FDA oversight not all bad for tobacco companies

Even under the watchful eyes of the U.S. Food and Drug Administration, tobacco companies such as Henrico County-based Altria Group Inc. will have opportunities to thrive, some industry observers say.

That's because the legislation passed by Congress this week giving the FDA authority to regulate the industry leaves some doors open for tobacco companies to innovate, and even to make health claims about products, something they cannot do now.

After years of political debate about FDA regulation, "we are entering a much more science-based phase now," said Scott Ballin, a tobacco and health policy consultant who has lobbied for FDA regulation of the industry for 20 years.

The legislation requires the FDA to set up a process by which companies could submit products for approval to be marketed as less risky than conventional cigarettes. Larger companies with significant research resources, such as Altria Group Inc., are in the best position to do that, Ballin said.

"They have got the experience," he said, noting that Altria once owned food-maker Kraft Foods Inc., "so they know what the FDA is all about."

"They understand the science and the regulatory structure," he said. "What they are going to do is apply [that] to the tobacco model."

That seems to be exactly the game plan for Altria, which supported the FDA legislation approved by the Senate Thursday and the House of Representatives yesterday. President Barack Obama has said he will sign the bill.

"We think that the regulation is going to create a framework -- where one does not exist right now -- for the pursuit of tobacco products that are less harmful than cigarettes sold today," Altria spokesman Bill Phelps said yesterday. "We think that is one of the strengths of this legislation and one of the reasons that we support it."

While the best health choice for smokers is to quit, Phelps said, "our goal would be to design the best products that we can and then under federal authority make them available to adults who do not quit."

Industry observers said the FDA legislation sets a high bar for making reduced-risk claims about new tobacco products, higher even than some public health advocates wanted.

Some tobacco-control advocates have argued that smokeless tobacco products, such as moist snuff, should be given priority because noncombustible tobacco products have fewer dangerous chemicals than smoke. But that view is highly controversial.

"The bar should be set very high for any tobacco products that would attempt to claim reduced risk," said Mitch Zeller, who was associate commissioner of the FDA from 1993 to 2000.

Altria and its top competitor, Reynolds American Inc., acquired smokeless tobacco companies in recent years, mainly because smokeless products are gaining sales, while cigarette consumption is declining.

When it comes to introducing new and novel tobacco products, "for the first time, those decisions will be made not by the product developers at the Philip Morrises of the world, but by the scientists and experts at the FDA," said Zeller, who now serves as co-chairman of the National Cancer Institute's Tobacco Harm Reduction Network.

The FDA legislation also has other provisions seen as favorable to the industry, especially the largest companies. One weakness of the bill, some health advocates said, is that the FDA cannot raise the legal smoking age over 18.

"If they really wanted to stop the marketing [of tobacco] to kids, then why does this bill have a provision that says the FDA cannot ban the sale of cigarettes to high school seniors?" said Bill Godshall, a tobacco-control advocate in Pennsylvania who favors a harm-reduction approach that would emphasize smokeless tobacco products.

While the FDA will put new restrictions on advertising and marketing, the agency cannot ban nicotine, the addictive substance in tobacco.

"With potential greater advertising restrictions, larger industry participants [Altria Group Inc, Reynolds American and Lorillard Inc] with established brands are likely to benefit," analysts with Fitch Ratings Services wrote in a report this week.

The bill also requires the tobacco industry to finance the new FDA program, with costs rising from $85 million in fiscal year 2009 to $712 million in 2019. The costs, shared by the companies according to market share, are likely to be passed on to consumers, analysts say.

Critics have charged that the costs imposed on the industry, combined with the restrictions on advertising and new product introductions, will only cement Altria's position as the top tobacco company. The company and some prominent tobacco-control advocates deny that.

Zeller said reports that Altria had a major influence over the FDA bill, and even wrote the legislation, "are way overblown."

"I believe [the bill's] strengths outweigh its weaknesses, and ultimately this will be very good for public health," he said.

Contact John Reid Blackwell at (804) 775-8123 or .