August 12, 2004

Recently, the U.S. Senate voted 78-15 to give the Food and Drug Administration unprecedented authority to regulate tobacco as a drug. The bill still has to clear a conference committee, but its wide margin of support in the Senate does not bode well for advocates of liberty and consumer choice. Even more disheartening is the support this legislation received from Philip Morris USA, the largest American tobacco company.

The new bill would give the FDA sweeping regulatory powers and satisfy a decade-long ambition of anti-smoking crusaders. Under its provisions, the FDA could mandate larger health warnings on cigarette packs, ban color and pictures in printed ads, control the development of "light" or "safe alternative" cigarette brands, and restrict advertisements for those brands, regardless of their accuracy. The FDA would also be granted significant control over the actual production of cigarettes, with the power to order reductions in chemicals—including nicotine—that are currently present in tobacco products. Finally, under the Senate bill, cigarette manufacturers would be forced to pay the costs of a $13 billion tobacco farmer "buyout" program, a new expense that—when passed on to smokers—could raise cigarette costs by six cents per pack.

Philip Morris supported this bill with full knowledge of the harm that would be inflicted on its business and customers. Its critics charge that the tobacco giant is supporting the proposal in order to secure competitive advantages and government favor. These could prove useful later this year if, as predicted, Philip Morris unveils a new "reduced exposure" cigarette, a product with the potential to generate an estimated $20 billion in sales revenue. But whatever its motives, and despite the loud objections from its smaller competitors, Philip Morris's tactic of appeasement is not new to the tobacco industry.

Big Tobacco has endured years of public assault, throughout which it has been far too timid and too willing to capitulate to the demands of its harshest critics and avowed enemies. In a classic case of what Ayn Rand termed "the sanction of the victim," the tobacco industry meekly acceded to the moral premises and legal demands of its opponents.

When lifetime smokers began filing lawsuits against them, the tobacco companies claimed that they had been ignorant of smoking's health hazards. It was only after such hazards were confirmed by scientific research that tobacco makers finally asserted their right to sell cigarettes to adult consumers who, they now argued, voluntarily assume the risks of their behavior. This courtroom shuffle came too late to save the tobacco companies from being accused of offering a confused, contradictory defense in the civil courts.

When 46 state attorneys general jumped on the legal extortion bandwagon, the tobacco giants ultimately rolled over and purchased immunity from state lawsuits with a promise to pay state governments $206 billion in damages, plus billions more in attorneys' fees. (Tobacco companies cover this cost by raising the price of cigarettes, so the lawsuit "damages" are essentially a backdoor excise tax.) The tobacco companies were even made to fund ad campaigns encouraging people not to buy their products!

The new "Master Settlement Agreement" did not run entirely counter to Big Tobacco's interests; its advertising restrictions and market entry barriers were an effort to protect market share for the "Big Four." Nevertheless, tobacco companies secured these ill-gotten gains only by trading away a fundamental right of far greater importance: the right to market and sell their product, and the right to profits generated by those sales.

These legal and political maneuvers reflect the general industry strategy of retrenchment and compromise. Cigarette manufacturers have been far too willing to dole out huge sums of money in exchange for paltry government promises and monopolistic insulation against competition. Is it any wonder that, after the Big Four tried to muscle out smaller cigarette companies, the biggest of these would seek to force out the other three?

The only possible outcome of the new FDA authority is a further erosion of tobacco companies' rights to sell their products, and consumers' rights to buy and use them (with full knowledge of the risks involved). The anti-tobacco activists claim that their goal is to protect people's health and prevent premature deaths. Why, then, are they so adamantly opposed to the development of safer alternatives for tobacco users? In truth, the public health crusade is also driven by a Puritanical impulse to purge smoking from American culture, one airplane, restaurant, bar, and home at a time. They cannot conceive of smoking as an individual personal choice, let alone as something that can be done for pleasure in safe moderation. These nanny state busybodies are not people with whom the tobacco companies can forge a beneficial allegiance.

Far from Philip Morris's corrupt and ineffective approach, the tobacco industry needs a concerted and successful effort to combat the anti-smoking hysteria that has taken over American legislatures and airwaves. Cigarette makers, having acknowledged the risks associated with excessive tobacco use, should proudly assert their right to produce and market tobacco to consenting adults, free from legislative and legal harassment.

Big Tobacco cannot indefinitely weather the higher taxes, punishing lawsuits, and increasingly onerous regulations being foisted upon it. Once the tobacco industry has accepted its enemies' premise—that tobacco is an evil influence to be forcibly controlled, cut back, and apologized for—its outright defeat is only a matter of time. If these companies are to survive as viable long-term enterprises, they must abandon their policies of retreat and surrender, which have only served to cede ground and grant sanction to the anti-smoking zealots.

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