Originally created 11/30/03

Philip Morris' FDA plan blocked



RICHMOND, Va. - From all appearances, Philip Morris was turning over a new leaf.

The nation's biggest cigarette maker had already broken ranks with competitors in 2000 with its admission that nicotine is indeed addictive. It aggressively pushed an ad campaign with the stern message: "There's no such thing as a safe cigarette."

And it was the only major cigarette maker to end years of bitter opposition and back a congressional measure that would have given the Food and Drug Administration oversight of the industry.

Did it work? Not this year.

An unlikely coalition of critics - including rival cigarette makers and anti-tobacco groups - charged that Philip Morris' new face was all about the same old goals: further dominance of an industry it already controls with a 50-percent market share.

The critics ridiculed the FDA measure as the "Marlboro Monopoly Act," saying it would benefit Philip Morris by providing only weak oversight, blocking competition from start-ups and helping the tobacco giant market what it bills as a potentially less-hazardous cigarette.

"There is a little bit of cockiness," Alliance Tobacco Corp. executive Josh Kemp said of the behemoth rival. "They felt like they were invincible. And they still feel that way."

Indeed, Richmond-based Philip Morris made significant gains this year by winning the support of tobacco-state lawmakers who had bitterly opposed FDA regulation.

It did it through a grand compromise: agreeing to back a long-sought measure forcing manufacturers to spend up to $16 billion to buy out tobacco farmers' growing rights under a Depression-era price-support program.

Negotiations over the FDA measure broke down last month along partisan lines in the Senate health committee, and some observers question whether it will be revived during the upcoming, election-year session.

Under the bill, co-sponsored by Sen. Judd Gregg, R-N.H., the FDA oversight of the cigarette industry would have tightened ad restrictions and created new rules about the marketing of new tobacco products. It also would have given the FDA authority to demand the removal of harmful ingredients.

The bill stalled after health advocates and Democrats said they were concerned about a number of issues, including a loophole in the bill that would weaken the FDA's authority and prevent the agency from demanding changes to make cigarettes safer. The bill would have allowed Congress - not the FDA - to ban cigarettes.

The Campaign for Tobacco-Free Kids said Philip Morris wanted to market a cigarette as safer under FDA oversight - which could help the company overcome public distrust. The product could be introduced as early as next year.

"I think Philip Morris sees FDA jurisdiction as part of an overall campaign to overcome the lack of credibility it faces with the American public," Matthew Myers, the anti-tobacco group's president, said last month.

Tobacco companies opposed the bill because it included new advertising restrictions, which historically have helped Philip Morris retain its dominance of the market and keep its leading brand, Marlboro, unchallenged. Last year, Philip Morris had $18.9 billion in domestic sales.

"You don't have to have an MBA to see who will benefit," said Tommy Payne, a spokesman for R.J. Reynolds Tobacco Co., which plans to merge with Brown & Williamson Tobacco Corp.'s U.S. cigarette business and create a company with 34 percent of the domestic tobacco market.