Full Broadside From Congress

Tobacco White Paper II

By Fred Brown

Today’s tobacco user is on the verge of sweeping changes. He or she has been hit with one federal bullet, known as the SCHIP (State Children’s Health Insurance Program), and is about to be shot with the full load from Congress.

The next round is the Family Smoking Prevention and Tobacco Control Act, H.R. 1256, which will put the Food and Drug Administration in charge of all tobacco products in a way that has never been seen before. Three months after the act passes (provided it passes in the form it is in now), the tobacco industry will come under a tobacco czar, the Center for Tobacco Products.

The FDA, which has difficulty today managing the mandates it has now, will have to oversee the entire tobacco industry if the Senate passes the FSPTCA. The bill, H.R.1256, has been passed by the U.S. House of Representatives and is on the Senate Calendar and is being pushed by the anti-tobacco lobby, the medical industry, and those who believe in legislating social reform through Congressional action.

Tobacco as it is produced today is going to be forever changed with the passage of this law. If not, the industry can rest assured that some change is coming. Regardless if the full measure of this bill gets past the Senate and then comes out intact through the House-Senate conferee hearings

Essentially, the bill gives the FDA sweeping powers, to regulate the tobacco industry.

For example, the bill says: “It is essential that the Food and Drug Administration review products sold or distributed for use to reduce risks or exposures associated with tobacco products and that it be empowered to review any advertising and labeling for such products. It is also essential that manufacturers, prior to marketing such products, be required to demonstrate that such products will meet a series of rigorous criteria, and will benefit the health of the population as a whole, taking into account both users of tobacco products and persons who do not currently use tobacco products.”

Further, the bill says the purpose of the legislation is to give the FDA wide range of authority, “by recognizing it as the primary Federal regulatory authority with respect to the manufacture, marketing, and distribution of tobacco products as provided for in this Act.”

It says the FDA will have the authority to address issues of public health, to set national standards controlling tobacco manufacturing, “and the identity, public disclosure, and amount of ingredients used in such (tobacco) products.”

The law establishes oversight authority to regulate levels of tar, nicotine, “and other harmful components of tobacco products.”

Under the law, manufacturers will have to disclose, “Research which has not previously been made available as well as research generated in the future, relating to the health and dependency effects or safety of tobacco products.”

Also, the act does not abrogate any of the USDA laws that affect tobacco.

And, here is a doosey that is going to throw the pipe world into a spin. The law defines “additive” as “any substance the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting the characteristic of any tobacco product (including any substances intended for use as a flavoring or coloring or in producing, manufacturing, packing, processing, preparing, treating, packaging, transporting, or holding), except that such term does not include tobacco or a pesticide chemical residue in or on raw tobacco or a pesticide chemical.”

In addition, the law says: “(4) tobacco product shall not be marketed in combination with any other article or product regulated under this Act (including a drug, biologic, food, cosmetic, medical device, or a dietary supplement).”

And, there’s more. The law further states that, “(A) SPECIAL RULE FOR CIGARETTES–Beginning 3 months after the date of enactment of the Family Smoking Prevention and Tobacco Control Act, a cigarette or any of its component parts (including the tobacco, filter, or paper) shall not contain, as a constituent (including a smoke constituent) or additive, an artificial or natural flavor (other than tobacco or menthol) or an herb or spice, including strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, or coffee, that is a characterizing flavor of the tobacco product or tobacco smoke. Nothing in this subparagraph shall be construed to limit the Secretary’s authority to take action under this section or other sections of this Act applicable to menthol or any artificial or natural flavor, herb, or spice not specified in this subparagraph.”

In other words, what happens when a pipe tobacco manufacturer cases the tobacco with a food additive, such as licorice, rum or vanilla? He can use menthol only.

Here is what the new law says: “(1) ADDITIVE- The term ‘additive’ means any substance the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting the characteristic of any tobacco product (including any substances intended for use as a flavoring or coloring or in producing, manufacturing, packing, processing, preparing, treating, packaging, transporting, or holding), except that such term does not include tobacco or a pesticide chemical residue in or on raw tobacco or a pesticide chemical.”

There are a host of other “what ifs” not addressed, or if addressed spell out many, many difficulties for the tobacco industry.

For example:

If you believe pipe tobacco and cigars are not going to affected, here is the law:
“(rr)(1) The term ‘tobacco product’ means any product made or derived from tobacco that is intended for human consumption, including any component, part, or accessory of a tobacco product (except for raw materials other than tobacco used in manufacturing a component, part, or accessory of a tobacco product).”

What happens now that pipe smoking comes under the term, “smoke constituent?” Does this mean you, the pipe smoker, can be held responsible for the “mainstream or sidestream tobacco smoke. . . .that is formed by the combustion or heating of tobacco, additives, or other component of the tobacco product?”

What happens if the tobacco manufacturer is caught short in the mind-boggling confusion of what is included in the definition of a tobacco warehouse under the new law. The FDA law defines the warehouse as a “person who removes foreign material from tobacco leaf through nothing other than a mechanical process; humidifies tobacco leaf with nothing other than potable water in the form of steam or mist; de-stems, dries, and packs tobacco leaf for storage and shipment; who performs no other actions with respect to tobacco leaf; and who provides to any manufacturer to whom the person sells tobacco all information related to the person’s actions . . . . that is necessary for compliance with this Act.”

But, one is excluded in the defined term of tobacco warehouse if, “the person. . . .reconstitutes tobacco leaf; is a manufacturer, distributor, or retailer of a tobacco product; or applies any chemical, additive, or substance to the tobacco leaf other than potable water in the form of steam or mist.”

You figure it out.

Here’s another: Even before the bill is enacted, the new regulations governing tobacco products will have to come before a select scientific body. What happens if that body decides that all tobacco products must be eliminated? It could under the new law.

Here is the wording: “In applying manufacturing restrictions to tobacco, the Secretary shall . . . . prescribe regulations (which may differ based on the type of tobacco product involved) requiring that the methods used in, and the facilities and controls used for the manufacture, preproduction design validation (including a process to assess the performance of a tobacco product), packing, and storage of a tobacco product conform to current good manufacturing practice, or hazard analysis and critical control point methodology, as prescribed in such regulations to assure that the public health is protected and that the tobacco product is in compliance with this chapter. Such regulations may provide for the testing of raw tobacco for pesticide chemical residues regardless of whether a tolerance for such chemical residues has been established.”

The law says the Secretary “shall before promulgating any regulation under subparagraph (A, or the one above), afford the Tobacco Products Scientific Advisory Committee an opportunity to submit recommendations with respect to the regulation proposed to be promulgated; before promulgating any regulation under subparagraph (A), afford opportunity for an oral hearing;  provide the Tobacco Products Scientific Advisory Committee a reasonable time to make its recommendation with respect to proposed regulations under subparagraph (A); in establishing the effective date of a regulation promulgated under this subsection, take into account the differences in the manner in which the different types of tobacco products have historically been produced, the financial resources of the different tobacco product manufacturers, and the state of their existing manufacturing facilities, and shall provide for a reasonable period of time for such manufacturers to conform to good manufacturing practices; and not require any small tobacco product manufacturer to comply with a regulation under subparagraph (A) for at least 4 years following the effective date established by the Secretary for such regulation.”

There’s more in this nightmare bill. Six months after passage of the bill, tobacco manufacturers will be responsible for a “listing of all ingredients, including tobacco, substances, compounds, and additives that are, as of such date, added by the manufacturer to the tobacco, paper, filter, or other part of each tobacco product by brand and by quantity in each brand and sub-brand.”

It doesn’t stop there. The manufacturer will be responsible for describing “the content, delivery, and form of nicotine in each tobacco product measured in milligrams of nicotine in accordance with regulations promulgated by the Secretary.”

And then beginning 36 months after passage, manufacturers will be required to list “all constituents, including smoke constituents as applicable, identified by the Secretary as harmful or potentially harmful to health in each tobacco product, and as applicable in the smoke of each tobacco product, by brand and by quantity in each brand and sub-brand. Effective beginning 3 years after such date of enactment, the manufacturer, importer, or agent shall comply with regulations promulgated under section 915 in reporting information under this paragraph, where applicable.”

And finally, six months after the bill is enacted manufacturers will have to provide “all documents developed after such date of enactment that relate to health, toxicological, behavioral, or physiologic effects of current or future tobacco products, their constituents (including smoke constituents), ingredients, components, and additives.”

To increase paperwork, sections 904 and 905 of the bill set up requirements for data collection, and rules governing annual registration.

And what happens if a manufacturer or dealer/operator fails to comply with this thicket of rules and regulations?

The Secretary of the FDA can impose “a no-tobacco-sale order on that person prohibiting the sale of tobacco products in that outlet.”

To be sure, this is only the tip of the FDA law iceberg. It is a throwback to the days when the U.S. enacted legislation against alcohol, and then set up huge bureaucracies to manage the sale and distribution. You can look for something similar here.

Points to Ponder:

Point: From the New York Times: “As passed by the House the legislation would set up an F.D.A. office, financed by industry fees, with powers to restrict harmful chemicals in existing tobacco products — including nicotine and possibly, after further study, menthol. The F.D.A. would also be empowered to approve or reject new tobacco products and to expand marketing restrictions and warning labels.”

Ponder: What happens if the “industry fees” are not enough? Would this mean an increase in tobacco products, over and above what has already been legislated? And, who is going to pay this “industry fee”?

Point: From the website of Tobacco Free Kids: “On November 23, 1998, 46 states settled their lawsuits against the nation’s major tobacco companies to recover tobacco-related health care costs, joining four states — Mississippi, Texas, Florida and Minnesota — that had reached earlier, individual settlements.

“These settlements require the tobacco companies to make annual payments to the states in perpetuity, with total payments estimated at $246 billion over the first 25 years.

“Ten years later, this report finds that most states have failed to keep their promise to spend a significant portion of the settlement funds on programs to protect kids from tobacco addiction and help smokers quit.”

This report is issued by the Campaign for Tobacco-Free Kids, American Heart Association, American Cancer Society Cancer Action Network, American Lung Association and Robert Wood Johnson Foundation.

Ponder: What are the states doing with that money? And what happens now to the Master Settlement Agreement under the proposed new FDA law?

Point: From the MSNBC Blog, Red Tape Chronicles: “The money (from the Master Settlement Agreement) was supposed to help the states pay for health care and anti-smoking campaigns. Instead, much of it — even payments that aren’t due for 20 years — has already been spent on politically popular tax breaks through complicated borrowing schemes initiated by Wall Street investment banks.

“Because these states have essentially borrowed against future payments from the tobacco industry, they are now dependent on the continued vitality of cigarette sales. If Big Tobacco stumbles, states will be on the hook for these massive, billion-dollar loans. In other words, David and Goliath are now allies.

“Where did those loans come from? Perhaps from you. When Wall Street talked 25 states into borrowing against future tobacco payments — a process known as “securitization” — it sold bonds to individual investors and mutual funds that buy municipal bonds. Now, they are betting on Big Tobacco, too.

“Worse yet, anyone invested in tobacco bonds has been seeing their money go up in smoke. Some bond funds that are heavily invested in tobacco have lost nearly 40 percent of their value this year. The reason for the sharp drop is disputed, but some observers say it’s partly attributable to anti-smoking efforts. For the first time, fewer than 20 percent of American adults are smoking, new government statistics show. In other words, good news for the state health department is bad news for the revenue department — and for the portfolios of those who invested in tobacco bonds.”

Ponder: Read it for yourself at http://redtape.msnbc.com/2008/11/ten-years-later.html

Point: So, what if the state’s bond surety is affected because the states have already used the Master Settlement money?

Ponder: Will there be a new stimulus package to bail out the cities and municipalities who have spent their tobacco settlement money on bricks and mortar? If so, who pays that—the taxpayer, or the smoker?

Point: It is already a known fact that the FDA bill coming up before the U.S. Senate will eliminate many jobs in the tobacco industry.

Ponder: Will the states pick up the unemployment costs?

Point: What will be the cost to stop the inevitable black market? A recent story in the Online The Huffington Post had this: “NEW YORK — The big cigarette tax increases that many states are instituting to balance their out-of-whack budgets are raising fears that the trend will make black-market smokes more profitable and lead to more cigarette smuggling.

“Cigarette smuggling has been going on for generations and already costs states untold billions in lost tax revenue.”

Ponder: Read it for yourself at http://www.huffingtonpost.com/2008/04/10/higher-cigarette-taxes-lu_n_96094.html

Point: The law reads: “(7) DISTRIBUTOR- The term ‘distributor’ as regards a tobacco product means any person who furthers the distribution of a tobacco product, whether domestic or imported, at any point from the original place of manufacture to the person who sells or distributes the product to individuals for personal consumption. Common carriers are not considered distributors for purposes of this chapter.”

Ponder: What if foreign manufactures/growers cannot or will not comply with the new FDA rules in the Family Smoking Prevention and Tobacco Control Act?

Point: If you think your pipe shop or favorite pipe tobacco manufacturer won’t be affected, read the law: “(16) SMALL TOBACCO PRODUCT MANUFACTURER- The term ‘small tobacco product manufacturer’ means a tobacco product manufacturer that employs fewer than 350 employees. For purposes of determining the number of employees of a manufacturer under the preceding sentence, the employees of a manufacturer are deemed to include the employees of each entity that controls, is controlled by, or is under common control with such manufacturer.”

Ponder: Will this put a lot of small businesses out of business? And then, who picks up the tab for that?

Point: What is the future of pipe tobacco and cigars?

Ponder: Good question.

This entry was posted on Thursday, April 30th, 2009 at 12:27 am and is filed under Commentary, General, News. You can follow any responses to this entry through the RSS 2.0 feed.