Smoking Out Big Tobacco; Critics contend that Philip Morris is backing FDA regulation of the tobacco industry in hopes of snuffing out smaller competitors

0 Comments | Insight on the News, Nov 24, 2003 | by John Berlau

Byline: John Berlau, INSIGHT

In the late 1990s the Clinton administration and its Food and Drug Administration (FDA) commissioner, David Kessler, called for the FDA to regulate tobacco. Massive opposition rose like smoke from the tobacco companies and Republicans in Congress as well as conservative and libertarian activists. Tobacco is neither a food nor a drug, they argued, and FDA regulation of tobacco products would limit the freedom of consenting American adults. A few years later FDA regulation still is being proposed, but the advocates have changed. This time many Republicans, including a few conservatives, are on board and the push is being led by America's largest cigarette manufacturer, Philip Morris Co.

Judd Gregg (R-N.H.), chairman of the Senate Health, Education, Labor and Pensions Committee (known as the HELP Committee), is proposing legislation that, in the words of a committee summary, "grants FDA authority to regulate the production, distribution, labeling and marketing of tobacco products to protect the public health."

In a press release, Gregg says, "The bill ... gives the FDA the authority to regulate the tobacco industry and, in doing so, will ultimately save lives." A fellow Republican senator on the committee, Mike DeWine of Ohio, adds in the same press release: "We are taking a step toward limiting the kinds of advertisements directed at our children. And we are taking a step toward finally giving the FDA the authority to fix the problem of youth smoking."

In the House, Reps. Tom Davis (R-Va.) and Mike McIntyre (D-N.C) are cosponsoring a bill that would let the FDA regulate tobacco and give a "buyout" to tobacco farmers and end government support. Bills for FDA regulation of tobacco also were backed by Rep. Ernie Fletcher (R-Ky.), who was just elected governor of that state. House Majority Whip Roy Blunt (R-Mo.) also has supported FDA regulation of tobacco.

These sudden conversions could be explained by the new support for FDA oversight by Philip Morris. In Blunt's case, as reported in June by Jim VandeHei of the Washington Post, Philip Morris was a big donor, and both his son and the girlfriend who now is the congressman's wife worked as lobbyists for the company. Only quick action by his fellow top Republicans stopped Blunt last November from inserting a last-minute provision into the homeland-security bill that would have benefited Philip Morris by cracking down on sales of tobacco products on the Internet.

Philip Morris is telling Insight and others it has seen the light and now supports "responsible" regulation. "We have a lot of reasons," says Mark Berlind, an associate general counsel to Altria Group Inc., the new name for what used to be called Philip Morris Companies and which also owns Kraft Foods and Miller beer. (The cigarette division still is called Philip Morris USA.) Berlind explains: "We believe that all of our businesses should do what they can to align their business practices with society's expectations. Clearly, the American public wants FDA regulation. There's a big perception out there that there's not enough oversight of the industry. We agree with that, and we think that the whole industry would benefit from having much clearer rules across a range of issues for how to conduct its business."

There remain plenty of sticking points between Philip Morris and antitobacco activists. The company still opposes allowing the FDA to regulate tobacco as a "drug-delivery device," as Kessler had planned to do, and it wants a separate category for tobacco. Gregg's bill currently is stalled in the HELP Committee because Sen. Edward Kennedy (D-Mass.) and the National Center for Tobacco-Free Kids believe it does not give the FDA enough power.

Meanwhile, opposition slowly is arising both from Philip Morris rivals and from conservative groups that believe big government is bad no matter which companies or legislators are pushing it. "Big business likes big government as long as big government can be used to serve their economic ends and interests, so that's nothing new," says Richard Lessner, executive director of the American Conservative Union (ACU). "We don't think government should be used to give any company a competitive advantage over another company. The free market ought to determine these things."

What Lessner is referring to as "competitive advantage" reflects a long history of tobacco companies using government regulation as a weapon to bludgeon their competition or potential new upstarts. Critics on the right suspect that in this effort the real motive of Philip Morris, which controls about 50 percent of the U.S. cigarette market with brands including Marlboro, Benson & Hedges and Virginia Slims, is not public health but sticking it to the company's competitors. Opponents like to refer to Gregg's bill as the "Marlboro monopoly act."

"They want to put their competitors at a disadvantage," Jacob Sullum, libertarian critic of the antismoking movement and a senior editor of Reason magazine, tells Insight. "They feel that they, as the leading company and the biggest company, are best able to bear the burden of regulation. Certainly, regulation is going to put small upstart companies at more of a disadvantage, as well as R.J. Reynolds. For the manufacturers that are smaller than Philip Morris, it's going to be harder in general to meet the requirements of the regulations. So that too will help Philip Morris. If there are additional advertising and promotion restrictions there already are a bunch of them as a result of the [medical-costs] settlement with the states that also helps the company with the biggest market share. To the extent that you restrict advertising and promotion, you tend to freeze market share."