Cornered (48 page)

And that was that. There was no ticker-tape parade. Only critics—by the score. They would pronounce that at various levels Scruggs and Co. had been hoodwinked, deceived, and outmaneuvered by a smarter enemy. Matt Myers would be branded by his own antismoking crusaders as a “sellout” and an appeaser.

Moore was shocked at the reception. Two months later he would say bitterly, “Probably, I didn't expect so much sniping. But others want to own a piece; the congressmen and the senators. As time goes by, they'll change a few things and call it their own.”

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B
ECAUSE THE DEAL
had been negotiated behind closed doors and in a hurry, the actual piece of paper produced was a hastily typed draft lacking even the scantiest of peer reviews. The final clause slipped in at the last minute by Scruggs was an amnesty for Jeffrey Wigand and all other whistle-blowers, but even that was so ambiguously worded as to not be clear whether it included the first great whistle-blower, Merrell Williams. Scruggs assured Williams that it did. The sometimes confusing language caused everyone in authority, from. President Clinton down, to greet the document with caution. David Kessler was the first to use the phrase, “The devil is in the details.” He was followed by the former Surgeon General C. Everett Koop, who quickly branded its regulatory clauses as “woefully inadequate” and “deeply flawed.” And the public health groups, which had supposedly been represented by the hapless Matt Myers, declared the provision that did not allow immediate regulation by the FDA as “absolutely unacceptable.” Skip Humphrey, who had boycotted the talks all along, refused to sign the deal, calling it a “Trojan Camel.” It was “inherently flawed” because it answered the wrong question. “The negotiators had asked, ‘How much regulation will this industry accept?' But the real question was, Is this good for America?” he said.

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E
VEN SO
, there had been remarkable gains for the public health, and it could certainly be argued that if implemented, the proposed agreement would do more for the nation's health than all of the lawsuits combined—as Mike Moore proclaimed. Under the deal, the industry would pay a total of $368.5 billion; $10 billion in the first year, of which $7 billion would go to the states and $3 billion to the federal Department of Health and Human Services to fund a smoking-cessation campaign, enforce a ban on sales to minors, and set up a compensation fund for smokers who win court cases. Thereafter, the industry would pay $8.5 billion rising to $15 billion annually in perpetuity. The figure of $368.5 billion covered the first twenty-five years.

This sounded like a tremendous amount of money—and it was the largest proposed industry payout in history. The annual payments were comparable with the gross domestic product of small- to medium-sized developing countries (Mozambique $10.6 billion, El Salvador $9.8 billion, Uganda $16.2 billion). But the stunning fact was that the industry could easily afford it, testimony to the “cash cow” that cigarettes had been for more than a century. A mere fifty cents on a pack of cigarettes, then at $1.80, would pay for roughly half the punishment, and the rest was tax deductible—a business expense. (By contrast, a punitive-damage award cannot be set against taxes.) According to market surveys, such a price hike would reduce consumption by only 10 percent. So the burden would fall mainly on the poor, addicted smoker.

Critics focused on two points. First, the industry escaped FDA regulation that would be available, in theory, now that Judge Osteen had found the agency did have authority over tobacco. Second was the question of whether the tort system had been violated by granting even partial immunity.

On the public health side, Matt Myers was quick to point to the extra advertising controls in the deal that would not be available under Judge Osteen's ruling. Among Myers's examples were a ban on all cigarette vending machines instead of only those to which children had access, putting cigarettes out of reach of buyers in retail stores, funds to enforce such measures, elimination of all billboard ads by consent decrees (to overcome First Amendment objections), an end to more “product placement” of cigarettes in movies and on TV, an end to calling some cigarettes “light” and suggesting they are healthier than other brands, and an end to the Marlboro Man, Joe Camel, and any other human and romantic images the advertisers might dream up. Health warnings would follow the Canadian government pattern, minus the ambiguities. They would say cigarettes “are addictive” and “cause cancer.” The “look-back” provision would require the companies to reduce underage smoking by 30 percent in five years, 50 percent in seven years, and 60 percent in ten years. If they failed they would pay a fine—they preferred to call it a “surcharge”—of $80 million per percentage point, up to a maximum of $2 billion a year.

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B
UT
D
AVID
K
ESSLER
and C. Everett Koop refused to accept Myers's explanation. If Kessler thought anything positive had been achieved, he was very good at hiding it, and his disdain for Myers was made plain in several media confrontations immediately after the announcement. Kessler's anger was hardly surprising. The agreement had, in fact, whittled down FDA authority to regulate nicotine—which was his personal crusade of the past five years that had culminated with Judge Osteen's stunning decision in April.

The agreement prevented the FDA from regulating nicotine levels in cigarettes for at least twelve years. And it placed two extra burdens on the agency. First, the FDA would have to create a scientific advisory board to study nicotine and health issues. But the FDA has its own scientists, whose recommendations can always be challenged in court or rejected by Congress. The second provision was even more intrusive. Before reducing nicotine levels, the FDA would have to show, with substantial evidence, that such a move would result in a significant reduction of the health risks associated with smoking, and would not create a black market for cigarettes with a higher nicotine level. “How could the FDA prove a negative?” asked Koop.

The proposal would reduce the burden of proof after twelve years to a “preponderance of evidence,” but the tobacco industry would remain a privileged business, above the law. Normally, the FDA only has to show that it has not acted “arbitrarily or capriciously” in making a new rule. The prospect loomed of the tobacco industry's legal armies once again tying up FDA challenges in court.

At the request of a bipartisan group of congressmen led by Henry Waxman, Kessler and Koop formed a blue-ribbon advisory committee on tobacco policy and public health to study the proposals. In the wake of the agreement, they released their own report, recommending the restoration of the FDA's full authority and dropping the arbitrary twelve-year deferral and the industry-imposed standards of proof. The report had immediate support among health groups.

The American Lung Association attacked the advertising provisions of the agreement—the very section that Matt Myers had claimed as a substantial victory. But the lung association saw it otherwise. They complained that the restrictions as written were “a mere inconvenience” to the industry and still allowed powerful images in ads that could portray the romance of smoking. They pointed to the new ad for Camels, which used a motorcycle, the wings of an eagle, and a camel. They wanted all ads to be limited to black and white, showing only the product with no props or scenery, and only the warning labels as text.

Finally, the elimination of punitive damages and class actions came under fire from trial lawyers across the country. “Punitive damages are my sword,” protested Woody Wilner. “My resources are already weak compared with the industry's and I need all the swords I can get.” The restrictions on class actions seemed to some plaintiffs' lawyers effective immunity for the industry. But Meyer Koplow disagreed. Asked whether he thought there would by any future litigation against the tobacco industry if the proposal passed Congress and became law, he said, “I believe in the field of dreams theory. If you build it, they will come. Five billion dollars is an enormous amount of money.”

EPILOGUE

AN ILLUSION OF SURRENDER

A
WEEK BEFORE
the June 20 proposal, Professor Stan Glantz, his wife, and his daughter went out for a Father's Day dinner near his home in San Francisco. When they returned around midnight, a car followed them up the dirt lane to their garage. Glantz was alarmed to be followed this late at night. He zipped into the garage and quickly closed the automatic door. But as the door clattered to the ground, someone began to pound on it from the outside. Glantz hustled his family into the house, but the pounding moved to the front door. He ignored it and went to bed. He thought he knew what had happened. Earlier that day at Glantz's office at the university, a Brown & Williamson representative had attempted to serve a subpoena on the professor; the company wanted him to appear at a deposition for the Florida Medicaid case, but university rules say that court orders on faculty members can only be accepted by the college counsel. Glantz guessed that the company was trying to serve the subpoena again—at midnight.

The next day, a court processor acting for B&W called Glantz on the phone at home and, after apologizing for interrupting his Father's Day, said he had been instructed to harass Glantz until he accepted the summons. Glantz told the man about the university rules, and the subpoena was served the next day at the university legal counsel's office. It turned out that Brown & Williamson wanted to cross-examine Glantz about the book,
The Cigarette Papers,
Glantz and colleagues had written on the Merrell Williams documents.

The professor was no longer surprised at the antics of Big Tobacco. Ever since he had received copies of the Merrell Williams papers from his anonymous donor, “Mr. Butts,” and had placed them in the university archives and then made them available on the Internet, he had been hunted by the protobacco forces. The industry's congressional lobbyists had tried, unsuccessfully as it turned out, to persuade congressmen to cancel the National Cancer Institute funding of Glantz's tobacco control studies. One of those had tracked the effects of tobacco money on state legislators' voting patterns. Another had looked at the industry's role in so-called grassroots smoker's rights campaigns.

Now, a new citizens' group with the high-sounding title of Californians for Scientific Integrity, which is partly funded by the industry, filed suit against the university, charging Glantz with skewing data in a 1994 study of the effect of smoking bans in restaurants. Glantz's study had concluded there was no economic impact, and antismoking forces had used the results to widen smoking bans in other states. In its law suit, the new group charged that Glanz had used state funds illegally to promote tobacco control.

They obtained a court order to “lock up” his computer and prevent him from destroying relevant materials. They also sponsored a critique of Glantz's report that charged the professor with manipulation of data. They demanded that the
American Journal of Public Health,
an ancient, prestigious journal where Glantz's 1994 article had been published, rereview it. The journal did so, but concluded that the article was sound and that the critique was, as one of the reviewers said, “much ado about nothing.” The journal's editor, Dr. Mervyn Susser, wrote in the October 1997 issue that, “plainly, the aim is to destroy Glantz's career.” Certainly, it appeared that the fine promises being made by the industry in Washington about new ways of doing business were as duplicitous as old pledges about safeguarding the public health. As Dr. Susser put it, the tobacco companies had once again created “only an illusion of surrender.”

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O
N CAPITOL HILL, THERE
was more evidence that the industry's old campaigners had not given up. In what was dubbed by
Time
magazine as “the biggest heist of the year,” tobacco lobbyists led by Haley Barbour, the former Republican National Committee chairman, had quietly slipped a $50 billion tax credit for Big Tobacco, designed to offset the industry's settlement costs, into the new tax bill. The tax bill included a 15-cents-a-pack rise in Federal taxes (then at 24 cents, the lowest in the developed world). Over twenty-five years, this new tax would add up to $50 billion. In the last-minute rush to approve the bill, the provision was supported by the Republican leadership—Trent Lott and Newt Gingrich—and even given conditional approval at the White House. Clinton advisers, anxious to pass the tax bill, claimed that the credit was not meaningful until the terms of the June 20 proposal were fixed. But Senator Richard Durbin, a tobacco foe, spotted the ruse. Calling it “midnight madness that shines and stinks like a mackerel in the moonlight,” Durbin, a Democrat from Illinois, proposed a motion to strike the provision, but he was resoundingly defeated 78 to 22. The $50 billion credit was such an obvious scam, however, that over the summer recess, members of Congress realized it couldn't survive.

When Congress returned in September, a new mood prevailed and the Senate reversed itself. A Durbin amendment to repeal the $50 billion credit was passed by a stunning 97 to 3 vote—the three being staunch industry supporters from tobacco states: North Carolina senators Jesse Helms and Lauch Faircloth and Kentucky senator Mitch McConnell. The result of the industry's self-inflicted wound was evidence of how volatile its congressional support had become.

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B
UT IT WAS
the fine print of the June 20 proposal that began to turn it sour. The agreement had underscored what an incredible cash machine the industry really was. Even with the biggest dollar penalties in history, the industry would be comfortably secure. Wall Street said so. The projected figures were startling. An increase in the federal cigarette tax of 50 cents (on the 1997 average retail price of $1.88 a pack) could yield $10.8 billion annually in net revenues and still leave the industry with $5.4 billion in pretax profits. The industry could raise prices, make full use of tax deductions on the penalties—which are legitimate business expenses unless ruled otherwise by Congress—and easily cover the proposed maximum penalty of $15 billion a year.