Cigarette Advertising and Promotion Expenditures Rise to All-Time High; Anti-Smoking Groups Still Calling for More Money

The Federal Trade Commission (FTC) last week issued its report on cigarette advertising and promotional expenditures for the year 2003. The report revealed that cigarette marketing expenditures rose by 21.5% from 2002 to 2003, reaching a level of $15.2 billion, the highest total ever reported to the FTC. The largest single category of marketing expenditures was price promotions (paid to wholesalers or retailers to allow them to reduce the sale price of cigarettes to consumers), which accounted for 71.4% of expenditures (at $10.8 billion).

When considered together with spending for promotional allowances (which pay retailers to stock and display cigarette brands), coupons, and retail-value-added (e.g. buy two packs, get one free) promotions, it is clear that the overwhelming bulk of cigarette marketing expenditures was related to efforts to encourage retailers to carry and display cigarette brands and to keep the prices of cigarette brands down. These retail or price-related promotions totaled 92.9% of cigarette marketing expenditures for 2003.

Traditional advertising expenditures (i.e., newspaper, magazine, outdoor, and point-of-sale advertising) accounted for just 2.4% of overall marketing spending, although still amounting to $353 million, down from $418 million and 3.4% of all marketing expenditures in 2002.

In response, the Campaign for Tobacco-Free Kids called for passage of the proposed FDA tobacco legislation, which it has claimed will "curtail" cigarette marketing to children, and it continues its call for the DOJ to "strengthen" its case by increasing the proposed smoking cessation remedy from $10 billion to $130 billion.

The Rest of the Story

This report demonstrates the absurdity of the D.C. health groups' (Tobacco-Free Kids, ACS, ALA, and AHA) claims that the FDA legislation is going to curtail the marketing of cigarettes to children and therefore save lives by reducing tobacco use.

The primary lesson that anyone reading this report should receive is that marketing is a multi-dimensional strategy that encompasses a broad spectrum of activities aimed at a variety of outlets. Traditional advertising is just one part of this spectrum. When one aspect of the marketing toolbox is limited, the industry can simply shift its resources into other areas. And since limits on its overall spending cannot be imposed, the industry has almost unlimited potential to devise a marketing strategy that will be successful in promoting its products, including to youths.

There is an intervention that could effectively curtail the industry's ability to market to youths. That intervention is a comprehensive ban on cigarette advertising and promotion. But such a ban would clearly violate the First Amendment, at least as it was interpreted in Lorillard v. Reilly.

Thus, there is simply nothing that FDA could do that is both consistent with the First Amendment and broad enough to effectively curtail cigarette marketing to youths. The D.C. health groups' claim that this legislation will curtail cigarette marketing to kids and therefore reduce smoking and save lives is completely unfounded, and should be rejected outright by public health organizations and practitioners.

But the most unfortunate aspect of this story is not the absurdity of the claims that the major anti-smoking organizations are making. Rather, it is the fact that despite their moaning about the fact that cigarette marketing has reached an all-time high, they have failed to take any serious steps to encourage DOJ to address this marketing in its proposed remedies. Instead, these groups continue to clamor about the irrelevant loss of $120 billion in funds that would never see the light of day anyway.

Rather than putting their focus on the one area where effective DOJ remedies could actually address both the legal issues in the case and the protection of the public's health, the D.C. health groups have chosen instead to whine about the money.

The rest of the story is not just about how the cigarette companies have reached an all-time high in their marketing expenditures. It is about how the major anti-smoking groups are making completely unfounded claims on what the FDA legislation would do to curtail cigarette marketing to kids in their zeal to see something accomplished (see tomorrow's post for more on this mentality).

It is also about how the D.C. health groups are so blinded by the desire for monetary remedies that they themselves fail to see the most appropriate and logical remedy available by which they could address the very problem that they bemoan to no end, if they only could stop for long enough to set aside their sights on the money.

Weekly Update on Leader in Tobacco Control Movement: Time Inc.

This post marks the start of a new weekly feature of The Rest of the Story. Each week, we will comment on the work of a leading anti-smoking organization. This week's leader: Time Inc.

According to the American Legacy Foundation, Time Warner - a corporate partner of Legacy - is a "leader" in the tobacco control movement. So let's look at the contributions that Time Inc. (Time Warner's magazine division) is making to tobacco control this week.

The Rest of the Story

This week's issue of TIME features a full-page ad for Kool cigarettes, showing an attractive image of a jazz trumpet player holding a cigarette, with the tagline "Be Authentic."

Sports Illustrated features the same full-page ad for Kool cigarettes, showing an attractive image of a jazz trumpet player holding a cigarette, with the tagline "Be Authentic."

People Weekly features a full-page ad for Camel cigarettes, showing a blond woman lining up a billiards shot holding a cigarette, with the tagline "Pleasure to Burn."

And Entertainment Weekly features a full-page Newport ad, showing a young couple at a summer picnic.

Now this post is not written to criticize Time Inc. for publishing these ads. Cigarettes are a legal product, it is legal for a magazine to accept tobacco ads, Time Inc. is not a public health organization, and I would not expect Time Inc. to unilaterally make a decision not to accept cigarette ads and decrease its advertising revenue.

But it does show the hypocrisy in the American Legacy Foundation's decision to partner with Time Inc., to award Time Inc. for progress in tobacco-free publications, and to publically credit Time Inc. with being a leader in the anti-tobacco movement, all the while condemning the high youth exposure to cigarette advertising in magazines out of the other side of its mouth.

This isn't leadership. This is hypocrisy at its worst.

Congratulations to Time Inc. and the American Legacy Foundation for their excellent contributions to tobacco control this week through contributing to the exposure of millions of children to cigarette advertising.

Campaign for Tobacco-Free Kids Argues that Cigarette Price Promotions and Opposition to Cigarette Taxes Prove Industry Wants Kids to Smoke

In a statement issued in response to the Federal Trade Commission's (FTC) recently released report on cigarette advertising and marketing expenditures for the year 2003, the Campaign for Tobacco-Free Kids has argued that the aggressive efforts of cigarette companies to oppose cigarette taxes and their massive expenditures for price promotions that allow sellers to offer cigarettes at lower prices prove that the companies want kids to smoke.

Here is the argument: "The new FTC report shows that 71.4 percent of cigarette marketing in 2003, or $10.81 billion, was spent on price discounts paid to cigarette retailers or wholesalers in order to reduce the price of cigarettes to consumers. An additional $1.3 billion was spent on coupons and free cigarette promotions (e.g., buy one, get one free). These price promotions have served to effectively undercut the many state tobacco excise tax increases that the companies know reduce smoking, especially among kids. ... The fact that the tobacco companies act so aggressively to undermine the public health benefits of cigarette taxes, in addition to their well-financed opposition campaigns against the taxes, shows that they cannot be taken seriously when they say they do not want kids to smoke."

The Rest of the Story

While I agree with the ultimate conclusion that cigarette companies do want kids to smoke (they would be crazy if they didn't - it would be essentially throwing in the towel to their long-term business prospects), I find it a very weak argument to suggest that price discounts and opposition to tax increases prove that the companies want kids to smoke.

What manufacturer of a product would not oppose tax increases on their product, even if the product were sold exclusively to adults?

And what manufacturer would not offer price promotions as an incentive to customers to try to increase sales of their products, even if the products were sold exclusively to adults?

Clearly, the simple fact that a manufacturer opposes tax increases on its products and aggressively offers price promotions for its products does not prove that it is trying to get kids to use its products.

By the Campaign for Tobacco-Free Kids' reasoning, the huge coupon promotion for Depend incontinence products proves that Depend wants kids to use incontinence products.

Note that I'm not arguing that tobacco companies use price promotions solely to increase sales of their products to adult customers. They may well desire to make the products more affordable so that youths will smoke them. But the point is - simply - the fact that companies are offering these promotions in no way proves that they want kids to smoke. The companies would be expected to compete vigorously with each other on price and to collectively oppose higher taxes, even if they truly desired only to sell their products to adults.

Price is in fact one of the primary ways by which tobacco companies compete for the adult market. While youths overall are more price sensitive than adults in terms of cigarette consumption, adults are far more price sensitive in terms of brand choice. Thus, while the entrance of a large number of generic, discount, and deep-discount brands into the market has had little effect on brand choice among kids (they still smoke Marlboro, Camel, and Newport almost exclusively), it has had a large effect on brand choice among adults (where generic and discount brands have started to make significant inroads into the market).

So even if all youth were to stop smoking immediately and no youth was ever to smoke again, cigarette companies would still oppose tobacco taxes and would still use price promotions to promote their brands.

The Campaign's statement closes by suggesting that the FTC report demonstrates the need for passage of the FDA legislation presently before Congress: "Today’s FTC report underscores the need for Congress to enact legislation granting the U.S. Food and Drug Administration (FDA) effective authority to regulate tobacco products, including the authority to restrict marketing that appeals to children. Among other things, this legislation would have given the FDA the authority to restrict tobacco marketing to the extent permitted by the First Amendment, including especially marketing that impacts kids. Until Congress grants the FDA this authority, the tobacco companies will face only minimal restrictions on their ability to engage in marketing that impacts our children."

What the Campaign does not reveal is exactly what marketing restrictions it believes the FDA will promulgate that are permitted by the First Amendment and that will substantially curtail the tobacco companies' ability to market their products to our children. The Supreme Court has already found that even rather minimal regulations, such as prohibiting outdoor advertising near schools and playgrounds, violates the First Amendment. What exactly does the Campiagn have in mind that would pass constitutional muster (and thus would likely have to be more narrow than the proposed Massachusetts restriction on outdoor advertising) yet be broad enough to limit the tobacco companies so severely that they will be no longer able to effectively market their products to kids.

I suspect we'll all be waiting for a long time for the answer to that question.

The rest of the story reveals that the Campaign for Tobacco-Free Kids has again made an absurd argument that flies in the face of basic economics and marketing principles. While in its own right, making such an argument may not carry any public health significance, the fact that this is the organization that ran the show in developing FDA tobacco legislation and is now running the show in promoting this legislation, does have significance.

Because if the Campaign cannot be counted upon to make reasonable, rational, and defensible arguments when it doesn't really matter, what reason do we have to count on them for solid arguments when it does matter?

Buffalo Grove (IL) and Greenville (TX) Ban Smoking in Parks

The Greenville (TX) City Council approved an ordinance Tuesday that bans smoking in all of the city's parks, except for the municipal golf course and parking lots. This action is on the heels of the Buffalo Grove (IL) Park District Board of Commissioners' decision to ban smoking on all park district property.

Smokers who violate the Greenville ordinance will be charged with a misdemeanor - a criminal charge - and would then face conviction proceedings, which could ultimately result in up to a $500 fine. Violations of the Buffalo Grove rule would face only a civil charge, which could result in a fine of between $25 and $100.

Buffalo Grove previously had a rule that banned smoking within buildings on park property and within 20 feet of the entrance to these buildings. But the new rule extends the old one so that people who wish to smoke will have to leave park property entirely: "Park District Executive Director Michael Rylko agreed that in some situations enforcing the smoking ban could be difficult, such as when people step outside the Alcott Center to smoke. The current rule prohibits smoking within 20 feet of the entrance to Alcott, at 530 Bernard Drive, and other park buildings. But Rylko said he still frequently sees 'three or four senior ladies puffing on their weed. When I tell them they can't smoke (even outside the Alcott building or in the parking lot), they are going to go crazy,' Rylko said. 'What do I do, call 911?'"

The Rest of the Story

I don't see secondhand smoke exposure as such a serious health threat that banning smoking in outdoors, non-enclosed areas where people are not contained in a particular area is warranted. Certainly, smoking in parking lots is not a severe health hazard that deserves attention from public health practitioners. And I just don't see how those three or four senior ladies puffing on cigarettes outside the Alcott building represent a serious enough threat to the public's health to warrant government intrusion of this nature.

But the absurdity of this story is evidenced in the inconsistency of these actions as public policy. In Greenville, if you smoke in a remote areas of a park with no one around, you have committed a crime and could potentially enter into the criminal justice system, requiring criminal proceedings and using up valuable court time. But if you smoke on a crowded golf course, no problem. Even worse, if you smoke in a bar or restaurant where you are actually exposing workers to high levels of carcinogens, that's also not viewed as a problem worthy of government intervention. Only non-golf course outdoor parks are apparently viewed as a health threat that needs attention. This is an absurd approach to public health policy!

The same is true of Buffalo Grove's policy. That town apparently does not see a need to protect bar and restaurant workers from exposure to high levels of secondhand smoke, but it does see a need to prevent the severe health threat posed by three or four seniors puffing meekly on their cigarettes outside the Alcott Center.

The word absurd is defined as "ridiculously unreasonable, unsound, or incongruous" and "having no rational or orderly relationship to human life." The recent actions of Buffalo Grove, Illinois and Greenville, Texas fit this defnition to a tee.

Challenging Dogma (Post #4): All Groups that Oppose Tobacco Control Policies are Big Tobacco Front Groups

One of the things that I was "taught" during my experience as a tobacco control advocate was that all opposition to tobacco control policies originates, ultimately, from the tobacco industry. Therefore, any group that opposes tobacco control policies is most probably a tobacco industry front group. Through my years of working with Americans for Nonsmokers' Rights (ANR), I was led to believe that organizations such as the Competitive Enterprise Institute, the Cato Institute, FORCES, and the Heartland Institute (all are currently listed on ANR's web site as front groups/allies) were merely fronts for the tobacco industry.

Interestingly, my experience accords with Michael McFadden's observation that many anti-smoking advocates "are quick to put the label of 'Big Tobacco Front or Ally' upon any group or individual who opposes the notion of the deadliness of secondary smoke or any who question the funding or motivation of Crusading groups."

The ANR web site explains what it means by a front group as follows:

"Tobacco companies are the engineers behind the scenes keeping the trains running on time for the opposition in your town. The problem for Big Tobacco is that it has no credibility with the public. So tobacco companies have developed a system of front groups and allies to allow them to stay in the shadows and have others carry their message publicly. The industry then arms these front groups with strategies and tactics to spoil smokefree air campaigns."

ANR also explains that:

"It has been a common practice of Big Tobacco to use third parties or to create front groups 'to be out in front fighting' smokefree policies, while the industry remains behind the scenes, protecting its public image."

I think there are essentially 3 major criteria that define a tobacco industry front group in the way that ANR and other anti-smoking groups and advocates use the term. These criteria stem from the central principle that the intended purpose of the front group is, by definition, to create or sustain a group that is perceived as an independent party that is expressing its own views, when in fact, it is really just serving as a vehicle for the industry to promote its own interests, but in a way that allows the industry to remain behind the scenes.

1. The group is created by and/or primarily funded by the tobacco industry.

2. The group hides the fact of its establishment by, or heavy funding from, the tobacco industry.

3. The group promotes the interests of the tobacco industry rather than any true independent interests of its own and of its members.

To see how this works and how these criteria can be used to assess whether a group is indeed a front group, let me present two examples of what I consider to be "real" front groups.

1. THE BEVERLY HILLS RESTAURANT ASSOCIATION (BHRA) -- It appears that in 1987, with a smoke-free restaurant ordinance being considered in Beverly Hills, the tobacco industry established and supported an organization (BHRA) to have the appearance of being an independent association of restaurateurs who were concerned about their business, but that in fact was simply a front group to allow the industry to fight the ordinance without having to identify itself.

The association was non-existent before the ordinance was proposed and was set up primarily, if not solely, to lobby against the ordinance. It was organized by the tobacco industry, rather than an independent effort of concerned restaurateurs. The tobacco industry basically ran the show.

Barry Fogel, president of the BHRA at the time, later revealed the truth behind the organization, while testifying in support of New York City's smoke-free ordinance: "There was no Beverly Hills Restaurant Association before the smokefree ordinance. We were organized by the tobacco industry. The industry helped pay our legal bills in a suit against Beverly Hills. The industry even flew some of our members by Learjet to Rancho Mirage, another California city considering smokefree restaurant legislation, to testify before their City Council against a similar smokefree ordinance. Tobacco Institute representatives attended some of our meetings."

Here, all 3 criteria are met. The front group in question was established by and was primarily funded by the tobacco industry. The group apparently did hide its true affiliation. And it is pretty clear that the group was established almost solely to promote the tobacco industry's interest of fighting smoke-free ordinances in Beverly Hills and elsewhere in California.

2. THE CITIZENS' COMMISSION TO PROTECT THE TRUTH -- The Citizens' Commission, on the surface, appears to be an independent group that seeks to promote funding for the American Legacy Foundation's "truth" anti-smoking campaign. It has filed amicus briefs in a number of lawsuits, seeking to promote the Legacy Foundation's interests. For example, it filed a brief in the DOJ case, requesting that any funding resulting from a remedy involving an anti-smoking media campaign be awarded to Legacy. It also filed a brief defending Legacy in a lawsuit brought by Lorillard charging Legacy with violating the anti-vilification clause of the Master Settlement Agreement.

However, the truth is that the Citizens' Commission is primarily funded by the American Legacy Foundation. It failed to disclose this in the DOJ amicus brief, and while it did disclose it in the Lorillard case, it downplayed the significance of this fact and it still denied that it had any affiliation with Legacy.

Here, all 3 criteria are met. The front group in question is funded primarily by the American Legacy Foundation. It has taken great steps to hide and even deny its affiliation with Legacy, failing to disclose this relationship or downplaying it before federal judges. And it exists pretty much exclusively to promote the interests of the American Legacy Foundation: namely, to secure funding to continue the "truth" anti-smoking campaign.

The Rest of the Story

Now let's look at 3 of the organizations that ANR lists as being tobacco industry front groups: FORCES, the Competitive Enterprise Institute (CEI), and the Cato Institute.

It is quite clear that none of these organizations was established by the tobacco industry.

It is also quite clear that while at least two of these groups have received contributions from the tobacco companies, the industry is not the primary source of their funding.

It does not appear to be the case that the Cato Institute is hiding its tobacco funding, since this information is readily displayed on its web site. That CEI has received tobacco funding also seems to be well-known.

It is also clear that while these groups have tended to take positions that align with those of the tobacco industry, the groups are not merely working to promote the industry's interests, but they are in fact promoting their own interests, which tend to center around the idea of limited government intrusion into the private behavior of citizens and/or the preservation of free enterprise and limited government.

So none of the 3 criteria are clearly met for any of these organizations. They were not established by the tobacco industry and are not funded primarily by the industry. The organizations for which tobacco funding is clear do not appear to be hiding that information. And these groups are all clearly promoting a range of interests that extend far beyond simply protecting the tobacco industry's profits. In fact, they have taken a position that is directly counter to Big Tobacco's interests and which could result in major economic harm to the major tobacco companies.

The truth of the matter, in my opinion, is that it is simply not the case that any organization that opposes tobacco control policies is a tobacco industry front group. And it is simply not the case that a number of the organizations listed by ANR as being tobacco industry front groups actually are.

The rest of the story suggests that the dogma that has led many anti-smoking organizations and advocates to assume that any organization which opposes tobacco control policies must be a tobacco industry front group is wrong. While there might not be any damage done if groups and advocates simply made this false assumption, they are doing more than that. They are actually, in my view, falsely accusing these organizations of being front groups.

That's wrong, and I hope that it changes. You can monitor the ANR front group list here to see if it changes.

Most importantly, I hope that tobacco control practitioners will begin to understand that there are non-tobacco-industry-related interests that would motivate an individual to oppose tobacco control policies. We need to have respect for individuals we find are fighting on the other side of issues, and to discontinue the knee-jerk reaction of attacking them as being affiliated with the tobacco industry. We also need to respect the fact that there is another way of looking at things, even though we may vigorously disagree. Respect for, and fair treatment of individuals must come ahead of any institutional goals.

FORCES International: Tobacco Industry Front Group?

Since welcoming readers from the FORCES International web site to my blog on July 25, there has been a vigorous response from anti-smoking advocates, who have accused FORCES of simply being a tobacco industry front group. I have been labeled as having fallen for a huge propaganda campaign by which FORCES has somehow disguised its connections with Big Tobacco and its interest in serving as a vehicle to simply promote Big Tobacco's interests in a way that allows the tobacco companies to hide behind the scenes. It is clear to me that the post really shook up many anti-smoking advocates.

Note that I really only made two major statements related to FORCES in that post. First, I welcomed a group of readers to my blog site (which seems perfectly appropriate). Second, I pointed out that in my opinion, FORCES International is not a tobacco industry front group, but rather, a group that opposes tobacco control policies for a number of interests of its own. But that seems to be too much to take for anti-smoking advocates.

For essential background, it appears to be Americans for Nonsmokers' Rights (ANR) that is the originator of the claim that FORCES is a tobacco industry front group. ANR lists FORCES in its section entitled "Front Groups and Allies," and although ANR admits that "internal tobacco industry documents are inconclusive" about whether FORCES is a tobacco industry-funded organization, ANR states that background information from its document on the National Smokers' Alliance "is still relevant to other smokers' rights groups such as FORCES." Since that National Smokers' Alliance document accused the NSA of being a tobacco industry front group and documented that assertion, it is implied, I believe, that ANR is accusing FORCES of also being a tobacco industry front group.

I now address the basic issue at hand: is FORCES International merely a front for the tobacco industry, established primarily to defend the tobacco industry's interests?

The Rest of the Story

From the information I can gather, it appears that FORCES was established around 1995. There is no evidence I can find that FORCES was created by the tobacco industry. Rather, it seems to be an independent group that the tobacco industry later sought out once it was clear that the group was supporting smokers' rights issues.

In fact, a 1999 Philip Morris memo reveals that FORCES, at that time, did not accept tobacco industry funding. And the nature of that memo makes it clear that Philip Morris was doing investigative work to find out what FORCES was all about - hardly the kind of situation one would expect if Philip Morris had in fact set up FORCES as a front group for itself and the tobacco industry.

While one researcher associated with FORCES (John Luik) has apparently produced articles for and with the tobacco industry, there is no evidence that the organization is funded, to any significant extent, by tobacco companies. The FORCES web site states: "We have no link with the tobacco companies, and we are supported solely by member donations and volunteer work." So the organization itself is making it clear that it is currently not financially supported by the tobacco companies.

Even if it is true, as one anonymous commenter stated in response to my earlier post, that FORCES did receive tobacco industry funding for one ad campaign related to a California ballot initiative, there is simply no evidence at this point that the organization is heavily or significantly funded by the tobacco companies.

Now as to whether FORCES merely exists to promote Big Tobacco's interests:

Well - let's look at what FORCES posted on its web site just last Friday:

"The Master Settlement Agreement is a massively corrupt price-fixing scheme contrived between forty-six states and the major American cigarette manufacturers. As this latest challenge states, upon signing the MSA, 'the States became business partners in establishing one of the most effective and destructive cartels in the history of the Nation.' If there is any justice left in the USA these suits shall prevail. The happiest outcome of all would be total bankruptcy of the major manufacturers to the benefit of fair dealers and the public. We have a bottle of Dom Perignon cooling for the day Philip Morris and the rest bite the dust. Big Tobacco's ignominious demise is a dream that really could come true. ... It's going to take years. That's okay. Smokers and all seekers of justice are watching, and strategizing, and we're ready for the long haul."

This doesn't exactly sound like something that an organization that existed merely to promote the interests of Big Tobacco would state: "The happiest outcome of all would be total bankruptcy of the major manufacturers to the benefit of fair dealers and the public. We have a bottle of Dom Perignon cooling for the day Philip Morris and the rest bite the dust."

If FORCES is a Big Tobacco front group, then it is certainly doing a lousy job. Promoting the bankruptcy and "ignominious demise" of the companies whose interests you are supposed to be representing is not consistent with the concept of serving as a "front" for those companies.

You'd certainly have to get failing marks as a front group if you called for the demise of the company whose interests you are supposed to be "fronting," but to call for its "ignominious" demise would put you off the charts for incompetent "fronting."

So what does this all mean?

What it means is that there are interests that would lead an organization and its members to oppose tobacco control measures other than simply being a group set up primarily by and for the tobacco companies to help them do their bidding in a way that allows the companies to remain hidden behind the scenes.

One of those interests, clearly stated on the FORCES web site, is the principle that: "we do not recognize that the state has the right to legislate on the behavior of citizens when it comes to personal choice and lifestyle, regardless of the reason used to justify such interference."

Could it also be that another interest is the desire not to have to pay ten dollars a pack to purchase cigarettes, when a lot of that money is going to balance your state's budget at your expense?

And could another interest possibly be that you want to preserve the opportunity for smokers to maintain jobs and make a living to support themselves and their families? In an environment where employers are increasingly considering policies to not hire or even fire smokers simply because they choose to smoke off-the-job, is it not possible that some of those who smoke might have a personal (not a tobacco industry-related) interest in opposing such policies?

And might another interest be not wanting the government to tell you that you can't smoke in a parking lot, because it's possible that the smoke could affect the health of people coming into and out of their cars?

Look - I'm not saying that I believe that these interests outweigh the interest in taking measures to protect the public's health (my research supporting the need to protect restaurant and bar workers from secondhand smoke exposure is well-known, although my opinions about raising cigarette taxes to balance state budgets, employer policies that fire or refuse to hire smokers, and certain outdoor smoking bans are also quite clear).

What I am saying is simply that these are legitimate interests that individual smokers might have and which an organization set up to promote the interests of smokers might therefore support. And you don't need to be representing the tobacco companies to have a personal interest in keeping the government from regulating your behavior, raising your taxes, or failing to protect you from being fired for your off-the-job behavior.

And until anti-smoking organizations and advocates recognize the existence of these interests, I'm afraid that unjustified personal attacks as well as misleading or inaccurate accusations about organizations are going to continue.

Am I saying that anti-smoking groups should never accuse an organization of being a front for Big Tobacco? NO - I'm just saying that they shouldn't accuse an organization of being a front for Big Tobacco unless it IS a front for Big Tobacco. And there needs to be documentation to support such an accusation, not just mere speculation.

The rest of the story reveals that contrary to claims made by ANR and what seems to be a general assumption among many anti-smoking advocates, FORCES International is not a Big Tobacco front group, but instead, is an organization that represents the interests of smokers who generally believe that the government should not regulate their behavior.

The group is not primarily representing the interests of Philip Morris and other tobacco companies, but rather, is promoting the interests of a group of smokers who have increasingly begun to feel stigmatized, intruded upon, and perhaps even persecuted by their government.

They are acting primarily out of concern for their own interests and not out of concern for the interests of Big Tobacco. In fact, they would love nothing other than for Big Tobacco to go by the wayside so that the government-Big Tobacco cartel's price-fixing scheme can end and real competition can force prices to drop substantially in the marketplace.

Democratic National Committee Takes Swipe at Administration for Political Interference in DOJ Tobacco Case

The Democratic National Committee (DNC) can be added to the list of groups that has taken a swipe at the Bush Administration by accusing it of political interference in the DOJ tobacco case. Specifically, the DNC has accused political appointee Robert McCallum (Associate Attorney General who oversees the civil division of the DOJ) of destroying the case by reducing the requested smoking cessation remedy from $130 billion to $10 billion in order to protect the financial interests of the tobacco companies.

According to the DNC: "In a shocking development, DOJ lawyers abandoned the recommendations provided in testimony by key government witnesses and requested a fraction of the amount suggested as an appropriate financial penalty for these companies. Even the judge in the case was confused, stating that 'There may be some additional influences being brought to bear on the government's decision.' Associate Attorney General Robert McCallum, who oversees the lawyers trying this case, said he would not comment on why DOJ changed its position. But with $9 million in donations to the GOP over the past four years, and with no fewer than four members of the DOJ leadership with strong ties to the tobacco industry, does he really need to say a word?"

The evidence that the DNC presents to support its accusation is basically two-fold: (1) Robert McCallum previously was a partner in a law firm that did patent work for R.J. Reynolds and a number of other DOJ appointees have "tobacco industry ties"; and (2) the tobacco companies have given a lot of money to the Republican party.

The Rest of the Story

Well that pretty much cinches it for me. If the tobacco companies gave a lot of money to the Republican party and the lawyer overseeing the DOJ case once was a partner at a law firm that did patent work for R.J. Reynolds, then by definition, the decision to reduce the requested smoking cessation remedy from $130 billion to $10 billion must have been motivated by a desire to protect the tobacco industry's financial interests.

This only leaves a few questions unanswered:

1. If the DOJ is acting solely in the interests of protecting Big Tobacco, then why has it refused to settle the case, even after it was clear that settlement negotiations were taking place and that Judge Kessler herself had ordered the two parties to discuss a potential settlement?

2. If the DOJ is acting solely in the interests of protecting Big Tobacco, then why did it decide to pursue the case in the first place? The suit could easily have been quashed long ago.

3. If the DOJ is acting solely in the interests of protecting Big Tobacco, then why did it appeal the D.C. Court of Appeals ruling to the Supreme Court, which potentially could open the door to large financial remedies?

Of course, the biggest question that remains unanswered is: in what possible way does altering a remedy that never had a chance of passing legal muster with the D.C. Court of Appeals protect the financial interests of the tobacco companies?

If anything, leaving that ridiculous remedy request intact would have been the best thing DOJ could have done to protect Big Tobacco. Judge Kessler and, if it got that far, the D.C. Court of Appeals would have dismissed the $130 billion proposed remedy so quickly that it would have been an embarrassment for the Department.

If anything, tailoring the remedy more narrowly so that it is smaller and applies only to future smokers will strengthen the case by at least providing a shot at the remedy being upheld.

But the most disturbing aspect of the DNC's accusation, to me, is its dismissal of the need for any solid evidence before making a stinging political attack that is not supported by legal reasoning: "But with $9 million in donations to the GOP over the past four years, and with no fewer than four members of the DOJ leadership with strong ties to the tobacco industry, does he really need to say a word?"

Yes - you do need to say a word. It is not enough to just say that the Republican party takes tobacco money, thus anything DOJ does must be to protect the interests of the tobacco companies. In what way was continuing the suit in the first place protecting the interests of the industry? And how does appealing the case to the Supreme Court help the industry? And how could refusing to settle the case on weak terms protect the industry's financial interests?

Yes - you do need to say a word. With no less than $1.6 milion in tobacco industry donations to the Democratic party at the state level in the last three election cycles, with $1.2 million in donations to the Democratic party in the 2001-2002 election cycle alone, and with a whopping $13.3 million in donations to the Democrats over the past 14 years, I might conclude, using the precise reasoning you are providing, that the Democratic party is in the hands of the tobacco industry.

In fact, the reason why the DOJ, under the Clinton administration, did not request $130 billion for a smoking cessation remedy must therefore be that it was trying to protect the financial interests of Big Tobacco, in light of the more than $13 million in donations the Democratic party has received.

Since the DNC reaped in $900,000 in soft money from the tobacco industry between 1993 and 1995, it must be true that Clinton's decision to file the suit against the tobacco companies was a disguised attempt to protect their financial interests. He obviously must have felt that by filing a lawsuit that had little chance of financial success, he would ultimately give the industry the legal security they needed to solidify their stock value.

The rest of the story reveals that the Democratic National Committee's attack of the Bush Administration for poltically interfering in the DOJ case by reducing the requested smoking cessation remedy from $130 billion to $10 billion in order to protect the financial interests of the tobacco companies is nothing other than a pot shot.

The accusation is not supported by an understanding of the legal issues involved in the case; nor is it supported by the weak evidence that the DNC uses to justify its political attack.

If the DNC wants to find evidence of political interference in the effort to protect the public from the hazards of tobacco products, motivated by tobacco industry donations to politicians, then I suggest it begin by looking no further than its own house.

New Study Links Secondhand Smoke Exposure with Abdominal Obesity, High Triglycerides, and Low HDL Cholesterol in Adolescents

An article published in this week's online issue of Circulation has reported that secondhand smoke as well as active smoking are associated with metabolic syndrome in adolescents -- which in this study, primarily consisted of central (abdominal) obesity, high triglyceride levels, and low HDL cholesterol levels (see: Weitzman M, Cook S, Auinger P, et al. Tobacco smoke exposure is associated with the metabolic syndrome in adolescents. Circulation 2005; 112:862-869).

The authors found a dose-response relationship between cotinine-confirmed levels of tobacco smoke exposure and presence of metabolic syndrome, characterized by 3 or more of the following: central obesity, high blood pressure, high fasting blood sugar, low HDL, and high triglycerides. Compared to adolescents without tobacco smoke exposure, those exposed to secondhand smoke were 4.1 times more likely to have metabolic syndrome and those who actively smoked were 6.1 times more likely to have metabolic syndrome.

The authors conclude that "this is the first study to demonstrate a dose-responsive, cotinine-confirmed relationship between tobacco smoke and the metabolic syndrome and the first that we are aware of to demonstrate any association between tobacco smoke and the metabolic syndrome in adolescents."

The media widely reported the results of this research as implying that secondhand smoke was a cause of metabolic syndrome in adolescents, and by virtue of this relationship, placed teens at higher risk of later developing diabetes and cardiovascular disease.

The Rest of the Story

Based on my review of this research, there are really two problems:

First, the study did not control for diet and levels of physical activity among these adolescents, which I think could reasonably be expected to be associated both with the likelihood of tobacco smoke exposure and with abdominal obesity, high triglycerides, and low HDL cholesterol levels.

A key factor to recognize is that exposure to tobacco smoke in this study implies a much higher likelihood of having a smoking parent (in the dose-response analyses, it actually implied an absolute likelihood of a smoking parent). And think of the whole constellation of factors that are likely to be more prevalent in families when a parent smokes. One might also expect that overall health concerns are lower in such a family, and the children in such families would be more likely to not get exercise and not eat a "healthy" diet (what I mean here is that they are more likely to have a substantially higher fat intake in their diets).

In other words, one would expect that adolescents who are exposed to tobacco smoke would also have a more sedentary lifestyle with less physical activity and a poorer diet, with higher fat intake.

It would not be unexpected to find that kids who get less physical activity and who have higher fat intake would also be more likely to have fat bellies, high fat levels (i.e., triglycerides), and low HDL cholesterol (which is related to the degree of physical activity). It would not be unexpected, then, to also find that secondhand smoke exposure is related to fat bellies, high fat levels, and low HDL levels.

In epidemiology, this is called confounding, and I view it as a critical concern that precludes one from being able to make a causal conclusion in this study. In other words, while secondhand smoke was clearly associated with metabolic syndrome in this study, I don't think one can conclude that the metablic syndrome was caused by the secondhand smoke. In fact, it may likely have been related to a completely different pattern of behavior and lifestyle, marked notably by decreased levels of physical activity and increased fat intake.

A second problem, which would not be a problem if data had been available on physical activity and diet, is that social class was not accounted for in the study. It appears to me that what is really going on here is largely a class effect. Tobacco smoke exposure is characterizing a class of young people who are also characterized by different behavior and lifestyle patterns - including differences in diet and physical activity.

Some of the effects of these potential confounding variables could possibly be accounted for by controlling for parental smoking in the analyses - but it does not appear that was done.

But perhaps the greatest problem in drawing a causal inference from this paper is that the data do not support the underlying hypothesis regarding a mechanism by which secondhand smoke exposure would cause metabolic syndrome. The paper posits that it is largely through insulin resistance that the effects of secondhand smoke on metabolic syndrome would occur: "it is well accepted that insulin resistance is an underlying force driving the metablic syndrome and its components."

However, the paper actually found no evidence for insulin resistance associated with secondhand smoke or active smoke exposure. While 11.6% of adolescents had high fasting glucose levels, 14.1% of secondhand smoke exposed subjects did, and only 9.6% of active smoking adolescents did. These differences were not significantly different, and there was no trend evident.

Thus, the paper does not provide support for the very hypothesis that would need to be relied upon to draw a causal inference.

Another inconsistent finding in the study was that the prevalence of high blood pressure was actually significantly lower in tobacco smoke-exposed adolescents. However, this finding does not, in and of itself, render a causal conclusion invalid.

It is important to note that I am not faulting the authors of the paper at all. They were careful to point out each of the potential threats to the validity of the study, including the possible confounding effects of physical activity and diet. And they seemed to have been quite careful in not drawing causal inferences in the paper itself. It seems to be the media that played the study up to infer a definitive causal relationship between secondhand smoke and metabolic syndrome. I'm not at all blaming the authors for this. But the end result is that I think the media coverage was potentially quite misleading.

But I do have to point out that while the authors were quite accurate and careful in their presentation of the study results to the media, at least one anti-smoking organization was not. The Campaign for Tobacco-Free Kids jumped on the study, and despite what I feel is an inability to draw any causal conclusions from the paper, immediately issued its own definitive causal conclusion:

"The study 'adds to the body of evidence demonstrating that secondhand smoke exposure is one of the most serious causes of disease in the United States,' said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids. 'It is particularly disturbing because it demonstrates that exposure to smoke as a child could well have long-term heart disease consequences.' "

In my opinion (as a researcher who certainly has not downplayed what I view as the health hazards of secondhand smoke), I don't think the study demonstrates anything of the sort. I have seen no evidence (previously or in this study) that exposure to smoke as a child has long-term heart disease consequences, and I find it irresponsible for an anti-smoking organization to be spreading that message to the public.

The rest of the story suggests that the media, and in at least one case, an anti-smoking group, have been far too hasty in jumping to a conclusion that secondhand smoke causes fat tummies, when in fact, this study could simply be another reminder that if you sit around, don't get exercise, and eat a lot of high-fat food, and especially if you're already overweight or at risk of overweight, then you're at higher risk of developing a constellation of abnormalities that may end up putting you at greater risk of heart disease.

While I would argue that we should certainly be taking aggressive steps to protect kids from secondhand smoke exposure, I don't see this study as adding to the evidence of the health risks of secondhand smoke to children. If anything, the immediate action that should come from this is to try to get kids off of the sofa, away from the TV, out into the parks and playgrounds, and on a more reasonably moderate fat diet.

ANR-Proclaimed Tobacco Industry Front Group Goes After Big Tobacco

The Competitive Enterprise Institute, proclaimed by Americans for Nonsmokers' Rights (ANR) to be a tobacco industry "front group," has filed suit in a Louisiana federal court to challenge the constitutionality of the Master Settlement Agreement and has asked the judge to invalidate the settlement (see earlier post for details of lawsuit).

According to ANR's web site: "The Competitive Enterprise Institute (CEI) is another one of Big Tobacco's front groups. Big Tobacco has funded CEI to pump out papers opposing tobacco policy. Opinion papers authored by CEI often appear in some of the nations' larger media outlets."

ANR describes tobacco industry front groups as follows: "Tobacco companies are the engineers behind the scenes keeping the trains running on time for the opposition in your town. The problem for Big Tobacco is that it has no credibility with the public. So tobacco companies have developed a system of front groups and allies to allow them to stay in the shadows and have others carry their message publicly. The industry then arms these front groups with strategies and tactics to spoil smokefree air campaigns."

The Competitive Enterprise Institute (CEI) describes itself as "a non-profit public policy organization dedicated to advancing the principles of free enterprise and limited government," which believes that "individuals are best helped not by government intervention, but by making their own choices in a free marketplace."

The Rest of the Story

It shouldn't take a rocket scientist to figure out that something is wrong with ANR's claim. If ANR is correct that CEI is nothing more than a front group for Big Tobacco, funded by the major tobacco companies to promote their interests, then CEI would never have filed this lawsuit attempting to bring down the Master Settlement Agreement (MSA).

If the MSA is invalidated, as CEI desires, it will be a major blow to the financial interests of Philip Morris and the other major tobacco companies that make up "Big Tobacco."

First, it would be a devastating public relations hit. The tobacco companies would be recognized as a "cartel" that is trying to work with the states to fix prices and inhibit competition.

Second, it would decimate the tobacco companies' arguments in a number of major lawsuits, including the DOJ tobacco case, in which Big Tobacco's primary defense is that the MSA is already serving to prevent and restrain any possible future RICO violations, so no further remedies are required.

Third, it would presumably open up the possibility of a whole new string of state lawsuits against Big Tobacco, since if the MSA is invalidated, then the clause which permanently enjoins the state's from filing Medicaid cost recovery lawsuits against these companies could also be invalidated.

So there is no question that this lawsuit challenging the MSA is an attack on Big Tobacco, and it actually, in my mind, represents one of the greatest threats to the financial interests of Big Tobacco of our time (second only to the Engle case and the Price case).

So whatever CEI is, it is clearly not a group that is merely doing the tobacco industry's work for it.

This should immediately cause ANR to remove CEI from its group of tobacco industry front groups, or at very least, to revise its claims. You can check here to see whether ANR has revised its claims. As of the writing of this post, CEI was still listed as a Big Tobacco front group.

The lesson here is that the world is a bit richer, and more complex than ANR seems to view it. In ANR's eyes, there seem to be only two sides: theirs and Big Tobacco's. Anyone who is fighting tobacco control policies must, by default, be part of Big Tobacco and must be motivated by a desire to advance the interests of Big Tobacco.

In fact, ANR goes so far as to instruct local advocates to attack any groups that oppose their efforts as being tobacco industry front groups, even if they cannot find evidence to prove or document it. By inferring that these groups are merely puppets of the tobacco industry, they can discredit these opposition groups, even if the claims about funding and orchestration by Big Tobacco are not true. Just by making the claim, advocates can discredit these groups in the public's eye:

"Advocates should shine the light on these associations and connections to the tobacco industry. See our factsheet on how to follow the money to find industry connections in your community. There isn't always a "smoking gun" linking the tobacco industry to these groups, either due to lax local campaign finance laws, or money getting funneled through third parties. Often we don't find out until years later that the tobacco industry was funding opposition activities. In any case, showing that suspicious groups are pulling out all the familiar tricks will encourage people to take the Big Tobacco message delivered by these groups with a grain of salt."

The reality is that there are groups out there which have interests which tend to (but do not always) coincide with those of Big Tobacco. The Competitive Enterprise Institute's primary interest is in promoting "free enterprise and limited government." By definition, that is going to most often result in opposition to major tobacco control policies that involve intense government intervention to regulate private companies. So it is no surprise that the CEI's position has often coincided with that of Big Tobacco. And it's also no surprise that tobacco companies have therefore wanted to contribute money to support CEI's work.

But that doesn't necessarily mean that CEI exists simply to promote the interests of Big Tobacco. As the rest of the story reveals, CEI is out to promote free enterprise and limited government, and they'll go after anyone who gets in the way of that mission, even if that anyone happens to be Big Tobacco itself.

Right now, CEI should actually be congratulated by anti-smoking groups for taking an action that they themselves should have taken long ago. But I guess they have been too busy bickering about the money, and fantasizing about how they were going to spend $130 billion.

STAY TUNED for Monday's Challenging Dogma post, which will address the issue of tobacco industry front groups in detail, including ANR's charge that FORCES International is merely a tobacco front group.

APHA Issues Statement Showing Lack of Understanding of Legal Issues in DOJ Tobacco Case

The American Public Health Association (APHA), in its August newsletter (The Nation's Health), weighed in on the DOJ tobacco case. Specifically, APHA criticized the Justice Department's decision to ask for just a $10 billion smoking cessation remedy instead of the $130 billion remedy originally proposed.

According to the newsletter, APHA Executive Director Georges Benjamin, MD, called the penalty request an "unconscionable" move that "places the financial interests of the industry above fighting this nation's leading cause of death."

Benjamin stated that: "The government's decision is bad policy, bad economics and downright short-sighted." He added that the revised remedy "is a betrayal of the nation's 45 million smokers, because most of them will not get the help they need in breaking their deadly addiction."

The APHA newsletter also attacks Associate Attorney General Robert McCallum for politically interfering in the case, calling him a "former tobacco industry lawyer."

The Rest of the Story

It is troubling to me that APHA, the nation's leading public health advocacy organization, appears to have such a shallow (actually, incorrect) understanding of the legal issues involved in the DOJ tobacco lawsuit that it is almost embarrassing to read its analysis of the case and its statement about what is involved.

"The government's decision is bad policy": I didn't know that this was a policy issue. I thought it was a lawsuit.

"bad economics": I didn't know this was an economic issue. I thought it was a lawsuit.

"and downright short-sighted": I didn't know that the plaintiff in the case is supposed to look beyond the facts of the case and the law that governs it.

The APHA statement that the new "plan" is a betrayal of the nation's smokers suggests that the organization, like the Campaign for Tobacco-Free Kids, appears to view this as a free-for-all tobacco policy and program opportunity, in which anti-smoking groups can ask for all the pet programs that they desire without any regard for what remedies are actually allowed by the law under which the suit was filed and the law that governs the case.

And asking for anything less than what these organizations apparently would like to see represents a betrayal of the public's interests and catering to the tobacco industry, rather than an attempt to follow the confines of the law.

This is not a policy forum. It is not a discussion to try to come up with the best programs to help the nation's smokers. There is no betrayal of smokers, as there was no obligation to them to begin with.

APHA doesn't seem to understand that this is a lawsuit, and the Department of Justice actually has to follow the law under which the case is being heard (i.e., the RICO statute) as well as the law that governs the case (i.e., the D.C. Court of Appeals ruling regarding permissible remedies).

The only remedies that are appropriate are those designed to do one and only one thing: to prevent and restrain the tobacco companies from further RICO violations. Any other remedy, even if it might be effective as a public health policy, is not appropriate and proposing it does not advance any public health cause nor deny the tobacco companies of anything.

While its apparent misunderstanding of the legal issues in the case is troubling but excusable based on perhaps simple ignorance of the legal framework involved, the misleading attack this public health advocacy group makes on an individual - Robert McCallum - is not excusable.

To call him a former tobacco industry lawyer is, in my mind, blatantly misleading to the public because he is not a former industry lawyer - he is, instead, a former partner in a law firm that represented a tobacco company. Calling him a former tobacco industry lawyer, in my opinion, implies that he has previously represented a tobacco company and this appears not to be the case.

Perhaps one could also excuse this misleading political smear attempt based on simple ignorance of the truth - but since it represents a public attack on an individual that could potentially lead to irreparable harm to him and his reputation, I don't buy that as a defense. I think if you are going to make a public attack on an individual, you need to be at least somewhat diligent in fact-checking and making sure that your claims are accurate.

Even a little bit of internet searching by APHA would have uncovered that McCallum never represented the tobacco companies in his life, and that instead, he merely happened to be a partner at a law firm that did patent work for R.J. Reynolds. They could have quite easily found that the claim that he is "a former tobacco industry lawyer" is misleading and without adequate foundation.

Unless, of course, they did their fact checking on the ANR (Americans for Nonsmokers' Rights) web site, where they would have themselves been misled into thinking that McCallum previously represented tobacco clients.

The rest of the story suggests that APHA - the nation's leading public health advocacy group - has a shallow (at best) understanding of the legal issues involved in the DOJ case and is making statements that completely disregard the fact that this is a lawsuit that must follow the dictates of law and the confines of the way that law has been interpreted by the courts.

The public health and tobacco control causes are good ones - but that doesn't mean that we are above the law.

Master Settlement Agreement Threatened by Lawsuit

The Competitive Enterprise Institute yesterday filed a lawsuit in a U.S. District Court in Louisiana which challenges the constitutionality of the 1998 Master Settlement Agreement (MSA) between 46 states and the major tobacco companies.

The suit, filed on behalf of a distributor, two small tobacco manufacturers, a tobacco store, and an individual smoker, alleges that the MSA created a state-Big Tobacco cartel that harmed consumers and small businesses by inhibiting competition in the cigarette market. Specifically, the suit claims that the MSA violated Article I, Section 10 of the Constitution - the Compact Clause - which decrees that: "No State shall, without the Consent of Congress ... enter into any Agreement or Compact with another State."

The Competitive Enterprise Institute's complaint alleges that: "The States became business partners in establishing one of the most effective and destructive cartels in the history of the Nation."

CEI explained that: "The Compact Clause was meant to prevent states from collectively encroaching on federal power or ganging up on other states. The tobacco settlement set up a national government/tobacco cartel that harmed consumers and small businesses by increasing cigarette prices and restricting competition. According to the terms of the settlement, major tobacco companies would make annual payments to the states in perpetuity, with an estimated cost of $206 billion over 25 years. Small tobacco companies that were never part of the settlement are nonetheless required to make separate payments to the states."

The Rest of the Story

This is a pretty complex issue, so let me do my best to try to explain what I think is going on here and what it all means:

First, we need some background. As I explained in a May 16 post, the MSA contained a clause known as the Non-Participating Manufacturer (NPM) Adjustment, a complex provision described in section IX(d)(1) of the Agreement. Basically, the provision states that if the market share of the participating manufacturers in any given year falls to more than 2 percentage points below the baseline aggregate market share for 1997, then MSA payments for the following year are reduced by a percentage equal to the amount of the market share loss exceeding 2 percentage points (that is, the market share loss minus 2 percentage points) times a factor of 3.

As an example to demonstrate the provision, assume that the market share for participating manufacturers was 99.6% in 1997 and dropped to 91.9% in 2004 (these are the data cited in a recent Business Week article). The market share loss that exceeds 2% is 99.6-91.9-2.0, or 5.7%. The adjustment factor is then 5.7% times 3, or 17.1%. This means that total industry payments to the states would be reduced by 17.1% in 2005. Based on the $6.2 billion paid to the states in 2004, this would represent a loss of about $1.1 billion in state revenue.

Now, the kicker: this loss of $1.1 billion in revenue to the states does not apply to all the MSA states; it only applies to those states which have failed to enact a statute that imposes escrow payments on non-participating manufacturers (companies that are not parties to the agreement).

Here it is - section IX(d)(2)(B): "A Settling State's Allocated Payment shall not be subject to an NPM Adjustment: (i) if such Settling State continuously had a Qualifying Statute (as defined in subsection (2)(E) below) in full force and effect during the entire calendar year immediately preceding the year in which the payment in question is due, and diligently enforced the provisions of such statute during such entire calendar year; or (ii) if such Settling State enacted the Model Statute (as defined in subsection (2)(E) below) for the first time during the calendar year immediately preceding the year in which the payment in question is due, continuously had the Model Statute in full force and effect during the last six months of such calendar year, and diligently enforced the provisions of such statute during the period in which it was in full force and effect."

Well - what is a "Qualifying Statute?"

For that, you have to go to Exhibit T (Model Statute), where, under section (2)(b)(1), you learn that a Qualifying Statute is a state law requiring any non-participating manufacturer (a company that is not a party to the MSA) to "place into a qualified escrow fund by April 15 of the year following the year in question the following amounts (as such amounts are adjusted for inflation) --
1999: $.0094241 per unit sold after the date of enactment of this Act;
2000: $.0104712 per unit sold after the date of enactment of this Act;
for each of 2001 and 2002: $.0136125 per unit sold after the date of enactment of this Act;
for each of 2003 through 2006: $.0167539 per unit sold after the date of enactment of this Act;
for each of 2007 and each year thereafter: $.0188482 per unit sold after the date of enactment of this Act."

In other words, the MSA has pulled a fast one - a trick of a sort. It cannot serve as a vehicle upon which to enact state legislation. Nor can it impose a requirement on non-participating manufacturers to make them pay the states in order that they not have a competitive advantage over the participating manufacturers who are subject to the burdensome MSA payments. After all, the non-participating manufacturers are not party to the agreement. It cannot possibly impose payments on them!

So instead, the MSA goes around it the back way. It first creates an incentive for the states to protect the economic interests (i.e., market share) of the participating manufacturers: that's what the NPM adjustment does.

Then, it imposes a requirement that unless a state enacts the model statute which imposes payments on non-participating manufacturers, they must share the full burden of the reduced payments attributable to the NPM adjustment. This is, of course, a strong incentive for the states to enact such a statute to preserve their MSA payments.

The simple, and it seems logical, contention of the CEI's lawsuit is that this arrangement is unconstitutional because it represents the formation of a cartel between the states and the participating manufacturers that unduly interferes with the ability of smaller (non-participating) manufacturers to compete in the marketplace, AND it does so by essentially enforcing a pact between states by which these states represent the interests of participating manufacturers' market shares and impose payments on non-participating companies which are not subject to the agreement, AND all of this is done without Congressional approval as required under the Constitution's Compact Clause.

Furthermore, the MSA actually requires that the Model Statute be enacted by a state in precisely the form specified in order for it to count. It essentially sets up the National Association of Attorneys General (NAAG) as an enforcement body to keep the states in line with the compact - any deviation from the exact wording of the Model Statute is at least potentially grounds for making a state bear the burden of the loss of revenue via the NPM adjustment.

Although not cited in the CEI's complaint, I think there is further evidence of the role of NAAG in coordinating and enforcing the behavior of the compact among the states relating to the treatment of participating and non-participating manufacturers. As I mentioned in my March 16 post: "According to a recent Fortune article (Roger Parloff, Is the $200 billion tobacco deal going up in smoke? March 7, 2005), Attorney General William Sorrell of Vermont wrote a letter to all state attorneys general in September 2003 warning them that the success of non-participating tobacco companies was threatening the market share of Big Tobacco and urging them to take action to protect Big Tobacco from this competition: "Increasing sales by [nonparticipating manufacturers] will sharply reduce the next scheduled payments. These results underscore the urgency of all states taking steps to deal with the proliferation of [nonparticipant] sales."

What is my take on all of this?

I think that the lawsuit makes perfect sense, and that the claim appears to be quite valid. I do not see how the states can constitutionally enter into a compact that governs how they must treat non-participating manufacturers -- non-parties to the settlement contract -- without Congressional approval.

I also think there are strong grounds to claim that the MSA violates the 10th Amendment (as asserted in the lawsuit) by forcing states to adopt the Model Statute without revision; this appears to take powers away from the state government and to bestow such power upon a body that is not subject to control by any level of government: namely, the compact itself, as administered by NAAG.

There is also a reasonable claim, I believe, (also as asserted in the lawsuit) that the MSA violates both the Commerce Clause and Due Process Clause of the Constitution by basing MSA tobacco company payments on sales occurring in the four non-settling states, which appears to represent a regulation of interstate commerce that occurs outside of the settling states, and without their consent.

All of this goes to reinforce what I stated back in March and in May, when I concluded that:

"The MSA has in fact set up a partnership between the states and the tobacco companies, and the attorneys general have gone to great lengths to come to the financial rescue of Big Tobacco in order to protect both of their financial interests. The financial interests of the states and Big Tobacco are irretrievably intertwined because of the MSA."

AND

"The MSA represents the greatest public health blunder of my lifetime. Now, more than ever, the financial well-being of the states is inextricably tied to the economic health of the major tobacco companies, creating an overwhelmingly compelling incentive for the states not to enact any policies or take any actions that may endanger the sales and/or profits of the major tobacco companies. The states are now economic partners with the tobacco companies and as such, deserve a share of the blame for the most important epidemic of the 21st century."

New Jersey Considering Legislation to Ban Smoking While Driving

The New Jersey legislature is considering legislation that would ban smoking while driving. The bill, introduced by Assemblyman John McKeon (D-West Orange), is intended to reduce motor vehicle accidents by preventing distracted driving due to smoking. McKeon cited data from a AAA-sponsored study which showed that approximately 1% of accidents due to driver distraction are related to smoking.

Appearing on MSNBC's The Situation with Tucker Carlson, McKeon estimated that this legislation would prevent the 1% of distracted driver accidents related to smoking: "if you extrapolate it to the national statistics, there’s three million vehicular accidents a year. A third of them are related to driver distraction. So, take one percent of one-third. That’s 1,000. That’s 1,000 accidents a year. That’s 150 fatalities a year. That’s $70 million per year. And this legislation costs nothing. That’s pretty significant."

Since distraction-related accidents make up 33% of all motor vehicle accidents, McKeon is suggesting that if the New Jersey legislation were enacted in all states (where there are 3,000,000 motor vehicle accidents per year), 10,000 accidents (his math appears to have been off by an order of magnitude) and 150 fatalities could be prevented.

McKeon explained that the law is not intended to be enforced as a primary offense: that is, drivers will not be stopped for smoking while driving. Only if they are stopped for another reason will police be able to issue a citation for smoking: "People aren’t going to be pulled over for smoking while driving. It’s similar to how the seat belt laws used to be. It’s the same in New Jersey as to how the cell phones are. If you’re pulled over for another offense, speeding, whatever other primary offense it might be, then, in that circumstance, you can be."

The Rest of the Story

While smoking was related to 0.9% of distracted driver-related motor vehicle accidents in the AAA study, a number of other sources of driver distraction, each of which is easily preventable, were more important causes of accidents:

• Adjusting the car radio, cassette player, or CD player was related to 11.4% of distraction-related crashes;
• Another device or object brought into the vehicle was related to 2.9%;
• Adjusting vehicle climate controls was related to 2.8%;
• Eating or drinking was related to 1.7; and
• Using cell phones was related to 1.5%.

If proponents of this legislation were truly interested in preventing driver distraction-related accidents, then it would make far more sense for them to address these more important preventable causes of distraction-related crashes before worrying about smoking (or to address smoking along with these other more important causes).

It seems to me that proponents of the New Jersey law are on a slippery slope upon which they cannot stand. If they argue that the impact of smoking while driving is so large that government must intervene into the privacy rights of individual drivers, then they must also agree that government should outlaw more important causes of distraction-related motor vehicle crashes, such as adjusting car radios, reading maps and books while driving, adjusting vehicle climate controls, eating and drinking, and talking on cell phones.

The fact that proponents of the legislation are singling out smoking as the only factor that needs government intervention suggests that the proposed legislation is an example more of moralizing than of a legitimate public health concern.

This impression is furthered by the fact that the bill would not allow for primary enforcement of violations. This negates any potential safety impact of the bill by removing any substantial deterrent function of the legislation. If drivers know they cannot be pulled over for smoking while driving, then what exactly is this legislation going to prevent? Its deterrent effect will be quite minimal, meaning that the estimates of accidents prevented and lives saved are completely overblown.

A quite interesting result from the AAA Foundation for Traffic Safety-sponsored study was that drivers who were smoking were more likely to have at least one hand on the steering wheel than drivers who were not smoking. While not smoking, 1.4% of drivers failed to have any hands on the wheel, while when smoking, only 0.8% of drivers failed to have any hands on the wheel. It was lighting or extinguishing a cigarette that seemed to impair driving performance: 3.6% of drivers failed to hold the steering wheel during that distraction.

But the proportion of drivers not holding the steering wheel was much higher with other activities: 7-8% for cell phone use; 5% for eating/drinking; 12% for grooming; 10% for manipulating vehicle controls; and 15% for reading or writing.

The study also found that driver performance was better for drivers who were smoking compared to those who were not: eye focus on the road was higher and the number of adverse vehicle events was lower. Again, lighting and extinguishing cigarettes was what was associated with impaired driver performance.

These results actually show that when smoking (but not in the process of lighting or extinguishing the cigarette), drivers are actually safer than when not smoking.

An evidence-based approach informed by the AAA-sponsored study would suggest that a far broader view of distracted driving is warranted and that any interventions to prevent distraction-related accidents should address not only the specific behavior but the effect of various aspects of the behavior on driver performance. The view that smoking is the primary driver distraction that needs government intervention just doesn't appear to be reasonable based on the data.

The rest of the story reveals that the attempt to ban smoking while driving is a misguided policy that ignores far greater causes of distraction-related accidents, will not actually prevent accidents, and represents a level of government intrusion into privacy rights that is not justified .

An Insider's Take on the DOJ Tobacco Trial: Don't Be Hasty in Accusations of Political Interference

Kenneth N. Bass, an attorney who formerly represented Brown & Williamson in the DOJ tobacco lawsuit but has subsequently left that case and the practice of Kirkland & Ellis, offers an insider's view of the events that occurred during the final days of the tobacco trial in a July 25 article published in the Legal Times Online.

The premise of Bass' opinion regarding the sudden change in the smoking cessation remedy from $130 billion to $10 billion is that "anti-tobacco activists, newspaper ediotrialists, and leading Democratic Party figures have called for an investigation into the DOJ's actions, and the DOJ inspector general has reportedly begun looking into the matter. Unfortunately, those same press reports ignored key facts that suggest a far more benign explanation for the DOJ's actions."

The most important of these facts is that "this new remedy (the $130 billion smoking cessation program) was practically dead on arrival...In Order No. 886, entered on Feb. 28, a clearly frustrated Judge Kessler wrote that while it would be 'premature' to rule out any of the government's nondisgorgement remedies, she was concerned that most of them read as if the appeals court had 'never written' its intervening decision. ... Yet the government went forward. The court repeatedly asked during the remedies phase, and then again in closing arguments, how the government could square the cessation program with the appellate ruling, but no one had a satisfactory answer."

According to Bass, then, the most plausible explanation for the government's change in course and for the intervention of senior DOJ officials, is that the request for the $130 billion remedy was a "train wreck" with no chance of being ordered or upheld, that the trial team lawyers wanted to stick to the $130 billion, and that senior officials therefore intervened to give the remedy at least a shot and insisted that the backwards-looking remedy be re-fashioned as a less expensive but more carefully tailored forwards-looking remedy.

Bass further argues that those lawyers who were not involved in the day-to-day court activities and were not so heavily vested in the weak testimony that supported the $130 billion remedy might have been in a better position to see the widest and most clear perspective on the case. If anything, Bass asks, why did it take so long for senior officials to intervene?

Finally, Bass argues that the changes requested in the expert testimony of two witnesses - Matthew Myers and Dr. Max Bazerman - were not the result of political intererence to protect the tobacco industry, but rather, were due to a concern that the Department not "embarrass" itself by having Myers' testimony, which Judge Kessler apparently called a "political speech," thrown out and to protect against Bazerman's testimony, which Kessler called "troubling on many grounds," from also being thrown out.

The Rest of the Story

To those who have been reading The Rest of the Story during the past seven weeks, Bass' arguments may sound familiar. That's because his impression of the case, from the inside, is exactly the same as my impression, from the outside.

In a June 10 post, entitled "IN MY VIEW: Don't Be Hasty in Accusations of Political Interference in DOJ Case," I wrote:

"Accusing the Administration and high-ranking DOJ officials of political interference certainly makes a nice story, but I think anti-smoking groups should be careful before jumping to conclusions about the reasons for the DOJ's reduction from $130 billion to $10 billion in the amount requested for a national smoking cessation program it proposes as a remedy should it prevail in the RICO-based lawsuit against the tobacco companies. ...

First, there is as yet no evidence that political interference indeed was the reason for the abrupt change in legal strategy. I think we in public health need to be more careful and to have better documentation before we make the kind of definitive accusatory statements that some anti-smoking groups have made. ...

Second, it makes no sense for the Administration or senior DOJ officials to intervene on behalf of the tobacco companies by demanding that the lawyers prosecuting the case present a more narrowly tailored remedy that has a greater chance of passing muster with the D.C. Court of Appeals. If anything, the Administration and senior DOJ officials could have hurt the case the most by allowing the statutorily unjustified request (at least in the view of the appellate court) to stand. ...

Asking for a $130 billion program to treat existing smokers in light of an appellate court decision that a RICO remedy has to be "forward-looking" is guaranteed to produce as a result a $0 billion program. Can it not be said that a program to treat existing smokers "is a quintessentially backward looking remedy focused on remedying the effects of past conduct to restore the status quo?" This is the exact language of the D.C. Court of Appeals decision against allowing disgorgement as a remedy. Under these constraints, a program to provide cessation services for existing smokers simply has no chance of prevailing, even if Judge Kessler were to ignore the appellate court ruling and issue such an order. ...

Now, before readers ask the question, let me address the clear evidence that the decision to change the requested remedy was thrust upon the trial lawyers from above. That seems clear. But that doesn't imply that it was a politically-motivated decision. It still could well have been a strategic decision, one based on an upper-level judgment that a remedy that is more consistent with the D.C. Court of Appeals' decision has a better chance of being upheld. Again, being familiar with the legal issues in the case, it just doesn't make sense for the Administration to intervene in this way as a means of "protecting" the tobacco companies from financial harm. The D.C. Court of Appeals has already done that."

Bass' comments are in particular accord with those made by a blogging commentator named "tobacco observer" in response to Gene Borio's post about the DOJ case events: "Now I agree that it is actually quite probable that someone higher up in the DOJ mandated this last minute change. But that’s probably because someone higher up and less close to the case could see the obvious. . .that the $130 billion request was absurd, has nothing whatever to do with RICO violations, and is exactly the same kind of thing that the DCCA said wasn’t allowed. Whomever made the decision probably realized that there was going to be no settlement negotiations, and was sick-and-tired of watching the gov’t get slapped around every single day in the courtroom on impermissible remedies, so they mandated this change as a tactical one (not a political one)."

None of this, by the way, means that Kenneth Bass, "tobacco observer," or I am right. It is still possible, and I am not ruling out the possibility that the decision was based purely on a political desire to protect the tobacco companies from financial harm. But I really don't think so. At very least, I do not see grounds to justify the vigorous definitive accusations of political interference and wrongdoing by a number of anti-smoking groups.

When I issued my initial opinion on this matter, I myself was roundly criticized and attacked by some very prominent members of the anti-smoking movement. In fact, I was called a "discredit" to the tobacco control movement, was attacked as having gone off the deep end, and was asked to take a 3-month hiatus from my writing on this issue. The attacks forced me to leave an anti-smoking list-serve that I had been a significant contributor to for the past four or five years.

But when all is said and done, the rest of the story suggests that at the present time, there is every bit as much reason to believe that the decision by DOJ's senior officials to force the trial team to re-fashion the smoking cessation remedy was a strategic one as there is to believe that it was a political one, and probably a whole lot more.