Tobacco Deal Gives Away Too Much, President Says
Settlement: Clinton wants FDA to have control over nicotine content.
Federal panel offers a strategy.
By JONATHAN PETERSON, HENRY WEINSTEIN, Times Staff Writers

President Clinton gave notice Wednesday that a pending
$368.5billion legal settlement of tobacco litigation will have
to be stiffened considerably because of "totally unreasonable"
provisions in the deal that would restrict the government's authority
to control nicotine in cigarettes.
In his most pointed comments to date on the mammoth
proposed settlementwhich requires White House and
congressional approvalthe president made it clear that he objects
to one of the key provisions, although he did say he still wants a
final compromise to be reached.
The settlement provision that curbs the Food and Drug
Administration's ability to limit the nicotine content or to ban it
outright "is a totally unreasonable restriction," Clinton told a press
conference on the final day of a NATO summit in Madrid.
Clinton made the remarks the same day that a congressional
advisory panelheaded by former Surgeon General C. Everett
Koop and former FDA Commissioner David A. Kesslergave
Vice President Al Gore and other ranking administration officials a
detailed blueprint for a new national strategy on tobacco control
that would be considerably tougher on the industry than the massive
settlement announced last month, particularly the sections dealing
with the FDA and nicotine.
The report states emphatically that the FDA must have unlimited
authority to regulate all areas of nicotinethe addictive component
of cigarettesincluding the ability to reduce nicotine content in
cigarettes, and that this authority should be made "completely
explicit."
Prepared with input from 20 major public health organizations,
the report undoubtedly will help shape the congressional debate
about the controversial tobacco deal in the months ahead.
Kessler said he was pleased with the report's reception at the
White House, where the panel was informed that a White House
task force had essentially come to the same conclusions they had on
nicotine regulation.
* * *
"We are delighted with the White House taking a first step on
insisting on full FDA authority," Kessler said. "If there is to be a
settlement, the public health measures in the document must be
unequivocal; they must be very strong . . . they must work at
reducing the number of people, especially children, who smoke."
Almost as soon as the settlement was announced on June 20 by
tobacco industry representatives and a group of state attorneys
general who had filed massive lawsuits against cigarette companies
seeking to recover tax money spent treating sick smokers, Kessler
and Koop pounced on the FDA provisions.
The settlement states that in order to alter nicotine content, the
FDA would have to prove by "substantial evidence" that any such
changes would have a significant positive impact on public health,
be technologically feasible and not create a black market.
Critics such as Kessler and Koop and several congressmen said
this term created an impossible conditionproving a negativeand
on Wednesday, Clinton jumped on that theme.
He said he could not accept the argument that restricting FDA
authority over nicotine content would lead to a black market in
stronger cigarettes.
"What is a black market. . . ?" Clinton asked aloud. "The 1%
penetration of the market, a 3% penetration of the market?
"Would we deny the FDA the right to protect 100% of our
children because there's a few blackmarket cigarettes around?" he
asked, describing the provision as unreasonable.
"I cannot believe that the tobacco companies or others would
bring down the entire settlement over that," he said, stressing that
"there are a lot of really important, good things" in the deal, and he
saw no reason why his objection should kill it.
Clinton's statement clearly had political as well as policy
dimensions, observers said.
His announcement shows that "Clinton feels he has enormous
freedom of action here," said a veteran Democratic consultant
speaking on the condition that he not be identified by name.
"White House polling shows that in any contest between the
industry and the president, the industry doesn't have much
leverage," the source said.
The settlement would require tobacco companies to reduce teen
smoking by 30% over five years or face up to $2 billion a year in
penalties. Vendingmachine sales would be prohibited; retailers
would have to check identification of consumers who looked to be
age 27 or younger; outdoor advertising would be banned, as would
potent advertising symbols like Joe Camel and The Marlboro Man;
and tobacco products would come with more ominous warning
labels.
Settlement money would be used to finance antismoking
advertising campaigns, fund smoking cessation programs and
compensate individuals who won civil suits.
In return, the tobacco industry would be shielded from the
potentially massive costs of lawsuits brought by states that wish to
recover health care costs, as well as from classaction suits brought
by smokers. Both types of suits would be barred in the future, as
would punitive damages against the industry. That is one of several
matters with which the KesslerKoop panel takes issue.
Their report recommends:
* That "all currently available avenues of litigation, both civil and
criminal, must be fully preserved."
* The adoption of strict performance standards, on a
companybycompany basis, for the reduction of underage
smoking, starting within two years, not five years as the settlement
provides.
* Steep tax hikes on tobacco products and the elimination of the
settlement provision that would permit cigarette companies to seek
a tax deduction for fines paid for failing to reduce youth smoking.
* Considerably more stringent requirements on internal
documents that the industry would have to disclose, "including
disclosure of all information inappropriately shielded by an assertion
of attorneyclient privilege." There are thousands of such
documents.
* That the Clinton administration encourage other countries to
adopt marketing and advertising restrictions as strict as those
contained in the settlement.
For their part, the cigarette companies issued a cautious joint
statement:
"The preservation of the rights of American adults to choose to
use tobacco products is a central element of the proposed tobacco
resolution. The White House has repeatedly made clear that it is not
in favor of prohibiting the use of tobacco products by adults, and
the concern over development of a substantial black market has
been articulated by the Food and Drug Administration itself."
"We understand President Clinton's remarks today in light of
these prior statements," said the statement from Philip Morris, R.J.
Reynolds Tobacco Co., Brown & Williamson Tobacco Corp.,
Lorillard Tobacco Co. and United States Tobacco Co. "The
industry believes that the proposed resolution appropriately
balances the various factors that should be considered in any
determination to ban nicotine, and we look forward to opportunity
to make the case for keeping intact the provisions of the proposed
resolution as negotiated."
But that appears highly unlikely, according to the White House,
members of Congress and even industry analysts on Wall Street
such as Smith Barney's Martin Feldman, who acknowledged that
the FDA provisions will have to rewritten if the deal is to fly.
Donna Shalala, the secretary of Health and Human Services,
who is playing a key role in administration review of the tobacco
deal, said no conclusions have been reached other than Clinton's
announcement and a White House critique of the issue will take
several more weeks.
"The only thing we do know is there's nothing fragile about the
tobacco industry in this country," Shalala said. "It has survived lots
of assaults."
After the White House meeting, Kessler and Koop met with
antitobacco members of Congress, who in May asked them to
form the advisory panel.
"It seems to me what the KoopKessler committee has said is
that the proposed settlement is a vehicle with a flat tire or two," said
Sen. Ron Wyden (DOre.). "They're saying Congress better take it
to the repair shop and figure out how to make it work for the kids
and public health."
Wyden said it is not clear how long that will take, but it could be
considerably longer than the settlement's proponents had hoped for.

Peterson reported from Madrid and Weinstein from Los
Angeles. Times staff writers Elizabeth Shogren and Edwin Chen in
Washington contributed to this story.

Copyright Los Angeles Times