The U.S. Food and Drug Administration (FDA) says it is taking a "pivotal step" as it pushes ahead with its plan to make cigarettes less addictive.
On Thursday, the agency's commissioner, Dr. Scott Gottlieb, announced that it would propose the rule, and in doing so begins a long bureaucratic process. The move is set to disrupt the tobacco industry and accelerate an ongoing shift away from cigarettes and toward new smoking technologies.
The decision is unprecedented for the FDA, which only just received permission to regulate tobacco products in 2009, and it could have major implications for market leaders such as Philip Morris International Inc. (PM), British American Tobacco (BTI) and Reynolds American Inc. (RAI). (See also: Philip Morris, the Best is Yet to Come: Wells Fargo.)
Cutting Nicotine Levels
"Today's milestone places us on the road to achieving of one of the biggest public health victories by saving millions of lives," said Gottlieb to reporters. "As part of our comprehensive plan on tobacco and nicotine regulation announced last summer, we're issuing an advance notice of proposed rulemaking to explore a product standard to lower nicotine in cigarettes to minimally or non-addictive levels," saod the Commissioner in a statement. According to the FDA, cutting the addictive substance in cigarettes could result in 5 million fewer adult smokers in the first year, prevent 33 million people from picking up the habit and result in over 8 million fewer tobacco-related deaths over the same period.
As the agency expects the initiative to bring smoking rates down from the current 15% to 1.4%, the world's leading tobacco companies, already facing heightened pressure from business groups, governments, media and consumers at large, could see demand for their flagship product fall further. Earlier this year, Big Tobacco companies launched court-ordered ads that forced them to detail the harms of smoking in newspapers and on prime-time TV, including the fact that their products kill 1,200 Americans every day.
As smoking becomes less popular in the U.S., and a sharp drop off in demand has weighed on Big Tobacco sales, companies have hedged against losses by diversifying with new products such as "smokeless" tobacco sticks. One industry innovator and the third-largest cigarette company in America, Imperial Brands (IMBBY), which strategically took the word tobacco out of its name, has taken its experimentation to a new level with chili- and pomegranate-flavored caffeine strips. (See also: Business Groups Increasingly Turn Against Tobacco.)