"The days of Congress doing the bidding of the tobacco industry are over," Rep. Henry Waxman, D-Calif., recently declared. "This long overdue legislation would give FDA broad powers to regulate tobacco products and protect Philip Morris."
Actually, Waxman said "protect public health," but I’ve taken the liberty of decoding the phrase for you. The bill to which Waxman was referring, the Family Smoking Prevention and Tobacco Control Act, has the enthusiastic backing of Philip Morris, which thinks regulation by the Food and Drug Administration will help shore up its position as the leading cigarette manufacturer. Take that, Big Tobacco!
Waxman’s bill, which has bipartisan support and a good chance of passing now that the Democrats control Congress, shows that politicians are happy to help big corporations hobble their competitors, as long as they can claim to be acting in the interests of consumers. This trick is especially easy in the case of tobacco, since its consumers are considered irrational by definition and therefore do not get to judge their own interests.
Waxman’s bill would codify the advertising and promotion regulations issued by the FDA in 1996, when the agency was pretending it already had the authority Waxman wants to give it. (The Supreme Court disagreed.) Among other things, tobacco ads in publications read by minors would be limited to black text on a white background, as would tobacco signs in stores open to minors.
By impeding brand competition, advertising restrictions help keep market shares the way they are, which is fine — if you’re Philip Morris. As an R.J. Reynolds spokesman put it, "If you eliminate ways to communicate with … consumers, that certainly benefits the market leader and makes it difficult, if not impossible, for those who aren’t the market leader to compete."
As the biggest cigarette maker and the one that has been pushing and preparing for FDA regulation, Philip Morris is also best positioned to comply with the federal government’s reporting requirements, manufacturing standards and approval process for new products. Those demands will weigh more heavily on smaller companies, especially upstart competitors.
Even the more obscure provisions of Waxman’s bill seem tailor-made for Philip Morris. For example, the bill permits menthol cigarettes, which Philip Morris sells, but prohibits various flavorings used by R.J. Reynolds.
The promise of improving "public health" by limiting competition should sound familiar. It was the rationale for the agreement that resolved state lawsuits against the major tobacco companies by creating a government-backed cigarette cartel designed to funnel money into state treasuries.
Under that deal, the top five cigarette companies — including the ones that are now complaining about Philip Morris’ efforts to protect its market share through FDA regulation — agreed to give up some marketing techniques (including billboards and promotional clothing) and to pay the states billions of dollars every year. They funded the payments by raising their prices, secure in the knowledge that the states would prevent nonparticipating companies from gaining market share by underselling them.
Higher prices due to reduced competition were counted as a benefit of the agreement, encouraging smokers to quit and deterring teenagers from picking up the habit. The fact that smokers themselves might prefer cheaper cigarettes did not matter to the attorneys general who negotiated the deal.
Likewise, Waxman’s bill pays no heed to smokers’ preferences regarding cigarette flavors, prices (which the regulatory burden and limits on competition would tend to drive up), nicotine levels (which the FDA would be empowered to reduce), safer cigarettes (which the FDA could keep off the market if it thought they would encourage people to continue smoking) or information on the relative hazards of different tobacco products (which the FDA would be authorized to censor). While he seems determined to make Philip Morris happy, Waxman does not seem to care what consumers want. Or rather, he cares, but he wants to make sure they don’t get it.