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PROPOSED RESOLUTION
PREAMBLE
This legislation would mandate a total reformation and restructuring of how tobacco products are manufactured, marketed and distributed in this country. The nation can thereby see real and swift progress in preventing underage use of tobacco, addressing the adverse health effects of tobacco use and changing the corporate culture of the tobacco industry.
The Food and Drug Administration ("FDA") and other public health authorities view the use of tobacco products by our nation's children as a "pediatric disease" of epic and worsening proportions that results in new generations of tobacco dependent children and adults. There is also a consensus within the scientific and medical communities that tobacco products are inherently dangerous and cause cancer, heart disease and other serious adverse health effects.
The FDA and other health authorities have concluded that virtually all new users of tobacco products are under legal age. President Clinton, the FDA, the Federal Trade Commission ("FTC"), state Attorneys General and public health authorities all believe that tobacco advertising and marketing contribute significantly to the use of nicotine-containing tobacco products by adolescents. These officials have concluded that because past efforts to restrict advertising and marketing have failed to curb adolescent tobacco use, sweeping new restrictions on the sale, promotion and distribution of such products are needed.
Until now, federal and state governments have lacked many of the legal means and resources they need to address the societal problems caused by the use of tobacco products. These officials have been armed only with crude regulatory tools which they view as inadequate to achieve the public health objectives with which they are charged.
This legislation greatly strengthens both the federal and state governments' regulatory arsenal and furnishes them with additional resources needed to address a public health problem that affects millions of Americans, including most importantly underage tobacco use. Further, it is contemplated that certain of the obligations of the tobacco companies will be implemented by a binding, enforceable contractual protocol.
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The legislation reaffirms individuals' right of access to
the courts, to civil trial by jury and to full compensatory damages. Resolution
through the Act of potential punitive damages liability of the tobacco industry
for past conduct is only made in the context of the comprehensive settlement
proposed by the legislation. It is not intended to have precedential effect, nor
does it express any position adverse to the imposition of punitive damages in
general or as applied to any other specific industry, case, controversy or
product and does not provide any authority whatsoever regarding the propriety of
punitive damages.
Among other things, the new regime would:
-- Confirm FDA's authority to regulate tobacco products under the Food, Drug and Cosmetic Act, making FDA not only the preeminent regulatory agency with respect to the manufacture, marketing and distribution of tobacco products but also requiring the tobacco industry to fund FDA's oversight out of ongoing payments by the manufacturers pursuant to the new regime ("Industry Payments").
-- Go beyond FDA's current regulations to ban all outdoor tobacco advertising and to eliminate cartoon characters and human figures, such as Joe Camel and the Marlboro Man, two tobacco icons which the public health community has long assailed as advertising appealing to our nation's youth.
-- Impose and provide funding out of the Industry Payments for an aggressive federal enforcement program, including a State-administered retail licensing system, to stop minors from obtaining tobacco products, while in no way preventing the States from enacting additional measures.
-- Ensure that the FDA and the States have the regulatory flexibility to address issues of particular concern to public health officials, such as youth tobacco usage and tobacco dependence.
-- Subject the tobacco industry to severe financial surcharges in the event underage tobacco use does not decline radically over the next decade.
-- Empower the federal government to set national standards controlling the manufacturing of tobacco products and the ingredients used in such products.
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-- Provide new and flexible regulatory enforcement powers to
ensure that the tobacco industry works to develop and introduce less-hazardous
tobacco products," including, among other things, vesting FDA with the power to
regulate the levels of nicotine in tobacco products.
-- Require the manufacturers of tobacco products to disclose all previously non-public internal laboratory research and all new internal laboratory research generated in the future relating to the health effects or safety of their products.
-- Establish a minimum federal standard with tough restrictions on smoking in public places with enforcement funding from the Industry Payments, while preserving the authority of state and local governments to enact even more severe standards.
Authorize and fund from Industry Payments a $500 million annual, national education-oriented counter-advertising and tobacco control campaign seeking to discourage the initiation of tobacco use by children and adolescents and to encourage current tobacco product users to quit use of the products.
-- Authorize and fund from Industry Payments the annual payment to all States of significant, ongoing financial compensation to fund health benefits program expenditures and to establish and fund a tobacco products liability judgments and settlement fund.
-- Authorize and fund from Industry Payments a nationwide program, administered through State governments and the private sector, of smoking cessation.
The sale of tobacco products to adults would remain legal but subject to restrictive measures to ensure that they are not sold to underage purchasers. These measures respond directly to concerns voiced by federal and state public health officials, the public health community and the public at large that the tobacco industry should be subject to the strictest scrutiny and regulatory oversight. This statute imposes regulatory controls, including civil and criminal penalties, equal to, and in many respects exceeding, those imposed on other regulated industries. Further, it imposes on tobacco manufacturers the obligation to provide funding from Industry Payments for an array of public health initiatives.
The sale, distribution, marketing, advertising and use of tobacco products are activities substantially affecting interstate commerce. Such products
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are sold, marketed, advertised and distributed in interstate
commerce on a nationwide basis, and have a substantial effect on the nation's
economy. The sale, distribution, marketing, advertising and use of such products
are also activities substantially affecting interstate commerce by virtue of the
health care and other costs that federal and State governmental authorities have
attributed to usage of tobacco products.
Various civil actions are pending in state and federal courts arising from the use, marketing or sale of tobacco products. Among these actions are cases brought by some 40 state Attorneys General, cases brought by certain cities and counties, the Commonwealth of Puerto Rico, and other third-party payor cases seeking to recover monies spent treating tobacco-related diseases and for the protection of minors and consumers. Also pending in courts throughout the United States are various private putative class action lawsuits brought on behalf of individuals claiming to be dependent upon and injured by tobacco products. Additionally, a multitude of individual suits have been filed against the tobacco products manufacturers and/or their distributors, trade associations, law firms and consultants.
All of these civil actions are complex, slow-moving, expensive and burdensome, not only for the litigants but also for the nation's state and federal judiciaries. Moreover, none of those litigation's has to date resulted in the collection of any monies to compensate smokers or third-party payors. Only national legislation offers the prospect of a swift, fair, equitable and consistent result that would serve the public interest by (1) ensuring that a portion of the costs of treatment for diseases and adverse health effects linked to the use of tobacco products is borne by the manufacturers of these products, and (2) restricting nationwide the sale, distribution, marketing and advertising of tobacco products to persons of legal age. The unique position occupied by tobacco in the nation's history and economy, the magnitude of actual and potential tobacco-related litigation, the need to avoid the cost, expense, uncertainty and inconsistency associated with such protracted litigation, the need to limit the sale, distribution, marketing and advertising of tobacco products to persons of legal age, and the need to educate the public, especially young people, of the health effects of using tobacco products all dictate that it would be in the public interest to enact this legislation to facilitate a resolution of the matters described.
Public health authorities believe that the societal benefits of this legislation, in human and economic terms, would be vast. In particular, FDA has found that reducing underage tobacco use by 50% "would prevent well over 60,000 early deaths." FDA has estimated that the monetary value of its present regulations will be worth up to $43 billion per year in reduced medical costs, improved productivity and the benefit of avoiding the premature death of loved
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ones. This statute, which extends far beyond anything FDA
has previously proposed or attempted, can be expected to produce human and
economic benefits many times greater than such existing regulations.
As part of this settlement, the tobacco companies recognize the historic changes that will be occurring to their business. They will fully comply with increased federal regulation, focus intense efforts on dramatic reductions in youth access and youth tobacco usage, recognize that the regulatory scheme encourages the development of products with reduced risk and acknowledge the predominant public health positions associated with the use of tobacco products.
[Source/precedent: FDA Rule]
