Senate Panel Floats Tobacco Plan

The price of a pack of cigarettes would rise by $1.10 over the next five years and tobacco companies would pay $506 billion over 25 years--significantly more than the settlement proposed by the industry and state attorneys general last summer--under an agreement being hammered out by the Senate Commerce Committee.

However, both the tobacco industry and public health groups are sharply critical of the proposal and, by pulling negotiators in opposite directions, are undermining chances that there will be a tobacco law this year.

If legislation is to be enacted, it will need the public health community’s approval and the acquiescence of cigarette manufacturers, which would be asked to accept limits on advertising of their products as well as financial penalties. It is too early to tell if the proposal being floated by the Senate committee will evolve into a bill that a broad spectrum of interests can support.

Dr. David A. Kessler, former commissioner of the Food and Drug Administration, was cautious about its prospects.

“This is very complicated. This is not going to be easy. . . . It’s close to impossible to get a consensus,” said Kessler, who is closely involved in the negotiations.

Kessler and Dr. C. Everett Koop, the former surgeon general, are being consulted on many of the deal’s provisions.

“There is a simple litmus test for a bill: Does it meet the public health need . . . ? If it doesn’t meet that test, it won’t go forward,” said Sen. Ron Wyden (D-Ore.), a member of the committee and a longtime tobacco foe who is not satisfied with many of the bill’s provisions.

Although the tobacco companies are not among those at the negotiating table, they are registering their criticisms in letters to the White House and through Wall Street analysts.

“I’m not talking to the tobacco companies, but I do talk to these Wall Street analysts and they are saying that this could put the companies out of business,” committee Chairman John McCain (R-Ariz.) said Friday.

A company forced into bankruptcy would not be able to meet the obligations of a settlement.

“The industry is the one with the money and the advertising restrictions,” said Gary Black, a tobacco analyst at the Wall Street investment house of Sanford Bernstein. Strict advertising restrictions can be achieved only if the companies agree to them voluntarily. A law restricting them likely would violate the 1st Amendment’s guarantee of free speech.

“If you don’t give them something, why should they go along?” said Black.

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The work of McCain’s committee is being closely watched, both because of its role in shaping the Senate version of legislation and because the chairman is viewed as one of the few senators who can persuade Republicans and Democrats to compromise. Other proposals have been supported by lawmakers of just one party or have had only a small group of co-sponsors.

The main sticking points for McCain are the same ones that have plagued the debate from the beginning: the extent of legal protections that would be granted to the industry in exchange for large payments, the reach of the FDA’s regulatory authority and how much cigarette prices would increase.

The Clinton administration, which is in the midst of a lawsuit challenging the role it assigned the FDA in regulating tobacco, insists that nicotine and cigarettes fall under the same law that regulates other drugs and medical devices.

Some Republicans want regulations drawn specifically for tobacco. Administration officials argue that that could result in years of court battles, possibly delaying government regulation of the industry.

As of late this week the bill’s provisions included:

* Price: The per-pack price would increase by $1.10 per pack by 2003 and yearly payments by the industry would increase from $14.4 billion in 1999 to $23.4 billion in 2003. The total industry payments over 25 years would be $506 billion.

* Liability: Tobacco companies would be protected from class-action lawsuits and punitive damages for past actions. Annual damage payments for individual lawsuits would be capped at $6.5 billion. All claims above the cap would be paid in future years. Class-actions and punitive damages would be permitted for future conduct. There also has been discussion of allowing class-action lawsuits but capping or disallowing punitive damages in those cases.

* FDA Authority: The FDA would be given broad authority to regulate tobacco, including advertising, youth access and new products. However, it would be in a separate chapter of the Food, Drug and Cosmetic Act. The FDA and the Federal Trade Commission would share responsibility for regulating advertising.

* Marketing and Advertising: The industry would voluntarily agree to strict limits on advertising, including bans on outdoor advertising and human or cartoon images with only black-and-white text permitted in advertisements. Adult periodicals and venues, such as bars, would be excepted.

* Youth Access: To prevent sales to minors, photo identification would be required if a purchaser is under age 27. Sales would have to be made, face to face. Vending machines and self-service sales would be barred, except in adult-only facilities, such as bars.

* Penalties: If it failed to meet targets for reducing youth smoking, the industry would have to pay a penalty, capped at $3.5 billion a year. Over 10 years, the goal is to have 60% fewer teenage smokers. Any company that misses the target by more than 20%, would lose its liability protections.