Tobacco Deal Flawed

There has been a great deal of publicity regarding the 'grand tobacco deal' made between Attorneys-General from some US states and the tobacco companies, with the Attorneys-General claiming great progress and the media treating it as a defeat for the tobacco companies. It is assumed that it will have to be ratified by Congress. So, what is the settlement?

The Youth Angle

The report is extremely "youth oriented". If passed it will change the legal age for purchasing cigarettes to 18 and will require proof of age at the point of purchase. It limits vending machines, bans free sampling and alters the packet size to a minimum of 20. It curbs tobacco advertisements in 'youth-oriented' magazines to text only, bans the use of cartoons and human figures, and bans tobacco product placement in films and on TV. But it does not ban tobacco advertising outright.

In Australia these changes are old hat and in some cases Australian legislation goes further without any 'deals'.

Smoking in Public Places

The report recommends the limiting of tobacco use in public places and 'most' workplaces to areas that are separately ventilated to the outside and through which non-smokers do not pass. To avoid furore, casinos, restaurants, bingo and bars are exempt from the settlement. It is also highly likely that Congress will amend the deal. Philip Morris have indicated that they are keen on this idea.

Demise of the Tobacco Lobby

The report demands that the Tobacco Institute and the Council for Tobacco Research be disbanded. If this happened it is likely they would reappear with new names.

Regulation of Nicotine Content

Most contentious of all, the report gives the Food and Drug Administration the authority to control the amount of nicotine in cigarettes. However, the full text of the agreement demands that the FDA show 'substantial evidence' that the regulation of nicotine would

a) Result in a significant reduction of health risks

b) Be technically feasible

c) Not result in the creation of a black market for nicotine cigarettes.

This is a concern. Firstly, the term 'substantial evidence' is unclear in a way that tends toward terms such as total, 100% fool proof evidence. Furthermore it is demanded of statements that are difficult to clearly define - how does the FDA prove that there is no black market? So it seems likely that the tobacco companies will be able to wriggle out of what the Attorneys-General see as their finest achievement, or mire the FDA in endless litigation.

Also the FDA could be changed. David Kessler was pressured immensely when in charge. A new person would be weaker, because on 25 June the Republican-controlled Agriculture Appropriations Subcommittee slashed $19 million from the $34 million the FDA had requested to enforce the tobacco rule.

$490 Billion Compensation Package

Last but not least, the agreement puts a cap on the amount of money that States/people are able to extract from tobacco companies for compensation. This is capped at $US400 billion - an amount that is well below what has been forecast that people could recoup from tobacco litigation. It is an amount that could easily be covered by a price rise in the US to less than Australian levels.

So, what can Australia learn from the outcome of these negotiations? Probably that our governments should sue also to recoup the $12.7 billion a year the health system spends on treating tobacco related illnesses.

Top executives at tobacco firms stand to make millions of dollars through the US tobacco settlement. The chief execs hold shares that could rise as much as $US65 million by the end of next year. Geoffrey Bible, head of Philip Morris could make as much as $US50m. Age 23/6/97

Mathematician Analyses Settlement

Law professor and mathematician John Banzhaf of ASH has said that the $US370 billion is only $US200 billion, because of its 25 year time span. More than this, most of it will be paid by smokers and taxpayers. Calculated another way, as US tobacco-caused health costs are $US100 billion a year, and the deaths will continue roughly 60 years or $US6 trillion ($6000 billion). Thus a cash settlement of even $US400 billion would represent only about 7 cents in the dollar.

Editorial- What Does the US Settlement Mean?

As Dr. Sharad Vaidya of India has pointed out, this is not a 'Global Settlement'. The US has 4% of smokers, but the most aggressive tobacco companies. Now by giving a bit to those 4%, they can be immune from US prosecution as they get stuck into the other 96%. While $US495 billion sounds a lot of money, this is over 25 years. And it reduces if tobacco sales fall.

The US is far behind the rest of the developed world in tobacco tax levels, so US cigarette prices are about half those in Australia. If prices went to present Australian levels, but this rise went to the industry rather than tax, they would make much more money than ever.

The US is also very backward in tobacco advertising regulation. While the settlement is a better restriction than anyone has had before, it does not actually make advertising illegal so there is likely to be always another method of promotion. Advertising gave rise to sponsorship, which is now giving way to parallel products, then product placement, then the Internet- what is next? Yet breaking the advertising link at the pack level by generic packaging was not even discussed!

The US is ahead in Smoke-free indoor air because tort law has driven legislation; without this driver, further progress there is likely to be slow. The crucial element in the settlement is that the Industry caps payments to plaintiffs and gets immunity from prosecution. This concession by the health forces will make the agreement worthless in the medium term. They have lied and cheated, and they are going to be let off. They can then put up their prices and fight another day. Hence the stock market has tobacco stocks making huge gains. As campaigner Stan Glantz has pointed out, "If the stock price is rising, health is losing".

The bad news does not end there. Congress will have to agree to the deal, and Philip Morris has already stated that they hope the settlement will be modified there. At the last election the tobacco industry targeted marginal seats, and helped the Republicans win both houses of parliament. It is thus in the box seat to weaken what is already a suboptimal settlement. One health campaigner suggested that the Industry went for this settlement to get the issue into Congress, where they have more strength. Congress may then give them immunity from prosecution, achievable because everyone hates lawyers nearly as much as the tobacco industry. The Industry could not have put such a controversial proposal into Congress themselves, but naive health forces have helped them. The President will not veto this as he is a weak man who has capitulated on tobacco before (see below). He is likely to get weaker as his real estate and sex scandals develop.

Some health groups are trying to stop the settlement before it gets to Congress, but now the settlement has a momentum of its own. People think tobacco is losing, so once again tobacco will steal victory from the jaws of defeat. Let's hope I'm wrong, but Ralph Nader, the famous consumer campaigner, former US Surgeon C. Everett Koop, former FDA head David Kessler, ASH founder John Banzaf, and Californian campaigner Stan Glantz agree. It's a worry.

Arthur Chesterfield-Evans

Federal Government Launches Quit Campaign

On the 12th of June the Federal Government launched a new $7.2 million anti-smoking campaign with graphic television advertisements that try to educate smokers about the effects of smoking. Philip Morris have, unsurprisingly, accused the Government of wasting taxpayers money on an issue that is not of high importance (only 18,000 deaths per year). The $7.2 million is a big campaign by Australian standards, though this is not saying much. Financial Review. 12/6/97

NSMA's Dr Chesterfield-Evans had some input into the campaign, and suggested the image of fat in arteries.

WorkCover Launches Passive Smoking Campaign

NSW Workcover has launched a Passive Smoking in the Workplace campaign. It gives some good legal facts, suggests how a workplace policy should be set up, and the latest WorkCover News tells how the Blue Water Cafe in Manly went smoke-free, despite most of it being outdoor. The manager, Petas Clark got pregnant and told the boss she intended to leave as in most winds the smoke from outside drifted in. He thought, 'Why lose a good manager when we should go smoke-free?' He did. After a short lull, business improved. Two weeks later, when a feral smoker lit up the waiter asked her to stop. She was so unpleasant he had to ask her to leave. All the patrons clapped.

The NSW govt is quite happy to spend taxpayers' money on small campaigns; doing something that will affect the whole state is too hard. But having told us privately that they could not stand up to the Hotels' Association on smoke-free areas, two weeks later they gave them a 10% bed tax and ignored their complaints...

Delays to A.C.T. Smoke-Free Clubs and Hotels

Clubs and Hotels in Canberra which were supposed to go smoke-free on 13 June won another 'transitional arrangement' for 18 months till they have to finally ban smoking altogether or install special air-conditioning. Canberra Times 11/6/97

So WD and HO Wills have opened a so-called "Fresh Look" bar and brasserie to show that both smokers and non-smokers can be comfortably accommodated in the same venue. With super-duper air conditioning of course.

No doubt the delay is to make a great success of the air-conditioning system so it can be the model for a non-ban.

NSMA Congratulates Mike Gibson

NSMA founder, Brian McBride sent a letter of congratulation to sports and radio journalist Mike Gibson on 20 years of refusing to advertise cigarettes. Gibson always referred to the Rugby League as the 'Sydney Premiership' rather than the 'Winfield Cup'. This was despite consistent pressure from both his employers and the tobacco companies. This was while Rothmans was fighting NSMA and saying that the name had nothing to do with advertising cigarettes. Well done Mike!

ASH (US) $25,000 Reward for Tobacco Executives

ASH (US) has offered up to $US25,000 reward for information leading to the arrest and conviction of tobacco industry executives for cigarette-related felonies. ASH 2013 H St. NW, Washington DC 20006, ph 202 659-4310.

Tobacco War Between Wills and Philip Morris

WD & HO Wills has taken legal action against Philip Morris, alleging that Philip Morris have copied the marketing techniques of Horizon, Wills' top selling brand. Apparently, both the packets of Horizon and the alleged copy Summit have similarly blue packaging and images of floating and flight. If Wills wins, the Summit cigarettes will have to be destroyed, representing a retail loss of $9.3 million. The Australian 29/5/97

Queensland to Raise Age for Sales to Minors

The Queensland government is again developing laws to raise the legal age for cigarette smoking from 16 years to 18 years and to increase the fine for selling cigarettes to minors. The Qld Minister for Health, Mike Horan also said that he would be expanding the Government's anti-smoking campaign among young people. The question is whether this is a result of being awarded the ACOSH 'Dirty Ashtray' award for the second year running, as the state which did least on tobacco. Last year after receiving the award the Government increased the tobacco tax. Daily Tele. 2/6/97

We are quite unsure if it is useful to raise the age, as it may make the law unenforceable. But if the 'Dirty Ashtray' award leads to progress, perhaps next year Qld will get a ban on smoking in public places? Don't hold your breath.

ACOSH Seeks To Sue

The Australian Council on Smoking and Health plans to sue tobacco companies on behalf of an estimated 500,000 smokers under the age of 21. The council is seeking compensation for smokers and declarations that the three tobacco companies engage in misleading, deceptive and unconscionable conduct. It has limited its case to those under 21 in order to make the case more manageable. ACOSH have run into some problems, however. The Commonwealth's Legal Aid branch rejected an application for $640,000 by ACOSH for the class action. ACOSH are challenging this decision. West Australian 13/6/97

Clinton Helps Defeat Cigarette Tax Increase

By a vote of 55 to 45 the US Senate defeated a bipartisan proposal by Orin Hatch (Republican) and Edward Kennedy (Democrat) to increase federal tobacco tax by 43 cents per pack and to use the proceeds to provide health insurance for children of low-income families. President Clinton and Republican opponents led by Senate Majority Leader Trent Lott (R-MS) acted to defeat the measure on the grounds that it jeopardised the Senate passage of a bipartisan, five-year budget plan to eliminate the deficit and reduce taxes.

This has made health groups very distrustful of President Clinton on the tobacco issue. Al Ertel of the Coalition for Smoke Free Maryland points out that Clinton has never done anything significant to impact adversely on tobacco sales to adults, not even to finally sign an executive order banning smoking in federal workplaces. He has not pushed the federal OSHA (Occupational Safety and Health) nation-wide workplace/public place smoking ban. He has also appointed a former tobacco lawyer, John Ruff, as White House Counsel. NY Times 22/5/97

Dr Lee's AMA Term Expires

The esteemed Dr Julian Lee's term as NSW president of the AMA has now expired. He has been succeeded by surgeon Assoc. Professor Peter Thursby, from Concord Hospital.

The States are pushing for a major overhaul of State taxes as part of the Federal Govt's tax reform process. The States are concerned about an imminent High Court ruling on tobacco franchising fees. Financial Review 20/6/97

Smoking should be restricted in restaurants according to most Melbourne diners. And nearly half say it should be banned, a new survey by Quit shows. In April, Quit surveyed nearly 2000 Melbourne diners in 44 restaurants and found 97 per cent felt smoking should be restricted in restaurants. Herald Sun 28/5/97

Health groups received a surprise boost when the Arthur Anderson and Tourism Task Force survey of more than 100 tourism industry chief executives found 68% supported a national ban on smoking in restaurants, hotels, pubs and clubs. But 93% said they believed the ban would be better received by tourism operators if allocated smoking floors in hotels and outside areas in restaurants were exempted. Weekend Australian 24/5/97

Philip Morris Australia has staged a profit recovery after the cigarette price war in 1995. Net profits grew 113%.

A new report published in the Australian and NZ Journal of Obstetrics and Gynaecology calculates that up to 33 babies die in NSW each year as a result of birth complications caused by their mothers smoking in pregnancy. Also, 441 are born prematurely and 1012 are born at a low weight, which increases the risk of complications. Sydney Morning Herald 5/6/97

World News

The Supreme Court in India has upheld the government's total ban on the use of tobacco in toothpaste. Because of the local misconception that tobacco was good for the teeth, an enterprising local tobacco company had put it in, and then fought an attempt to ban it. Prakash Gupta, India

SAS will go smoke-free on 1 September, being the fourth European airline to do so. Finnair, Iceland Air and KLM have previously banned smoking on all flights. All Nordic airlines will now be completely smoke free. Tore Sanner, Norwegian Tobacco-free Coalition

UN Secretary General Kofi Annan said on World No Tobacco Day, "We seek to make the United Nations buildings smoke-free by the end of 1997."

ACSH (American Council on Science and Health) has an excellent new publication called "Cigarettes, What the Warning Label Doesn't Tell You", which details in layman's language the wide variety of health effects You can read much of this at http://www.acsh.org

A study in the American Heart Association journal, 'Circulation,' of 32,000 nurses found that exposure to second-hand smoke on a regular basis nearly doubles the risk of heart disease in non-smoking women.

UK's Govt To Ban Sports Sponsorship of smoking.

Britain's new Labour government will seek to ban tobacco companies from sponsoring sporting events. Proposals would prohibit tobacco advertising and launch a strong tobacco control education program. The ban would affect cricket, rugby, darts, snooker, and Grand Prix auto racing. Health Secretary Frank Dobson said the government would phase in the bans to allow time to find alternative sponsors. Figures show that tobacco provides only 8m pounds sterling of the 350m sponsorship for sport.

Wall St. Journal 20/5/97

This may allow the European parliament to get a Europe-wide advertising ban which was being held up by Britain's Conservative Party. Formula 1 auto racing chief Bernie Ecclestone has threatened to cut Europe from 12 races to 4 and stage them instead in Asia (and Australia?).

Breath-taking arrogance eh!

Police are investigating instances in which Virginia smokers lit up Marlboros which then exploded. The smokers reported finding a straw-like, hard object in their cigarettes. The cigarettes have been sent to a laboratory for testing. Philip Morris says it is conducting its own investigation. Washington Post 24/5/97

After all, cigarettes are supposed to kill slowly!

Club Med resort company is planning a marketing collaboration with cigar company Davidoff of Geneva. The promotion will involve a sweepstake promoted in 90 cigar stores across the US and on the website, cigarshop.com. The sweepstake's first prize will be a vacation for two at a Club Med resort plus a year's supply of Davidoff White Label cigars. NY Times 22/5/97

Action Point Write to Club Med at 9/55 Market St., Sydney 2000 and express anger at this piece of drug pushing. Say you will never take another Club Med holiday!

60,000 flight attendants are suing the tobacco industry in Miami, charging that second-hand smoke led to a variety of ailments. It is the first passive smoking case against the tobacco industry itself and the first class action to make it to trial - six years after it was filed. West Aust. 4/6/97

California's legislature has given final approval on a bill clearing the way for the state to sue tobacco companies to re-coup smoking related health costs. The Age 6/6/97

Hong Kong Tobacco Advertising Ban Passed

One of the last acts of the old Hong Kong Legislative Council was to ban tobacco advertising on June 23.

As part of the lobbying process, the Tobacco Institute of Hong Kong tabled the report of Dr David Hill, chairman of the Federal Ministerial Tobacco Advisory Group, before the Hong Kong Legislative Council's Bills Committee as evidence that there was no link between tobacco advertising and teenage smoking. Dr Hill was angry and wrote to the committee claiming that the pro-smoking group had drawn 'erroneous conclusions'. Sth China Morn.Post 7,24/6/97

The US Federal Trade Commission have won their case against RJReynolds, banning 'Cool' Joe Camel from areas kids can see. The Court reopened the case claiming its investigators had uncovered 'new information' (including a bipartisan petition from 67 members of Congress). Fin. Review 30/5/97. Australian politicians take note!!