Philip Morris, Reynolds raising per-pack prices

The nation's two top cigarette-makers are boosting per-pack prices by 6 cents to 8 cents.

Though the companies won't say why, analysts believe it is to cover new user fees charged by the U.S. Food and Drug Administration to pay for the costs of its new assignment to regulate tobacco.

The increase on what manufacturers charge wholesalers seems unlikely to have a big effect on smoking, as this spring's 61.66-cent-a-pack increase in federal excise taxes did.

Last week, Altria Group Inc. Chairman and CEO Michael E. Szymanczyk told analysts the effect of that tax increase accounted for two-thirds of the 16 percent drop in the number of cigarettes it sold in the third quarter. The rest came from wholesalers' inventory reductions.

That price effect was in line with the historical trend, he said.

Though tobacco companies don't disclose their models for forecasting the effect of price changes on smoking, economists and security analysts have estimated that every 10 percent increase in prices cuts consumption by 4 percent.

In Virginia, the 6to 8-cent-a-pack change amounts to a bit more than a 1 percent increase. In states with higher state taxes, the effect of the change will be smaller.

Altria's Philip Morris USA increased the price of its flagship Marlboro by 6 cents a pack.

The nation's No. 1 cigarette-maker also increased prices of its two main discount brands, Basic and L&M, by 6 cents. It increased prices for its premium Virginia Slims and Parliament brands by 8 cents a pack.

Winston-Salem, N.C.- based Reynolds American, the No. 2 cigarette-maker, will raise the price of its flagship brand, Camel, by 6 cents. That, as well as 6-cent-a-pack increases for Kool, Winston, Salem, Pall Mall, Doral, GPC and Misty, take effect Monday. Reynolds will raise the price of Lucky Strike and its other brands by 8 cents.

The FDA will collect about $23 million in user fees this fiscal year, rising to $235 million in fiscal year 2010 and to $712 million by fiscal year 2019.

Contact David Ress at (804) 649-6051 or dress @timesdispatch.com.

Bloomberg News Service contributed to this report.