tobacco in the 21st century

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                  Alliance for Health Economic and Agriculture Development
                              6220 30th Street NW Washington DC
                              Tel: 202 686-8898 Fax 202 244-0698

                   TOBACCO IN THE 21 ST CENTURY

Good morning. I‟d first like to thank the USDA and specifically the ERS and the Farm
Foundation for sponsoring this workshop. I think it is timely and I think it should begin to
stimulate some serious and urgently needed dialogue about the future of how tobacco and
is grown, processed, manufactured, sold and distributed, labeled and marketed.

With the passage of the „buyout‟ legislation last year, we have entered a new era of
tobacco production in this country. The question is what that era will bring? How will it
be shaped and who will shape it? For me, and many others, the buyout wasn‟t just about
the money or reducing the numbers of farmers growing tobacco. It was about preparing
for the future and bringing tobacco production (and manufacturing) into the 21st century.

It was a necessary prerequisite for change. We needed to have it before we could talk
about the fundamental changes that now must be addressed and which are being driven
more and more by issues related to public health, science and new technologies, global
competition and new consumer demands.

Whether I or anyone likes it or not, the reality is that the interests of the public health
community, tobacco growers, manufacturers, researchers, scientists, biotech companies,
economists, academics, pharmaceutical companies, consumers and others who deal
directly and or indirectly with both the tobacco leaf and tobacco products are continuing
to converge. Make no mistake about it, all of these various stakeholders and players are
assessing what the future holds, what needs to be done next, and how they can position
themselves to take advantage of it. After decades of a black and white tobacco
environment in which you had the „tobacco industry‟ and its allies on one side and the
public health community on the other we are now seeing an increasing gray area in which
the interests of many of the various players overlap. And the number of players seems to
increase every day. Today we increasingly operate in a global environment --- an
environment fraught with new challenges but more importantly pregnant with
opportunities. The recognition that change is happening and that there needs to be change
is all around us.

Later this week, the tobacco industry will be holding its 59 th Tobacco Science Research
Conference. The title of this year‟s symposium is “The Tobacco Industry: Changes and

Last years conference symposium was on “Biotechnology a tool for developing reduced-
risk products”. The subject of GM tobacco was the symposium topic several years ago at
a meeting in Montreal.

Just last week (at the Prudential Back-to-School Consumer Conference) Philip Morris in
discussing future strategies to develop new revenue and income sources for the future
stated that:

       We have chosen an adjacency growth strategy. Looking at potential moves into
       complimentary tobacco and tobacco related products or processes that would allow PM USA
       to use its existing core infrastructure elements.

And JP Morgan, in late August, issued an investors assessment for the industry titled, The
Third Innovation, focusing on the development of new lower risk products. They
concluded that:

   There are two main ways in which cigarette manufacturers can produce a safer cigarette:

          The tobacco leaf or ingredients can be altered
          Cigarette construction can be modified

There will be a Tobacco Summit in Savannah in early October where discussion about the
future of tobacco production, technologies, manufacturing and public health issues will
continue to get discussed, and debated.

Health groups will continue to push for FDA regulation, challenge the industry at every
turn and talk about the pros and cons of risk reduction strategies. NIH has called for
applications from researchers and academics and to look at issues related to the new risk
reduction products that are appearing in the market place. A major tobacco global
tobacco control conference is scheduled to be held here in Washington next year, and
regional tobacco control meetings will be taking place all over the globe.

The list of issues, sub-issues, players, meetings, conferences and activities both here in
the US and abroad is extensive.

All leads me to conclude the tobacco environment, from production through
manufacturing will be under going some major changes over the next 5-10 years.

How we work to remove barriers, take opportunities and shape the future is yet to be
determined but I wanted to talk for a few minutes about some of the issues and areas that
are ripe for consideration.

Reforms for the production of tobacco

Last year when Congress passed the buyout legislation, which many growers rightly
celebrated, Congress also all but dismantled the rest of a program that had set standards
and safeguards for both domestically produced tobacco as well as imported tobacco.
They in effect, “threw the baby out with the bath water”. It seems inconceivable that with
the knowledge we have about the hazards of tobacco, with the knowledge we have about
how some of the tobacco overseas is being produced, with the knowledge that we have
about what and how new technologies can be applied to help growers produce leaf that is
lower in health risks, that our congressional leaders would sit on the sidelines failing to
look at the future, not only for US tobacco producers but for the public‟s health as well.

And so, the buyout does not represent an „end‟ to me but a new „beginning‟. What needs
to be discussed and talked about is, not governmental „handouts‟ but rather providing
the „tools‟ and incentives, fairness and structures that will be needed for US growers to be
more competitive in the world and to stimulate the production of leaf that meets the
highest quality and health and safety standards possible. US tobacco producers have an
important role to play not only here in the US but in also shaping how tobacco is
produced, processed and marketed elsewhere in the world.

I also believe, if I may be so bold, that the USDA should have greater authorities for
tracking and monitoring tobacco production on both a domestic and global basis. It
should also be working with the growers, manufacturers, leaf dealers, public health
researchers and scientists and other high- tech businesses to encourage more research on
tobacco leaf and to establish health and quality assurance standards. We need a better
system that serves grower interests, manufacturers, public health and even homeland
security (smuggling and illegal trafficking of tobacco and tobacco products).

Public health hazards sssociated with tobacco use

The serious public health problems associated with tobacco are not just a domestic
problem but a serious and growing global problem as well. Cigarette smoking accounts
for over 400,000 premature deaths in the US. On a global level, the World Health
Organization estimates that there are 5 million tobacco deaths each year. The WHO‟s
Framework Convention on Tobacco Control has now been signed by 168 countries and
ratified by more than 80 countries and that number will continue to climb. Global efforts
to protect the health and well being of people all around the world is well underway.
China the largest producer of tobacco leaf and cigarettes and a country with the largest

number of smokers recently ratified the treaty --- a very significant action. I encourage
all of you to take a look at the FCTC if you haven‟t already. It can be found at the World
Health Organization‟s website.

Recognizing that not all tobacco products (or tobacco leaf) carry the same hazards

For decades, it has been convenient to say that all tobacco is equally hazardous and
carries the same risk. But it is quite the contrary and all of the stakeholders, including
manufacturers, growers and the public health community need to recognize it, accept it
and use what science tells us in a responsible and accountable way.

Starting with the leaf, not only are there different types and varieties of tobacco but
tobacco leaf can contain different levels of potentially harmful ingredients both naturally
occurring and added. TSNA‟s and pesticides are but two examples. Genetically modified
tobacco and other technologies will make it possible to do a great deal with the tobacco.
It has been noted for example that:

       (GMO) Tobacco with enhanced quality traits has the potential to address issues held by the
       manufacturers and consumers of tobacco products and may add value to the grower in the form of
       premium pricing. Specific traits could include; higher yield of quality leaf per acre; flavor
       metabolism, reduced accumulation of metals, reduced alkaloids, reduced tobacco-specific
       nitrosamines, and enhanced processing properties.

When tobacco is combusted, it produces more than 4,000 chemical constituents in the
smoke, dozens of which are known carcinogens and others that increase the risk of heart
disease and stroke and many other ailments. Independent of the tobacco itself, chemicals,
pesticides and other additives may also increase the toxicity of the product.

If tobacco is used in a noncombustible form the levels of the toxic chemicals drops
significantly. Even the public health community is acknowledging that noncombustible
tobacco products may be as much as 90% (or even more) lower in disease- causing toxins
than those found in combustible products. While smokeless tobacco presents a
significant lower level of risk, there are several toxins that are known to produce disease
related health problems and there are a wide range of smokeless products both here and
in the world that carry different levels of risk. And I am sure that there will be more
products appearing on the market as technology changes are implemented.

The public and consumers of tobacco are entitled to complete, truthful and accurate
information about the risks and relative risks of the products they use, including where
the tobacco used in the product comes from. For years, tobacco companies have withheld
information from the public while touting the unsubstantiated „benefits‟ of smoking low
yield/ low tar and low nicotine cigarettes. They have claimed their products to be
American when in many cases much of the tobacco has come from overseas. That must

Science, research and technological advancements all are making for significant changes
in tobacco and tobacco products and the risks of those products. I have mentioned several
already but let me reiterate them again:

      New high- tech filters systems have and will continue to appear on the market.
      GM tobacco (considered the „white rat‟ of the plant world) research holds great
       promise for not only the development of higher quality leaf but also potentially
       lower risk tobacco products, finding better ways to increase crop yields, reducing
       the use of pesticides etc. GM tobacco is also being used to develop new medicines
       and industrial enzymes.

      Curing processes for tobacco leaf are already able to significantly reduce one of
       the most potent carcinogens (TSNA‟s) in tobacco.

      Other chemical and non-chemical ways are being researched to alter or modify
       tobacco and the tobacco product design and construction.

The need for FDA oversight – leveling the playing field

Given that tobacco is hazardous; given that tobacco products are highly complex and
given that new technologies and processes will only continue to be developed; the
question that needs to be addressed is how and who will monitor both the current more
traditional products on the market as well as the development of the newer products?
Who will ensure that there is enough science to back any claims that are made ? Who will
ensure that consumers can compare the risks and relatives risks of products? And who
will ensure that there is a level playing field and that manufacturers are playing by a set
of fair but enforceable rules? Or will we be headed down a road to more questionable
advertising and marketing that is designed to keep smokers smoking at all costs and in
some cases enticing children and adolescents into a life of addiction and disease? That
cannot and should not be allowed to happen. The FDA is the only logical place for
ensuring proper oversight of tobacco products. Even industry analysts are now talking
about how FDA will provide stability in the tobacco industry – something that was taboo
even a one or two years ago. The JP Morgan investor‟s analysis I mentioned earlier
suggests that there are two primary reasons for manufacturers to support FDA:

      Reduced forward looking litigation risks, as FDA regulation of product content
       marketing and distribution makes it more difficult for plaintiff-lawyers to attack
       the industry in the courtroom; and
      Opportunity to successfully market PREPS cigarettes, as the FDA determines
       which products are reduced risk and authorizes any health claims.

I think there are many others --- such as promoting fair competition in the market place.


Competition within (and in some instances outside) the tobacco industry will also help
drive the industry forward in producing more science -based technologically advanced
products. Competition coupled with FDA regulation will also help drive irresponsible
manufacturers and others looking to make a quick buck at the expense of the public‟s
health out of the market place.

One thing that should also be considered is what kinds of incentives might be given to
producers, manufacturers, and technology- based companies to invest in developing
lower- risk science- based products? The IoM report Clearing the Smoke had as one of its
principle recommendations, the need for industry to have “incentives to develop and
market products that reduce exposure to tobacco toxicants and that have a reasonable
prospect of reducing the risk of tobacco related disease”. Several of the key health
organizations have also said that industry should be encouraged to develop products that
can be scientifically shown to reduce harm (coupled with regulatory oversight).

Next Steps

We have a major educational challenge ahead of us. We need greater „transparency‟ from
all of the players and stakeholders if we are to move forward. Those who have regarded
each other as the enemy and have refused to engage in any dialogue will increasing be
finding that they will have to deal with each other (as well as with new players) or „get
off or get pushed off the field‟. We can pursue a purely adversarial course that may take
years if not decades to reach resolution, or we can engage in a civil manner, in a neutral
environment where substantive, legitimate issues can be debated and discussed. Today‟s
meeting is an example of the latter. Had health groups and growers not sat down to talk
many years ago, I would suggest, no I would bet on it, that there would have been no
buyout and that the prospects for getting fair and effective oversight of the industry
(FDA) would be nowhere close to where it was last congress and where it is today.

The stakes are high for public health, for growers and for responsible manufacturers. We
have a chance to develop a system and process that can change the way tobacco is grown,
processed, manufactured, distributed, labeled, and marketed----- one that serves public
health interests, grower interests, responsible manufacturer interests, and consumer
interests. But all of the parties have to dispense with their „silo mentality‟ approach that
is preventing change and to recognize that their goals and objectives are significantly
intertwined with and influenced by the goals, objectives, views and actions of many

In addition, governmental agencies must work more cooperatively. This includes the
USDA, the Department of HHS and its various agencies (NIH, CDC and FDA), the EPA,
the FTC and even the Department of Homeland Security. Such cooperation exists in
other arena such as food, and there is no reason why it shouldn‟t exist when it comes to
tobacco. All of these agencies have a responsibility to the American people to work

towards establishing a more effective, workable national tobacco policy that looks to
solve problems rather than perpetuating them.

The time is ripe for leadership. The time is ripe for action.

Thank you.

Presented at the USDA/ERS Workshop: “Tobacco Quota Buyout Impacts”
September 20, 2005