Tobacco Deal Gives Away Too Much, President Says

President Clinton gave notice Wednesday that a pending $368.5-billion legal settlement of tobacco litigation will have to be stiffened considerably because of “totally unreasonable” provisions in the deal that would restrict the government’s authority to control nicotine in cigarettes.

In his most pointed comments to date on the mammoth proposed settlement--which requires White House and congressional approval--the president made it clear that he objects to one of the key provisions, although he did say he still wants a final compromise to be reached.

The settlement provision that curbs the Food and Drug Administration’s ability to limit the nicotine content or to ban it outright “is a totally unreasonable restriction,” Clinton told a press conference on the final day of a NATO summit in Madrid.

Clinton made the remarks the same day that a congressional advisory panel--headed by former Surgeon General C. Everett Koop and former FDA Commissioner David A. Kessler--gave Vice President Al Gore and other ranking administration officials a detailed blueprint for a new national strategy on tobacco control that would be considerably tougher on the industry than the massive settlement announced last month, particularly the sections dealing with the FDA and nicotine.

The report states emphatically that the FDA must have unlimited authority to regulate all areas of nicotine--the addictive component of cigarettes--including the ability to reduce nicotine content in cigarettes, and that this authority should be made “completely explicit.”

Prepared with input from 20 major public health organizations, the report undoubtedly will help shape the congressional debate about the controversial tobacco deal in the months ahead.

Kessler said he was pleased with the report’s reception at the White House, where the panel was informed that a White House task force had essentially come to the same conclusions they had on nicotine regulation.

*

“We are delighted with the White House taking a first step on insisting on full FDA authority,” Kessler said. “If there is to be a settlement, the public health measures in the document must be unequivocal; they must be very strong . . . they must work at reducing the number of people, especially children, who smoke.”

Almost as soon as the settlement was announced on June 20 by tobacco industry representatives and a group of state attorneys general who had filed massive lawsuits against cigarette companies seeking to recover tax money spent treating sick smokers, Kessler and Koop pounced on the FDA provisions.

The settlement states that in order to alter nicotine content, the FDA would have to prove by “substantial evidence” that any such changes would have a significant positive impact on public health, be technologically feasible and not create a black market.

Critics such as Kessler and Koop and several congressmen said this term created an impossible condition--proving a negative--and on Wednesday, Clinton jumped on that theme.

He said he could not accept the argument that restricting FDA authority over nicotine content would lead to a black market in stronger cigarettes.

“What is a black market. . . ?” Clinton asked aloud. “The 1% penetration of the market, a 3% penetration of the market?

“Would we deny the FDA the right to protect 100% of our children because there’s a few black-market cigarettes around?” he asked, describing the provision as unreasonable.

“I cannot believe that the tobacco companies or others would bring down the entire settlement over that,” he said, stressing that “there are a lot of really important, good things” in the deal, and he saw no reason why his objection should kill it.

Clinton’s statement clearly had political as well as policy dimensions, observers said.

His announcement shows that “Clinton feels he has enormous freedom of action here,” said a veteran Democratic consultant speaking on the condition that he not be identified by name.

“White House polling shows that in any contest between the industry and the president, the industry doesn’t have much leverage,” the source said.

The settlement would require tobacco companies to reduce teen smoking by 30% over five years or face up to $2 billion a year in penalties. Vending-machine sales would be prohibited; retailers would have to check identification of consumers who looked to be age 27 or younger; outdoor advertising would be banned, as would potent advertising symbols like Joe Camel and The Marlboro Man; and tobacco products would come with more ominous warning labels.

Settlement money would be used to finance anti-smoking advertising campaigns, fund smoking cessation programs and compensate individuals who won civil suits.

In return, the tobacco industry would be shielded from the potentially massive costs of lawsuits brought by states that wish to recover health care costs, as well as from class-action suits brought by smokers. Both types of suits would be barred in the future, as would punitive damages against the industry. That is one of several matters with which the Kessler-Koop panel takes issue.

Their report recommends:

* That “all currently available avenues of litigation, both civil and criminal, must be fully preserved.”

* The adoption of strict performance standards, on a company-by-company basis, for the reduction of underage smoking, starting within two years, not five years as the settlement provides.

* Steep tax hikes on tobacco products and the elimination of the settlement provision that would permit cigarette companies to seek a tax deduction for fines paid for failing to reduce youth smoking.

* Considerably more stringent requirements on internal documents that the industry would have to disclose, “including disclosure of all information inappropriately shielded by an assertion of attorney-client privilege.” There are thousands of such documents.

* That the Clinton administration encourage other countries to adopt marketing and advertising restrictions as strict as those contained in the settlement.

For their part, the cigarette companies issued a cautious joint statement:

“The preservation of the rights of American adults to choose to use tobacco products is a central element of the proposed tobacco resolution. The White House has repeatedly made clear that it is not in favor of prohibiting the use of tobacco products by adults, and the concern over development of a substantial black market has been articulated by the Food and Drug Administration itself.”

“We understand President Clinton’s remarks today in light of these prior statements,” said the statement from Philip Morris, R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co. and United States Tobacco Co. “The industry believes that the proposed resolution appropriately balances the various factors that should be considered in any determination to ban nicotine, and we look forward to opportunity to make the case for keeping intact the provisions of the proposed resolution as negotiated.”

But that appears highly unlikely, according to the White House, members of Congress and even industry analysts on Wall Street such as Smith Barney’s Martin Feldman, who acknowledged that the FDA provisions will have to rewritten if the deal is to fly.

Donna Shalala, the secretary of Health and Human Services, who is playing a key role in administration review of the tobacco deal, said no conclusions have been reached other than Clinton’s announcement and a White House critique of the issue will take several more weeks.

“The only thing we do know is there’s nothing fragile about the tobacco industry in this country,” Shalala said. “It has survived lots of assaults.”

After the White House meeting, Kessler and Koop met with anti-tobacco members of Congress, who in May asked them to form the advisory panel.

“It seems to me what the Koop-Kessler committee has said is that the proposed settlement is a vehicle with a flat tire or two,” said Sen. Ron Wyden (D-Ore.). “They’re saying Congress better take it to the repair shop and figure out how to make it work for the kids and public health.”

Wyden said it is not clear how long that will take, but it could be considerably longer than the settlement’s proponents had hoped for.

Peterson reported from Madrid and Weinstein from Los Angeles. Times staff writers Elizabeth Shogren and Edwin Chen in Washington contributed to this story.