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09 August 2017

The Global War on Smoking Is Really Heating Up

The Global War on Smoking Is Really Heating Up
by Sam Chambers, bloomberg.com, 9 August 2017

  • U.K. discusses U.S. nicotine reduction proposal with FDA
  • Tobacco makers face possible global campaign on addictiveness

The U.S. Food and Drug Administration’s proposal to strip cigarettes of their addictive properties has opened a new front in the international campaign to reduce smoking, with health authorities in at least four other countries studying the idea.

After FDA Commissioner Scott Gottlieb suggested mandating drastic cuts in nicotine levels, public-health experts in New Zealand last week published an action planrecommending such reductions within five years. Canada and Finland say they’re looking into regulating amounts of the drug in tobacco products, while officials in the U.K.’s Department of Health have discussed the U.S. proposal with FDA representatives, according to a person familiar with the matter.

The FDA has “massively raised the attention on reduced-nicotine cigarettes for regulators across the world,” Clive Bates, a public health consultant, said by phone. The move provides “tremendous impetus” to the concept of nicotine limits despite the policy’s flaws, which include the likelihood that it would create a black market for standard cigarettes, he said.

The FDA’s proactive stance could embolden authorities outside the U.S. to step up the war on nicotine, undermining tobacco companies’ prospects in developing countries where they’ve sought growth to compensate for falling smoking rates in the wealthy world. History shows that government efforts to curb smoking, from advertising bans to restrictions on packaging, can spread quickly across borders.

Gottlieb’s move wiped about $36 billion off the value of tobacco companies in a single day, initially hitting those with the biggest U.S. exposure, such as Lucky Strike owner British American Tobacco Plc and Marlboro parent Altria Group Inc., the hardest. The timing of the FDA announcement may be particularly painful for BAT, which is said to be marketing bonds in Europe after on Tuesday announcing one of 2017’s biggest bond sales in the U.S., to refinance its $49.4 billion buyout of Reynolds American Inc. BAT shares fell as much as 1.2 percent in London on Wednesday.

The likes of Japan Tobacco Inc. and Imperial Brands Plc have also slumped as investors have come to grips with the prospect of a global campaign to curb nicotine. The industry has taken Australia and the U.K. to court over regulation in recent years, and while cigarette makers said nicotine caps could spur sales of less dangerous alternatives, they’re expected to fight the FDA’s proposals.

Philip Morris International Inc.’s director of product policy, Rolf Lutz, last year estimated it would cost the company $10 billion to $12 billion to extract nicotine from all the cigarettes it sells across the European Union. Lutz said the cost could be minimized by genetically modifying tobacco plants, but this would take about 20 years.

Eradicating Smoking

New Zealand and other countries, including Canada, Ireland, Finland and Malaysia, have set targets of eradicating smoking or reducing it to less than 5 percent of the population as early as 2025.

Health Canada has already banned menthol flavored tobacco and is moving to open up the sale of vaping products. The regulator is considering “reducing the addictiveness” of tobacco products, spokesman Gary Holub said.

In Finland, regulating the amount of nicotine in cigarettes is one measure that a working group preparing anti-smoking proposals may also consider, said Meri Paavola, an adviser in the health ministry.

The WHO estimates that global smoking prevalence will fall from about 20 percent to about 19 percent in 2025. But population growth means there will be little change in the absolute number of smokers, according to Jefferies analyst Owen Bennett. Tobacco sales in Eastern Europe, the Middle East and Africa are expected to grow at more than twice the rate of Western Europe and North America from 2016 through 2021, according to research firm Euromonitor.

“We fully expect other markets to follow the approach of the FDA,” Bennett said. “There’s an increasing acceptance that regulatory measures are having no impact.”

The public health groups in New Zealand published their action plan amid what they described as “insufficient” progress against smoking. The recommendations go further than the FDA’s plan by proposing a permanent ban on the sale of tobacco to people born after 2002 and limiting distribution to a small number of specialist retailers.

The U.K.’s dialogue with the FDA follows the government’s publication of a new tobacco control plan in July that calls for reducing the smoking rate to 12 percent or below by 2022 from about 17 percent now. Similarly to the FDA’s approach, it seeks to encourage smokers to switch to e-cigarettes, although it stops short of targeting nicotine levels in conventional smokes.

Developing economies, which have historically been faster-growing and more lenient regulatory environments for the tobacco industry, are also moving to reduce smoking more aggressively. The WHO’s tobacco control framework, which has 168 signatories, includes a recommendation to cut the nicotine content in cigarettes, though no members have so far taken such a step.

Continue reading:
https://www.bloomberg.com/news/articles/2017-08-09/global-war-on-smoking-fired-up-by-u-s-proposal-to-cut-nicotine

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