective, science-based regulatory framework for the tobacco industry.”

A Lorillard spokesman didn't return an e-mail seeking comment on the FDA rules.

Altria gained 13 cents to $20.46 at 4 p.m. in New York Stock Exchange composite trading. Reynolds rose 46 cents to $53.59. Lorillard fell 12 cents to $76.83.