By Jennifer Maloney
U.S. health officials said Friday they want tobacco companies to
make all cigarettes with such low levels of nicotine that they are
no longer addictive, part of a sweeping regulatory overhaul that
threatens Big Tobacco's main moneymaker.
The Food and Drug Administration also said it would encourage
smokers to switch to products such as e-cigarettes and smokeless
tobacco that are less dangerous than cigarettes. The so-called
harm-reduction strategy is a break by the U.S. government from an
abstinence-only approach to fighting tobacco-related diseases and
deaths.
Shares of major tobacco companies, which have been reaping
growing profits in the U.S. market even as the number of smokers
dwindles, tumbled Friday on the surprise move. Marlboro maker
Altria Group Inc. fell 10%, while British American Tobacco PLC,
maker of Camel cigarettes, dropped 8.5%, erasing tens of billions
of market value.
"The problem isn't just nicotine, the problem is the delivery
mechanism, " FDA Commissioner Scott Gottlieb said at a press
conference Friday.
"Cigarettes will likely remain incredibly toxic.... We may be
able to reach a day when the most harmful products will no longer
be capable of addicting our children," he said.
Dr. Gottlieb said the FDA's new approach would consider "a
continuum of risk for nicotine delivery," from combustible products
such as cigarettes to replacement therapies like nicotine gums.
Nicotine hooks people on cigarettes, but nicotine itself doesn't
cause cancer, heart disease or lung disease, he noted. It is other
harmful compounds in cigarette smoke that kill 480,000 people in
the U.S. each year, according to the Centers for Disease Control
and Prevention.
In addition to pursuing regulation to "render cigarettes
minimally addictive," Dr. Gottlieb said the FDA would consider a
ban on menthol cigarettes.
The announcement is the biggest step by the U.S. government to
curb smoking since a landmark legal settlement in 1998. In addition
to paying more than $100 billion to help states pay for health
care, tobacco companies agreed to restrictions on the use of
cartoons in marketing, as well as transit advertising, billboards
and free product samples.
"This is a huge switch from the 'tobacco-free world'. approach
to tobacco and nicotine by U.S. government agencies," said David
Sweanor, a Canadian law professor and tobacco expert who supports
the harm-reduction approach.
The FDA began regulating the industry in 2009 but that move in
some ways proved beneficial to Big Tobacco by grandfathering in
cigarettes already on the market and eliminating regulatory
uncertainty. The FDA's new stance "represents a paradigm shift in
regulatory risk for U.S. tobacco companies," Stifel analyst
Christopher Growe told clients in a note Friday.
Altria, which supported the 2009 legislation that gave the FDA
authority to reduce nicotine levels, said "any proposed rule such
as a nicotine product standard must be based on science and
evidence, must not lead to unintended consequences and must be
technically achievable."
BAT's U.S. subsidiary Reynolds American, which also sells
nicotine gum, e-cigarettes and smokeless tobacco, said: "We are
well prepared and look forward to participating in a thorough
process to develop a comprehensive plan for tobacco and nicotine
regulation."
Imperial Brands PLC, which sells the Winston and Kool brands,
said "it's too early to understand the practical implications" of
the FDA's new position. Philip Morris International Inc., which
doesn't sell products in the U.S. but has applications pending
before the FDA, didn't respond to a request for comment.
Some tobacco analysts were skeptical, saying such regulation
would take years to develop and would likely be litigated. Others
questioned the public-health benefit, suggesting smokers would just
smoke more cigarettes to compensate for the lower levels of
nicotine.
Citigroup analyst Adam Spielman said he doesn't believe the FDA
will be able to lower nicotine to nonaddictive levels because
defining that level would be difficult and there would be political
opposition. "We don't believe the proposal to reduce nicotine in
cigarettes dramatically is practical," Mr. Spielman said.
Nicotine levels in cigarettes can be reduced in different ways.
Manufacturers can adjust the blend of tobacco leaves or use
different types of paper or filters. Nicotine can also be stripped
from the leaf in the manufacturing process.
But products with very low levels of nicotine have never
garnered a significant share of the U.S. market. In 1989, Philip
Morris Cos., the company now known as Altria, introduced an
ultralow-nicotine cigarette called Next De-Nic, created through a
process that stripped the majority of the nicotine from the tobacco
leaf similar to the way caffeine is removed from coffee beans.
The FDA also said Friday it will allow more time for makers of
e-cigarettes and vaping products to submit products for agency
review. Those that were on the market in August 2016 won't be
subject to review until 2021 or 2022.
The FDA's shift comes as the agency considers whether to approve
new health-related marketing claims for several cigarette
alternatives. In April, Reynolds American submitted applications to
market six styles of Camel Snus tobacco pouches as being less
harmful than cigarettes. Philip Morris International also has a
health-claim application pending for a new device that heats
tobacco instead of burning it. Analysts said the FDA's new position
could bode well for such products.
Saabira Chaudhuri contributed to this article
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
July 28, 2017 17:26 ET (21:26 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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