FDA: Curbing the Habit

, The American Lawyer

Since the first product liability lawsuit against cigarette makers in 1954, individuals, classes, and the government have filed hundreds of similar actions. Most of these cases have been unsuccess-ful. In the early 2000s, juries in California and Oregon awarded multimillion-dollar verdicts to ailing smokers, but judges then slashed these awards, and the cases are still on appeal. Even U.S. v. Philip Morris Incorporated et al., the U.S. Department of Justice’s 2000 racketeering case against the industry—which cost the government more than $100 million to bring—failed to re-sult in monetary damages against the cigarette makers.

Meanwhile, the federal government’s efforts to regulate the industry that kills 400,000 Ameri-cans annually, according to the Centers for Disease Control and Prevention, have so far proved unsuccessful—until now. Proposed legislation that would give the Food and Drug Administra-tion sweeping authority over tobacco appears poised to become the federal government’s first successful attempt to regulate tobacco companies. It could also significantly reduce future to-bacco litigation. In August the House of Representatives overwhelmingly approved the Family Smoking Preven-tion and Tobacco Control Act, which is expected to pass a Senate vote. Both presidential candi-dates were cosigners of the legislation in the Senate, and regardless of whether Barack Obama or John McCain wins the election, the bill will almost certainly be signed into law.

The bill’s most important provision limits nicotine and tar content in tobacco products. The leg-islation also adds to existing state and Federal Trade Commission rules governing tobacco adver-tising, prohibits claims that certain brands are less harmful, bans fruit- and candy-flavored ciga-rettes, and expands the size of the surgeon general’s warnings on cigarette packages.

These rules will help stymie the steady stream of civil suits (however futile) against tobacco companies, because the banned practices—such as the marketing of low-tar and light ciga-rettes—are the issues that have dominated tobacco litigation in recent years, explains a lawyer who represented Altria Group, Inc., Philip Morris’s parent company, while at Hunton & Wil-liams. Though the bill explicitly states that it will not affect any pending cases, its restrictions would reduce the impetus for future litigation, explains this lawyer, who requested anonymity.

The law will particularly affect lawsuits filed by government entities, says Paul Honigberg, a Blank Rome partner and former deputy director of the Justice Department’s tobacco litigation team during the late 1990s. In the past, because the government has lacked substantive regulatory authority over the tobacco industry (which does not fall under FDA jurisdiction), the Justice De-partment and states’ attorneys general tried to keep the industry in check by filing suits, Honig-berg explains. But under the new law, government fines will take the place of litigation.

The bill is poised to become law, proponents say, because it delivers the congressional approval that a past regulatory attempt lacked. In 1996 the FDA exerted authority over tobacco without congressional approval, but three years later tobacco companies challenged the regulations in FDA v. Brown & Williamson Tobacco Corp. The U.S. Supreme Court ultimately ruled that the FDA lacked the authority to regulate tobacco.

The Bush administration’s FDA explicitly shied away from regulating tobacco. When Democ-ratic congressman Henry Waxman and senator Edward Kennedy introduced the Family Smoking Prevention bill in February 2007, FDA commissioner Andrew von Eschenbach warned that al-lowing his agency to regulate tobacco products could inadvertently harm public health. He ar-gued that a reduction in nicotine levels might increase cigarette consumption and cause smokers to inhale more deeply. The Bush White House also opposed the legislation on the grounds that the additional regulatory responsibilities would overburden the FDA. Though the scope of the department’s expansion has not been announced, the bill funds the FDA’s new tobacco division for the first ten years through a “user fee” on the tobacco companies—$85 million in the first year and up to $400 million in year three.

Altria is the only major tobacco company that has embraced the proposed legislation. In a state-ment, the company’s spokesman said: “We see the benefits of this legislation as creating a regu-latory framework that will benefit consumers, shareholders, and other stakeholders.” The other major tobacco companies are opposed. Tommy Payne, executive vice president for public affairs for Reynolds American Inc., argues that it could actually increase litigation in the short term be-cause of legal challenges from the tobacco companies. Former Justice Department lawyer Honigberg agrees that the companies will likely use the courts to try and scale back the scope of the regulations.

The tobacco companies are already showing signs that they are ready for a fight. Payne argues that the authority the bill grants is too broad and will allow the FDA to impose rules that exces-sively harm the tobacco industry. “If [the FDA] deems it in the best interest in public health to make cigarettes taste like lard, they have the authority to do that,” he says. Some might argue that would be an improvement.