Cornered
Page 21
Madison Avenue joined the tobacco industry in Judge Osteen’s courtroom. The new FDA would kill off Joe Camel and the Marlboro Man by banning “romantic images” in ads. And the black and white “tombstone” ads Kessler demanded would kill off most of the other tobacco ads, as presently designed. Hal Shoup, the executive vice president of the four A’s, the American Association of Advertising Agencies, showed an example of the “tombstone” format at a press conference. An ad for Carolina cigarettes had been appearing against a pine-covered hillside with the headline “Carolina on My Mind.” Shoup had made a mock-up of a Kessler-type ad with the letters in black against a white background. “No advertiser in this category would pay anything to run an advertisement such as this,” said Shoup.
Hardest hit under the FDA plan would be the billboard advertisers. In 1994, the tobacco industry spent $122 million on billboards—12 percent of the billboard business revenue. The industry spent $284 million on magazines, or 3.3 percent of that industry’s revenue. The ad and promotion agencies would also be affected because of the proposed ban on brand-name promotional items, such as lighters, T-shirts, and baseball caps.
But the billboard industry complained that they had already imposed voluntary restrictions and were not placing tobacco and liquor ads within 500 feet of schools and churches. If the limit was extended to 1,000 feet from schools, as Kessler proposed, that would eliminate billboard advertising in cities, the industry complained. “If tobacco is so bad, why not ban it entirely,” said Kent Brownridge, senior vice president of Wenner Media and general manager of Rolling Stone. “How can you have something that is legal and yet can’t be advertised?” He forecast that the government would go after ice cream next because it contains cholesterol.
The advertisers filed suit in the same North Carolina court, claiming Kessler’s advertising ban would violate the “commercial free speech” interpretation of the First Amendment. Longtime tobacco foe John Banzhaf, the George Washington University law professor who had led the fight to get antismoking ads on TV free of charge, observed wryly, “The liquor industry doesn’t protest its inability to sell spirits in vending machines. It’s funny, things only become unconstitutional when it applies to the tobacco industry.”
Under the federal regulatory process, the FDA was required to take public comment for ninety days—but the agency extended the period for two more months to January 1996. More than 700,000 comments came pouring into FDA headquarters, including 30,000 form letters provided by the tobacco companies. Philip Morris put its 300-page argument against the FDA rules on the Internet. Meanwhile, retailers and distributors joined in the lawsuit. The vending-machine owners were upset, as well. About $2 billion worth of tobacco products are sold through 400,000 vending machines each year. Sponsored events such as motor sports, stock-car and hot-rod racing, power-boat racing, and tennis tournaments would also have to find other backers.
Teenagers scoffed at the proposals, saying they thought it would always be possible to bypass any new laws on the sales of cigarettes, just as they had the old ones. Some suggested that the new enforcement effort would only lead to minors being more, rather than less, intrigued by cigarettes.
In the backlash, however, came a surprising and important voice in favor of Kessler’s plan. In a letter to The Wall Street Journal, former Senator Barry Goldwater said he had devoted his life to fighting for limited government, but on this occasion there was a “social role” for government in protecting children from tobacco. “It is hard to think of a more compelling case for government action,” he said. “Cigarette companies say such action is unnecessary because they will solve the problem of youth smoking on their own. Hogwash. I’ve watched the tobacco industry make promise after promise to avoid government oversight for the past forty years. With every promise they give an inch, grudgingly, and buy enough time to hook another generation.… It’s time to stop kidding ourselves. Backroom deals and gentlemen’s agreements never have worked with this industry and never will.”
Goldwater said times had changed and it was time to move with them. North Carolina now produced more poultry and eggs than tobacco. Public opinion on tobacco had changed, too. You only had to look at his own home state of Arizona, which had raised cigarette taxes by forty cents a pack. “The tobacco industry used every trick in the book and spent millions to try and confuse the voters, but in the end they understood that the issue was protecting children,” wrote Goldwater. It was a powerful statement from a once powerful and still respected figure, the kind of signal that was making the untouchable tobacco barons suddenly start to look vulnerable.
Wall Street analysts remained optimistic that the companies would evade regulation. Analysts did not believe the FDA’s proposals would ever pass Congress and they forecast many years of legal challenges to the proposed rules. Still, investors were edgy.
* * *
WHILE THE TOBACCO INDUSTRY compiled their dossier on what they called Kessler’s “reckless distortion” of FDA powers, the tobacco wars continued in the courts. In New Orleans, Gauthier’s nationwide Castano class action had been certified by Judge Okla Jones two months after the dinner at Antoine’s. Judge Jones ordered a two-step process where the plaintiffs would first determine if the tobacco companies had committed negligence and fraud in not revealing their knowledge of nicotine addiction, and then proceed to separate minitrials seeking damages for addicted smokers. The tobacco companies complained it was an attempt to extend the class-action rule beyond the limits authorized by law and appealed Judge Jones’s ruling to the Fifth Circuit Court of Appeals. Meanwhile, the Medicaid cases in Mississippi, Minnesota, and Florida were leading the pack of states now suing the industry.
Throughout the summer, rumors spread that ABC was going to settle the $10 billion libel suit brought against them by Philip Morris and R. J. Reynolds. They turned out to be true. On the August 24 evening news, eighteen months after the program in which they had accused the industry of “spiking” cigarettes with nicotine from outside sources, the network apologized. While conceding it should not have said the industry adds nicotine from outside sources, ABC’s settlement agreement was quite narrow. The apology said, “ABC believes that the principal focus of the reports was whether cigarette companies use the reconstituted tobacco process to control levels of nicotine in cigarettes in order to keep people smoking.… ABC thinks the reports speak for themselves on this issue and is prepared to have the issue resolved elsewhere.” In the end, it was an expensive adventure; the network paid $15 million in legal costs to Philip Morris and R. J. Reynolds, and there would be no reopening of the case.
During the fall of 1995, the tobacco companies launched a counter-offensive. In newspaper ads around the nation they asked, “Who should be responsible for your children, a bureaucrat, or you?” Under the picture of a grinning, tripled-jowled, snaggle-toothed, unidentified man, another ad asked, “Can We Really Make the Underage Smoking Problem Smaller by Making the Federal Bureaucracy Bigger?” And the ad declared piously, “We all agree we must do something to keep cigarettes out of the hands of children under the age of eighteen. A proven solution is to teach young people how to resist peer pressure and to enforce existing laws.”
Meanwhile, the Third Wave lawsuits were uncovering a series of confidential documents showing how concerned the industry was, starting in the 1970s, about maintaining their youth sales. The documents put the lie to the notion, promoted by the companies, that they do not target youth. The simple reason was laid out in a 1974 RJR marketing interoffice memorandum: “Over 50 percent of main smokers start smoking fairly regularly before the age of 18 and virtually all start by the age of 25.” A second 1974 RJR memo, from the company’s marketing department, spoke of the high incidence—40 percent—of smoking in the sixteen-to-twenty-four age group, and why this should be so—adventure, peer pressure, providing confidence in stressful situations. “To some extent the young smokers ‘wear’ their cigarettes and it becomes an important part of the ‘I’ they wi
sh to be, along with their clothing and the way they style their hair.” RJR was particularly concerned about the success of Marlboro among teenagers.
In a 1973 memo entitled “Research Planning Memorandum on Some Thoughts About New Brands of Cigarettes for the Youth Market,” Claude Teague, who was then R. J. Reynolds’s assistant director of research and development, urged that more be done to attract the “twenty-one-year-old and under group.” Teague wrote, “Realistically, if our company is to survive and prosper, over the long term, we must get our share of the youth market. In my opinion this will require new brands tailored to the youth market.” New products should be marketed as a way to fight pressures of the teenage years, such as “stress … awkwardness, boredom,” and as a way of achieving “membership in a group.” Teague’s view was that “there is certainly nothing immoral or unethical about our company attempting to attract these smokers to our products. We should not in any way influence nonsmokers to start smoking; rather we should simply recognize that many or most of the ‘21 and under’ group will invariably become smokers, and offer them an opportunity to use our brands.”
Teague recommended, in his convoluted way, that “now is the time to launch the next brand to become the ‘in’ cigarette with the next generation as Marlboro ages from ‘in’ to hopefully ‘out’ and over thirty status, [and] hence becomes something for youth to avoid.” The next question, of course, was what to call this new youth cigarette. Teague had some ideas about that, as well.
“Ideally, the name should have a double meaning; that is, one desirable connotation in ‘straight’ language and another in the jargon of youth. A current example may be Kool.… A careful study of the current youth jargon, together with a review of currently used high school American history books and like sources for valued things might be a good start at finding a good brand name and image theme.” This was really a matter for the marketing division, admitted Teague. He could supply expertise in scientific research, however.
The memo discussed the precise level of nicotine in a cigarette aimed at the youth market. As the beginning smoker had a low tolerance for “smoke irritation” (an industry phrase for nicotine level), the smoke in the cigarette aimed at such groups should be as “bland as possible.” Teague suggested, “The rate of absorption [of nicotine] should be kept low by holding pH [acidity] down, probably below 6.” On the pH scale anything below 7 is acid and anything above 7 is alkali. The more alkaline the tobacco mix, the greater the rate of absorption of nicotine. The implication of the memo was that the company manipulates the levels, something they still deny doing. John Schwartz, The Washington Post reporter who first wrote up the memo, called Teague at home to ask him about it. “I wouldn’t care to talk to you, I don’t talk to strangers,” said Teague. “Why would I want to talk to you, what earthly gain would it be?” A Reynolds company spokesman called the memo a “draft document that reflects preliminary thoughts of one individual in research and development. We have seen nothing that indicates that it was ever reviewed or acted upon in any way.” Shortly thereafter, the company made great inroads into the youth market with its reborn Camel brand, accompanied by the new cartoon character, Joe.
Lorillard, the fourth-largest cigarette company, also had concerns about the youth market, according to a 1970 letter that surfaced in one of the lawsuits. It was written by the then assistant creative director of Robert Brian Associates, a promotion agency working for the cigarette company. The letter is addressed to Charles Seide, then head of the art department at New York’s Cooper Union college. The agency was preparing to market a cigarette, named “Kick,” to youth and wanted a design from his students. “We’re adults. You’ve got a group of talented kids,” the letter began, then gave guidelines, including that the pack must contain the words, “Caution: Cigarette Smoking May Be Hazardous to Your Health.” It cautioned the art director, “While this cigarette is geared to the youth market, no attempt obviously can be made to encourage persons under twenty-one to smoke. The package design should be geared to attract the youthful eye, not the ever-watchful eye of the Federal Government.” Nothing came of the project.
Even though Philip Morris had Marlboro, the leading brand among youth in the early ’70s, the company was always worried about losing its youth-market share. It hired pollsters and economists to keep a constant check on “college students living on campus, young people in the fourteen-to-seventeen age group, and men in the military services,” as one pollster’s memo put it. The company commissioned a study by the Roper Organization in 1974; this was not the “usual sample of 18–24; in this study no lower age limit was set.” Other Philip Morris studies looked at the “higher Marlboro market penetration among 15–17-year-olds.”
By the 1980s, Philip Morris was worried about the effect on the youth market of raising taxes. “Unfortunately,” said a 1982 in-house report, “it is among the young that we have our greatest market penetration, and theoretically price increases should effect Philip Morris to a greater extent than the total industry.” By the end of the 1980s, Philip Morris was sufficiently worried about this decline to launch a study on smoking among high school seniors. In 1988, an in-house report suggested that the decline was caused by the sharp increase in the price of gasoline between 1976 and 1979. High school senior males in 1976 smoked about the same as they did in 1979—up to the age of sixteen. Then they got their driving licences. Smoking among the class of ‘79, and later, started to drop; the inference made was that the school children could not afford gas and cigarettes. In 1978, it was possible to buy two gallons of gasoline and a pack of cigarettes for one dollar; by 1980 one dollar would not even buy two gallons of gas. The report concluded, “When it comes to a choice between smoking cigarettes or cruising around in his car, the average red-blooded American male would probably choose the latter.” In other words, cut gas prices and youth will smoke more cigarettes. The company’s “gasoline hypothesis” turned out to be credible. The end of the decline in smoking among high school males coincided with the stabilization of gasoline prices.
* * *
ON THE LAST DAY available to them, December 31, 1995, the tobacco companies sent in their comments on the FDA’s proposed rules. Their response came in twelve volumes that stood more than a foot high. In it, they attacked the FDA on three fronts. First, they said that Congress had never intended the FDA to have authority over cigarettes, and it never would. Second, they said cigarettes could not be regulated as a “delivery device for nicotine” (although that’s exactly how they were described in some company memos). Third, they said the FDA had no authority to restrict advertising. The companies were typically exhaustive in their arguments, covering any and all aspects of the law and delving deep into the congressional record.
The tobacco companies claimed Congress was the rightful body to deal with tobacco because it was necessary to balance three competing interests: maintaining the freedom of adults to smoke, informing the public of the risks associated with smoking, and preserving the significant economic interests involved in the manufacturing and marketing of cigarettes. Already, the companies noted, Congress delegates its authority over cigarettes to agencies other than the FDA. For example, Congress requires the department of Health and Human Services to review annual lists of cigarette ingredients and report back on any perceived health effects. The Department of Agriculture sets production quotas and price levels for tobacco leaf. The Bureau of Alcohol, Tobacco and Firearms regulates tobacco manufacturers. The Federal Trade Commission requires the tobacco companies to display government warning labels on their products.
But when Congress could have used other laws to move against the industry, it chose not to do so. In 1975, Congress had been asked to regulate cigarettes under the Federal Hazardous Substances Act, but had instead quickly amended the FHSA to exclude tobacco products. The 1976 Toxic Substances Control Act (TSCA) empowered the EPA to regulate chemical substances that might pose a threat to health. Congress included in TSCA’s definition o
f “chemical substance” an exception for “tobacco or any tobacco product.”
The industry’s main argument was that it was “preposterous” to suggest that after Congress had excluded cigarettes from other laws it now meant them to be regulated under the Medical Device Amendments to the Food, Drug, and Cosmetics Act. The companies argued that the definition of a “device intended to affect the function of the body” was limited in the act to medical products for which the manufacturers made a health claim.
The FDA might as well regulate guns and bullets as “devices” because they were “intended to affect the structure or function of the body of man or animals,” the industry claimed. In the same way, the FDA could regulate down jackets and flannel pajamas as “devices,” since temperature regulation is a “function” of the body. The agency could regulate boots and raincoats because they keep the body warm and dry. Even beach umbrellas could come under the act because they shield people from the sun’s rays and prevent them from developing skin cancer. You could also say bicycles and roller skates were “devices” under the meaning of the act because exercise is, or can affect, a function of the body. But the FDA didn’t regulate these products because no medical claims are made for these “devices.”
Finally, the companies claimed that the FDA could not treat nicotine as a drug at the same time that it regulated cigarettes as “devices.” If nicotine is a “drug,” a fact they disputed, then the rest of the cigarette is merely a “dosage form,” not a “device.” The FDA had long recognized the distinction, the industry argued. Nicotine patches and nicotine gum, for example, had been regulated as drugs, not as “nicotine delivery devices.” Taking the FDA’s new interpretation of drug delivery “devices” literally, then tablets, capsules, suppositories, creams, gels, powders, and aerosols were also drug delivery devices.