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January 18th, 2008:

Should Tobacco Companies Be Required to Reduce Their Number of Customers?

By Stephen D. Sugarman, Berkeley Law School – Independant Media Institute
Posted on January 18, 2008, Printed on January 18, 2008

If tobacco companies were required by law to sharply reduce their number of U.S. customers, we might finally rid our country of the scourge of smoking. It’s a bold idea that merits a closer look.

The traditional public health strategy is to order tobacco companies to do things like put warnings on their packages or stop advertising on billboards in the hope that this would reduce smoking rates.

But U.S. Senator Mike Enzi, R-Wyo., has proposed a tobacco-control plan that cuts to the chase and simply orders companies to get fewer people to smoke. With roots in the regulation of power plant emissions and the educational reform act known as No Child Left Behind, Enzi’s idea is that government
would set performance goals for tobacco companies to meet. Instead of conventional “command and control” regulation — in which government regulators tell people what to do — under “outcome-based regulation,” government tells them what to achieve.

How would tobacco firms comply? They could raise prices, promote cessation aids, sell nontobacco competitive products or innovate in ways we can’t imagine. What to do and how to do it is their decision to make.

Under the senator’s plan, tobacco companies would be required to reduce their U.S. customer base by approximately 90 percent over two decades. At the end of that period, our country could be down to an incredibly low smoking rate of about 2 percent, an ambitious target. Companies that failed to meet performance goals would face whopping financial penalties, making it fiscally more attractive for them to lose smokers than to gain new ones.

As bold as it sounds, Enzi’s idea of imposing outcome-based regulation on cigarette companies is not entirely new. It surfaced as part of the never-enacted “Global Settlement” of tobacco litigation to prevent teen smoking in the late 1990s. It re-emerged in testimony presented by the Department of Justice in its racketeering case against the tobacco industry.

But once the Bush administration took control of the case, the idea of outcome-based regulation was dropped.

Certain tobacco-control measures have proven to be effective — increased cigarette taxes, bans on indoor smoking and harsh “counter-ads” that disparage the tobacco industry — all of which have been adopted in California. Yet even here the impact of such tactics may have peaked.

Social norms may continue to evolve against smoking without further governmental intervention. But leading anti-smoking advocates are not content to wait. Most support a bill that would give the Food and Drug Administration regulatory authority over tobacco products. But there has been grumbling within the tobacco-control community about this bipartisan effort lead by democrats — Sen. Edward Kennedy, D-Mass., and Rep. Henry Waxman, D-Calif. Dissenters consider the proposed bill flawed and inherently suspect, given its support by tobacco giant Philip Morris.

Other anti-smoking advocates call for increasing the federal tobacco tax, a strategy included in the congressional plan to expand the federal health insurance program for children in low- and middle-income families. But this law ran afoul of a presidential veto that supporters seem unable to override. And in California, voters recently nixed a sharp increase in cigarette taxes proposed in a ballot initiative.

Enzi’s idea deserves bipartisan support. It establishes a laudable public health goal and forces business to take responsibility for achieving it. It does not impose anything that can be called taxes (at least not if tobacco firms do their jobs right). If Congress does not move on the Enzi proposal, the idea could be adopted by California. Gov. Schwarzenegger and the legislature could team up to commit the tobacco industry to reduce the smoking rate in our state below 10 percent by 2012, a reduction of one percentage point per year.

Dramatically reducing smoking rates is one of the greatest public health steps we can take to prevent the more than 400,000 annual deaths caused by smoking.

Stephen D. Sugarman is the Roger J. Traynor Professor of Law at the University of California, Berkeley, Law School and author of books on smoking policy and tobacco regulation.