Regulating Tobacco

Tobacco Related Deaths

American Deaths

Estimated Fatality Rate

Worldwide Deaths

Major Causes of Death

Despite Scientific Evidence: Worldwide Increase

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Smoking Rates By Sex in America

Smokers

• About 19% of the population—45 million people.

• About 800,000 teens take up smoking each year.

• About half of American smokers will suffer serious health problems often leading to death as a result of smoking.

• It is estimated that smokers add $96 billion to the nation’s annual health care costs.

Health and Health Care Costs• Smoking was first linked to lung cancer and

other diseases in the late 1940s and early 1950s.

• In 1956 the Surgeon General’s scientific study group determined that there was a causal link between cigarette smoking and lung cancer.

• In 1972 the Surgeon General report became the first of many science-based reports linking tobacco smoke as a health risk to nonsmokers.

Tobacco Policy in the Political Arena

• Between 1940s and 1993, government policy-making followed what Derthick calls “ordinary politics.”

• Congress, the Executive branch and, to some extent, the state legislatures were the focus of tobacco regulation.

• In the 1940s and 1950s the Federal Trade Commission (FTC) sought to remove health claims from cigarette advertising.

• It brought a number of actions against companies for false advertising.

“Ordinary Politics”

• In 1965 Congress enacted the Federal Cigarette

labeling and Advertising Act. • “Caution: Cigarette Smoking May be Hazardous to

Your Health.”• In 1969 the warning was strengthened, and in 1984

Congress required four different warnings to be rotated.

• Each warning provided a direct link between tobacco use and serious health issues.

“Ordinary Politics”

• In 1973 Arizona became the first state to restrict smoking in many public places.

• In the mid-1970s the federal government started banning smoking in government buildings.

• In 1988, Congress prohibited smoking on domestic commercial flights scheduled for 2 hours or less.

• In 1990, the ban was extended to all commercial U.S. flights.

“Ordinary Politics”• In 1992 Congress required states to have and

enforce laws prohibiting the sale of tobacco to anyone under 18.

• Failure to do so would cost a state 40% of its federal mental health and substance abuse grants.

• Most states had laws prohibiting sale of tobacco products to anyone under 18, but were not effectively enforcing the law.

• The 1992 law prompted the states to develop and enforce these laws because they did not want to lose any of their grant money.

“Ordinary Politics”

• Anti-tobacco advocates in Congress held hearings on a host of plans to regulate tobacco sales and advertising in the 1980s and 1990s, but could not convince Congress to pass the legislation.

• During this period the states passed a lot of laws, but most simply restricted smoking in certain places and sometimes placed restrictions on advertising.

• Additionally, all states enacted excise taxes on tobacco products, but in most states the taxes were modest until the late 1990s.

The Federal Drug Administration

• Over the years the FDA tried to regulate tobacco as a drug, particularly focusing on “spiking” or “fortifying” cigarettes with extra nicotine to keep smokers addicted.

• The FDA’s argument was that people do not freely choose to smoke, instead they are addicted.

• In March, 2000 the United States Supreme Court narrowly upheld the 1998 decision of the 4th Circuit Court of Appeals that the FDA lacked jurisdiction to regulate tobacco.

A Loss of Faith

• Anti-tobacco activist had been lobbying Congress and State legislatures since the 70s to sharply regulate the advertising and sale of tobacco products, and win damages for health care costs, but had won only modest, mostly nonmonetary victories.

• At the state level, there was abundant evidence that tobacco use was significantly impacting the cost of medical care—driving up the costs of private and public programs.

The Loss of Faith in “Ordinary Politics”

• In 1998 when the Senate failed to pass a bill reflecting the settlement terms being debated between 46 states and the tobacco industry, the era of ordinary politics made a major shift toward litigation.

• Anti-smoking activist finally concluded that Congress could not play a constructive role or was simply too slow to act.

• In the states, Attorneys General decided to follow the lead of a few other states and adopt litigation as the best way to recover costs being imposed on the states by smokers.

The Turn to Public Litigation

• Increasingly, many activist and state officials were becoming convinced that the tobacco lobby was too powerful, skilled, well-financed, and entrenched to be effectively regulated by elected bodies like Congress and state legislatures.

• In 1994 the Mississippi Attorney General decided that the only way to suppress tobacco sales in his state and gain compensation for the state’s increased burden for health care, was to sue the major tobacco companies.

Adversarial Legalism

• Mississippi became the first state to sue the tobacco industry to recover Medicaid costs for tobacco-related illnesses, and to place restrictions on the advertising and sale of tobacco products. The suit was settled in 1997.

• The tobacco industry settled because they realized that they could not prevail against local judges and juries.

• Three other states followed Mississippi’s lead and reached settlements with the tobacco industry—Florida (1997), Texas (1998), and Minnesota (1998). The four state cases were settled for about $40 billion.

• The other 46 states then filed similar suits.

The Master Settlement Agreement• The state cases stalled for a period in 1998 when

the states and tobacco companies submitted suggested settlement terms to Congress. Congress was asked to pass national legislation that included a financial settlement with the states and set up new terms of tobacco regulation.

• The Senate debated a major settlement and regulatory bill, but the Republicans accused the Democrats of overreach and the bill died.

• When the bill failed, litigation became the preferred strategy of the Attorneys General.

The MSA

• In November, 1998, the tobacco industry agreed to a 46-state Master Settlement Agreement with the private litigation teams hired by the states.

• It was the largest legal settlement in history, totaling nearly $206 billion to be paid through the year 2025.

• As part of the Master Settlement, the major U.S. Tobacco companies agreed to remove all advertising from outdoor billboards.

• The leases on these billboards, valued at $100 million, were turned over to the states for posting anti-tobacco messages.

The MSA

• It banned cartoon characters in advertising, promotion, and packaging, putting an end to the infamous Joe Camel.

• It banned the distribution of nontobacco merchandise with brand logos, such as caps, T-shirts, and backpacks, except at tobacco-sponsored events.

• It limited brand-name sponsorship of concerts, events with a significant youth audience, and team sports to one per year.

The MSA

• It disbanded the Tobacco Institute, the industry’s lobbying organization.

• It prohibited the cigarette companies from lobbying against any of the terms of MSA or challenging their constitutionality.

• It prohibited them from seeking bankruptcy. • It also barred them from lobbying against various

state and local legislative proposals, such as those limiting youth access to vending machines or penalizing youths for possession of tobacco.

The Master Settlement Agreement

• The MSA was a rather unique and controversial public policy.

• The states hired “contingency fee lawyers” to bludgeon the tobacco companies into submission.

• The object was to raise the threat level high enough to coerce tobacco companies into suing for peace.

MSA

• This approach was very controversial because it bypassed the political process.

• There are many critics on both the left and right.

Private Tort Litigation

• While state litigation produced the MSA, private plaintiff litigation has generally not faired well.

• Juries have often not been sympathetic to individual plaintiffs because they believed these individuals engaged in irresponsible behavior.

• Juries generally have concluded that plaintiffs continued to use tobacco products despite overwhelming evidence and clear warnings that the products were harmful, even fatal.

Tort Litigation

• Through the early 1990s private citizens brought 813 suits against tobacco companies because they had been diagnosed with lung cancer or other serious health issues.

• Only 23 were tried and all but two resulted in a victory for the tobacco companies.

• Tobacco companies have fought individual cases with vigor, because they fear that victories will open the flood gates.

Reasonable Fear

• In recent years a large number of individual cases have been filed in Florida.

• The Engle Case (2006) has become the foundation for some 8,000 pending cases in Florida.

• In the Engle case the jury found that:– Cigarettes are unreasonably dangerous;

• Cigarettes cause numerous types of cancer

• Nicotine is addictive

Engle

• Big tobacco has acted negligently;• Even though they knew about these dangers,

tobacco companies intentionally concealed information from consumers about the impact of tobacco on their health.

• The jury also found that tobacco causes: • Lung cancer

• (COPD)Chronic obstructive pulmonary disease;

• Emphysema• Buerger’s disease

• The Florida Supreme Court upheld all these findings and said that in future Florida cases, they would not have to be proven again.

Florida

• Currently the 8,000 or so individual cases are working their way through the Florida courts.

• In March of 2012, the United States Supreme court upheld the terms of a judgment in one of the Florida cases based on Engle.

• The family of the deceased plaintiff was awarded over $30 million.

Florida

• A couple of other Florida cases have resulted in jury verdicts against plaintiffs.

• There are plaintiff cases working their way through the system in other states, but the numbers seem to be modest.

Back to the Political Arena

• While private plaintiff suits will continue, tobacco policy is now back in the political arena.

• States, including the tobacco states, have continued to regulate the sale and use of tobacco, and in 2009 Congress finally gave the FDA explicit regulatory powers.

Family Smoking Prevention and Tobacco Control Act: 2009

This act gives the FDA broad authority to regulate both the manufacture and marketing of tobacco products. This legislation passed Congress by a vote of 307-97 in the House and 79-17 in the Senate. The new act creates a section of the Food, Drug and Cosmetic Act solely for the regulation of tobacco products.

FDA Authority

• Has the authority to require changes in the design and characteristics of current and future tobacco products, including the reduction or elimination of harmful ingredients and additives, although it cannot reduce nicotine yields to zero.

• Most new tobacco products must be approved by the FDA.

FDA

• Restricts youth marketing and sales• Requires detailed disclosure of ingredients• Prohibits terms such as light, mild and low • Requires bigger, graphic warnings on both

sides of packs in advertising. • Manufacturers must pay the costs of FDA

regulations.

Despite Progress

• About 19% of Americans continue to use tobacco products.

• Americans are estimated to have spent $77 billion on tobacco products in 2009.

• Despite all the payouts, tobacco companies are still very profitable business with high stock values.

Price of a Package of Cigarettes