Tobacco Control Bid by US FDA Gets Top Court Review
Washington, April 26 -- The U.S. Supreme Court agreed to consider letting the Food and
Drug Administration regulate tobacco, dashing industry hopes of ending the agency's bid
for sweeping power over cigarette design and marketing.
Philip Morris Cos., RJR Nabisco Holdings Corp. and other companies had urged the justices
to let stand a lower court conclusion that a 1938 law didn't permit FDA rules designed to
reduce tobacco's availability and appeal to children. The justices will hear the Clinton
administration's appeal of that ruling and probably issue a decision by June 2000.
If the justices side with the FDA, the agency would have authority to reduce the addictive
power of cigarettes and smokeless tobacco. They could even ban the products, although
officials so far have ruled out that step. Tobacco company share prices slipped after the
high court announcement.
``It's the biggest unknown out there,'' said Ethan Siegal, president of the Washington
Exchange, which analyzes policy and politics for institutional investors. ``The industry
has the power, if it wants to, to settle smoker lawsuits. The regulatory aspect is
something that, once it falls under the power of an agency, is less and less under the
Philip Morris shares fell 3/4 to 34 3/8; RJR Nabisco slipped 7/16 to 25 7/8; Loews Corp.
dropped 3 to 74; UST Inc. fell 11/16 to 27 11/16 and British American Tobacco Plc's
American depositary receipts fell 7/16 to 16 3/16.
Tobacco company stock options also fell. Options to buy Philip Morris at 37 1/2 before May
22 fell 5/16, or 36 percent, to 9/16. Those securities had risen 40 percent on Friday.
FDA regulatory authority would buttress restrictions already imposed on tobacco companies
by the $206 billion settlement that resolved state claims for the costs of treating sick
smokers. Among other things, that accord places a number of advertising and marketing
restraints on tobacco companies.
The FDA wants to impose other restrictions, including a ban on sponsorships of sporting
events and sharp limits on vending machines and self-service displays.
The rules would ``help stop young people from smoking before they start by eliminating
advertising aimed at children and curbing minors' access to tobacco products,'' President
Bill Clinton said in a statement.
An FDA court victory also would let it enact new rules later. The agency could require
cigarette manufacturers to include an ingredient list on packages, make tobacco less
addictive by limiting nicotine and other substances, or require companies to disclose
their health-related research. The agency even would have the legal authority to outlaw
cigarettes, although the FDA says it has no intention of doing so.
The FDA already has that type of broad authority over prescription drugs and
``Tobacco remains the one product consumed by Americans that isn't regulated by an agency
for health and safety purposes,'' said Matt Myers, general counsel for the Campaign for
Tobacco- Free Kids.
Intent of Congress
Tobacco companies successfully convinced a lower court that Congress never intended to
give such sweeping power to an administrative agency.
``Congress has not given FDA limitless jurisdiction and a roving commission to protect the
public health as it sees fit,'' the companies said in a Supreme Court filing.
Cigarette makers today expressed confidence in their case.
``The FDA's attempt to distort the law to allow it to regulate tobacco puts many other
industries at risk for similar bureaucratic power grabs,'' BAT's Brown & Williamson
Tobacco Corp. said in a statement. ``This is precisely the sort of government overreaching
the Supreme Court has struck down in the past.''
The FDA announced its rules in 1996, after then-Commissioner David Kessler convinced
Clinton that regulation of tobacco was the single most important way to change how the
industry does business. Clinton initially was reluctant to embrace Kessler's approach for
fear the tobacco companies could successfully attack him as a big-government activist.
The agency says it has authority over cigarettes under the Federal Food, Drug and Cosmetic
Act, which lets the FDA regulate products ``intended to affect the structure and function
of the body.'' That law serves as the basis for the agency's power over drugs and medical
Legislators probably weren't thinking about tobacco when they wrote that language,
public-health advocates and the FDA acknowledge. Still, the Clinton administration points
to new evidence about nicotine's addictive nature and the industry's marketing and
manufacturing tactics, saying regulators now know that tobacco meets the statutory
``It is difficult to see how the FDA could have come to a different conclusion based on
the evidence before it,'' the government's appeal said. ` `In light of its findings,
tobacco products cannot be distinguished meaningfully from other products that FDA
regulates, such as stimulants, tranquilizers, appetite suppressants, nicotine replacement
narcotics used to treat addiction.''
The 4th Circuit disagreed. Writing for a 2-1 majority, U.S. Circuit Judge H. Emory Widener
cited a series of tobacco-specific laws passed by Congress over six decades and concluded
that legislators deliberately rejected a role for the FDA.
``Congress developed a regulatory scheme whereby it retained the position of policy-maker
for the industry,'' Widener wrote.
That ruling drew a dissent from Circuit Judge Kenneth K. Hall, who said tobacco products
``fit comfortably'' into the 1938 law. The 4th Circuit decision overturned a federal trial
judge's ruling that had largely sided with the FDA.
Tobacco companies are likely to face a tough fight at the nation's top court. In the last
several years, the justices have reversed lower courts in about two-thirds of the cases
they hear. And the decision to take the case means at least four of the nine justices want
to take a close look at it.
``Several of the justices likely believe that the lower court got it wrong,'' said Thomas
C. Goldstein, a Washington lawyer who monitors the high court's docket. ``The mere fact
that the court took the case is a great victory for the federal government. The Supreme
Court so easily could have let the case die and be resolved by the Republican Congress.''
Still, several stock analysts were skeptical the high court ultimately would side with the
``It would be wrong to assume that a decision to take the case necessarily means it's
going to be lost,'' said Salomon Smith Barney analyst Martin Feldman. ``The Supreme Court
could as easily take the case simply to come up with a declarative judgment on government
agencies trying to usurp the authority of Congress.''
If they back the FDA, the justices probably would return the case to a lower court to
resolve other issues. Tobacco companies argue the U.S. Constitution's free-speech clause
bars the marketing restrictions. They also say the FDA can't classify cigarettes as ``drug
delivery devices'' -- a status that gives the agency more regulatory options than if
cigarettes were simply drugs. Those issues aren't before the high court.
If they follow their normal schedule, the justices will hear oral arguments in November or
December and issue a decision before their 1999-2000 term ends in the middle of next year.
The case is Food and Drug Administration v. Brown and Williamson Tobacco Corp.,