Magazine

Commentary: Philip Morris' Latest Smoke Screen


By John Carey

On June 28, the U.S. Supreme Court struck down tough Massachusetts restrictions on tobacco advertising. That's just the latest in a string of triumphs, from a 1998 settlement that ended a legal threat from states to March, 2000, when the Supreme Court rejected the Food & Drug Administration's bid to regulate tobacco. The industry, says David J. Adelman, tobacco analyst at Morgan Stanley Dean Witter & Co., "faces less legal risk than at any time in the last several years."

So, with the industry ascendant, why is Philip Morris Cos. (MO) asking the FDA to rein in the incidence of teen smoking? The quick answer is that Philip Morris' lobbying has little to do with health--and a lot to do with self-interest.

LOOPHOLES GALORE. On the face of it, though, that's not how it looks. Consider the bill introduced in June by Representative Thomas M. Davis III (R-Va.), chairman of the National Republican Congressional Committee, a major recipient of Philip Morris' largess. It would give the FDA authority to impose new restrictions on advertising, make it harder for youths to buy smokes, and potentially require companies to remove harmful ingredients. That sounds like an industry death wish. But, says analyst Martin Feldman of Salomon Smith Barney, "Philip Morris clearly wants FDA regulation very badly."

That's because cigarette companies stand to reap major benefits from such regs. The bill has enough loopholes that the feds couldn't do much to hurt the industry. Meanwhile, the very fact of FDA regulation would instantly neutralize the most powerful legal argument in outstanding personal-injury suits: the idea that tobacco is a rogue industry that must be punished. According to Adelman, regulation of tobacco would "immunize" companies from further government criticism. Of course, Congress could toughen up any bill. That's one reason the likes of R.J. Reynolds, Brown & Williamson, and Lorillard don't want anything to do with it.

END GAME. But their main objection is that the bill would make Philip Morris even more formidable. It amounts to "little more than a `Marlboro Monopoly Act,"' fumes Lorillard Vice-President Steven C. Watson. The reason: Philip Morris already owns about half the U.S. market-- and two-thirds of the key teen market--so ad curbs are more likely to hurt its rivals. What cigarette icon is more pervasive or persuasive than the Marlboro Man? "As older Americans smoking Lorillard and B&W cigarettes die off," says William T. Godshall, SmokeFree Pennsylvania's director, "Philip Morris will keep increasing market share."

For its part, Philip Morris insists it's looking out for the public. "Consumers need to have confidence that there is proper government oversight of this industry," says Morris attorney Mark Berlind. But the push for the bill needs to be seen for what it is: a ploy to trick Congress into giving Big Tobacco cover to keep selling its products with impunity. John Carey covers tobacco and the FDA from Washington.


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus