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Week Ending August 1, 2008

H.R.1108 To protect the public health by providing the Food and Drug Administration with certain authority to regulate tobacco products.

The bill would amend current law to allow for regulation of tobacco products by the FDA. The bill imposes disclosure, annual registration, inspection, record keeping and user fees on the industry. The user fees are generally expected to cover the cost of the bill.

In general, regulations shall consider scientific evidence concerning the risks and benefits to the population as a whole, the increased or decreased likelihood that existing users of tobacco products will stop using them and the increased or decreased likelihood those who do not use the products will start. Regulations may provide for the reduction or elimination of an additive or constituents based on the finding that they may be harmful. Any objections from the industry must come with evidence to the contrary.

Labeling, promotion, and sales of tobacco products

The new authority would look to determine if tobacco products are adulterated or misbranded and gives the Secretary of Agriculture authority to approve statements made on tobacco product labels. Labeling may be changed by the FDA including on smokeless tobacco products. Matchbooks containing not more than 20 matches and which are customarily given away with the purchase of a tobacco product are considered adult-written publications and are governed by labeling rules in regard to protecting the public health. Warnings on tobacco product packages may become more vivid.

The Secretary is also given the authority to restrict the sale of distribution of tobacco products to include advertising and promotion if it is determined that the regulation would be appropriate to protecting the public health. The authority does not extend to limiting product sales or distribution to a practitioner licensed to prescribe medical products, may not prohibit sales in face-to-face transactions in some retail outlets and may not establish a minimum purchasing age greater than 18 years of age.

Unreasonably harmful products may be recalled and pre-market approval of any new products must be done by the FDA. The Secretary is prohibited from banning all cigarettes, all smokeless tobacco products, all little cigars, all cigars other than little cigars, all pipe tobacco or all roll-your-own tobacco products and may not require the reduction of nicotine yields of a tobacco product to zero. The agency has the authority to reduce nicotine yields to levels considered non-addictive. The Secretary does have the authority to recall a product if it is determined that it contains a manufacturing or other defect not ordinarily contained in such products that would cause serious, adverse health consequences or death.

Additives-

Special rule for cigarettes

In three months a cigarette or any of its component parts shall not contain as a constituent of additive, an artificial or natural flavor or an herb or spice including strawberry, grape, orange, clove cinnamon, pineapple, vanilla, coconut. Licorice, cocoa, chocolate, cherry or coffee that is a characterizing flavor or the product or its smoke. The flavoring prohibitions aim to reduce the appeal of smoking to minors.

Sales to minors continues to be prohibited and any sales schemes other than face-to-face exchanges between a retailer and a consumer may face regulations to prevent the sale and distribution of tobacco products to minors. Provisions also oversee advertising to the extent of limiting color advertising to make the ads less attractive to youth.

No tobacco product may contain imported foreign grown tobacco that contains a level of any pesticide chemical residue in excess of maximums permitted in domestic tobacco or that was grown or processed using any pesticide chemical not approved under Federal law.

The addition of menthol additive is not included in the additive prohibitions but a decision on the health effects of menthol in cigarettes is ordered in one year.

Ultimately the Secretary will publish yearly a list of harmful tobacco products in plain English.

Manufacturer oversight and reporting

Manufacturing regulations requiring the methods used in and the facilities and controls used for the manufacturing, preproduction design validation, packing and storage of a tobacco product are authorized to conform to current good manufacturing practice or hazard analysis and critical control point methodology to assure the public health is protected. The regulations may provide for the testing of raw tobacco for pesticide chemical residues regardless of whether a tolerance has been established.

n six months tobacco product manufacturers, importers or agents must submit to the Secretary al list of all ingredients, including tobacco, substances, compounds, and additives that are added to the tobacco, paper, filter or other parts by brand and by quantity. Also to be reported is a description of the content, delivery, and form of nicotine in each tobacco product measured in milligrams of nicotine. In three years the report must include a list of all constituents, including smoking constituents identified by the Secretary as harmful or potentially harmful to health in each tobacco product. After six months the Secretary must receive all documents developed after enactment of this act that relate to health, toxicological, behavioral, or physiologic effects of current or future tobacco products, their ingredients, components and additives.

Tobacco companies must notify the Secretary in writing 90 days before adding a new additive or increases an existing additive. The Secretary must also be notified when an additive that is not a human or animal carcinogen is eliminated from a tobacco product.

Sponsor:  Rep. Henry Waxman (D-CA-30^th)

Vote: Passed House July 30, 2008 326 to 102 RC 542

Cost to the taxpayers:

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MORE INFORMATION

Findings

Dissenting Views

Section-by-section analysis

The Congress finds the following:

(1) The use of tobacco products by the Nation's children is a pediatric disease of considerable proportions that results in new generations of tobacco-dependent children and adults.

(2) A consensus exists within the scientific and medical communities that tobacco products are inherently dangerous and cause cancer, heart disease, and other serious adverse health effects.

(3) Nicotine is an addictive drug.

(4) Virtually all new users of tobacco products are under the minimum legal age to purchase such products.

(5) Tobacco advertising and marketing contribute significantly to the use of nicotine-containing tobacco products by adolescents.

(6) Because past efforts to restrict advertising and marketing of tobacco products have failed adequately to curb tobacco use by adolescents, comprehensive restrictions on the sale, promotion, and distribution of such products are needed.

(7) Federal and State governments have lacked the legal and regulatory authority and resources they need to address comprehensively the public health and societal problems caused by the use of tobacco products.

(8) Federal and State public health officials, the public health community, and the public at large recognize that the tobacco industry should be subject to ongoing oversight.

(9) Under article I, section 8 of the Constitution, the Congress is vested with the responsibility for regulating interstate commerce and commerce with Indian tribes.

(10) The sale, distribution, marketing, advertising, and use of tobacco products are activities in and substantially affecting interstate commerce because they are sold, marketed, advertised, and distributed in interstate commerce on a nationwide basis, and have a substantial effect on the Nation's economy.

(11) The sale, distribution, marketing, advertising, and use of such products substantially affect interstate commerce through the health care and other costs attributable to the use of tobacco products.

(12) It is in the public interest for Congress to enact legislation that provides the Food and Drug Administration with the authority to regulate tobacco products and the advertising and promotion of such products. The benefits to the American people from enacting such legislation would be significant in human and economic terms.

(13) Tobacco use is the foremost preventable cause of premature death in America. It causes over 400,000 deaths in the United States each year, and approximately 8,600,000 Americans have chronic illnesses related to smoking.

(14) Reducing the use of tobacco by minors by 50 percent would prevent well over 10,000,000 of today's children from becoming regular, daily smokers, saving over 3,000,000 of them from premature death due to tobacco-induced disease. Such a reduction in youth smoking would also result in approximately $75,000,000,000 in savings attributable to reduced health care costs.

(15) Advertising, marketing, and promotion of tobacco products have been especially directed to attract young persons to use tobacco products, and these efforts have resulted in increased use of such products by youth. Past efforts to oversee these activities have not been successful in adequately preventing such increased use.

(16) In 2005, the cigarette manufacturers spent more than $13,000,000,000 to attract new users, retain current users, increase current consumption, and generate favorable long-term attitudes toward smoking and tobacco use.

(17) Tobacco product advertising often misleadingly portrays the use of tobacco as socially acceptable and healthful to minors.

(18) Tobacco product advertising is regularly seen by persons under the age of 18, and persons under the age of 18 are regularly exposed to tobacco product promotional efforts.

(19) Through advertisements during and sponsorship of sporting events, tobacco has become strongly associated with sports and has become portrayed as an integral part of sports and the healthy lifestyle associated with rigorous sporting activity.

(20) Children are exposed to substantial and unavoidable tobacco advertising that leads to favorable beliefs about tobacco use, plays a role in leading young people to overestimate the prevalence of tobacco use, and increases the number of young people who begin to use tobacco.

(21) The use of tobacco products in motion pictures and other mass media glamorizes its use for young people and encourages them to use tobacco products.

(22) Tobacco advertising expands the size of the tobacco market by increasing consumption of tobacco products including tobacco use by young people.

(23) Children are more influenced by tobacco marketing than adults: more than 80 percent of youth smoke three heavily marketed brands, while only 54 percent of adults, 26 and older, smoke these same brands.

(24) Tobacco company documents indicate that young people are an important and often crucial segment of the tobacco market. Children, who tend to be more price sensitive than adults, are influenced by advertising and promotion practices that result in drastically reduced cigarette prices.

(25) Comprehensive advertising restrictions will have a positive effect on the smoking rates of young people.

(26) Restrictions on advertising are necessary to prevent unrestricted tobacco advertising from undermining legislation prohibiting access to young people and providing for education about tobacco use.

(27) International experience shows that advertising regulations that are stringent and comprehensive have a greater impact on overall tobacco use and young people's use than weaker or less comprehensive ones.

(28) Text only requirements, although not as stringent as a ban, will help reduce underage use of tobacco products while preserving the informational function of advertising.

(29) It is in the public interest for Congress to adopt legislation to address the public health crisis created by actions of the tobacco industry.

(30) The final regulations promulgated by the Secretary of Health and Human Services in the August 28, 1996, issue of the Federal Register (61 Fed. Reg. 44615-44618) for inclusion as part 897 of title 21, Code of Federal Regulations, are consistent with the first amendment to the United States Constitution and with the standards set forth in the amendments made by this subtitle for the regulation of tobacco products by the Food and Drug Administration, and the restriction on the sale and distribution of, including access to and the advertising and promotion of, tobacco products contained in such regulations are substantially related to accomplishing the public health goals of this Act.

(31) The regulations described in paragraph (30) will directly and materially advance the Federal Government's substantial interest in reducing the number of children and adolescents who use cigarettes and smokeless tobacco and in preventing the life-threatening health consequences associated with tobacco use. An overwhelming majority of Americans who use tobacco products begin using such products while they are minors and become addicted to the nicotine in those products before reaching the age of 18. Tobacco advertising and promotion play a crucial role in the decision of these minors to begin using tobacco products. Less restrictive and less comprehensive approaches have not and will not be effective in reducing the problems addressed by such regulations. The reasonable restrictions on the advertising and promotion of tobacco products contained in such regulations will lead to a significant decrease in the number of minors using and becoming addicted to those products.

(32) The regulations described in paragraph (30) impose no more extensive restrictions on communication by tobacco manufacturers and sellers than are necessary to reduce the number of children and adolescents who use cigarettes and smokeless tobacco and to prevent the life-threatening health consequences associated with tobacco use. Such regulations are narrowly tailored to restrict those advertising and promotional practices which are most likely to be seen or heard by youth and most likely to entice them into tobacco use, while affording tobacco manufacturers and sellers ample opportunity to convey information about their products to adult consumers.

(33) Tobacco dependence is a chronic disease, one that typically requires repeated interventions to achieve long-term or permanent abstinence.

(34) Because the only known safe alternative to smoking is cessation, interventions should target all smokers to help them quit completely.

(35) Tobacco products have been used to facilitate and finance criminal activities both domestically and internationally. Illicit trade of tobacco products has been linked to organized crime and terrorist groups.

(36) It is essential that the Food and Drug Administration review products sold or distributed for use to reduce risks or exposures associated with tobacco products and that it be empowered to review any advertising and labeling for such products. It is also essential that manufacturers, prior to marketing such products, be required to demonstrate that such products will meet a series of rigorous criteria, and will benefit the health of the population as a whole, taking into account both users of tobacco products and persons who do not currently use tobacco products.

(37) Unless tobacco products that purport to reduce the risks to the public of tobacco use actually reduce such risks, those products can cause substantial harm to the public health to the extent that the individuals, who would otherwise not consume tobacco products or would consume such products less, use tobacco products purporting to reduce risk. Those who use products sold or distributed as modified risk products that do not in fact reduce risk, rather than quitting or reducing their use of tobacco products, have a substantially increased likelihood of suffering disability and premature death. The costs to society of the widespread use of products sold or distributed as modified risk products that do not in fact reduce risk or that increase risk include thousands of unnecessary deaths and injuries and huge costs to our health care system.

(38) As the National Cancer Institute has found, many smokers mistakenly believe that `low tar' and `light' cigarettes cause fewer health problems than other cigarettes. As the National Cancer Institute has also found, mistaken beliefs about the health consequences of smoking `low tar' and `light' cigarettes can reduce the motivation to quit smoking entirely and thereby lead to disease and death.

(39) Recent studies have demonstrated that there has been no reduction in risk on a population-wide basis from `low tar' and `light' cigarettes, and such products may actually increase the risk of tobacco use.

(40) The dangers of products sold or distributed as modified risk tobacco products that do not in fact reduce risk are so high that there is a compelling governmental interest in ensuring that statements about modified risk tobacco products are complete, accurate, and relate to the overall disease risk of the product.

(41) As the Federal Trade Commission has found, consumers have misinterpreted advertisements in which one product is claimed to be less harmful than a comparable product, even in the presence of disclosures and advisories intended to provide clarification.

(42) Permitting manufacturers to make unsubstantiated statements concerning modified risk tobacco products, whether express or implied, even if accompanied by disclaimers would be detrimental to the public health.

(43) The only way to effectively protect the public health from the dangers of unsubstantiated modified risk tobacco products is to empower the Food and Drug Administration to require that products that tobacco manufacturers sold or distributed for risk reduction be reviewed in advance of marketing, and to require that the evidence relied on to support claims be fully verified.

(44) The Food and Drug Administration is a regulatory agency with the scientific expertise to identify harmful substances in products to which consumers are exposed, to design standards to limit exposure to those substances, to evaluate scientific studies supporting claims about the safety of products, and to evaluate the impact of labels, labeling, and advertising on consumer behavior in order to reduce the risk of harm and promote understanding of the impact of the product on health. In connection with its mandate to promote health and reduce the risk of harm, the Food and Drug Administration routinely makes decisions about whether and how products may be marketed in the United States.

(45) The Federal Trade Commission was created to protect consumers from unfair or deceptive acts or practices, and to regulate unfair methods of competition. Its focus is on those marketplace practices that deceive or mislead consumers, and those that give some competitors an unfair advantage. Its mission is to regulate activities in the marketplace. Neither the Federal Trade Commission nor any other Federal agency except the Food and Drug Administration possesses the scientific expertise needed to implement effectively all provisions of the Family Smoking Prevention and Tobacco Control Act.

(46) If manufacturers state or imply in communications directed to consumers through the media or through a label, labeling, or advertising, that a tobacco product is approved or inspected by the Food and Drug Administration or complies with Food and Drug Administration standards, consumers are likely to be confused and misled. Depending upon the particular language used and its context, such a statement could result in consumers being misled into believing that the product is endorsed by the Food and Drug Administration for use or in consumers being misled about the harmfulness of the product because of such regulation, inspection, approval, or compliance.

(47) If manufacturers are permitted to state or imply in communications directed to consumers that a tobacco product is approved or inspected by the Food and Drug Administration or complies with Food and Drug Administration standards, consumers are likely to be confused and misled. Such a statement could result in consumers being misled into believing that the product is endorsed by the Food and Drug Administration for use or in consumers being misled about the harmfulness of the product because of such regulation, inspection, or compliance.

(48) In August 2006 a United States district court judge found that the major United States cigarette companies continue to target and market to youth. USA v Philip Morris, USA, Inc., et al. (Civil Action No. 99-2496 (GK), August 17, 2006).

(49) In August 2006 a United States district court judge found that the major United States cigarette companies dramatically increased their advertising and promotional spending in ways that encourage youth to start smoking subsequent to the signing of the Master Settlement Agreement in 1998. USA v Philip Morris, USA, Inc., et al. (Civil Action No. 99-2496 (GK), August 17, 2006).

(50) In August 2006 a United States district court judge found that the major United States cigarette companies have designed their cigarettes to precisely control nicotine delivery levels and provide doses of nicotine sufficient to create and sustain addiction while also concealing much of their nicotine-related research. USA v Philip Morris, USA, Inc., et al. (Civil Action No. 99-2496 (GK), August 17, 2006).

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DISSENTING VIEWS

Forcing the Food and Drug Administration (FDA) to regulate tobacco products--products that will never qualify as `safe and effective'--could have significant negative impacts on all Americans. This Congress, and specifically this Committee, has spent a great deal of time investigating the ways in which the FDA has been unable to fulfill its core mission. Therefore, we are concerned that burdening the FDA with added responsibilities outside of the agency's expertise and core missions at this time will have dire consequences for the American people and the FDA's ability to ensure the safety and efficacy of our nation's food, drugs, and medical devices.

If enacted, this legislation significantly curtails, if not entirely eliminates, incentives to develop and market products that reduce exposure to tobacco toxicants. In order to obtain approval of a modified-risk product, an applicant must demonstrate that the marketing and labeling of the product will not mislead consumers into believing that the product is or has been demonstrated to be less harmful. Further, it has to be demonstrated that the product reduces risk for both the individual and for the population as a whole. It is unlikely that such a standard could ever be proven. The legislation provides no incentives to manufacturers to research and develop reduced-risk products, and the requirement forcing companies to turn over all research to the FDA--whether used in reduced-risk product development or not--is a significant hindrance to the development of modified-risk products.

The standard for approval of modified-risk products is unclear in H.R. 1108, which will create, at best, ambiguities for applicants in the standards that must be met or, at worst, product standards that can never be achieved, thus eliminating modified-risk products coming to market.

We are also opposed to the annual tax assessments placed on the manufacturers added to this bill during the markup. Manufacturers will be assessed $754.72 million by 2018, yet FDA will only be allowed to spend $712 million directly on tobacco regulation. Claiming that a tax is a user fee does not change the fact that it is a tax. The remaining $42.72 million is required to eliminate the `pay-go' problem that will result from lower tax collections in other areas once this bill is enacted.

On April 17, 1997, Chairman Bill Archer succinctly explained the various factors that determine whether an assessment should be considered a tax or fee based on well-established precedent in the House of Representatives. In his statement, Chairman Archer explained the four criteria generally used: (i) The fees are assessed and collected solely to cover the costs of specified regulatory activities; (ii) The fees are assessed and collected only in such manner as may reasonably be expected to result in an aggregate amount collected during any fiscal year which does not exceed the aggregate amount of the regulatory costs referred to in (i) above; (iii) The only persons subject to the fees are those who directly avail themselves of, or are directly subject to, the regulatory activities referred to in (i) above; and (iv) The amounts of the fees (a) are structured such that any person's liability for such fees is reasonably based on the proportion of the regulatory activities which relate to such person, and (b) are nondiscriminatory between foreign and domestic entities.

Clearly the assessments created under H.R. 1108 are taxes and not fees. The second prong of the test is clearly violated because the legislation does envision that the aggregate amount of fees collected during any fiscal year will exceed the aggregate amount of the regulatory costs.

H.R. 1108 will limit competition, and provide essentially a monopoly to the largest companies operating today. In doing so, smaller companies will be denied competitive opportunities within the market, because the barriers to entry are just too high. This legislation provides the unintended consequence of creating monopolies within the market. Section 906 could allow the FDA to create a virtual monopoly in the tobacco market by creating tobacco product standards that only a few of the well-capitalized companies have the resources to achieve. The regressive nature of excise taxes, as well as the price increases that accompany monopolistic behavior, will impact low-income Americans the hardest.

If the FDA is forced to regulate tobacco products, this legislation calls for the immediate codification of regulations that were drafted over twelve years ago. The regulations issued in 1996 were promulgated under the premise that cigarettes were medical devices. This legislation would not regulate cigarettes as medical devices but rather creates a new category of tobacco products with separate regulatory requirements. Since 1996, the Master Settlement Agreement has been executed and various other State regulations have been enacted with respect to marketing, advertising, and tobacco use. We believe that it is poor public policy to not revisit the regulations and take the time to better understand how the current regulations those manufacturers are operating under and then update the language as necessary.

We also believe that the marketing provisions of H.R. 1108 are violative of the First Amendment. Section 102 of the bill directs the Secretary of Health and Human Services to publish an interim final rule that is `identical in its provisions' to the proposed rule promulgated by the FDA in 1996. Numerous legal experts have stated that the broad restrictions in that proposal are in effect a de facto ban on tobacco advertising, and violate the First Amendment. In fact, the U.S. Supreme Court held in Lorillard Tobacco Co. v. Thomas Reilly, Attorney General of Massachusetts, 533 U.S. 525 (2001) that a Massachusetts tobacco regulation that was virtually identical to one part of the FDA 1996 proposal was unconstitutional.

The effect of the various proposals in H.R. 1108 is a suspension of the ability to advertise tobacco products to adults, violating the First Amendment protections for commercial speech. The U.S. Supreme Court has emphasized repeatedly, including the landmark Central Hudson case, Central Hudson Gas & Electric v. Public Service Commission, 447 U.S. 557 (1980) that truthful, nondeceptive commercial speech cannot be banned or restricted unless the restriction `directly and materially advances' a `substantial governmental interest' and is `narrowly tailored' to `reasonably fit' that interest.

Finding 30 in the legislation states that the final regulations issued on August 20, 1996 are consistent with the First Amendment. Finding 31 states the regulations described in Finding 30 `will directly and materially advance the federal government's substantial interest in reducing the number of children and adolescences who use cigarettes and smokeless tobacco and in preventing the life-threatening health consequences associated with tobacco use.'

These findings attempt to address the Constitutional test the Supreme Court developed in the Central Hudson case for determining if restrictions on commercial speech violate the First Amendment. One prong of the test is the restriction must be to advance a compelling government interest. The Central Hudson test also has a prong that states the restrictions be `narrowly tailored' to `reasonably fit' that interest. Finding 31 states that `less restricting and less comprehensive approaches have not and will not be effective in reducing the problems addressed by such regulations.' Again, the authors of the bill try to preempt Constitutional questions of the legislation by reciting findings designed to answer the Constitutional test of Central Hudson. However, Finding 31 is not based in fact and clearly ignores the fact that youth smoking has declined dramatically since the Master Settlement Agreement. A 2006 University of Michigan study has shown youth smoking rates have declined from over 28% in 1997 to less than 15% in 2006. Additionally, the rate of youths being able to purchase cigarettes in stores has dropped dramatically since the imposition of the Synar Amendment in 1996.

Many members of the Committee would have supported further steps to require states to use more of their Master Settlement Agreement funds to combat underage smoking and promote smoking cessation while also strengthening the Synar Amendment on the underage purchasing of cigarettes. Such steps would have been narrowly tailored to achieve the government interest without imposing clearly unconstitutional restrictions of the First Amendment. Unfortunately, H.R. 1108 was drafted in a manner that would have made such amendments non-germane during Committee consideration of the legislation.

The Majority understands the violative nature of many of the provisions in the legislation and thus included a severability clause to allow some parts of the bill to stand with the presumption that others would be struck down by the courts. In fact, in the Lorillard case, the Supreme Court struck down a regulation promulgated by the Attorney General of Massachusetts that was similar in many respects to the FDA's proposed rule. The Massachusetts regulation banned outdoor ads within 1,000-feet of schools, parks and playgrounds and also restricted point-of-sale advertising for tobacco products.

In finding that the Massachusetts regulation was not narrowly tailored, Justice Sandra Day O'Connor actually noted a similar problem with the FDA regulation:

First, the Attorney General did not seem to consider the impact of the 1,000-foot restriction on commercial speech in major metropolitan areas. The Attorney General apparently selected the 1,000-foot distance based on the FDA's decision to impose an identical 1,000-foot restriction when it attempted to regulate cigarette and smokeless tobacco advertising. The FDA's regulations would have had widely disparate effects nationwide. Even in Massachusetts, the effect of the Attorney General's speech regulations will vary based on whether a locale is rural, suburban, or urban. The uniformly broad sweep of the geographical limitation demonstrates a lack of tailoring.

In more recent commercial speech cases, the Supreme Court has substantially raised the bar government regulators need to hurdle to impose restrictions on advertising. Justice O'Connor, speaking for the majority of the court, for example, in Thompson v. Western States Medical Center, 535 U.S. 357 (2002), stated, `If the First Amendment means anything, it means that regulating speech must be a last--not first--resort.'

The government has a legitimate interest in protecting minors from the use of tobacco products. The proposed advertising regulations in H.R. 1108, however, are over broad and impermissibly restrictive. They are clearly unconstitutional.
JOE BARTON.
STEVE BUYER.
JOSEPH R. PITTS.
MARSHA BLACKBURN.
NATHAN DEAL.
GEORGE RADANOVICH.
JOHN SULLIVAN.

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SECTION BY SECTION ANALYSIS

TITLE I. AUTHORITY OF THE FOOD AND DRUG ADMINISTRATION

Section 101. Amendment of Federal Food, Drug, and Cosmetic Act

Chapter IX (in the FFDCA)--Tobacco products

The bill creates a new chapter within the FFDCA to regulate tobacco products.

Section 900. Definitions

Section 900 defines the following terms: additive; brand; cigarette; cigarette tobacco; commerce; counterfeit tobacco product; distributor; illicit trade; Indian tribe; little cigar; nicotine; package; retailer; roll-your-own tobacco; small tobacco product manufacturer; smoke constituent; smokeless tobacco; State, territory; tobacco product manufacturer; tobacco warehouse; and United States.

The Committee notes that `small tobacco product manufacturer' (STPM) is defined. The Committee believes that an entity that qualifies as an STPM has access to fewer economic resources and, therefore, needs the special considerations provided for STPMs in certain portions of the Act [e.g., Sec. 901(f) and Sec. 906(e)(1)(B)(v)]. Accordingly, the term `employees' includes not only those persons considered employees under labor or tax laws, but also any other person working full-time for a manufacturer doing the work of a regular employee (e.g., under a services contract or consulting agreement). Without this understanding of the term `employee,' some manufacturers would be able to qualify wrongfully as STPMs by replacing a number of their formal employees with consultants or contract workers or by changing their relationships with existing workers from a formal employer-employee relationship to an independent contractor relationship. The Food and Drug Administration should review annually the documentation of any company that qualifies as a small manufacturer to ensure that the number of its employees, taking into account employees of each entity it controls, is controlled by or is under common control, does not exceed 350. For purposes of determining the number of employees under the preceding sentence, the employees of a company that owns, has a substantial ownership interest in, or is owned by such manufacturer shall be included.

Section 901. FDA authority over tobacco products

Section 901(c) limits the scope of FDA's authority to regulate manufacturers of tobacco products, making clear that FDA does not have the authority to regulate tobacco growers. If a producer of tobacco leaf, however, is also a tobacco product manufacturer, the producer shall be subject to regulation in the producer's capacity as a manufacturer. The Committee notes that the phrase `in the producer's capacity as a manufacturer' refers to the actual process of manufacturing a tobacco product. While it covers a tobacco cooperative that operates as a tobacco product manufacturer, it does not refer to a tobacco producer who merely sells raw tobacco to a tobacco cooperative which operates a tobacco product manufacturing facility or to a tobacco producer who merely serves on the board of directors of such a cooperative.

Section 901(e) directs FDA to establish a separate Center for Tobacco Products.

Section 901(f) directs FDA to establish an Office to Assist Small Manufacturers of Tobacco Products to provide technical assistance to small manufacturers in complying with the requirements of this Act.

Section 902. Adulterated tobacco products

Section 902 lays out guidelines for determining whether tobacco products are adulterated. Filthy, decomposed, or otherwise contaminated substances in tobacco products, the preparation of such products, or the packaging of such products will cause them to be deemed adulterated. Tobacco products held under unsanitary conditions or manufactured, packed, or stored in violation of good manufacturing practices will likewise be deemed adulterated. A tobacco product will also be deemed adulterated if the manufacturer of it fails to pay required user fees, if it does not meet the product standards established for the product, or if the product is required to have premarket review and an order in effect under section 910 or to have an order in effect as a modified risk product under section 911 and does not have such an order in effect.

Section 903. Misbranded tobacco products

Section 903(a) states that tobacco products will be deemed misbranded if their label is false or misleading, if they are not correctly labeled (e.g., with the percentage of domestically grown versus foreign tobacco, proper warning labels, the name of the manufacturer, or in accordance with other requirements of the Secretary) or advertised, or if the manufacturing, distribution, or selling of the product does not comply with other parts of the Act.

Section 903(b) provides that the Secretary is specifically authorized to require prior approval of statements made on the label of a tobacco product.

Section 904. Submission of health information to the Secretary

Section 904(a) requires, within six months of passage, submission to the Secretary by brand and quantity of ingredients, compounds, substances, and additives that are added to the tobacco, paper, filter, or other part of the tobacco product. This section also requires a description of the content, delivery, and form of nicotine, as well as documents developed after enactment that relate to health, toxicological, behavioral, or physiologic effects of tobacco products. This information is required of all current tobacco products as well as any tobacco products introduced after enactment. Further, three years after enactment, a list of constituents, including smoke constituents, identified by the Secretary as harmful or potentially harmful, is required to be submitted to the Secretary.

Section 904(b) provides the Secretary with the authority to request documents and information relating to research activities and findings, scientific information on reduced risk products/technology, and marketing research. This provision applies to both foreign and domestic manufacturers.

Section 904(c) requires a written notice to the Secretary at least 90 days prior to marketing if a tobacco manufacturer adds a new additive to their product or increases the amount of an additive. This section requires a written notice to the Secretary at least 60 days prior to marketing if a tobacco manufacturer eliminates or decreases an existing additive.

Section 904(d)(1) requires within three years of passage, and annually thereafter, the Secretary must publish in an easily available and understood format a list of harmful and potentially harmful constituents in each brand.

Section 904(d)(2) requires the Secretary to also conduct consumer research to ensure that publication of the list is not misleading to lay persons. After 5 years, the Secretary must report to Congress on the results of the consumer research, and provide a recommendation on whether or not publication of the list should continue or be modified.

Section 905. Annual registration

Section 905 requires registration of every entity that owns or operates in any State any establishment engaged in the manufacture, preparation, compounding, or processing of tobacco products. The same requirement extends to foreign establishments. At the time of this registration, a listing is required of all tobacco products, which are being manufactured, prepared, compounded, or processed. Once registered, every establishment is subject to an inspection once every two years.

Section 905(e) allows the Secretary to create a uniform system for identification of tobacco products.

Section 905(j) requires a report to the Secretary 90 days prior to the introduction of a new tobacco product demonstrating that the product is substantially equivalent to a tobacco product already on the market and therefore not subject to premarket review. If the new product is not substantially equivalent to a product already on the market, the new product must be reviewed pursuant to Section 910. Section 905(j) requires reports on products first marketed between February 16, 2007, and 21 months after enactment. Additionally, section 905(j) authorizes the Secretary to issue regulations creating exemptions from premarket notification for minor modifications of existing products or where otherwise appropriate.

Section 906. General provisions respecting control of tobacco products

Section 906(b) provides for notice and comment rulemaking.

Section 906(c) ensures limited confidentiality of certain information reported to the Secretary. Section 906(d) authorizes the Secretary to issue regulations restricting the sale and distribution of tobacco products, including access to, advertising, and promotion of tobacco products, if the Secretary determines that the regulations would be appropriate to protect the public health, taking into account factors specified in the provision.

Advertising and promotion restrictions are permitted to the full extent consistent with the First Amendment. The Committee notes Section 906(d) authorizes the Secretary to impose restrictions on the advertising and promotion of tobacco products within retail establishments that limit admittance to persons over age 18 where the Secretary finds that such restrictions would be `appropriate for the protection of the public health,' based on the factors laid out in Section 906(d)(1)(A) and (B), and where consistent with the First Amendment to the Constitution.

Section 906(d) does not permit the Secretary to prohibit the face-to-face sale of any tobacco product by a specific category of retail outlets, or to establish a national minimum age of greater than 18 years to purchase tobacco products. Section 906(d) requires the Secretary, however, to regulate the sale, distribution, promotion, and marketing of tobacco products that are sold through means other than a direct, face-to-face exchange. Section 906(d) permits advertising on conventional matchbooks to the extent permitted in adult publications, unless the Secretary determines that such treatment of matchbooks is not appropriate for the protection of the public health.

Section 906(e) allows for regulations requiring that tobacco products conform to specified good manufacturing practices or hazard analysis and critical control point methodology (with input from the public and interested parties, and from the Tobacco Products Scientific Advisory Committee). This section exempts small tobacco manufacturers from the above requirements for at least four years following the effective date of the Secretary's regulation. Section 906(e)(2) provides for a petition process for a temporary or permanent exemption or variance from the regulation.

Section 907. Tobacco product standards

Consistent with the overall intent of the bill to reduce the number of children and adolescents who smoke cigarettes, section 907(a)(1) is intended to prohibit the manufacture and sale of cigarettes with certain `characterizing flavors' that appeal to youth. Examples of these products include, but are not limited to, those introduced in recent years such as `Mandalay Lime,' `Warm Winter Toffee,' `Mocha Taboo,' and `Midnight Berry,' which were the subject of an investigation and subsequent settlement agreement between one cigarette manufacturer and the Attorneys General of 40 States in October 2006.

Accordingly, this section prohibits the use of any constituent or additive that causes a cigarette or its smoke to have a characterizing flavor other than menthol or tobacco. Section 907(a)(1) is not intended to prohibit the use of specific ingredients, including those found in some American blend cigarettes, so long as those additives or constituents are not a characterizing flavor (other than tobacco or menthol) of the cigarette or its smoke. A cigarette (including any component of the cigarette) or its smoke should not be determined to have a prohibited characterizing flavor based solely on the presence of an ingredient in the product or its smoke.

The Committee recognizes the unique issues surrounding menthol cigarettes and urges the Secretary to address these issues as quickly as practicable. The Committee is especially concerned about proportionately higher rates of menthol cigarette use among African American smokers, as well as the historic targeting of African Americans for menthol cigarette use by tobacco companies. While it is unclear what effect the presence of menthol in cigarettes may have on addictiveness, toxicity, or other qualities of cigarettes, the Committee recognizes that menthol cigarettes may pose unique health risks to those who smoke them. Given the high rates of use among African American smokers, including African American youth, as well as higher rates of lung cancer documented among African American smokers as compared to non-African American smokers, the Committee believes that it is critical for the Secretary to move quickly to address the unique public health issues posed by menthol cigarettes.

Menthol cigarettes currently represent over one quarter of all cigarettes smoked in the United States, representing more than 12 million individual smokers. Additionally, nearly 7 in 10 African Americans who smoke choose to smoke menthol cigarettes. Given the number of open questions related to menthol cigarettes, the legislation authorizes the Secretary to ban or modify the use of menthol in cigarettes based on scientific evidence. Given the large number of Americans who smoke menthol, the disproportionate prevalence of menthol cigarettes among African Americans, the racial and ethnic differences in lung cancer incidence, and the uncertainty about the potentially negative consequences of an immediate menthol ban, the Committee believes that this approach ensures that FDA has the scientific evidence necessary to make the best decisions to protect the public health.

Section 907 allows the Secretary to adopt, through notice and comment rulemaking, a product standard for tobacco products if the Secretary determines that such standard is appropriate for the protection of the public health. `Appropriate for the protection of public health' is used because tobacco products are not `safe' or `safe and effective,' the standards used by FDA for foods, drugs, and medical devices. The public health standard is intended to be a flexible standard that focuses on the overall goal of reducing the number of individuals who die or are harmed by tobacco products. Standard(s) could include provisions to alter nicotine yields, to reduce or eliminate other constituents or harmful components, or other aspects of the construction, constituents, properties, and labeling of the tobacco product.

Section 907 (a)(3) provides that the Secretary may adopt a tobacco product standard if the Secretary finds that it is appropriate for the protection of the public health. Section 907(a)(3)(B) sets forth certain considerations with respect to that finding and additional considerations with respect to a standard that would reduce or eliminate an additive, constituent (including a smoke constituent), or other component of a tobacco product. In the event that the Secretary has proposed the adoption of such a standard because the Secretary has found that the additive, constituent, or other component is or may be harmful, an objecting party may, in response to such finding, provide for the Secretary's consideration scientific evidence that demonstrates that the proposed standard will not reduce or eliminate the risk of illness or injury. In issuing a final standard as with any rulemaking, the Secretary shall review and consider all information and scientific evidence and data, presented by any party that comments on the proposed standard, including any information, evidence, or other documentation that is submitted concerning the population impact or any other matter related to the proposed standard. The Committee intends that the Secretary will base his or her determinations on sound information and scientific evidence and data when issuing the proposed standard that is appropriate for the protection of the public health.

The Committee also intends for the agency to have authority to establish product standards regarding the testing and measurement of products, nicotine yields, constituents, construction, components, ingredients, additives, and all other properties of the tobacco product, including the form and content of the labeling. This authority is limited in 907(d)(3) to prohibit FDA from banning all cigarettes, all smokeless tobacco products, all little cigars, all cigars, all pipe tobacco, or all `roll your own' tobacco products, or requiring the reduction of nicotine levels to zero.

It is the Committee's intent that there be a level playing field between domestic tobacco growers and foreign tobacco growers with regard to the development and implementation of any tobacco product standard. No manufactured tobacco product shall contain foreign tobacco that contains a pesticide that is not approved under applicable Federal law for use in domestically grown tobacco. No manufactured tobacco product shall contain foreign tobacco that was grown or processed using an approved pesticide in a manner inconsistent with the approved labeling for use of the pesticide in domestic tobacco farming and processing.

The Secretary is required to review periodically the product standards, taking into consideration new medical, scientific, or other technological data. In creating rules, the Secretary is required to consult with other Federal agencies and invite appropriate persons to provide their input before issuing a rule. The Secretary may also refer a proposed rule to the Tobacco Products Scientific Advisory Committee for collecting additional data and creating a report on the issue, which would then be made public.

Section 908. Notification and other remedies

Section 908(a) provides authority for the Secretary to give notice (e.g., through public service announcements) if a tobacco product presents an `unreasonable risk of substantial harm', and notification is necessary and the most practicable means available to eliminate the unreasonable risk.

Section 908(c) authorizes the Secretary to recall a tobacco product, after an opportunity for an informal hearing, if the product contains a manufacturing or other defect that would cause serious adverse health consequences or death and is not ordinarily contained in tobacco products on the market.

Section 909. Records and reports on tobacco products

Section 909(a) requires tobacco manufacturers and importers to establish and maintain records and submit them to the Secretary, if required by the Secretary by regulation, to ensure that tobacco products are not adulterated or misbranded.

Section 909(a) allows the Secretary to also require manufacturers and importers to report serious unexpected adverse reactions caused by the use of a tobacco product. The Secretary may also require the reporting of other significant adverse reactions, if necessary, and of actions taken to correct or remove products from the market when undertaken to reduce a health risk.

Section 909(a) states that reports required under this section shall not be unduly burdensome, nor require the disclosure of the identity of patients or users unless required for reasons specified in the provision.

Section 910. Application for review of certain tobacco products

Section 910(a) requires premarket review for all new tobacco products entering the market, unless the Secretary determines that the product is substantially equivalent to an existing product. Section 910(a) defines substantial equivalence to mean that the product has the same characteristics as a marketed product, or has different characteristics, but does not raise different public health questions. Section 910(a)(4) specifies information that must be provided under section 905(j) to establish substantial equivalence, including detailed information on adverse health effects, and provides that such information be made public within 30 days of a determination of substantial equivalence.

Section 910(b) requires an application for premarket review to contain all information published, known, or which should reasonably be known, to the applicant concerning studies on the health risks of the product. The application also must contain a listing of components, ingredients, and composition of products; how the product is operated or used; a description of the methods used to manufacture or produce the product; and samples of the product and the product's proposed labeling. The Secretary may refer the application to the Tobacco Products Advisory Committee.

Section 910(c) requires the Secretary, within 180 days, to make a determination of whether to allow the new product to enter the market or deny the application. The Secretary may deny the application if the Secretary finds that the applicant has not shown that marketing of the product would be appropriate for the protection of the public health, or if the Secretary finds that the making and handling of the product do not conform to good manufacturing practices, the labeling is false or misleading, or the product fails to conform to an applicable product standard promulgated under section 907 without justification.

Section 910(d) provides the Secretary authority to withdraw or suspend an order pertaining to a new product for a number of reasons, including that continued marketing is no longer appropriate for the protection of public health; the application contained a materially false statement; the applicant has failed to maintain records or make reports; the labeling becomes false or misleading; or the product does not conform to a tobacco standard without appropriate justification. Section 910(f) authorizes the Secretary to require the maintenance of records and the making of reports as necessary to permit the Secretary to determine whether to withdraw or suspend the order pertaining to a new product.

Section 911. Modified risk tobacco products

Section 911 prohibits a person from selling or distributing a modified-risk tobacco product without having obtained an order pertaining to the product from FDA. Section 911(b) specifically defines the sale or distribution of these products to include labeling or advertising that states or implies that the product presents a reduced risk of harm or of tobacco-related disease, or that there is reduced exposure to a substance, or that uses the words `light', `mild', or `low', or similar descriptors. This definition also includes any action taken by the manufacturer after passage of the legislation directed to consumers through the media or otherwise, other than by means of the tobacco product's label, labeling, or advertising, which would be reasonably expected to result in consumers believing that the tobacco product or its smoke may present a lower risk of disease, lower exposure to a substance, or is less harmful.

Section 911(b)(2)(C) makes clear that the use of the following phrases on the label or advertising for a product does not constitute a reduced-harm claim: `smokeless tobacco'; `smokeless tobacco product'; `not consumed by smoking'; `does not produce smoke'; `smokefree'; `smoke-free'; `without smoke'; `no smoke'; or `not smoke'. Products intended for use in the treatment of tobacco dependence are not modified-risk tobacco products and are subject to Chapter V of the FFDCA.

Section 911(d) also outlines the specific requirements that tobacco manufacturers must meet before receiving an order permitting the sale or distribution of modified-risk tobacco products. An application for such an order must include a description of the product; the conditions for using the product with respect to the claim; formulation of the product; sample labels; all documents relating to research regarding the product (e.g., effect on tobacco-related diseases and other health-related conditions); data on how consumers actually use the product; and any other information required by the Secretary. Section 911(e) requires the Secretary to make the application and all of its contents (except trade secrets and confidential commercial information) public and seek public comment. The application must be referred to the Tobacco Products Advisory Committee for its recommendations.

Section 911(g)(1) states that the Secretary shall issue an order that a product may be commercially marketed. This order shall be issued only if the Secretary determines that the applicant has demonstrated that the product will significantly reduce harm and the risk of tobacco-related disease to individual users, and benefit the health of the population as a whole.

Section 911(g)(2) creates a special rule for allowing the sale and distribution of certain products, if the Secretary determines that (1) it would be appropriate for the protection of the public health; (2) the product's label, labeling, or advertising explicitly or implicitly claims only that the product contains a reduced level of a substance, or presents a reduced exposure to a substance; (3) scientific evidence of reduced harm is not, or cannot be made, available, using the best available scientific methods and cannot be made available without conducting long-term epidemiological studies; (4) such data as currently exists predicts substantially reduced morbidity or mortality among individual tobacco users; (5) the magnitude of the overall reductions in exposure to such substances is substantial and will not expose users to higher levels of other harmful substances; and (6) testing of actual consumer perceptions shows that consumers will not be misled into believing that the product is or has been demonstrated to be less harmful or presents less of a risk than one or more other commercially marketed tobacco products. These products are limited to a distribution term of 5 years, but that term may be renewed.

Section 911(h) states that the Secretary may require a manufacturer of a modified-risk product subject to an order under this section to comply with requirements relating to labeling, advertising, and promotion of the tobacco product, and the Secretary must require postmarket surveillance.

Section 911(h) states the Secretary has discretion to require that a modified-risk tobacco product making a comparative claim compare the tobacco product to a commercially marketed tobacco product that is representative of that type of tobacco product on the market (e.g. the average value of the top three brands). The Secretary may also require quantitative comparisons of the amount of the substance reduced. This information must be placed near the most prominent claim.

Section 911(j) states that the Secretary may withdraw the order pertaining to a modified risk product if: he or she can no longer make the findings on which the order was based; the application contained a material false statement; product representations about reduced risk or exposure are no longer valid; the applicant failed to conduct required postmarket studies and surveillance; or the applicant failed to meet any other condition of the order.

Section 911(l) requires the Secretary, within 2 years after enactment, to issue guidance or regulations on the scientific evidence required for assessment and ongoing review of modified-risk tobacco products. The regulations or guidance shall be developed by the Secretary in consultation with the Institute of Medicine (IOM).

Section 912. Judicial review

Section 912 states that any person adversely affected by an FDA regulation relating to performance standards or premarket review may, within 30 days, file a petition for judicial review of such regulation with a United States Court of Appeals. The remedies provided shall be in addition to, not in lieu of, any other remedies provided by law. Judgment by the appellate court shall be final, subject to review by the Supreme Court.

Section 913. Equal treatment of retail outlets

Section 913 seeks to ensure a level playing field among all retailers, and requires the Secretary to issue regulations requiring that retail establishments whose predominant business is the sale of tobacco products comply with any advertising restriction applicable to retail establishments accessible to individuals under the age of 18. This provision is necessary because the final rule promulgated by FDA on tobacco products, which is required to be reinstated under section 102 of the Committee's bill, exempted adult-only establishments from advertising restrictions applicable to retail outlets where persons younger than 18 years of age are allowed. This section is intended to level the playing field for all retailers, applying the restrictions on advertising equally across the board.

Section 914. Jurisdiction of and coordination with the Federal Trade Commission

Section 914(a) clarifies that the Federal Trade Commission's (FTC) authority regarding the advertising, sale, or distribution of tobacco products is not limited or diminished by the Act, and that violations of this Act related to advertising will also be considered unfair or deceptive practices under the Federal Trade Commission Act.

Section 914(b) states that the Secretary and the Chairman of the FTC are to coordinate enforcement of section 4 of the Federal Cigarette Labeling and Advertising Act and section 3 of the Comprehensive Smokeless Tobacco Health Education Act.

Section 915. Regulation requirement

Section 915 requires the Secretary, within 36 months of enactment, to issue regulations that require the testing and reporting of tobacco product smoke constituents, ingredients, and additives that the Secretary determines should be tested in order to protect public health. Regulations may require disclosure of the test results relating to tar and nicotine in labeling or advertising, and make disclosures regarding the results of the testing of other constituents that the Secretary determines should be disclosed to the public to protect the public health and will not mislead consumers.

Section 915(d) states that for small tobacco product manufacturers, the compliance times are delayed by at least 2 years and the testing and reporting requirements are delayed for 4 years. Additionally, two or more small tobacco product manufacturers may join together to purchase laboratory testing services. The Secretary may also delay the deadline for testing and reporting on a case-by-case basis.

Section 915(d)(2)(A) of the Act provides that testing regulations promulgated by FDA under Section 915 only shall provide an extended time period for small tobacco product manufacturers to complete product testing required by FDA. FDA regulations shall provide for such testing by small manufacturers to be conducted over a 4-year period, with each manufacturer testing 25 percent of its products per year. If product testing, however, is necessary due to the actions of a small manufacturer in seeking to market a new product within the definition of section 910(a)(1)(B), or modifying an existing product within the definition of section 910(a)(1)(B), that testing must be conducted within the same time frame applicable to non-small manufacturers under FDA rules. The Committee believes that commonly occurring natural variations in the tobacco leaf--meaning only those variations that result directly from geological, meteorological, or similar factors not under the control of and not the result of decisions by the tobacco grower, processor, or manufacturer--should not constitute a new product or a product modification for purposes of determining what time frames to apply for completion of testing.

Section 915(e) states that FDA regulations are required to provide an extension to a small tobacco product manufacturer for testing and reporting in the event that the manufacturer demonstrates an inability to gain access to an independent testing laboratory to conduct product testing in time to meet regulatory deadlines. This delay is conditioned, in part, on evidence provided to FDA that: (1) the products were submitted sufficiently in advance to meet regulatory deadlines; (2) the products are currently awaiting testing; and (3) neither that laboratory, nor any other laboratory, is able to complete testing by the deadline at customary, non-expedited testing fees.

The Committee believes that, in seeking an extension of time under this subsection, a small manufacturer should be required only to consult laboratories that are legitimate and that possess the expertise to produce meaningful and reliable testing reports. Therefore, we anticipate that FDA will assist small manufacturers in this regard through its Office to Assist Small Tobacco Product Manufacturers. The Committee expects that the Office will produce a list of testing laboratories with which a small manufacturer can check for testing capacity and availability. The list should include a description of testing services, an address, and known contact information for each laboratory. While FDA's production of this list will not eliminate the duty of each small manufacturer to use its best efforts to identify such laboratories on its own, the list will provide great assistance to small manufacturers in fulfilling that duty.

As stated in this subsection, FDA's authority to extend deadlines based on a demonstrated lack of laboratory capacity extends only to testing and reporting required under Section 915.

Section 916. Preservation of State and local authority

Section 916(a) states that State authority is preserved, with no Federal preemption, with regard to enacting, adopting, promulgating, and enforcing any law, rule, or regulation in critical areas with respect to tobacco products that is in addition to or more stringent than required under this Act, including measures relating to or prohibiting the sale, distribution, possession, exposure to, access to, advertising, and promotion of, or use of, tobacco products by individuals of any age, information reporting to the State, or measures relating to fire safety standards for cigarettes.

Section 916(a)(2)(A) states that States are generally preempted from establishing or continuing any requirement that is different from or in addition to any FDA requirement relating to specified and limited areas, including tobacco product standards, premarket review, adulteration, misbranding, labeling, registration, reporting, good manufacturing standards, and modified risk tobacco products.

Section 916(b) also states that product liability actions under State law are not modified or otherwise affected by this bill.

Section 917. Tobacco Products Scientific Advisory Committee

Section 917 establishes a 12-member advisory committee representing the public, tobacco growers, the health community, and tobacco manufacturers, including one member solely and specifically representing the interests of small manufacturers of tobacco products. The small manufacturers' position may be filled by different persons, one at a time, based on different areas of expertise relevant to the topics being discussed. Representatives of the tobacco industry and growers will be non-voting.

Section 917(c) states that this Committee will provide advice and guidance to the Secretary on the effects of alteration of the nicotine yields from tobacco products; the threshold level at which nicotine becomes addictive; and other health issues as requested by the Secretary.

Section 918. Drug products used to treat tobacco dependence

Section 918 requires the Secretary to consider designating nicotine replacement products, regulated under title V of the FFDCA, as fast-track research and approval products.

Section 918(a) requires the Commissioner of Food and Drugs to consider approving the extended use of over-the-counter nicotine replacement products, and to consider other issues relating to the approval of nicotine replacement therapies.

The Committee notes that the fees collected under section 919 of this Act shall not be used for the purposes of designating nicotine replacement products as fast-track research and approval products, or approving the extended use of over-the-counter nicotine replacement products, or to consider other issues relating to the approval of nicotine replacement therapies. The Committee notes that these activities are regulated under the authority of title V of the FFDCA.

The Committee has found that public health officials and other interested parties are not widely aware that FDA does not currently prohibit the sales of over-the-counter smoking cessation products--such as certain nicotine replacement products--in retail settings where age verification takes place. The Committee urges FDA to communicate its policy on such sales to the regulated community and public health officials through simple and effective means, such as through posting a statement of policy on the Food and Drug Administration's Web site.

Section 918(b) requires the Secretary to report to Congress within 3 years on how best to regulate, promote, and encourage development of innovative products and treatments to promote abstinence from tobacco use, reductions in consumption, and reductions in the harm associated with tobacco use. Cessation assistance is a critical component of the fight against the tobacco epidemic. Accordingly, the Committee believes that it is important for health insurers--public and private--to cover effective cessation treatments for those addicted to tobacco, including both medications and counseling. While it is clear to the Committee that the benefits of such coverage greatly outweigh the costs both in terms of human health and in terms of financial savings, private and public insurer coverage of such services remains less than comprehensive. For example, as CDC reported in 2006, only 38 of 50 State Medicaid programs provided coverage for any cessation benefits to tobacco users, with only one State providing all benefits recommended under applicable Public Health Service treatment guidelines. In addition, it is unknown to what extent private insurers are choosing to cover such benefits.

In light of the critical importance of insurer coverage of cessation treatment for those suffering from nicotine addition, the Committee urges the Secretary to examine this issue and to review the extent to which private insurers are covering effective cessation treatment for tobacco users. In conducting this examination, the Secretary should consider the potential cost savings of such coverage, taking into account not only the reduction of healthcare costs that would result, but also the gain in individual life years, improvements in quality of life, and increased productivity that would be achieved by such coverage.

Section 919. User fee

Section 919(a) requires the Secretary to assess a quarterly fee from tobacco product manufacturers and importers to cover the costs of the activities of the Food and Drug Administration related to the regulation of tobacco products under the Act. Section 919(b)(4) makes clear that only the funds provided for in this chapter will be used to pay for FDA tobacco regulation. In addition, none of the funds provided for in this chapter may be used to pay for activities not related to FDA's regulation of tobacco. The method of assessing fees shall be the same as that currently used by United States Department of Agriculture for all tobacco manufacturers and importers to fund the 2004 legislation providing transitional payments to tobacco grower quota holders.

Section 919(c)(3)(B) states that no manufacturer or importer shall be required to pay a user fee in excess of their percentage market share. Section 919(c)(2)(B) also limits the imposition of user fees to cigarettes, smokeless, and roll-your-own tobacco until the Secretary exercises jurisdiction over other tobacco products.

Section 919(g) requires a report by the Government Accountability Office, within 3 years of enactment, that studies the prevalence of youth tobacco use and the brands that individuals under the age of 18 consume; the feasibility of structuring a user fee based on youth market share of a manufacturer; and the potential effects of tobacco marketing to youth if user fees were calculated based on youth market share.

Section 102. Final rule

Section 102 states that on the first day of publication of the Federal Register that is 6 months or more after the enactment of this Act, the Secretary shall publish a final rule on the advertising of, and access to, tobacco products, which shall become effective 1 year after passage of the bill.

The final rule is deemed to be in compliance with the Administrative Procedure Act. The final rule shall be identical in its provisions to the advertising and access regulations promulgated by FDA in 1996, except where specifically provided in this Act. Prior to making any amendments to the published rule, the Secretary will be required to promulgate a proposed rule.

The final rule also includes a provision that allows the restricted distribution of smokeless tobacco products in qualified, adult-only facilities. In 1996, the Food and Drug Administration concluded that teens obtain free samples of tobacco products despite laws that prohibit the free distribution to minors. In the August 1996 rule, FDA wrote that `free samples represent a `risk-free and cost-free' way for young people to obtain and possibly use cigarettes or smokeless tobacco and that, when free samples are distributed at cultural or social events, peer pressure may lead some young people to accept and to use the free samples.' The Committee's intent in section 102 (a)(2) is to modify the final rule to allow free sampling of smokeless tobacco products only to adults in secured, enclosed, adult-only facilities or areas. The Committee expects FDA to monitor aggressively smokeless free-sampling facilities to assure that all requirements are being followed and that youth do not obtain the samples of smokeless tobacco that are being distributed. The Committee notes that this narrowly tailored sampling provision does not preclude the Secretary from taking further action related to the regulation or ban of free sampling of smokeless tobacco products.

The Secretary shall ensure that this Act, amendments made by the Act, and the implementing regulations, including such provisions, amendments, and regulations relating to the retail sale of tobacco products, are enforced with respect to the United States and Indian tribes.

Section 103. Conforming and other amendments to general provisions

Section 103 includes a number of export provisions and retailer/licensing provisions. Section 103 contains retailer procedural protections and requires FDA, to the greatest extent possible, to contract with the States for retailer enforcement.

As reflected in its Findings, the Committee is concerned that, depending on the particular language, communications directed to consumers by tobacco manufacturers about the impact of the authority granted to FDA under this legislation could confuse or mislead consumers. The Committee recognizes that unlike most products regulated by FDA, tobacco products will remain harmful. Therefore, section 103(b)(13) of the bill, in a new subsection (tt) of Section 301 of the FFDCA, prohibits statements directed to consumers through the media or through the label, labeling, or advertising that would reasonably be expected to result in a consumer believing that the product is regulated, inspected, or approved by FDA, or that the product complies with requirements imposed by FDA, and that could result in consumers believing that the product is endorsed for use by FDA or that otherwise could result in consumers being misled about the harmfulness of the product because of the authority given to FDA by this legislation. The Committee did not attempt to identify every situation in which such specific statements would reasonably be expected to mislead consumers, instead giving FDA the authority to analyze any specific examples presented to it. This section was carefully written so that it involves only communications directed to consumers and does not therefore, for example, involve communications to Government agencies, such as reports to the Securities and Exchange Commission, or as part of judicial or Congressional proceedings, in formal documents that companies provide to shareholders in the ordinary course of business, or in scientific articles that appear in scientific journals.

Section 103(q)(2)(C) is designed to protect retailers against the imposition of double penalties based on a single violation of any restriction under section 906(d) by directing the Secretary to consider the amount of penalties paid to a State by a retailer for the same violation. This provision is not meant to change the system of setting penalties in any other area within the jurisdiction of the Food and Drug Administration.

Section 104. Study on raising the minimum age to purchase tobacco products

Section 104 requires the Secretary to submit to Congress, within 5 years after enactment of this Act, a report on a study of the public health implications of raising the minimum age to purchase tobacco products.

Section 105. Tobacco industry concentration

Section 105 requires the FTC to submit to Congress, within 5 years after the enactment of this Act, a report on the causes and effects of concentration in the tobacco industry.

TITLE II. TOBACCO PRODUCT WARNINGS; CONSTITUENT AND SMOKE CONSTITUENT DISCLOSURE

Section 201. Cigarette label and advertising warnings

Section 201(a) amends section 4 of the Federal Cigarette Labeling and Advertising Act to specify nine new required warning labels, one of which must appear on cigarette packages and advertisements within 1 year of enactment of this Act. The warning must comprise at least the top 30 percent of the front and rear panels of the package, and at least 20 percent of the related advertisements. Retailers will not be held responsible for packages and advertisements bearing a warning label that they do not create or alter.

Section 201(c) requires that all warnings be displayed on all brands and be randomly distributed in all areas of the United States where the product is distributed and requires that a plan be submitted to the Secretary to ensure that the statements in product advertising are equally distributed and rotated quarterly and that all required label statements be displayed at the same time.

Section 202. Authority to revise cigarette warning label statements

Section 202 amends section 4 of the Federal Cigarette Labeling and Advertising Act to provide the Secretary with authority, by rulemaking, to adjust format, type size, and text of any label requirements, as well as to increase the required label area from 30 percent up to 50 percent of the front and rear panels.

Section 203. State regulation of cigarette advertising and promotion

Section 203 amends section 5 of the Federal Cigarette Labeling and Advertising Act to allow States or localities to enact statutes and promulgate regulations based on smoking and health, imposing specific bans or restrictions on the time, place, and manner. States or localities may not restrict the content of advertisements or promotions of any cigarettes.

Section 204. Smokeless tobacco labels and advertising warnings

Section 204(a) amends section 3 of the Comprehensive Smokeless Tobacco Health Education Act of 1986 to specify the required warning labels that must appear on smokeless tobacco product labels and advertisements, and imposes minimum size and text requirements.

Section 204(b) requires that all warnings be displayed on all brands and be randomly distributed in all areas of the United States where the product is distributed and requires that a plan be submitted to the Secretary to ensure that the statements in product advertising are equally distributed and rotated quarterly, and that all required label statements are displayed at the same time.

Section 205. Authority to revise smokeless tobacco warning label statements

Section 205 amends section 3 of the Comprehensive Smokeless Tobacco Health Education Act of 1986 to provide the Secretary with authority, by rulemaking, to adjust format, type size, and text of any label requirements, as well as to increase the required label area from 30 percent up to 50 percent of the front and rear panels.

Section 206. Tar, nicotine, and other smoke constituent disclosure to the public

Section 206 amends section 4 of the Federal Cigarette Labeling and Advertising Act to require the Secretary to determine, using his or her sole discretion, whether cigarette and other tobacco product manufacturers should be required to include in each advertisement, package, label, or both, the tar and nicotine yields of a tobacco product, and whether the yields of other constituents will be required to be disclosed by appropriate means.

This section requires that any differences between the requirements established by the Secretary and tar and nicotine disclosure reporting requirements established by the Federal Trade Commission be resolved by a memorandum of understanding.

TITLE III. PREVENTION OF ILLICIT TRADE IN TOBACCO PRODUCTS

Section 301. Labeling, recordkeeping, records inspection

Section 301 further amends new title IX of the Federal Food, Drug, and Cosmetic Act by adding a new section 920.

New section 920(a) requires the label, packaging, and shipping containers of tobacco products to bear a statement `sale only allowed in the United States'.

New section 920(b) directs the Secretary to issue regulations regarding the establishment and maintenance of records by any person who manufacturers, processes, transports, distributes, receives, packages, holds, exports, or imports tobacco products. These records will be used to track and assist in the investigation of illicit trade, smuggling, or counterfeiting of tobacco products. Retailers will not be required to maintain records of sales made to consumers.

New section 920(c) authorizes the Secretary to inspect and copy all records, including financial records, of each person who manufacturers, processes, transports, distributes, receives, holds, packages, exports, or imports a tobacco product that the Secretary has a reasonable belief is part of illicit trade, or smuggling, or is counterfeit.

New section 920(d) requires manufacturers and distributors to report to the Attorney General any knowledge that a tobacco product it manufactures or distributes has been imported, exported, distributed, or offered for sale (1) without payment of duties or taxes, or (2) for possible illicit marketing.

Section 302. Study and report

Section 302 requires the Comptroller General to conduct a study of cross-border trade in tobacco products, including illicit trade, cross-border advertising, and the health effects resulting from cross-border trade. This section also requires the Comptroller General to submit to the Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Energy and Commerce of the House of Representatives a report on the study described in this section no later than 18 months after enactment. Section 302(c) provides a definition for `cross-border trade', and states that the terms `Indian country', `State', and `Territory' share the same definitions found in current law.

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