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Tobacco Enemy Number One

Gingrich calls Kessler "a bully and a thug." Dole has pledged to fire him. When you look behind these attacks, says one top FDA official, "you will see the tobacco industry."

W H A T ' S A T S T A K E

The clock is now ticking down toward a summer showdown between the tobacco industry and the FDA. With the FDA set to unveil a precedent-shattering rule that defines the nicotine in tobacco as a drug and sets strict controls over its sale and advertising, the $45 billion tobacco industry is waging a life-or-death struggle to preserve its unfettered right to sell cigarettes and chewing tobacco.

The stakes are immense. The FDA's proposal could be the beginning of the end for the American tobacco industry. Already, the disorder in tobacco's ranks led the Liggett Group, the nation's fifth-largest tobacco company, to make a stunning break with the rest of the industry. In March, Liggett settled a range of lawsuits over the health impact of smoking--the first time any tobacco company has consented to pay damages--and agreed to abide by some proposed FDA tobacco marketing regulations.

For the Clinton administration, the battle with tobacco means an election-year showdown with what a key congressional aide calls "the most powerful special interest in America," one that has forged a close alliance with the Republican leadership and its putative presidential nominee, Senate Majority Leader Bob Dole.

T H E F D A T A K E S O N T O B A C C O

On August 10, 1995, President Bill Clinton made a historic announcement: The FDA proposed to make a rule, probably by the summer of 1996, regulating the nicotine in tobacco as a drug.

Unlike other efforts to control tobacco use--higher taxes, restrictions on smoking in restaurants, etc.--the FDA's proposed action represents a fundamental challenge to the very existence of the tobacco industry, which has maintained for nearly 100 years that tobacco is neither food, drug, nor cosmetic, and is therefore not subject to regulation.

The FDA based its decision on three landmark conclusions that strike at the very heart of the tobacco industry:

  • Nicotine is addictive and has other pharmacological effects on the structure and function of the body.

  • Tobacco manufacturers know consumers use tobacco for the pharmacological effects of nicotine.

  • Nicotine meets the legal definition of a "drug" because tobacco manufacturers "intend their products to have these effects" and manipulate nicotine levels to ensure they do.

In an October speech in Memphis, Tennessee, Kessler detailed the effort that led to the FDA's conclusions. "Our first clue...came from a search of the industry's patents," he said. The patents contained extensive research on ways the tobacco companies could control the precise amount of nicotine in their products. The industry could raise the content of addictive nicotine by carefully selecting which parts of the tobacco plant to use and by developing certain strains of tobacco leaves. One such effort uncovered by the FDA was Brown & Williamson's Brazilian patent, written in Portuguese, for a plant called "Y-1 tobacco" that had twice the usual nicotine content. Finding shipments of Y-1, said Kessler, "was like finding a needle in a haystack."

Other evidence compiled by the FDA concerned the chemical additives tobacco companies use to increase the amount of nicotine absorbed by the smoker. For example, an industry handbook acquired by the agency described how companies use ammonia to increase the absorption of nicotine into the lungs.

The FDA combined its scientific evidence with unambiguous statements by industry insiders that tobacco companies design cigarettes to hook consumers on the addictive power of nicotine. (The FDA quoted one tobacco industry official who said, "Think of the cigarette pack as a storage container for a day's supply of nicotine. Think of the cigarette as a dispenser for a dose unit of nicotine. Think of a puff of smoke as the vehicle for nicotine.")

Bolstered by this mountain of evidence, the FDA proposed to define nicotine as a drug, and regulate cigarettes as "drug-delivery devices." Specifically, the FDA proposed restricting the sale of tobacco to minors (see "Joe Camel's Tracks").

Backed by the White House and the Department of Health and Human Services, the FDA proposed to require age verification and face-to-face sales for tobacco products, eliminating all mail-order and vending machine sales. To reduce tobacco's appeal to kids, the FDA also proposed banning billboards that promote tobacco near schools; limiting tobacco advertising to black-and-white text in magazines that have a "significant youth readership"; forbidding tobacco-brand logos on teen-oriented products like caps and gym bags; and prohibiting brand-name sponsorship of sporting events, races, and concerts.

T O B A C C O C O U N T E R A T T A C K

The tobacco industry was prepared for the FDA action. "Prior to December 1993, they may well have been caught by surprise," says a senior FDA official, "but by February '94, they knew we were serious." As soon as the FDA made its announcement, the five largest tobacco companies (Philip Morris, R.J. Reynolds, Lorillard, Brown & Williamson, and Liggett) launched a massive lawsuit challenging the FDA's authority to govern tobacco. (As Mother Jones went to press, Liggett was still part of the FDA lawsuit despite speculation it would drop out.)

In record time, the industry prepared a 2,000-page legal reply to the FDA's announcement, with 45,000 pages of supporting documents. "It is mind-boggling that the tobacco industry was able to assemble this response so quickly," says an attorney close to the FDA. "They must have had countless lawyers working on this."

Some of those lawyers may themselves be former FDA attorneys. Over the years, the tobacco industry has assembled a legal team that includes five former FDA general counsels or deputy counsels. "It is astonishing. These lawyers are the experts in the field, and they know where everything is buried at FDA," says an FDA official. "When they talk to their clients, they say, 'Ask for this document,' and they know about the document because they are the ones who wrote it."

T H E H I D D E N W A R A G A I N S T T H E F D A 

The tobacco industry hasn't confined its counteroffensive against the FDA to the courts. "Quietly, behind the scenes, the industry is helping to support a much broader attack on the FDA," says Cliff Douglas, a longtime anti-tobacco activist.

The attack has three major components:

  • The industry has provided generous support to a host of Washington think tanks and advocacy groups that have led the effort to gut the FDA. The Competitive Enterprise Institute, for example, has received $50,000 to $100,000 or more from tobacco companies, according to the group's general counsel, Sam Kazman. Tobacco has also contributed hundreds of thousands of dollars to Citizens for a Sound Economy, and has made substantial donations to Gingrich's Progress & Freedom Foundation and the Washington Legal Foundation.

  • Tobacco companies have directed a massive letter-writing campaign against the FDA. Between the FDA's August 1995 decision to regulate tobacco as a drug and January 1996, when the official period for public comment on the plan ended, the agency received nearly 700,000 pieces of mail overwhelmingly condemning the FDA's stance on tobacco. The avalanche of mail was the result of an emergency push by Philip Morris, R.J. Reynolds, and The Tobacco Institute to create the impression of a citizens' uprising against the FDA, but most of it was organized, funded, and even written by the tobacco companies. It is widely seen as an effort to intimidate Washington. "The tobacco companies think it will have some psychological effect on the FDA, on the courts, and on Congress," says Alan Morrison, an attorney with the consumer advocacy group Public Citizen. "These guys are used to sparing no expense. This is war."

  • As it became clear that Clinton's FDA was going after them, the tobacco companies shifted their political support--traditionally bipartisan--to the Republicans. In 1993-94, the industry contributed an unprecedented $1.8 million in soft money to the GOP takeover of the House and Senate. Not only did the victory defang Democratic members of Congress who had harried the industry for decades, it also catapulted friends of tobacco into positions of power. Rep. Thomas J. Bliley Jr. (R-Va.), the new head of the Commerce Committee, wasted little time announcing an end to all congressional investigations into tobacco.

Other tobacco allies on Capitol Hill are less visible. Alan Slobodin, a lawyer at the Washington Legal Foundation before the Republican landslide, now is counsel to the Commerce Committee's Subcommittee on Oversight and Investigations, which has jurisdiction over the FDA. In his new post, Slobodin wages an unrelenting campaign against the agency, holding innumerable hearings and draining agency resources with his demands for documents and testimony. "Slobodin is constantly saying, 'Give us all your documents on this or that,'" says an attorney close to the FDA. "And then all of a sudden these papers show up in the hands of the Washington Legal Foundation."

So far, tobacco companies have not pressed their allies in Congress for legislation that would undermine the FDA's nicotine policy. Sources on both sides say the companies are unlikely to do so until after the industry's lawsuit against the FDA is decided. Part of the reason is that any effort to restrain the FDA through new legislation would lend credibility to the idea that the FDA does indeed have the power to regulate tobacco. Further, despite its alliance with the GOP leadership and a few key Democrats in Congress, the industry would find it difficult to raise majorities in both houses for a bill overturning the FDA's nicotine proposal, let alone gather enough votes to override a certain White House veto. For these reasons, Big Tobacco has thus far used its congressional influence primarily to intimidate the White House and the FDA.

In December, 124 members of the House sent a sharply worded letter to the FDA, claiming the agency's tobacco proposal would put 10,000 jobs at risk and "trample First Amendment rights to advertise legal products to adults." Two weeks later, 32 senators signed a virtually identical letter. (According to Common Cause, those senators who signed the letter had received an average of $31,368 from tobacco, compared to $11,819 for those senators who did not sign. Similarly, the House signatories received an average of $19,446, in contrast to $6,728 for other Congress members.)

T H E C O M I N G B A T T L E

The FDA has moved rapidly on its proposal to regulate nicotine. Though FDA officials will not predict exactly when the final rule will be announced, sources close to the agency say that it is likely by early summer. In March, the FDA stunned Philip Morris--and the rest of the industry--by releasing three devastating statements by former Philip Morris employees, stating that the company routinely manipulated nicotine levels in its products. These three statements were so important that the FDA took the unusual step of reopening the period for public comment on the proposed rule for another 30-day period, though the extension is not expected to cause any delay in the FDA's push to issue its final rule by this summer. "This is information that we believe the public should know," said Kessler in releasing the statement. "These documents shed light on the role of nicotine in the design and manufacture of cigarettes."

Though the industry has already challenged the FDA in court, it could be months before the judge in the case takes any action. In going to court, the industry chose the most friendly venue it could find, the Federal Middle District Court in Greensboro, North Carolina, in the heart of tobacco country. The judge in the case, William L. Osteen Sr., once worked as a lobbyist for the tobacco industry. In 1994, he delivered a ruling favorable to tobacco in a case involving the Environmental Protection Agency and secondhand smoke.

But anti-tobacco activists say that initial signs from the judge do not show obvious favoritism toward the tobacco industry. And despite the industry's urgency in pressing its legal argument, Osteen probably won't act before the FDA issues its rule. The FDA, in turn, intends to craft its rule with built-in waiting periods for the various provisions to take effect, in order to give the industry adequate time to comply.

That means the FDA's anti-tobacco rule will be an issue throughout the presidential election. President Clinton strongly backs Commissioner Kessler. He even traveled to Kentucky the day after his January State of the Union address to reaffirm the White House's support. But, if elected, President Dole would be certain to fire Kessler as one of his first actions in the Oval Office. Conceivably, a Dole-appointed FDA commissioner might reverse the FDA's anti- nicotine rule, though doing so would be politically explosive.

For now, the U.S. tobacco industry is on the defensive. The Liggett Group's controversial decision to settle and to comply with some of the FDA's proposed regulations rocked Philip Morris and RJR Nabisco. In just a week, the value of their companies on the New York Stock Exchange dropped by nearly one-sixth. Though it is just the first break in tobacco's ranks, Liggett's move signals the industry's potential vulnerability to the combined assaults from the FDA, the Justice Department, and a host of consumer injury cases piling up in the courts. "It's like a murder case," says Phil Schiliro, chief of staff for Rep. Henry Waxman (D-Ca.). "You have five people accused of murder and one of them tries to get a break by cutting a deal with the D.A. Now maybe one or two more may start talking. Who knows where this will end?"

Indeed, anti-tobacco activists do not yet know the full ramifications of the Liggett Group's settlement. But it makes their job easier. "At least it allows us to say to members of Congress, 'Look, the fifth-largest tobacco company has said that these regulations are reasonable,'" says Phil Wilbur of the Advocacy Institute. "'How can you as a member of Congress disagree?'"

Robert Dreyfuss is a contributing writer to Mother Jones. He co-authored the "Medikill" story on Golden Rule Insurance that appeared in our January/February 1996 issue.

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