[Federal Register Volume 75, Number 218 (Friday, November 12, 2010)]
[Proposed Rules]
[Pages 69524-69565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28538]
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Part II
Department of Health and Human Services
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Food and Drug Administration
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21 CFR Part 1141
Required Warnings for Cigarette Packages and Advertisements; Proposed
Rule
Federal Register / Vol. 75 , No. 218 / Friday, November 12, 2010 /
Proposed Rules
[[Page 69524]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 1141
[Docket No. FDA-2010-N-0568]
RIN 0910-AG41
Required Warnings for Cigarette Packages and Advertisements
AGENCY: Food and Drug Administration, HHS.
ACTION: Proposed rule.
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SUMMARY: The Food and Drug Administration (FDA) is proposing to amend
its regulations to add a new requirement for the display of health
warnings on cigarette packages and in cigarette advertisements. The
proposed rule would implement a provision of the Family Smoking
Prevention and Tobacco Control Act (Tobacco Control Act) that requires
FDA to issue regulations requiring color graphics depicting the
negative health consequences of smoking to accompany the nine new
textual warning statements that will be required under the Tobacco
Control Act. The Tobacco Control Act amends the Federal Cigarette
Labeling and Advertising Act (FCLAA) to require each cigarette package
and advertisement to bear one of nine new textual warning statements.
This proposed rule, once finalized, would specify the color graphics
that must accompany each of the nine new textual warning statements.
DATES: Interested persons may submit either electronic or written
comments on this proposed rule by January 11, 2011. See section IV.G of
this document for the proposed effective date of a final rule based on
this proposed rule.
ADDRESSES: You may submit comments, identified by Docket No. FDA-2010-
N-0568 and/or RIN number 0910-AG41, by any of the following methods:
Electronic Submissions
Submit electronic comments in the following way:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Written Submissions
Submit written submissions in the following ways:
FAX: 301-827-6870.
Mail/Hand delivery/Courier (for paper, disk, or CD-ROM
submissions): Division of Dockets Management (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.
Instructions: All submissions received must include the agency name
and Docket No(s). and Regulatory Information Number (RIN) for this
rulemaking. All comments received may be posted without change to
http://www.regulations.gov, including any personal information
provided. For additional information on submitting comments, see the
``Comments'' heading of the SUPPLEMENTARY INFORMATION section of this
document.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov and insert the
docket number(s), found in brackets in the heading of this document,
into the ``Search'' box and follow the prompts and/or go to the
Division of Dockets Management, 5630 Fishers Lane, rm. 1061, Rockville,
MD 20852.
FOR FURTHER INFORMATION CONTACT: Gerie Voss or Kristin Davis, Center
for Tobacco Products, Food and Drug Administration, 9200 Corporate
Blvd., Rockville, MD 20850-3229, 877-287-1373, [email protected]
or [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Legal Authority and Background
II. Cigarette Use in the United States and the Resulting Health
Consequences
A. Smoking Prevalence Among Adults and Children
B. Initiation of Smoking Among Adults and Children
C. Costs to Society and Health Effects of Cigarettes
1. Costs of Smoking to Society
2. Negative Health Effects of Cigarettes
III. Data Concerning Health Warnings
A. Current Warnings on Cigarette Packages and Advertisements Are
Inadequate
1. Current Warnings Have Not Changed in More Than Twenty-Five
Years
2. Current Warnings Often Go Unnoticed
3. Current Warnings Fail to Convey Relevant Information in an
Effective Manner
B. Larger, Graphic Warnings Communicate More Effectively:
International Experience
1. Getting Consumers' Attention
2. Influencing Consumers' Awareness of Cigarette-Related Health
Risks
3. Impacting Smoking Intentions and Behaviors
C. Benefits of FDA's Proposed Required Warnings
1. The Addition of Graphic Images Will Have a Significant,
Positive Impact on Public Health
2. The Revised Textual Statements Will Communicate More
Effectively
D. FDA's Process for Development and Plan for Selection of the
Required Warnings
IV. Description of Proposed Regulations
A. Section 1141.1--Scope
B. Section 1141.3--Definitions
C. Section 1141.10--Required Warnings
D. Section 1141.12--Incorporation by Reference of Required
Warnings
E. Section 1141.14--Misbranding of Cigarettes
F. Section 1141.16--Disclosures Regarding Cessation
G. Proposed Effective Date
V. Paperwork Reduction Act of 1995
VI. Executive Order 13132: Federalism
VII. Environmental Impact
VIII. Analysis of Impacts
A. Introduction and Summary
B. Need for Rule
C. Benefits
1. Reduced Smoking Rates
2. Expected Life-Years Saved
3. Benefits of Reduced Premature Mortality
4. Reduced Emphysema
5. Reduced Fire Costs
6. Medical Services
7. Summary of Benefits
8. Uncertainty Analysis
D. Costs
1. Number of Affected Entities
2. Costs of Changing Cigarette Labels
3. Market Testing Costs Associated With Changing Cigarette
Package Labels
4. Advertising Restrictions: Removal of Noncompliant Point-of-
Sale Advertising
5. Government Administration and Enforcement Costs
6. Summary of Costs
E. Cost-Effectiveness Analysis
F. Distributional Effects
1. Tobacco Manufacturers, Distributors, and Growers
2. National and Regional Employment Patterns
3. Retail Sector
4. Advertising Industry
5. Excise Tax Revenues
G. International Effects
H. Regulatory Alternatives
1. 24-Month Compliance Period
2. Six-Month Compliance Period
3. Summary of Regulatory Alternatives
I. Impact on Small Entities
1. Description and Number of Affected Small Entities
2. Description of the Potential Impacts of the Final Rule on
Small Entities
3. Alternatives to Minimize the Burden on Small Entities
IX. Comments
X. References
I. Legal Authority and Background
The Tobacco Control Act was enacted on June 22, 2009, amending the
Federal Food, Drug, and Cosmetic Act (FD&C Act) and FCLAA, and
providing FDA with the authority to regulate tobacco products (Pub. L.
111-31; 123 Stat. 1776). Section 201 of the Tobacco Control Act
modifies section 4 of FCLAA (15 U.S.C. 1333) to require that nine new
health warning statements appear on cigarette packages and in cigarette
advertisements:
WARNING: Cigarettes are addictive
WARNING: Tobacco smoke can harm your children
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WARNING: Cigarettes cause fatal lung disease
WARNING: Cigarettes cause cancer
WARNING: Cigarettes cause strokes and heart disease
WARNING: Smoking during pregnancy can harm your baby
WARNING: Smoking can kill you
WARNING: Tobacco smoke causes fatal lung disease in
nonsmokers
WARNING: Quitting smoking now greatly reduces serious
risks to your health.
Section 201 also states that ``the Secretary [of Health and Human
Services] shall issue regulations that require color graphics depicting
the negative health consequences of smoking'' to accompany the nine new
health warning statements.
Section 202(b) of the Tobacco Control Act amends section 4 of FCLAA
(15 U.S.C. 1333) to add a new subsection \1\ that permits FDA to, after
notice and an opportunity for the public to comment, adjust the format,
type size, color graphics, and text of any health warning statement if
such a change would promote greater public understanding of the risks
associated with the use of tobacco products. Similarly, section 202(b)
of the Tobacco Control Act permits FDA to adjust the format, type size,
and text of any other disclosures required under the FD&C Act, using
the same process and upon the same basis as for adjusting the health
warning statements.\2\ Among the provisions of the FD&C Act that
provide authority to require disclosures is section 906(d) (21 U.S.C.
387f(d)). This provision authorizes FDA to issue regulations
restricting the sale or distribution of cigarettes and other tobacco
products, including restrictions on the advertising and promotion of
such products, if FDA determines the restriction is appropriate for
protecting the public health.
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\1\ Section 202(b) of the Tobacco Control Act amends section 4
of FCLAA (15 U.S.C. 1333) to add a new subsection (d), ``Change in
Required Statements.'' However, section 201 of the Tobacco Control
Act also amends section 4 of FCLAA to add a new subsection (d),
``Graphic Label Statements.''
\2\ Provisions regarding adjustments to the health warnings and
other disclosures are also in sections 4(b)(4) and 4(d) of FCLAA, as
amended by section 201 of the Tobacco Control Act.
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These requirements are supplemented by the FD&C Act's misbranding
provisions, which require that product advertising and labeling include
proper warnings. For example, a tobacco product is deemed misbranded
under section 903(a)(1) or (a)(7)(A) of the FD&C Act (21 U.S.C.
387c(a)(1) or (a)(7)(A)) if its labeling or advertising is false or
misleading in any particular. Under section 201(n) of the FD&C Act (21
U.S.C. 321(n)), in determining whether labeling or advertising is
misleading, the agency considers, among other things, the failure to
reveal material facts concerning the consequences that may result from
the customary or usual use of the product. Similarly, under section
903(a)(8)(B) of the FD&C Act (21 U.S.C. 387c(a)(8)(B)), a tobacco
product is deemed misbranded unless the manufacturer, packer, or
distributor includes in all advertisements and other descriptive
printed matter a brief statement of, among other things, the relevant
warnings. Moreover, a tobacco product is deemed misbranded under
section 903(a)(7)(B) of the FD&C Act (21 U.S.C. 387c(a)(7)(B)) if it is
sold or distributed in violation of regulations prescribed under
section 906(d) of the FD&C Act. Under section 701(a) of the FD&C Act
(21 U.S.C. 371(a)), FDA has authority to issue regulations for the
efficient enforcement of the FD&C Act.
Cigarette smoking kills an estimated 443,000 Americans each year,
most of whom began smoking when they were under the age of 18 (Ref. 1).
Tobacco use is the foremost preventable cause of premature death in
America, and has been shown to cause cancer, heart disease, and other
serious adverse health effects (Ref. 2). In enacting the Tobacco
Control Act, Congress found that providing FDA with authority to
regulate tobacco products, including the advertising and promotion of
such products, would result in significant benefits to the American
public in human and economic terms (section 2(12) of the Tobacco
Control Act). The U.S. government has a substantial interest in
reducing the number of Americans, particularly children and
adolescents, who use cigarettes and other tobacco products in order to
prevent the life-threatening health consequences associated with
tobacco use (section 2(31) of the Tobacco Control Act). Virtually all
new users of tobacco products are minor children and a reduction in
tobacco use by this population alone could significantly reduce
tobacco-related death and disease in the United States (Ref. 3 at pp.
5-6).
In 1964, the Surgeon General of the Public Health Service issued
the landmark report titled ``Smoking and Health,'' which
comprehensively assessed the available scientific evidence relating to
the health effects of cigarette smoking and concluded that cigarette
smoking is a health hazard of sufficient importance in the United
States to warrant appropriate remedial action. Subsequently, Congress
passed the Federal Cigarette Labeling and Advertising Act (FCLAA) of
1965 (Pub. L. 89-92); this legislation required that a printed warning
appear on cigarette packages to warn consumers of the potential hazards
of cigarette smoking. This warning requirement was modified by later
amendments to FCLAA, including the Comprehensive Smoking Education Act
(CSEA) of 1984 (Pub. L. 98-474), which extended the warning requirement
to cigarette advertising. The current requirements for cigarette
package and advertising warning statements are set forth in FCLAA.
Although FCLAA has required the inclusion of textual health
warnings on cigarette packages and in cigarette advertisements for many
years, there is considerable evidence that the current warnings are
given little attention or consideration by viewers (Id. at p. 168).
These warnings, which have not changed in over twenty-five years, have
been described as ``invisible'' and fail to convey relevant information
in an effective way (Ref. 4; Ref. 5 at p. 291). The current warnings
also fail to include any graphic component. In proposing this current
regulation, FDA examined the scientific literature and found
substantial evidence indicating that prominent warnings including a
graphic component would offer significant public health benefits over
the current warnings used in the United States (see Section III). FDA
also found evidence of a strong worldwide consensus that effective
tobacco health warnings should be large and should include a graphic
image component. For example, the World Health Organization's (WHO)
Framework Convention on Tobacco Control (FCTC),\3\ an evidence-based
treaty that provides a regulatory strategy for addressing the serious
negative impacts of tobacco products, calls for warnings that are
rotating, ``large, clear, visible and legible.'' The treaty recommends
that the warnings occupy 50 percent or more of the principal display
areas, and states that they may be in the form of or include pictures
or pictograms. WHO FCTC art. 11.1(b). Worldwide, over 30 countries/
jurisdictions have implemented pictorial warnings on tobacco packages
and requirements for pictorial warnings are pending in several other
countries/jurisdictions.\4\
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\3\ There are 168 signatories to the WHO's Framework Convention
on Tobacco Control as of August 2010. At this time, the United
States is a signatory but has not ratified this treaty.
\4\ Countries/jurisdictions that have implemented pictorial
warning requirements for tobacco packaging include: Australia;
Belgium; Brazil; Brunei; Canada; Chile; Colombia; Cook Islands;
Djibouti; Egypt; Hong Kong; India; Iran; Jordan; Latvia; Malaysia;
Mauritius; Mexico; Mongolia; New Zealand; Pakistan; Panama;
Paraguay; Peru; Romania; Singapore; Switzerland; Taiwan; Thailand;
Turkey; United Kingdom; Uruguay; and Venezuela. Countries/
jurisdictions with pending requirements include: France; Guernsey,
Honduras; Malta; Norway; Philippines; and Spain.
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Therefore, as directed by section 201 of the Tobacco Control Act,
and in the interest of the public health, we are proposing to modify
the required warnings that appear on cigarette packages and in
cigarette advertisements to include color graphics depicting the
negative health consequences of smoking. Specifically, we are proposing
to add a new part 1141 to Title 21 of the Code of Federal Regulations,
which would require new warnings on cigarette packages and in cigarette
advertisements. These new required warnings would consist of the nine
textual warning statements set forth in section 201 of the Tobacco
Control Act accompanied by color graphics depicting the negative health
consequences of smoking. As required by section 201 of the Tobacco
Control Act, the new warnings would appear prominently on packages and
in advertisements, occupying at least 50 percent of the area of the
front and rear panels of cigarette packages and 20 percent of the area
of advertisements. Under sections 201 and 202 of the Tobacco Control
Act, FDA may adjust the type size, text, and format of the textual
warning statements. For example, under section 4(d) of FCLAA (as
amended by section 201 of the Tobacco Control Act), FDA may adjust the
type size, text, and format as FDA determines appropriate so that both
the textual warning statements and the accompanying graphics are clear,
conspicuous, legible and appear within the specified area. Such
adjustments, including adjustments to the text of some of the textual
warning statements, are included for some of the new warnings FDA is
proposing.
These proposed modifications to the warnings currently required in
the United States would promote greater public knowledge of the health
risks of using cigarettes and would help reduce the initiation of
smoking and the prevalence of cigarette use among Americans, and thus
help prevent the life-threatening health risks posed by cigarettes.
Specifically, the new required warnings are designed to clearly and
effectively convey the negative health consequences of smoking on
cigarette packages and in cigarette advertisements, which would help
both to discourage nonsmokers, including minor children, from
initiating cigarette use and to encourage current smokers to consider
cessation to greatly reduce the serious risks that smoking poses to
their health.
II. Cigarette Use in the United States and the Resulting Health
Consequences
In the United States, cigarette smoking is the leading cause of
preventable death and disease (Ref. 6), resulting in more deaths each
year than AIDS, alcohol, illegal drug use, homicide, suicide, and motor
vehicle crashes combined (Ref. 7). Each day, an estimated 6,600
Americans (nearly 4,000 of them under the age of 18) become new smokers
(Ref. 8 at p. 59), and due to the highly addictive nature of
cigarettes, many will find it difficult to quit smoking, despite the
severe health risks associated with cigarette use. Most smokers begin
smoking before they are 18 years old (Ref. 3 at p. 6)--more than 80
percent of established adult smokers began smoking before age 18 (Ref.
9)--and about half of adolescents who continue to regularly smoke will
eventually die from smoking-attributable disease (Ref. 10). Smoking
causes at least 443,000 premature deaths annually in the United States,
and each year cigarettes are responsible for approximately 5.1 million
years of potential life lost, direct health care expenditures of
approximately $96 billion, and at least $96.8 billion in annual
productivity losses in the United States (Ref. 1). The public health
benefits that would result from reducing the number of Americans who
smoke, and thus preventing the life-threatening consequences associated
with cigarette use, are substantial.
A. Smoking Prevalence Among Adults and Children
Adults. A significant percentage of U.S. adults are cigarette
smokers. For example, results from the 2009 National Health Interview
Survey (NHIS) indicate that approximately 46.6 million U.S. adults (or
20.6 percent of the adult population) are cigarette smokers (Ref. 6).
Among these adult smokers, the vast majority--78.1 percent, or
approximately 36.4 million people--smoke every day (Id.). There are
also subsets of the adult population with smoking prevalence rates that
are significantly higher than the overall average. For example, the
highest prevalence rates have been observed in adults with low
education levels. Data indicate that 49.1 percent of adults with a
General Education Development certificate (GED) and 28.5 percent of
adults with less than a high school diploma were current smokers in
2009, compared with 5.6 percent of adults with a graduate degree (Id.).
Children. Among children, data from the 2009 Youth Risk Behavior
Survey (YRBS), a nationally representative survey of students in grades
9-12 in the United States, showed that almost half (46.3 percent) of
U.S. high school students had tried cigarette smoking, and an estimated
19.5 percent of students were current cigarette smokers (Ref. 11 at p.
10). Of these current cigarette smokers, 7.8 percent reported that they
had smoked more than 10 cigarettes per day on the days they smoked (Id.
at p. 11). Overall, approximately 7.3 percent of high school students
in 2009 were frequent cigarette users, and 11.2 percent of students
under the age of 18 had been daily smokers at some point during their
lifetime (Id. at pp. 10-11). Furthermore, follow-up studies of youth
smokers have indicated that a significant number of students who are
light smokers (i.e., students who are not daily smokers or who smoke
less than 10 cigarettes per day) in high school will become heavy
smokers after leaving high school (Ref. 12).
Trends. During the period of 1998-2009, the proportion of U.S.
adults who were current cigarette smokers declined from 24.1 percent to
20.6 percent. However, the proportion did not decline from 2008 to 2009
(20.6 percent in both years), and during the five-year period of 2005
to 2009, rates showed virtually no change (20.9 percent in 2005 and
20.6 percent in 2009) (Ref. 6).
For children, data from the YRBS show that smoking prevalence rates
increased rapidly in the early 1990s, peaking around 1997. Prevalence
then declined during the late 1990s, but the rate of decline slowed
during 2003-2009 (Ref. 13). According to 2009 data from the University
of Michigan's Monitoring the Future survey, cigarette smoking rates
among 8th, 10th, and 12th grade U.S. students declined only slightly
from 2007 to 2009, at a much slower pace than observed previously.
Specifically, over the two-year time period from 2007 to 2009, smoking
prevalence fell by just 0.6, 0.9 and 1.5 percentage points among 8th,
10th, and 12th graders, respectively (Ref. 12). Data from this survey
also indicate that the proportion of students who perceive a great risk
associated with being a smoker has leveled off in the past several
years (Id.).
B. Initiation of Smoking Among Adults and Children
As discussed in section II.A, roughly one-fifth of Americans are
current cigarette smokers. Although the cigarette industry regularly
loses customers through user cessation and
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through deaths caused by smoking, each year millions of U.S. adults and
children become new smokers.
For example, results from the 2008 National Survey on Drug Use and
Health (NSDUH) indicate that the number of persons aged 12 or older who
smoked cigarettes for the first time within the past 12 months was 2.4
million (Ref. 8 at p. 59). This estimate was similar to the 2007
estimate (2.2 million) but statistically significantly higher than the
estimates for 2002 (1.9 million), 2003 (2.0 million) and 2004 (2.1
million) (Id.). This 2008 estimate averages out to approximately 6,600
new cigarette smokers every day (Id.). Most of these new cigarette
smokers (nearly 4,000) were under the age of 18 (Id.). However, it is
also notable that the number of people who began smoking at age 18 or
older showed a significant increase over the last several years,
jumping from approximately 600,000 in 2002 to 1 million in 2008 (Id. at
p. 60).
In addition, data from the 2008 NSDUH indicate that almost 1
million Americans aged 12 or older had started smoking cigarettes daily
within the past 12 months. Of these new daily smokers, 37.2 percent
(350,000 persons) were younger than age 18 when they started smoking
daily. In other words, each day in 2008 approximately 1,000 U.S.
children became new daily smokers (Id.). This is particularly
concerning from a public health perspective, as studies suggest that
the age individuals begin smoking can greatly influence how much they
smoke per day and how long they smoke, which will ultimately influence
their risk of tobacco-related disease and death (Refs. 14 through 16).
Data from animal studies also suggest that nicotine can cause permanent
brain changes in the adolescent brain that lead to addiction and that
these changes are greater in adolescents than in adults (Ref. 17).
Furthermore, data from human studies indicate that the younger smokers
start, the more likely they are to become addicted (Id.).
C. Costs to Society and Health Effects of Cigarettes
Cigarettes are responsible for premature deaths from a variety of
diseases, a substantial burden on the U.S. healthcare system, and
significant economic losses to society (Ref. 1). Smoking is the primary
causal factor for at least 30 percent of deaths from cancer, including
90 percent of deaths from lung cancer, almost 80 percent of deaths from
chronic obstructive pulmonary disease (COPD), and nearly one-fifth of
all deaths from cardiovascular disease (Ref. 1 and Ref. 2 at pp. 39 and
43).
1. Costs of Smoking to Society
Data from the Centers for Disease Control and Prevention's (CDC)
Smoking-Attributable Mortality, Morbidity, and Economic Costs (SAMMEC)
system for 2000-2004, the most recent years for which analyses are
available, indicate that cigarette smoking and exposure to cigarette
smoke are responsible for at least 443,000 premature deaths each year
(Ref. 1). For every person who dies from smoking, approximately 20 more
people (8.6 million persons) suffer from at least one serious smoking-
related illness, primarily heart disease and COPD (Ref. 18). The three
leading causes of smoking-attributable death for current and former
smokers were lung cancer, ischemic heart disease, and COPD (Ref. 1).
Cigarettes also have significant deleterious effects on nonsmokers. For
example, maternal smoking during pregnancy resulted in an estimated 776
infant deaths annually during 2000-2004, and each year an estimated
49,400 lung cancer and heart disease deaths were attributable to
exposure to secondhand smoke (Id.).
Overall, each year cigarettes are responsible for approximately 5.1
million years of potential life lost, direct health care expenditures
of approximately $96 billion, and at least $96.8 billion in
productivity losses due to premature deaths in the United States (Id.).
The total costs of smoking to society are much higher, as this estimate
of productivity losses does not include costs associated with smoking-
related disability, employee absenteeism, or costs associated with
secondhand-smoke attributable disease morbidity and mortality (Id.).
These health care expenditures and productivity losses result in a
combined economic burden from cigarette smoking of approximately $193
billion per year (Id.). There are also costs to the smoker and his or
her family. One study estimated that the total cost of smoking over a
lifetime, including private costs to the smoker and costs imposed on
society (e.g., second hand-smoke and costs of Medicare, Medicaid, and
Social Security) come to nearly $40 per pack of cigarettes smoked (Ref.
19 at p. 11).
2. Negative Health Effects of Cigarettes
The healthcare burdens, productivity losses, and deaths attributed
to smoking are related to an array of diseases and health conditions
caused by cigarettes. Beginning with the landmark 1964 report ``Smoking
and Health,'' the U.S. Surgeon General has issued a series of reports
addressing the health consequences of smoking and nicotine addiction.
According to the most recent Surgeon General's Report, ``The Health
Consequences of Smoking,'' which summarizes thousands of peer-reviewed
scientific studies and is itself peer-reviewed, smoking remains the
leading preventable cause of death in the United States, and cigarettes
have been shown to cause an ever-expanding number of diseases and
health conditions (Ref. 2 at pp. 9 and 25). As stated in the 2004
Report, ``[s]moking harms nearly every organ of the body, causing many
diseases and reducing the health of smokers in general * * * [and]
[q]uitting smoking has immediate as well as long-term benefits,
reducing risks for diseases caused by smoking and improving health in
general'' (Id. at p. 25). The following discussion presents a summary
of some of the diseases and conditions caused by cigarettes, and of the
impact smoking cessation has on some of these conditions.
Cancer. Cigarette smoking has long been tied to a variety of
cancers. For example, there is overwhelming evidence that smoking
causes lung cancer, and that the worldwide epidemic of lung cancer is
attributable largely to smoking (Id. at p. 43). Studies indicate that
the risk for developing lung cancer can be 20 or more times higher for
smokers compared to lifelong nonsmokers, and the risk of lung cancer
increases in smokers with the duration of smoking and the number of
cigarettes smoked (Id.). There are extensive data showing that quitting
smoking decreases the risk of lung cancer, and that this risk continues
to decline as the duration of not smoking increases in comparison to
the risk among continuing smokers (Id. at p. 49). However, the risk
does not decline to the level of risk for those who have never smoked,
even after 15 to 20 years of not smoking (Id. at p. 43).
It also has been established for some time that cigarette smoking
also causes a variety of other cancers, including laryngeal cancer,
oral cavity and pharyngeal cancers, esophageal cancer, and bladder
cancer (Id. at pp. 62, 67, 116, and 167). Furthermore, smoking has also
been shown to cause pancreatic cancer, kidney cancer, stomach cancer,
cervical cancer, and acute myeloid leukemia (Id. at p. 25).
For all of these cancers, increasing smoking prevention and
cessation would cause a significant decrease in the risk (Id. at ch.
2). For example, smoking cessation halves the risk for cancers of the
oral cavity and esophagus as soon as five years after cessation (Id. at
p. 117).
Cardiovascular disease. Smoking is causally related to all of the
major
[[Page 69528]]
clinical cardiovascular diseases, with higher levels of smoking and
longer duration of smoking increasing the risk of disease (Id. at p.
397). Heart disease and stroke are the main types of cardiovascular
disease caused by smoking and represent the first and third leading
causes of death in the United States (Id. at p. 363). Studies have
shown that smokers have a 70 percent greater death rate from coronary
heart disease than nonsmokers, a twofold to fourfold greater incidence
of coronary heart disease, and a twofold to fourfold greater risk of
sudden death than nonsmokers (Ref. 20 at pp. 58-59). The beneficial
impact of smoking cessation on these risks has also been well
established. For example, one year after quitting smoking, a former
smoker's additional risk of heart disease compared to a person who has
never smoked is reduced by about half and, after 15 years of
abstinence, this risk is similar to that of a person who never smoked
(Ref. 2 at p. 363).
Current smoking is also associated with a twofold to fourfold
increase in the risk of stroke; smoking cessation steadily decreases
this risk and, after 5 to 15 years of not smoking, the risk of stroke
is indistinguishable from that for lifetime nonsmokers (Id. at p. 394).
Smoking has also been shown to cause abdominal aortic aneurysm.
Studies have shown that the risk of death from abdominal aortic
aneurysm was increased more than fourfold in current smokers and
twofold in former smokers; smoking is one of the few avoidable causes
of this frequently fatal condition (Id. at pp. 396-97).
Respiratory diseases. Smoking has negative effects on the entire
lung--it impairs lung defenses against infection and causes the
sustained lung injury that leads to COPD (Id. at p. 423). Cigarettes
have been shown to cause a range of acute respiratory illnesses,
including increased risk of pneumonia, and chronic respiratory
diseases, which are leading causes of illness and death in the United
States and worldwide (Id. at pp. 423, 508-509).
For example, cigarette smoking is the leading cause of COPD in the
United States, and this major public health problem could be almost
completely prevented by smoking abstinence (Id. at p. 501). Although
smoking cessation reduces the risk of COPD, the risk of COPD mortality
among former smokers, even after 20 years or more of abstinence,
remains elevated compared with the risk among people who have never
smoked (Id.).
Maternal smoking during pregnancy causes a reduction in lung
function in infants, and children who smoke experience impaired lung
growth and an early onset of lung function decline (Id. at pp. 508-
509). Smoking during adulthood also leads to a premature onset of
accelerated age-related decline in lung function, while smoking
cessation can return the rate of lung function decline to that of
persons who have never smoked (Id. at pp. 480 and 509). Results from
several investigations suggest that the benefits of smoking cessation
for FEV1 decline (a measure of the air capacity of the lungs) are
greatest for persons who stop smoking at younger ages (Id. at p. 480).
Smoking also results in poor asthma control and it causes a range
of respiratory symptoms in children, adolescents, and adults, including
coughing, phlegm, wheezing, and shortness of breath (Id. at p. 509).
Smoking cessation reduces the rates of these respiratory symptoms and
of respiratory infections (Id. at p. 467).
Reproductive effects. Smoking has well-documented negative effects
on fertility, on pregnancies, and on infants and children born to women
who smoke. For example, studies show that women who smoke have reduced
fertility (Id. at p. 541). Women who smoke during pregnancy are more
likely to experience premature rupture of the membranes, placenta
previa, and placental abruption (Id. at p. 576). Smoking also increases
rates of preterm delivery and shortened gestation, and studies have
indicated that women who smoke are twice as likely to have low birth
weight infants as women who do not smoke (Id. at pp. 576 and 569).
Smoking also causes an increased risk of sudden infant death syndrome
(SIDS) for infants whose mothers smoke during and after pregnancy (Id.
at pp. 587 and 601).
Other effects. Smoking has been shown to have a variety of other
negative health effects. For example, cigarette smokers have poorer
overall health status compared to nonsmokers; this may manifest as
increased absenteeism from work and increased use of medical care
services (Id. at p. 818). Smokers have an increased risk of adverse
surgical outcomes related to wound healing and respiratory
complications compared to nonsmokers (Id.). In postmenopausal women who
smoke, smoking is associated with low bone density (Id. at p. 716).
Smokers are also at an increased risk for hip fractures, which account
for a significant proportion of the morbidity and mortality associated
with osteoporosis (Id. at pp. 717-719). Smoking also increases the risk
for periodontitis, cataract, and for the occurrence of peptic ulcer
disease in persons who are Helicobacter pylori positive (Id. at pp.
736, 777, 780 and 813). Furthermore, smokers are at a greater risk of
dying from peptic ulcer disease than nonsmokers (Id. at p. 807).
Addiction. Nicotine addiction is another negative effect of
cigarette smoking. Nicotine is the primary chemical compound in tobacco
that causes addiction, and the magnitude of public health harm caused
by cigarettes is inextricably linked to the addictive nature of these
products (Ref. 21 at p. 14; Ref. 5 at p. xi). Nicotine is psychoactive
(mood altering) and can provide pleasurable effects; it also causes
physical dependence characterized by withdrawal symptoms that usually
accompany nicotine abstinence (Ref. 21 at p. 14). The pharmacologic and
behavioral processes that determine tobacco addiction are similar to
those that determine addiction to drugs such as heroin and cocaine (Id.
at p. 9). Smokers develop tolerance to the effects of nicotine over
time as well as a physical dependence on these effects, and as a result
need greater amounts of nicotine over time to produce the same effects;
thus smokers tend to smoke more over time to avoid withdrawal symptoms
(Id. at pp. 50, 197-98). Withdrawal symptoms are common among persons
attempting to quit smoking--in one study, 78 percent of subjects
reported significant withdrawal symptoms (Id. at pp. 201-202).
In addition to physical dependence, nicotine addiction also results
in conditioned behavior in smokers in response to situations and
environmental stimuli associated with cigarette use. Smokers typically
use cigarettes in certain patterns--e.g., upon waking in the morning,
after a meal, with a cup of coffee or an alcoholic beverage--and this
patterned behavior is strongly reinforced by the pleasurable effects of
nicotine (Id. at pp. 306-308; Ref. 17). Other stimuli associated with
smoking itself, such as the smell of cigarette smoke or the sight of
cigarette-associated paraphernalia, also become part of the
conditioning process by repeated association with the desired
physiological effects of nicotine (Ref. 21 at p. 307; Ref. 17). As
these processes repeat over time as a result of regular smoking, these
situations and stimuli become a powerful cue to smoke due to their
association with the rewarding effects of nicotine, and the desire to
smoke triggered by these situations can persist long after withdrawal
symptoms subside (Ref. 17).
As a result of nicotine addiction, only a minority of smokers can
achieve permanent abstinence in an initial quit
[[Page 69529]]
attempt. There are data suggesting that more than 70 percent of smokers
in the United States report that they want to quit, and approximately
44 percent report that they try to quit each year (Ref. 19 at p. 15).
This estimate is likely a significant underestimate of the actual
number of quit attempts because unsuccessful quit attempts,
particularly if short-lived or in the past, are often not reported in
surveys. One study reported that at three months, 90.1 percent of quit
attempts lasting less than one day, 63.7 percent of those lasting
between a day and one week, and 38.9 percent of those lasting between
one week and one month failed to be reported to researchers conducting
surveys (Ref. 22). Many of the quit attempts that are reported are
unsuccessful. For example, among the 19 million adults who reported
attempting to quit in 2005, epidemiologic data suggest that only 4 to 7
percent were successful (Ref. 19 at p. 15). Similarly, the Institute of
Medicine (IOM), considering data for 2004, found that although
approximately 40.5 percent of adult smokers reported attempting to quit
in that year, only between 3 and 5 percent were successful (Ref. 5 at
p. 82). Furthermore, adults with education levels at or below the
equivalent of a high school diploma have the highest smoking prevalence
levels but the lowest quit ratios (i.e., the ratio of persons who have
smoked at least 100 cigarettes during their lifetime but do not
currently smoke to persons who report smoking at least 100 cigarettes
during their lifetime) (Ref. 23).
Adolescents also experience low success rates when attempting to
quit. Most Americans who use tobacco products begin using when they are
under the age of 18 and become addicted before reaching the age of 18
(Refs. 3 and 7). Although many adolescents believe ``they can quit
[smoking] at any time and therefore avoid addiction,'' nicotine
dependence can be rapidly established (Ref. 5 at p. 89; see also Ref.
19 at p. 158). Research has shown that some adolescents report symptoms
of withdrawal and craving within days or weeks of beginning to smoke
(Ref. 24). As a result, many adolescents are nicotine dependent despite
their relatively short smoking histories (Ref. 25). An analysis of data
from the 2007 YRBS found that 60.9 percent of high school students who
ever smoked cigarettes daily tried to quit smoking, but only 12.2
percent were successful (Id.). Research among adolescents also
highlights their poor understanding of the difficulty of quitting
smoking--for example, one study found that only 3 percent of 12th grade
daily smokers estimated that they would still be smoking in 5 years,
while in reality 63 percent of this population is still smoking daily 7
to 9 years later (Ref. 5 at p. 91).
Benefits of reduced prevalence. Dramatic declines in the deaths
caused by the conditions discussed above can be achieved by further
reducing smoking prevalence rates. Smoking cessation has major and
immediate health benefits for men and women of all ages, regardless of
health status (Ref. 26 at p. i). Smoking cessation decreases the risk
of the health consequences of smoking, and former smokers live longer
than continuing smokers. For example, persons who quit smoking before
age 50 have one-half the risk of dying in the next 15 years compared
with continuing smokers (Id. at p. v).
More importantly, preventing nonsmokers, particularly children,
from starting smoking in the first instance would allow them to avoid
nicotine addiction and the severe adverse health consequences of
smoking. Preventing initiation would result in enormous public health
benefits. As Congress found when enacting the Tobacco Control Act,
``reducing the use of tobacco by minors by 50 percent would prevent
well over 10,000,000 of today's children from becoming regular, daily
smokers, saving over 3,000,000 of them from premature death due to
tobacco-induced disease. Such a reduction in youth smoking would also
result in approximately $75,000,000,000 in savings attributable to
reduced health care costs'' (section 2(14) of the Tobacco Control Act).
III. Data Concerning Health Warnings
A. Current Warnings on Cigarette Packages and Advertisements Are
Inadequate
Section 201 of the Tobacco Control Act requires FDA to issue
regulations mandating the use of color graphics depicting the negative
health consequences of smoking to accompany the nine warning statements
that are specified in section 4(a)(1) of FCLAA (15 U.S.C. 1333(a)(1)).
The warning statements must be randomly displayed (i.e., in each 12-
month period, all of the different warnings must appear in as equal a
number of times as is possible on each brand of the product and be
randomly distributed in all areas of the United States in which the
product is marketed) on cigarette packages and rotated quarterly in
alternating sequence in cigarette advertisements, as provided by
sections 4(c)(1) and 4(c)(2) of FCLAA (15 U.S.C. 1333(c)(1), (2)), as
amended by the Tobacco Control Act. Congress directed that stronger and
larger warning statements, accompanied by graphics, would replace the
current text-only requirements. Data from studies indicate the current
warnings on cigarette packages and advertisements are ineffective at
communicating health risk information to consumers.
Cigarette packages and advertisements can be effective channels for
communication of important health information. The warning on a
cigarette package can provide a clear, visible vehicle to communicate
risk at the most crucial time for smokers and potential smokers. Pack-
a-day smokers are potentially exposed to warnings more than 7,000 times
per year (Refs. 27-29). When utilized effectively, cigarette packages
and advertisements can serve as an important channel for communicating
health information to broad national audiences that include both
smokers and nonsmokers.
The inclusion of strong health warnings on packages and in
advertisements can thus provide a critical opportunity to educate
consumers about the health risks of cigarettes, support intentions
among current smokers who want to quit or decrease cigarette
consumption, and discourage nonsmokers, particularly youth, from
initiating cigarette use. Prominent displays of warnings increase their
effectiveness; larger warnings, with pictures, are more likely to be
noticed by consumers, communicate information about health risks to
consumers, and reinforce intentions among tobacco users who want to
quit (Ref. 30).
However, cigarette warnings in the United States have not been
changed or improved in more than 25 years. The unchanging nature of
these warnings, as well as their relatively small size and lack of a
graphic image component, severely impairs their ability to effectively
communicate to consumers. Research has repeatedly illustrated that the
current warnings used in the United States frequently go unnoticed or
fail to convey relevant information regarding health risks.
1. Current Warnings Have Not Changed in More Than Twenty-Five Years
In response to the Surgeon General's first major report on smoking
and health in 1964, Congress passed FCLAA to require warning labels on
all cigarette packages. The warning, which was required to be
conspicuous and legible, was written in small print and located on one
of the side panels of each cigarette package. It stated ``CAUTION:
Cigarette Smoking May Be Hazardous to
[[Page 69530]]
Your Health.'' This language appeared on all cigarette packs sold from
January 1, 1966, through October 31, 1970. In 1969, Congress passed the
Public Health Cigarette Smoking Act (Public Law 91-222), which slightly
modified the warning statement on cigarette packages, but did not yet
require any warnings on cigarette advertisements. The new warning
language, ``Warning: The Surgeon General Has Determined That Cigarette
Smoking Is Dangerous to Health,'' appeared on cigarette packages sold
in the United States from November 1, 1970, through October 11, 1985.
In 1972, the Federal Trade Commission (FTC) issued consent orders
requiring six major cigarette manufacturers and distributors to include
in all their cigarette advertisements a clear and conspicuous
disclosure of the warning required to be on packages (Ref. 31 at 460-
65).
In 1981, the FTC issued a report to Congress that concluded that
the then-current health warning labels had little effect on public
awareness and attitudes toward smoking. The FTC stated that the
existing warning likely was ineffective because it ``(1) is overexposed
and worn out, (2) lacks novelty, (3) is too abstract, and (4) lacks
personal relevance'' (Ref. 32 at pp. 7-16).
Subsequently, Congress again modified cigarette warnings by passing
the CSEA, which required the following four rotational health warnings
on packages and advertisements \5\:
---------------------------------------------------------------------------
\5\ Slightly different health warnings were required on outdoor
billboard advertisements.
---------------------------------------------------------------------------
``SURGEON GENERAL'S WARNING: Smoking Causes Lung Cancer,
Heart Disease, Emphysema, and May Complicate Pregnancy.''
``SURGEON GENERAL'S WARNING: Quitting Smoking Now Greatly
Reduces Serious Risks to Your Health.''
``SURGEON GENERAL'S WARNING: Smoking by Pregnant Women May
Result in Fetal Injury, Premature Birth and Low Birth Weight.''
``SURGEON GENERAL'S WARNING: Cigarette Smoke Contains
Carbon Monoxide.''
In addition, the law established the location and format for these
warning statements and mandated that the warnings be rotated quarterly,
which helped keep them from becoming stale. Despite a FTC
recommendation to change the size and shape of warnings, Congress
retained the size and rectangular format of previous warnings.
More than twenty-five years have passed since these last changes,
and there is a substantial body of evidence that these warnings do not
effectively communicate information about the adverse health effects of
smoking to the American public, as discussed in more detail below.
Given the extreme hazards cigarettes pose to the public health, the
revised warnings required under section 4 of FCLAA (15 U.S.C. 1333) and
provided in this proposed rule are critical to the effective
communication of the health risks of smoking, and should encourage
current smokers to consider cessation and discourage nonsmokers from
initiating use of cigarettes.
2. Current Warnings Often Go Unnoticed
The CSEA requires the current warnings to be ``conspicuous and
legible'' with the same package location and font size required on the
date of enactment (i.e., October 12, 1984). However, researchers have
found that these health warnings go largely unnoticed and unconsidered
by both smokers and nonsmokers. For example, a major study into tobacco
policy in the United States by the IOM in 2007 concluded that U.S.
package warnings are both ``unnoticed and stale'' (Ref. 5 at p. 291).
The Chair of the IOM's Committee on Reducing Tobacco Use has described
the warnings on cigarette packs as ``invisible'' (Ref. 4).
Research regarding warning statements in cigarette advertisements
has shown similar results. For example, one study of the recall and
eye-tracking of adolescents viewing tobacco advertisements found: 43.6
percent of adolescents did not even look at the warning statement
included in the advertisement; just 36.7 percent looked at the warning
long enough to read any of its words; and the average viewing of the
warning only accounted for 8 percent of the total viewing time (Ref.
33). Researchers in this study also determined that adolescents are
unable to recall the content of the current cigarette warnings or to
correctly recognize the warnings from a list, indicating that the
current warnings are likely to be ineffective among younger consumers
(Id.).
Another study of adolescents also found that they are not seeing,
reading, and remembering health warnings on cigarette packages and
advertisements (Ref. 34). In this study of ninth-grade students, only
32 percent of regular smokers recalled seeing one of the current
warnings which states: ``Quitting Smoking Now Greatly Reduces Serious
Risks To Your Health'' (Id.). In addition, almost 20 percent
incorrectly reported having seen a simulated health warning that is not
among one of the four current required warnings (Id.).
Data from a 1989 study indicate that consumers also fail to notice
or read health warnings on outdoor billboards and taxicab cigarette
advertisements (though these advertising media are no longer in common
use). According to this study, which was published in the Journal of
the American Medical Association, drivers only read the entire warning
message on 5 percent of highway billboard advertisements and were only
able to fully read the health warning on 18 of the 39 street
advertisements used in this study (Ref. 35). Participants were unable
to read, even partially, the Surgeon General's warnings in any of the
47 taxicab advertisements used in this study (Id.). Yet, those same
consumers were able to identify the brand name and imagery on 100
percent of the highway billboards (Id.). Likewise, these participants
were able to identify the brand name in 100 percent and the imagery in
95 percent of the taxicab advertisements (Id.). These results indicate
that the current warnings are not appropriately conspicuous in
advertisements compared to the rest of the advertising message, as
discussed in more detail below.
3. Current Warnings Fail To Convey Relevant Information in an Effective
Manner
Even when consumers notice and contemplate the current health
warnings on cigarette packages and in advertisements, there is clear
evidence that these warnings fail to appropriately convey crucial
information such as the nature and extent of the health risks
associated with smoking cigarettes. The current small, wordy text-based
messages are ambiguous, providing less health information than is
provided regarding many other consumer goods that have significantly
less harmful impact on people's health (Ref. 36).
In its 2007 Report, the IOM concluded that the current U.S.
warnings fail to convey relevant health information in an effective way
(Ref. 5 at p. 291). The IOM cited an International Tobacco Control
Policy Evaluation Study, which found that 85 percent of Canadian
respondents cited packages (which, in Canada, contain prominent text
and graphic health warnings) as a source of health information, while
only 47 percent of U.S. smokers cited packages as a health information
source (Id. at 294, citing Ref. 37).
Studies also have shown that the current warnings do not motivate
consumers to look at them long enough to consider the concept being
communicated. For example, researchers have found that the warning
[[Page 69531]]
statements fail to attract attention or to make the consumer
appropriately aware of the health risks of smoking (Ref. 38). In a
study of U.S. and Canadian smokers and nonsmokers, researchers found
that participants voluntarily examined warnings on Canadian packages,
which include prominent text and graphics, for longer durations than
U.S. package warnings, because the current text-only messages used in
the United States are not memorable for consumers (Id.). The mere
textual presentation of vague hazard information in the current U.S.
warnings is not sufficient to motivate perceptions of risk (Id.).
The content and format of the current warnings have failed to
successfully draw and hold consumers' attention, especially when placed
in competition with the other text, images, and graphics that cigarette
companies have used on packaging and in advertising, which have been
thoroughly tested, regularly updated, and artfully crafted by tobacco
companies. According to the most recent data from the FTC, tobacco
companies spent approximately $12.49 billion on advertising and
promotion in 2006 (Ref. 39 at p. 1). Tobacco companies frequently have
employed marketing and advertising experts to craft campaigns with
messages targeted to certain demographics (Ref. 40 at p. 7). The
messages developed by companies in cigarette advertisements cover 96
percent of the space, are continuously updated to incorporate current
trends, and are targeted based on market research. In contrast, the
current health warnings cover only 4 percent of advertising space, are
solely textual, are not targeted to any population group, and consist
of only four rotating messages that have not been updated for more than
two and a half decades. On cigarette packages, these warnings appear
only on one side panel. As a result, the important health messages
frequently are functionally invisible in comparison to the rest of the
advertisement and package (Ref. 33 at p. 88).
Moreover, even if consumers notice the current warnings, those with
less education may not be able to adequately comprehend the text-only
messages. In its 2007 Report, the IOM expressed concern about the
ability of consumers with less education to recall the information
included in text-based messages (Ref. 5 at p. 295). The IOM cited a
study of Canadian smokers' knowledge about the country's prior warning
requirements, which, like the current U.S. health warnings, only
contained four textual warning statements. In that study, researchers
noted that comparatively few women with lower educational attainment
were aware of messages warning of the impacts of smoking on life
expectancy, heart disease, or pregnancy (Ref. 41). Because the current
U.S. smoking population has various levels of education (including a
high percentage of people with low educational attainment) and includes
teenagers (who have yet to complete their education), the current text-
only warnings are inadequate.
B. Larger, Graphic Warnings Communicate More Effectively: International
Experience
In 2001, Canada introduced graphic health warnings depicting the
adverse health consequences of smoking on the upper 50 percent of the
two primary panels of cigarette packages. Those warnings, like the
warnings proposed here, include a photograph or other image, a marker
word ``WARNING,'' and a warning statement. By mid-2009, 28 countries
also required graphic warnings and more countries are planning to do
so.
In its 2007 Report, the IOM concludes that the available scientific
evidence indicates that larger, graphic health warnings would promote
greater public knowledge of the health risks of using tobacco and would
help reduce consumption (Ref. 5 at p. 295). Similarly, an article
published by WHO concludes that, taken as a whole, the research on
graphic health warnings show that they are (1) more likely to be
noticed than text-only warnings, (2) more effective for educating
smokers about the health risks of smoking and for increasing the time
smokers spend thinking about the health risks, and (3) associated with
increased motivation to quit smoking (Ref. 42).
1. Getting Consumers' Attention
Several design features are associated with greater salience (i.e.,
noticeability and readability) of health warnings, including the size
and position of warnings on the cigarette package. Smokers are more
likely to recall larger warnings, as well as warnings that appear on
the front of packages (Ref. 5 at p. C-3). Warnings that include
pictures or graphics likewise are more noticeable and more likely to be
recalled than text-only warnings (Id. at p. C-4).
In Canada, awareness of warnings on cigarette packages was almost
universal among smokers and very high even among nonsmokers after that
country required cigarette packages to display large, graphic warnings
on the front and rear panels. In a 2001 cross-sectional survey
sponsored by the Canadian Cancer Society, 90 percent of Canadian
smokers and 49 percent of nonsmokers noticed changes to the Canadian
health warnings after the introduction of pictorial warnings (Ref. 43).
Similarly, a survey of youth sponsored by Health Canada showed that 73
percent of those who have never smoked, 86 percent of ``puffers''
(i.e., those who had tried smoking but never smoked a whole cigarette),
and 90 percent of those who have smoked beyond puffing reported seeing
health warnings on cigarette packages in 2002, a year after the
introduction of graphic warnings in Canada (Ref. 44). In a study of
young adults, 98.5 percent of smokers, 88.9 percent of occasional
smokers, and 67.5 percent of those who have never smoked reported that
they were aware of the Canadian graphic health warnings (Ref. 45).
Survey evidence also shows that awareness of health warnings on
cigarette packages increased significantly after Australia required
large, graphic warnings in 2006. In one study, smokers were more likely
to report that over the past month they noticed the enhanced warnings
and read or looked closely at them compared to the old warnings (Ref.
46). Among students in year levels 8 to 12 in Melbourne, cognitive
processing of cigarette warnings (i.e., reading, attending to, thinking
and talking about the warnings) increased in the year that Australia
adopted graphic warnings (Ref. 47). Developmental focus group research
conducted for Australia as it considered whether to require graphic
warnings similarly reported that graphic warnings on cigarette packs
were potentially more likely to help people remember the health effects
and warnings (Ref. 48).
Experimental studies also indicate that requiring large, graphic
warnings would significantly increase the salience of health warnings
on cigarette packages. In one experimental study, U.S. college students
were shown images of the Canadian cigarette warnings and the current
warnings appearing on cigarette packs sold in the United States.
Compared to the U.S. warnings, the Canadian graphic warnings
significantly increased aided recall of the warnings, increased depth
of message processing, and increased the perceived strength of the
message (Ref. 49). Similarly, in focus group research conducted among
young adults in the United States, participants reported that the
Canadian warnings were more visible and more informative than the
warnings appearing on cigarette packages in the United States (Ref.
50).
[[Page 69532]]
2. Influencing Consumers' Awareness of Cigarette-Related Health Risks
Large, pictorial warnings graphically convey the harm and danger
that tobacco use causes, eliciting an immediate impact. Effective
communication of the health risks associated with cigarette use is
critical from a public health perspective, as smokers who perceive a
greater health risk from smoking are more likely to want to quit and to
be successful in their quit attempts (Ref. 37). National surveys
conducted on behalf of Health Canada indicate that approximately 95
percent of youth smokers and 75 percent of adult smokers report that
the Canadian pictorial warnings have been effective in providing them
with important health information (Ref. 5 at p. 294). The 2001 survey
conducted by the Canadian Cancer Society found that the country's
pictorial warnings, which had recently been introduced, resulted in 58
percent of smokers reporting that they thought about the health effects
of smoking more frequently than previously (Ref. 43). Among Canadian
adult smokers in Ontario, 51 percent of study participants reported
that the pictorial warnings made them think about the health effects of
smoking (Ref. 51). Canadian smokers were more likely to report
cigarette packages as a source of information about the health risks of
smoking than smokers in the United States and other countries with
text-only warnings (Ref. 37).
Similarly, a study conducted for officials in Australia found that
graphic warnings increased participants' knowledge and awareness of the
health risks of smoking, especially among current smokers and recent
quitters (Ref. 52). A street intercept study in Australia suggests that
graphic warnings may also increase smokers' perceptions of their
personal risks of smoking. In that study, 51 percent of participants
stated that the graphic warnings on cigarette packs increased their
perceived risk of dying from smoking (Ref. 53).
Graphic warnings appear to influence risk perceptions among youth
as well as adults. In a cross-sectional survey of middle and high
school students in Greece, participants were shown several graphic
warnings prepared by the European Union as well as text-only warnings.
Study participants consistently selected the graphic warnings as more
effective in making them think about the effects of smoking on health
(Ref. 54). Similarly, in a youth survey conducted by Health Canada,
approximately two-thirds of youth nonsmokers reported looking at the
pictorial warnings at least once a week and, as indicated above, 95
percent agreed that the warnings had been effective in providing them
with important information about the health effects of smoking (Ref. 5
at p. C-5).
In an Internet-based study of current and former young adult
smokers in the United States, the Canadian graphic warnings were rated
as significantly more effective than the current U.S. warnings on
cigarette packs for conveying concerns about the health risks of
smoking (Ref. 55).
3. Impacting Smoking Intentions and Behaviors
In addition to increasing consumer awareness of the health risks of
smoking, the proposed graphic warnings also seek to impact changes in
smoking behavior. There are some studies indicating that large, graphic
warnings increase smokers' intentions to quit smoking or motivate them
to quit smoking.
The 2001 survey sponsored by the Canadian Cancer Society shows that
44 percent of adult smokers stated that the Canadian graphic health
warnings increased their motivation to quit smoking (Ref. 43). In
another study of Canadian young adults (ages 20 to 24), 37 percent of
male participants and 48 percent of female participants reported that
the warnings on cigarette packs led them to think about quitting
smoking (Ref. 45). In this same study, 36 percent of male participants
and 34 percent of female participants also indicated that the cigarette
warnings might make young people less likely to start smoking. Some
studies indicate that exposure to graphic warnings increases quit
intentions among youth smokers as well. A study of Australian
adolescents shows that experimental and established youth smokers
thought more about quitting after the introduction of graphic warnings
in Australia (Ref. 47).
There is also evidence suggesting that graphic warnings may be more
effective at preventing youth initiation than text-only warnings. For
example, in a cross-sectional survey of middle and high school students
in Greece where participants were shown several graphic warnings
prepared by the European Union as well as text-only warnings, the
adolescents rated the graphic warning labels as more effective in
preventing them from smoking (Ref. 54).
A few studies also indicate that large graphic health warnings may
increase quit attempts. In Canada, smokers who quit smoking after the
introduction of graphic warnings were 2.78 times more likely to
identify health warnings as a motivation for their quitting than former
smokers who quit during the two years before graphic warnings appeared
on Canadian cigarette packages (Ref. 29). In one Australian study,
participants reported increased attempts to quit smoking after
cigarette packs displayed graphic warnings, although there was no
association with short-term quit success (Ref. 46).
Some studies also indicate that large, graphic warnings may induce
individual smokers to reduce consumption. The Canadian Cancer Society
survey indicated that 21 percent of smokers reported that on one or
more occasions they chose not to smoke a cigarette due to the warnings
on cigarette packages (Ref. 43). The survey also indicated that 27
percent of participants reported that the then-new graphic warnings
motivated them to smoke less inside their homes (Id.). In another study
involving young adults in Canada, 22.6 percent of current male smokers
and 26.6 percent of current female smokers reported that in the past
month, noticing the warning on cigarette packages led them to decide
not to have a cigarette (Ref. 45). In a study of Australian youth
smoking behavior, adolescents who were experimenting with smoking or
were established smokers indicated that they thought more about
forgoing cigarettes after graphic warnings appeared on cigarette
packages in 2006 (Ref. 47).
One study suggests that graphic warnings may help persons who have
quit smoking remain abstinent from smoking. In that study, 26 percent
of former smokers in Canada reported that the then-new graphic warnings
on cigarette packages helped them remain abstinent (Ref. 29).
Canadian national survey data also suggest that graphic warnings
may reduce smoking rates. Smoking prevalence among Canadians aged 15 or
older dropped from 24 percent in 2000 (before the graphic warnings were
introduced) to 22 percent in 2001 and 21 percent in 2002 (Ref. 56). It
is not possible to draw a direct causal connection between the graphic
warnings and these data because other smoking control initiatives,
including an increase in the cigarette tax and new restrictions on
public smoking also occurred during the same period. At the same time,
however, these data are suggestive that large graphic warnings may
reduce smoking consumption.
After considering the available scientific evidence, the IOM
concluded in its 2007 Report that ``[o]n the basis of the evidence
accumulated thus far, [larger,] graphic warnings of the kind required
in Canada, Brazil and Thailand `would promote greater public
understanding of the risks' of using
[[Page 69533]]
tobacco and would help reduce consumption'' in the United States (Ref.
5 at p. 295).
C. Benefits of FDA's Proposed Required Warnings
FDA has carefully assessed the scientific literature studying the
impact of graphic images on the salience (i.e., noticeability and
readability) of warnings, on the effective communication of the health
risks of smoking, and on changes to smoking behavior. Although much of
the available research involved comparisons of warnings that differ in
more than one aspect (i.e., text size, use of graphics, and number of
images), the overall body of available research has illustrated that
the use of large text, color graphics, and multiple rotating health
statements will significantly improve the communication of the health
risks of smoking to the general public in the United States and delay
wear-out of these important health messages.
Our assessment of the literature and our experience as a public
health agency provide support for requiring that the nine textual
warning statements listed in section 4(a)(1) of FCLAA (15 U.S.C.
1333(a)(1)) appear on cigarette packages and in cigarette
advertisements, and that each textual warning statement be accompanied
by a specified color graphic image. It also supports the proposal that
the required warnings should comprise the top 50 percent of the area of
each of the front and rear panels of cigarette packages and 20 percent
of the area of cigarette advertisements in the United States in
accordance with section 4 of FCLAA (15 U.S.C. 1333(b)). The statute and
this proposal is consistent with the international consensus reflected
in the WHO's Framework Convention on Tobacco Control, i.e., the
proposed warnings would be rotating, large, clear, visible, and
legible, and would occupy ``50 percent or more of the principal display
areas'' of packages. WHO FCTC art. 11.1(b). Further, we believe that
the available evidence demonstrates that the addition of color graphics
to the nine new textual warning statements would ensure that warnings
on packages and in advertisements effectively provide critical
information to consumers while continuing to afford tobacco
manufacturers and retailers ample space (over 50 percent of packages
and 80 percent of advertisements) to convey other information regarding
the product.
1. The Addition of Graphic Images Will Have a Significant, Positive
Impact on Public Health
As summarized in section III.B, research on cigarette warnings with
a graphic component has found that they are more effective in educating
consumers about smoking risks than text-only warnings (Ref. 42), and
are more likely to be effective in impacting smoking behaviors (Ref.
27). Moreover, the available scientific literature suggests that
cigarette packages with larger, text-only warnings are inferior to
cigarette warnings with a graphic component in both communicating
health information and encouraging smoking cessation.
For example, data comparing the Canadian graphic warnings and the
United Kingdom (UK) text-only warnings, after the UK substantially
increased the number and size of its warnings (from 6 warnings that
covered 6 percent of the front and back of cigarette packages to 16
warnings that covered 30 percent of the front and 40 percent of the
back of the packages), found that the Canadian pictorial warnings had a
greater impact on smokers than the new UK warnings (Ref. 36).
Specifically, data collected 2.5 years after the implementation of the
Canadian pictorial warnings and 2.5 years after the implementation of
the larger, text-only UK warnings found that, while the UK respondents
reported greater levels of salience (i.e., noticing and reading the
warnings) than Canadian smokers, Canadian smokers were significantly
more likely to stop smoking a cigarette as a result of the graphic
warnings and to report that the graphic warnings had led them to think
about quitting. Canadian smokers also were significantly more likely
than those in the UK to report that the warnings made them think about
the health risks of smoking.
Likewise, data comparing the impact of Australia's graphic warnings
(introduced in 2005) and the UK's larger, text-only warnings showed
similar support for the use of a graphic component (Ref. 46).
Specifically, researchers found greater increases in the two strongest
predictors of subsequent quitting--cognitive responses (i.e., thinking
about the health risks of smoking) and foregoing cigarettes--after
Australia introduced its graphic warnings than after the UK introduced
its enhanced text-only warnings. This is especially noteworthy, given
that when the border is taken into account, the graphic warnings on the
front of the packages in Australia were smaller than the UK's text-only
warnings on the front of the packages.
It is worth noting that the UK amended its Tobacco Products
(Manufacture, Presentation and Sale) (Safety) regulations in 2007 to
require graphic warnings to appear on all cigarette packages as of
October 2009.
Furthermore, although both text and graphic cigarette warnings are
subject to wear-out over an extended period of time, research has shown
that graphic warnings maintain their impact longer than text-only
warnings. Approximately four years after the introduction of the 16
Canadian graphic warnings, youth and adult smokers reported little or
no decrease in their effectiveness (Ref. 42; Ref. 36; Ref. 5 at C-4).
Similarly, the use of color graphics in the proposed required warnings,
coupled with the increase in the number of rotating health statements
required under section 4 of FCLAA (15 U.S.C. 1333) and this proposed
rule from four to nine, will help ensure that the new cigarette health
warnings being proposed will retain beneficial effects over time (Ref.
5 at C-4).
2. The Revised Textual Statements Will Communicate More Effectively
The proposed required warnings would also modify the textual
warning statements currently required on cigarette packages and in
advertisements. Section 201(a) of the Tobacco Control Act sets forth
nine text statements that will replace the four statements currently
required under FCLAA once any final rule becomes effective. These nine
statements objectively communicate some of the major health risks
associated with smoking in a more effective manner compared to the
warning statements currently required in the United States. As the IOM
explained, specific, unambiguous warnings (e.g., ``cigarettes cause
lung cancer'') are more likely to be noticed and less likely to be
discounted than vague warnings (e.g., ``cigarettes are hazardous to
your health''), and warnings should target an appropriate literacy
level (Id. at C-3). The new textual warning statements set forth in the
Tobacco Control Act represent an improvement over the current warnings
in that they are specific and unambiguous and they succinctly describe
documented outcomes of cigarette use and exposure. For example, the
vague warning that ``Cigarette Smoke Contains Carbon Monoxide'' will no
longer be used, and two of the longer warnings currently in use,
``Smoking Causes Lung Cancer, Heart Disease, Emphysema, and May
Complicate Pregnancy'' and ``Smoking
[[Page 69534]]
by Pregnant Women May Result in Fetal Injury, Premature Birth, and Low
Birth Weight,'' will be replaced with shorter, more readable statements
(e.g., ``Cigarettes cause fatal lung disease,'' ``Cigarettes cause
cancer,'' ``Cigarettes cause strokes and heart disease,'' ``Smoking
during pregnancy can harm your baby,'' and ``Smoking can kill you'').
The proposed required warnings also will be easier to understand
because of the addition of the graphic component (Id. at 295).
Thus, the nine specific textual warning statements set forth in
section 201(a) of the Tobacco Control Act would effectively convey the
major health risks of smoking, which will help discourage nonsmokers
from initiating cigarette use, and encourage current smokers to
consider cessation, particularly when combined with graphic images
depicting the negative consequences of smoking. We intend to monitor
the effects of these required warnings once they are put into use. In
addition, there will continue to be social science research conducted
regarding the relative efficacy of various required warnings. We will
use the results of our monitoring and such research to determine
whether any of the textual warning statements or accompanying graphic
images should be revised in a future rulemaking.
D. FDA's Process for Development and Plan for Selection of the Required
Warnings
Section 4(d) of FCLAA (15 U.S.C. 1333(d)), as amended by section
201 of the Tobacco Control Act, requires FDA to issue ``regulations
that require color graphics depicting the negative health consequences
of smoking'' to accompany the textual warning statements specified in
section 4(a)(1) of FCLAA (15 U.S.C. 1333(a)(1)). In considering and
developing appropriate color graphics to accompany the textual warning
statements, FDA assessed the graphic warnings that other countries have
required for tobacco products. In addition, FDA worked with various
experts in the fields of health communications, marketing research,
graphic design and advertising to develop the required warnings
published with the proposed regulation.
The proposed required warnings, consisting of the color graphics
FDA developed and the textual warning statements, are available as
electronic files in portable document format (PDF) in this docket and
on FDA's Web site at http://www.fda.gov/cigarettewarnings. For the
final rule, the required warnings will be contained in documents titled
``Cigarette Required Warnings--English and Spanish'' and ``Cigarette
Warnings--Other Foreign Language Advertisements,'' as is further
discussed in section IV.D. Drafts of these two documents are included
in the docket as well.
The set of required warnings available with this proposed rule
encompasses a variety of themes and graphic techniques. The required
warnings are designed to communicate risk information to a diverse
range of audiences, including youth, young adults, and adults, and of
smokers as well as potential smokers. The images in some of the
required warnings are photographic while others are graphic
illustrations. Some images are more visually disturbing than others.
The fonts, typography, and layouts vary.
FDA believes that the graphics in the proposed required warnings
appropriately depict the negative health consequences of smoking.
Further, FDA believes that these graphics are consistent with the types
of pictorial warnings required or developed by other international
governmental authorities, such as Canada, the European Union, and
Australia, whose sets of warnings include a balance of images, some
more visually disturbing than others. FDA also believes that including
a varied set of warnings is consistent with the existing scientific
literature concerning the effectiveness of graphic health warnings.
The existing research shows that the effectiveness of health
warnings in communicating the health risks of smoking may vary
according to the audience, reflecting factors such as socioeconomic
background, gender, age, and smoking status and behavior (Ref. 57 at p.
22). A variety of health warnings facilitates better targeting of
specific groups whose primary concerns about smoking tend to vary (Id.
at p. 46). Specific issues that may make smoking desirable (or
undesirable) for one group might be quite different for another group
(Id. at p. 44). Similarly, using a variety of different warnings has
been found to be significant in counteracting over-exposure and wear-
out of health warnings (Id. at p. 46). In addition, in some cases, the
strength of the content of the message is what determines its impact,
while in other cases, peripheral factors, such as how and where the
message is delivered and its visual impact are the most significant
determinants (Id. at p. 28). In order to be effective with a broad
audience, health warnings should be developed with these different
factors in mind (Id.).
The existing research indicates that a balanced set of graphic
warnings that includes a range and variety of images is effective. For
example, the use of health warnings with ``frightening'' or
``disturbing'' tonal qualities appears effective (Id. at pp. 37-39).
Consistent with this research, some of the images published with the
proposed regulation are more ``frightening'' or visually disturbing
than others.
Research also indicates that other types of graphic warnings,
including those that do not include ``frightening'' or ``disturbing''
imagery, can be effective (Ref. 52 at pp. 24-25). For example, graphic
health warnings that convey the risks of secondhand smoke for babies
and children without being ``frightening'' or ``disturbing'' appear to
have widespread impact (Id.; Ref. 57 at pp. 34-35). The set of proposed
required warnings includes health warning statements and accompanying
images that convey the risk of secondhand smoke on children and babies
and the risk of smoking while pregnant.
Similarly, evidence also shows that warnings about specific health
risks, such as cancer, heart disease, and stroke, are more effective
than general warnings, and that the effectiveness of graphic warnings
relating to specific health concerns tends to vary for different smoker
groups, reflecting their perceived relevance (Ref. 52 at pp. 24-25;
Ref. 57 at p. 34). The statements and images published with this
proposed rule portray specific health risks using a variety of themes
and techniques in order to reach different smoker groups.
According to the existing research, graphic warnings that focus on
the benefits of quitting may also be effective (Ref. 57 at p. 35). The
set of published images includes warnings addressing the benefits of
quitting.
In addition to the types of messages and images, the salience or
noticeability of health warnings is enhanced by the use of larger type
size, contrasting colors, and different typography (Id. at p. 28).
Research assessing responses to warnings on tobacco product packaging,
as well as responses to safety warnings generally, indicate that the
effectiveness of warnings is enhanced through techniques such as larger
font sizes, upper case lettering, and bold type (Id. at p. 33). A
number of the proposed required warnings utilize these techniques.
Although FDA expects that any final rule will include a total of
nine different required warnings, it has developed a larger set of
images for the proposed rule. FDA is seeking comments on what required
warnings to include in the final rule, including comments on the color
graphics that are included in this proposal.
[[Page 69535]]
In addition to seeking comment on what color graphics to require in
the final rule, FDA is conducting research on the proposed required
warnings. The larger set of required warnings developed for this
proposed rule will allow for more productive research into the relative
efficacy of the different proposed color graphics. The research will:
(1) Measure consumer attitudes, beliefs, and intended behaviors related
to cigarette smoking in response to the proposed color graphics and
their accompanying textual warning statements; (2) determine whether
consumer responses to the proposed color graphics and their
accompanying textual warning statements differ across various groups
based on smoking status, age, or other demographic variables; and (3)
evaluate the relative effectiveness of the proposed color graphics and
their accompanying textual warning statements at conveying information
about various health risks of smoking, and additionally, at encouraging
smoking cessation and discouraging smoking initiation (See 75 FR 7604
(February 22, 2010); 75 FR 52352 (August 25, 2010)). FDA is in the
process of conducting this research. Once the research is complete and
final analyses of the results are available, FDA will place a report of
the results of the analyses in the docket and announce the report's
availability by a notice in the Federal Register so the public has an
opportunity to comment on the results.
After considering the public comments, research results, and
scientific literature, FDA plans to select a set of nine required
warnings for the final rule, each of which is comprised of one color
graphic that is paired with one of the nine textual warning statements.
Thus, FDA intends to select nine images from among the larger set of
images in this proposed rule for actual use. The agency believes that
nine required warnings will be sufficient to achieve its goal of
effectively communicating the health risks of smoking and to prevent
wear-out of the proposed required warnings for several years.
In addition, another set of color graphics is proposed for use
solely in advertisements with a small surface area (i.e., less than 12
square inches). The color graphics in this set differ in their
composition from the other color graphics in that the details of the
images should be clear, conspicuous, and legible even when the graphics
are reduced in size to be placed on surfaces with a relatively small
area. FDA proposes that the final version of ``Cigarette Required
Warnings--English and Spanish'' also contain graphics from this set,
which would only be used in advertisements with a small surface area.
But even an advertisement with a relatively small surface area would
need to be large enough so that the required graphic and accompanying
textual warning statement are clear, conspicuous, and legible.
IV. Description of Proposed Regulations
The Tobacco Control Act mandates that FDA issue regulations
requiring color graphics depicting the negative health consequences of
smoking to accompany the nine health warning statements that must
appear on cigarette packages and in cigarette advertisements under
FCLAA (15 U.S.C. 1333). FDA proposes to implement this requirement for
cigarette packages and advertisements by adding a new part 1141 to
title 21 of the Code of Federal Regulations governing cigarette package
and advertising warnings.
The graphic warnings rule, when finalized, is intended to help
educate consumers about the health risks of cigarettes, to support
intentions among current smokers to quit or decrease cigarette
consumption, and to discourage nonsmokers, particularly youth, from
initiating cigarette use. We seek comment on the proposed part 1141
described below. If you have comments on specific provisions of the
proposed regulation, we request that you identify these provisions in
your comments. In addition, if you have concerns that would be
addressed by alternative text, we request that you provide this
alternative text in your comments.
A. Section 1141.1--Scope
Proposed Sec. 1141.1 would set forth the scope of the proposed
regulations. Proposed Sec. 1141.1(a) explains that part 1141 would set
forth the requirements for the display of the health warnings on
cigarette packages and advertisements required by section 4 of FCLAA
(15 U.S.C. 1333), as amended by the Tobacco Control Act. This paragraph
would also indicate that FDA has the authority to require additional
statements on cigarette packages and advertisements in accordance with
the FD&C Act or other authorities (such as FCLAA). For example, section
4 of FCLAA, as amended by section 206 of the Tobacco Control Act,
requires the agency to initiate a rulemaking to determine whether
cigarette and other tobacco product manufacturers should be required to
disclose the tar and nicotine yields in advertisements and/or on
packages. In addition, section 906(d) of the FD&C Act authorizes FDA to
issue regulations restricting the sale or distribution of cigarettes
and other tobacco products, including restrictions on the advertising
and promotion of such products, if FDA determines the restriction is
appropriate for protecting public health.
Proposed Sec. 1141.1(b) would limit the applicability of the
proposed requirements by clarifying that these requirements would not
apply to manufacturers or distributors of cigarettes that do not
manufacture, package, or import cigarettes for sale or distribution in
the United States.
In accordance with section 4(a)(4) of FCLAA (15 U.S.C. 1333(a)(4)),
proposed Sec. 1141.1(c) would provide that a cigarette retailer would
not be in violation of the proposed rule if cigarette packages
displayed or sold by the retailer do not comply with all the
requirements set forth in the proposed rule, so long as the packages
contain a health warning, are supplied by a license- or permit-holding
tobacco product manufacturer, importer, or distributor, and are not
altered by the retailer in a way that materially impacts the display of
the required warnings on the packages. Thus, manufacturers, importers,
and distributors would have primary responsibility for ensuring that
the required warnings on cigarette packages comply with all the
provisions of proposed part 1141, but retailers would have some
responsibility as well. Specifically, retailers would be responsible
for ensuring that all cigarette packages they display or sell contain a
warning regarding the health risks associated with smoking cigarettes.
In addition, retailers could not alter the warning in a way that is
material to the requirements of FCLAA and this proposed rule, including
by obscuring the warning (e.g., by placing a sticker or other item on
top of it), by shrinking or severing the warning (in whole or in part),
or by otherwise changing it in a material way. However, retailers would
not be responsible for verifying that the warnings on packages they
display or sell contain the combination of textual statements and
accompanying color graphics required by FCLAA, or that they comply with
other specifications required in FCLAA or proposed part 1141.
Similarly, proposed Sec. 1141.1(d) implements section 4(c)(4) of
FCLAA (15 U.S.C. 1333(c)(4)) and would provide that a retailer would
not be considered in violation of part 1141 if it posts an
advertisement that does not comply with all of the proposed
requirements, so long as the advertisement was not created by or on
behalf of the cigarette retailer and the
[[Page 69536]]
retailer is not otherwise responsible for inclusion of the required
warnings. Note that, in accordance with section 4(b) of FCLAA (15
U.S.C. 1333(b)), any manufacturer, distributor, importer, or retailer
who is responsible for the creation of a cigarette advertisement is
responsible for compliance with FCLAA and proposed part 1141. This
paragraph also specifies that this provision would not relieve a
retailer of liability if it publicly displays an advertisement that
fails to contain a health warning or if it alters an advertisement in a
way that materially impacts the display of the required warning.
Therefore, except for when it is responsible for the creation of an
advertisement or otherwise responsible for the inclusion of the
warning, a retailer is not responsible for ensuring that its cigarette
advertisements contain the combination of textual statements and
accompanying color graphics required by FCLAA, or that they comply with
other specifications required in FCLAA or proposed part 1141. However,
retailers must ensure that their cigarette advertisements contain a
warning of smoking's risks. They are also responsible for complying
with the other requirements applicable to retailers, including those in
part 1140 of Title 21 of the Code of Federal Regulations.
B. Section 1141.3--Definitions
Proposed Sec. 1141.3 would establish definitions of terms used in
the proposed rule.
Proposed Sec. 1141.3 would define the terms ``cigarette,''
``commerce,'' ``package,'' ``person,'' and ``United States,''
respectively, for the purposes of part 1141, as those terms are defined
in section 3 of FCLAA (15 U.S.C. 1332).
Proposed Sec. 1141.3 would define ``distributor,'' for the
purposes of part 1141, as any person who furthers the distribution of
cigarettes at any point from the original place of manufacture to the
person who sells or distributes the product to individuals for personal
consumption. In addition, this paragraph would specify that common
carriers are not considered distributors for the purposes of part 1141.
Proposed Sec. 1141.3 would define the terms ``front panel'' and
``rear panel'' as the two largest display surfaces of the cigarette
package. FDA is proposing this definition to ensure that all entities
properly identify the sides or surfaces of the cigarette package on
which the required warnings must appear. On almost all cigarette
packages, these two panels are oriented directly opposite from one
another and are the same size.
Proposed Sec. 1141.3 would define ``importer,'' for purposes of
this part, as any person who introduces into commerce any cigarette
that (1) was not manufactured in the United States and (2) is intended
for sale or distribution to consumers in the United States.
Proposed Sec. 1141.3 would define ``manufacturer'' as any person,
including any repacker or relabeler, who manufactures, fabricates,
assembles, processes, or labels a finished cigarette product.
Proposed Sec. 1141.3 would provide a definition of ``required
warning.'' This term is used to refer to the combination of one of the
textual warning statements and the accompanying color graphic depicting
the negative health consequences of smoking required under section 4 of
FCLAA and this part.
Proposed Sec. 1141.3 would define ``retailer'' as any person who
sells cigarettes to individuals for personal consumption, or who
operates a facility where vending machines or self-service displays of
cigarettes are permitted.
C. Section 1141.10--Required Warnings
The Tobacco Control Act directs FDA to require that color graphics
depicting the negative health consequences of smoking accompany each of
the textual warning statements that must be randomly displayed (i.e.,
in each 12-month period, all of the different warnings must appear in
as equal a number of times as is possible on each brand of the product
and be randomly distributed in all areas of the United States in which
the product is marketed) on cigarette packages and rotated quarterly in
alternating sequence in cigarette advertisements under FCLAA. FDA is
proposing that cigarette packages and advertisements contain such a
combination graphic-textual warning in proposed Sec. 1141.10.
Proposed paragraph (a) would set forth the requirements specific to
cigarette packages. Proposed Sec. 1141.10(a)(1) would require that
each cigarette package sold, offered for sale, distributed, or imported
for sale or distribution within the United States contain a required
warning. This required warning would have to appear on both the front
and rear panels of the cigarette package. As defined in proposed Sec.
1141.3, this required warning would consist of one of the nine textual
warning statements set forth in FCLAA (15 U.S.C. 1333) and the
accompanying color graphic depicting the negative health consequences
of smoking.
Proposed Sec. 1141.10(a)(2) would provide that the warnings
required under paragraph (a)(1) must be obtained from the document
titled ``Cigarette Required Warnings--English and Spanish.'' Due to the
multi-color nature of the required warnings, they cannot be printed in
the Code of Federal Regulations, and due to the visual complexity of
the images, it will not be feasible to accurately describe the images
and their colors in the Code of Federal Regulations. Thus, FDA proposes
to provide the required warnings for regulated entities in ``Cigarette
Required Warnings--English and Spanish,'' which will contain
downloadable electronic files used to generate each required warning.
This approach would also help regulated entities ensure that their
packages contain required warnings that are consistent with the
requirements of FCLAA and proposed part 1141, when finalized.
Proposed Sec. 1141.10(a)(2) would also mandate that the required
warnings be accurately reproduced from the electronic images in
``Cigarette Required Warnings--English and Spanish.'' Thus, regulated
entities would have to ensure that the required warnings they place on
packages are not distorted or otherwise inaccurately reproduced from
the electronic images in ``Cigarette Required Warnings--English and
Spanish.'' For example, the colors used to display the required images
would have to be reproduced accurately from the colors used in
``Cigarette Required Warnings--English and Spanish.'' The use of the
electronic files from ``Cigarette Required Warnings--English and
Spanish'' to generate the required warnings should enable companies to
reproduce the warnings with relative ease. FDA recognizes that there
may be minor variations in the exact colors used to reprint the
required warnings across all cigarette packages due to differences in
inks and printing processes, but FDA expects that the colors in the
graphics that appear on packages and in advertisements will look the
same as the colors in the graphics set forth in ``Cigarette Required
Warnings--English and Spanish.''
Finally, proposed Sec. 1141.10(a)(2) would also specify that the
electronic images obtained from ``Cigarette Required Warnings--English
and Spanish'' must be adapted as necessary to meet the requirements of
section 4 of FCLAA (15 U.S.C. 1333) and this part, and the electronic
files provided in ``Cigarette Required Warnings--English and Spanish''
would be in a format that could be modified as necessary to comply with
this proposed rule. Specifically, regulated entities would be able to
modify the size of the required warnings to ensure they are the
required
[[Page 69537]]
size and occupy the required area of the cigarette package. However,
any modifications to such files would need to result in an accurate
reproduction of the electronic images contained in ``Cigarette Required
Warnings--English and Spanish,'' as proposed by Sec. 1141.10(a)(2).
For example, the width-to-height ratio (i.e., the aspect ratio) of the
images should be preserved when the images are compressed or expanded,
so that the resulting image is not distorted.
Proposed Sec. 1141.10(a)(3) would mandate that the required
warnings appear directly on the package and be clearly visible
underneath the cellophane or other clear wrapping. In order for the
required warnings to appear conspicuously and legibly as mandated by
section 4 of FCLAA (15 U.S.C. 1333), they must not be obscured. Thus,
any outer wrappings on the package must be clear so that the warnings
can be seen and read by consumers. Similarly, any other material that
is placed on the outside of packages, such as price information or
promotional material (e.g., coupons), must not be placed over or
otherwise obscure the required warning.
As required under section 4 of FCLAA (15 U.S.C. 1333), proposed
Sec. 1141.10(a)(4) would mandate that the required warnings occupy at
least 50 percent of the area of the front panel and rear panel of each
cigarette package. These area requirements would help ensure that the
required warnings are prominent and conspicuous enough to gain
consumers' notice in the first instance, and are easily viewed and read
by consumers once they are noticed. This will help ensure that
consumers comprehend the critical information conveyed in the required
warnings. As to location, proposed Sec. 1141.10(a)(4) states that the
required warnings must occupy at least the top 50 percent of the area
of the front and rear panels of the packages. For cigarette cartons,
where the front and rear panels have significantly longer horizontal
than vertical axes, the textual warning statement and accompanying
graphic might be distorted if they were placed on the top 50 percent of
these panels because the top runs along the longer horizontal axis.
Thus, under section 4(b)(4) and (d) of FCLAA, proposed Sec.
1141.10(a)(4) would specify a format for these warnings so that they
occupy at least the left 50 percent of the front and rear panels. With
this format, the required warnings can be sized for placement on
cigarette cartons without distortion.
Proposed Sec. 1141.10(a)(5) would mandate that the required
warnings and the other information on the panels be oriented in the
same direction. Thus, for example, if the front panel of a cigarette
package contains information, such as the brand name of the product, in
a left to right orientation, the required warning must not be placed
such that it appears at a right angle to this text. Rather, the
required warning and its component textual statement should also appear
in a left to right orientation. This requirement would help ensure the
required warnings on cigarette packages are conspicuous and legible to
consumers, as required by section 4 of FCLAA. In addition, FDA is
proposing this restriction under section 906(d) of the FD&C Act (21
U.S.C. 387f(d)). Requiring all the text on the panel of a cigarette
package that contains a required warning to be oriented in the same
direction would help ensure that the warnings are noticed and read by
consumers and, therefore, would be appropriate for the protection of
the public health.
Proposed paragraph (b) of proposed Sec. 1141.10 would set forth
the requirements specific to cigarette advertisements. Proposed Sec.
1141.10(b)(1) would mandate that manufacturers, importers,
distributors, and retailers include required warnings in all their
cigarette advertising within the United States. Thus, all
advertisements, regardless of form--which could include materials such
as magazine and newspaper ads, pamphlets, leaflets, brochures, coupons,
catalogues, retail or point-of-sale displays (including functional
items such as clocks or change mats), posters, billboards, direct
mailers, and Internet advertising (e.g., Web pages, banner ads, etc.)--
would have to contain required warnings.
Consistent with section 4(b) of FCLAA (15 U.S.C. 1333(b)), proposed
Sec. 1141.10(b)(2) would mandate that the textual component of the
required warning appear in the English language, with two exceptions.
First, per proposed Sec. 1141.10(b)(2)(i), if an advertisement appears
in a non-English language publication, the textual portion of the
required warning would need to appear in the predominant language of
the publication. The predominant language is the primary language used
in the non-sponsored content in the publication. For example, in the
case of a newspaper where the non-sponsored content (e.g., news
stories, articles of opinion, and features) are in a foreign language
but the sponsored content (e.g., advertising) is wholly or partially in
English, the predominant language would be the foreign language used in
the non-sponsored content, and the required warning would have to
appear in that foreign language. Because such non-English language
publications in the United States are targeted towards consumers who
speak the predominant language of the publication, this will help
ensure that the required warning effectively communicates to the target
audience that will view the advertisement. Second, per proposed Sec.
1141.10(b)(2)(ii), if an advertisement is in an English language
publication but is presented in a language other than English, the
textual portion of the required warning would need to be presented in
the same foreign language principally used in the advertisement.
English language publications in the United States are generally
targeted towards the consumer population as a whole or towards
consumers with a particular interest in the subject matter of the
publication rather than towards consumers who speak a particular
language; however, foreign language advertisements in English-language
publications are targeted towards consumers who speak the foreign
language used in the advertisement. Therefore, requiring foreign
language advertisements in English-language publications to present the
required warning in the same language that is used elsewhere in the
advertisement will help ensure that the target audience of the
advertisement is able to read and understand both the promotional
content and the important warning information.
Proposed Sec. 1141.10(b)(3) would require that English and Spanish
language required warnings be obtained and accurately reproduced from
``Cigarette Required Warnings--English and Spanish.'' As discussed
above, the required warnings cannot be accurately reprinted or
described in the Code of Federal Regulations, and FDA is thus proposing
to provide the required warnings for regulated entities in ``Cigarette
Required Warnings--English and Spanish,'' which will contain
downloadable copies of the electronic files used to generate each
required warning. In addition to offering the English-language versions
of the required warnings that would be used on all packages and in most
advertisements, the document would offer Spanish-language versions of
the required warnings for use in advertisements that either appear in
Spanish-language publications or that are presented primarily in
Spanish (see 15 U.S.C. 1333(b)). These versions are offered in
recognition of the fact that Spanish is the foreign language most
commonly used for cigarette
[[Page 69538]]
advertisements in the United States. However, color graphics for other
foreign language warnings would need to be obtained from the document
titled ``Cigarette Required Warnings--Other Foreign Language
Advertisements,'' as is discussed in more detail below. As with
cigarette packages, the required warnings placed in cigarette
advertisements would have to be accurate reproductions of those set
forth in ``Cigarette Required Warnings--English and Spanish.'' In
addition, the required warnings would need to be adapted as necessary
to meet the requirements of section 4 of FCLAA (15 U.S.C. 1333) and
part 1141. The electronic files provided in ``Cigarette Required
Warnings--English and Spanish'' would be in a format that would allow
regulated entities to resize the required warnings as necessary to
comply with the other provisions of this part, though any modifications
made would need to result in an accurate reproduction of the electronic
images contained in the documents.
Proposed Sec. 1141.10(b)(4) would require regulated entities to
obtain color graphics for foreign language required warnings, other
than Spanish language warnings, from the electronic files contained in
``Cigarette Required Warnings--Other Foreign Language Advertisements,''
into which they must insert a true and accurate translation of the
textual warning language required by FCLAA. ``Cigarette Required
Warnings--Other Foreign Language Advertisements'' would offer
downloadable electronic files of the color graphics and specify (in
English) the text that is to accompany each color graphic. These files
would allow for insertion of foreign language translations of the
required textual statements, so that regulated entities can generate
the appropriate required warnings for their foreign language
advertisements, as well as for their advertisements that appear in
foreign language publications. Advertisers would need to ensure that
the required English textual statements are accurately and
appropriately translated into the appropriate foreign language. If a
warning statement is not accurately translated, the advertisement would
be in violation of FCLAA. In addition to ensuring accurate translation,
it would be the advertiser's responsibility to ensure that the foreign
language text complies with the format specifications set forth in
section 4 of FCLAA (15 U.S.C. 1333). Thus, for example, the text should
not be placed in a manner that interferes with the accompanying color
graphic. Proposed Sec. 1141.10(b)(4) would also mandate that the
required warnings be adapted as necessary to meet any other
requirements of section 4 of FCLAA (15 U.S.C. 1333) and proposed part
1141. The electronic files provided in ``Cigarette Required Warnings--
Other Foreign Language Advertisements'' would allow regulated entities
to resize the required warnings as necessary to comply with the other
provisions of part 1141, though any modifications would need to result
in accurate reproductions of the electronic images contained in the
documents.
As required by section 4 of FCLAA (15 U.S.C. 1333), proposed Sec.
1141.10(b)(5) would mandate that the required warnings comprise at
least 20 percent of the area of each advertisement. This will help
ensure that the required warnings are appropriately clear, conspicuous,
and legible by consumers, so that the important health information in
the required warnings can be adequately seen and comprehended. Proposed
Sec. 1141.10(b)(5) would also specify that the required warnings are
to be placed in accordance with the other requirements set forth in
FCLAA for the display of such warnings. For example, section 4 of FCLAA
(15 U.S.C. 1333) contains requirements related to the placement of the
required warnings, as well as requirements related to the border that
must enclose each warning in cigarette advertising. FDA intends to
separately address some of these other FCLAA requirements, as well as
the provisions in section 4(c) of FCLAA (15 U.S.C. 1333(c)) related to
the submission of plans regarding the random display of warnings on
packages and rotation of warnings in advertisements.
Proposed Sec. 1141.10(c) would mandate that the required warnings
be indelibly printed on or permanently affixed to packages and
advertisements. Removable or impermanent warning displays on packages
and in advertisements would not comply with the requirements of FCLAA,
in that the required warnings could become separated from the package
or advertisement and thus would not meet the requirement that they be
conspicuous on the package or advertisement. The purpose of the
amendments made to FCLAA by the Tobacco Control Act is to strengthen
the warnings for greater impact on consumers. Removable warnings would
run counter to this purpose. For example, if the required package
warning was printed or stickered on a clear outer wrapper, and this
wrapper was meant to be removed in order for the package (or cigarettes
within the package) to be accessed, the consumer could access the
package of cigarettes numerous times without viewing the warning and
receiving the impact of the critical health message.
D. Section 1141.12--Incorporation by Reference of Required Warnings
Section 1141.12 proposes that two documents, ``Cigarette Required
Warnings--English and Spanish'' and ``Cigarette Required Warnings--
Other Foreign Language Advertisements,'' be incorporated by reference
in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Any final
regulation will provide information on how to obtain the two documents.
Draft versions of both documents are available in the docket. These
draft versions of the documents contain placeholders for the color
graphics; once FDA selects the required warnings for the final rule, it
intends to include the electronic files for these required warnings in
the final versions of both documents. The material incorporated by
reference must meet the Office of the Federal Register's requirements
for incorporating material by reference, and thus the way these two
documents are displayed may be changed for the final rule to meet such
requirements.
Section 1141.12(a) proposes the incorporation by reference of
``Cigarette Required Warnings--English and Spanish.'' This document
would contain the required warnings that must be included on all
cigarette packages, and in cigarette advertisements in which the text
of the required warning must be set forth in the English language or
the Spanish language. Regulated entities would utilize ``Cigarette
Required Warnings--English and Spanish'' to obtain the required
warnings and reproduce them on cigarette packages and in advertisements
in accordance with proposed part 1141. This document would offer
downloadable electronic files for each of the required warnings.
FDA expects that the final version of ``Cigarette Required
Warnings--English and Spanish'' will provide a total of nine different
images, each of which is comprised of one color graphic that is paired
with one of the nine textual warning statements set forth in FCLAA. In
addition, for each of these nine sets, FDA expects that the final
version would include six formatting options in accordance with
sections 4(a)(2) and 4(b)(2) of FCLAA (15 U.S.C. 1333(a)(2) and
(b)(2)). Specifically, each of the nine sets would have one formatting
option where the textual portion of the required warning is presented
in black text on a white background and one
[[Page 69539]]
formatting option where the textual portion of the required warning is
presented in white text on a black background for use on packages. In
addition, each of these sets would include a version of the two
previous formatting options enclosed in a rectangular border for use in
advertisements in accordance with section 4(b)(2) of FCLAA (15 U.S.C.
1333(b)(2)). Furthermore, each of the nine sets would contain an
English version of these advertisement formatting options and a Spanish
version of these advertising formatting options. FDA is requesting
comments on the different proposed required warnings (i.e., the
combinations of the textual warning statements and accompanying color
graphics). For more information regarding FDA's research analyses, see
section III.D.
In addition, FDA is proposing a subset of color graphics for use in
advertisements with a small surface area (i.e., less than 12 square
inches). These color graphics differ in their composition from the
other color graphics in this document. FDA is proposing this subset of
color graphics to ensure that the details of the images are clear,
conspicuous, and legible even when the image is reduced in size to
occupy 20 percent of a surface with an area of less than 12 square
inches. FDA proposes that a final version of ``Cigarette Required
Warnings--English and Spanish'' contain such options, which would be
used (in combination with one of the nine textual statements) only in
advertisements with a small surface area. However, even an
advertisement with a relatively small surface area would need to be
large enough so that the required graphic and accompanying textual
warning statement are clear, conspicuous, and legible.
Section 1141.12(b) proposes the incorporation by reference of
``Cigarette Required Warnings--Other Foreign Language Advertisements.''
This document would contain the electronic files that are to be used to
generate the required warnings for advertisements in which the text of
the required warning must be set forth in a foreign language (other
than Spanish) under proposed Sec. 1141.12(b). Regulated entities would
utilize ``Cigarette Required Warnings--Other Foreign Language
Advertisements'' to generate the required warnings for such
advertisements. This document will offer downloadable files of the
color graphic for each of the required warnings and specify (in
English) the text that is to accompany each color graphic. The
downloadable files would allow for insertion of foreign language
translations of the required textual statements, so that regulated
entities can generate the appropriate required warnings for their
foreign language advertisements, as well as for their advertisements
that appear in foreign language publications.
E. Section 1141.14--Misbranding of Cigarettes
Section 1141.14(a) proposes that a cigarette shall be deemed to be
misbranded unless its labeling and advertising bear one of the required
warnings. Under section 903(a)(1) and (a)(7)(A) of the FD&C Act (21
U.S.C. 387c(a)(1) and (a)(7)(A)), a tobacco product, including a
cigarette, is deemed misbranded if its labeling or advertising is false
or misleading in any particular. Under 201(n) of the FD&C Act (21
U.S.C. 321(n)), in determining whether something is misleading, it:
``shall be taken into account * * * not only representations made or
suggested * * * but also the extent to which the labeling or
advertising fails to reveal facts * * * material with respect to
consequences which may result from the use of the article to which the
labeling or advertising relates * * * under such conditions of use as
are customary or usual.'' The required warnings, which concern risks
associated with the use of cigarettes, are clearly material with
respect to consequences that may result from the use of cigarettes.
These required warnings convey information about the addictive nature
of cigarettes (which is inextricably linked to all the health harms
caused by cigarettes) as well as the major, potentially deadly health
consequences of smoking, including the causal relationship between
smoking and cancer (cigarettes have been shown to cause more than 10
different cancers), fatal lung disease (e.g., COPD, which is a major
public health problem in the United States), heart disease and stroke
(the first and third leading causes of death in the United States), and
negative pregnancy outcomes. In addition, the warnings provide
information on the negative, potentially fatal health effects
cigarettes can have for non-users, including the harm tobacco smoke can
cause to children and non-smoking adults (e.g., fatal lung disease).
The warnings also provide critical information on the significant
health benefits of quitting. Overall, the required warnings provide
highly material information that every consumer should know about the
consequences of cigarettes under customary conditions of use.
In order to ensure that the required warnings are conspicuous,
prominent, and legible, each individual cigarette package or
advertisement is required to contain only one of the nine required
warnings under this proposed rule, although all nine statements are
material for cigarettes in general. It generally would not be feasible
to fit all nine statements and their accompanying color graphics and
have them be conspicuous, prominent, and legible. Moreover, while any
individual package or advertisement will not convey the information
from all nine required warnings, all nine warnings will be on public
display at any given time as the Tobacco Control Act requires the
warnings to be randomly displayed in as equal a number of times as
possible on cigarette packages for all cigarette brands and in
quarterly rotation in advertisements under section 4(c) of FCLAA (15
U.S.C. 1333(c)). Thus, consumers will be exposed to conspicuous,
prominent, and legible displays of all nine warning statements (which
apply to all cigarettes) in the marketplace at any given time, and as a
result will receive a summary of the major risks of smoking.
It is worth noting that the warning disclosure requirements for
tobacco products are different than the disclosure requirements that
apply to other products that FDA regulates, as (1) the warning
information for cigarettes is different in its applicability than the
warning information for other products, (2) the disclosure requirements
for other products have a different purpose than the cigarette
warnings, and (3) the mechanisms for exposure to warning information
are different for tobacco products than for other products FDA
regulates. For example, medical products such as drugs and devices have
risks that are specified for each particular product; these risks are
set forth in the FDA-required product labeling for each product. The
statutory and regulatory requirements for prescription and restricted
medical products require that each product's labeling and advertising
disclose all material risk information about the particular product
(See 21 U.S.C. 352(a), (c), (f), (n), (q) and (r); 321(n); see also 21
CFR 201.100(d)(1) and (d)(3); 201.105(c)(1); 801.109(d); and 21 CFR
part 202). This information also has a different purpose than cigarette
warning information. For example, disclosure of all the material risk
information associated with a particular prescription or restricted
medical product helps healthcare professionals by giving them some of
the information they need to
[[Page 69540]]
know about the medical product that will enable them to safely use or
prescribe it. Similarly, this risk information helps consumers know
whether medical products may be appropriate for them as well as what
they should tell their healthcare professionals about before taking or
using or while taking or using a product. It also lets consumers know
what risks they might experience and what steps they need to take for
safety reasons (e.g., no driving) because of taking or using a product.
It would not be appropriate to provide partial information of this type
because the full summary of information is needed to ensure safe use.
In contrast, the warnings for cigarette products set forth in FCLAA
apply to every cigarette product. Cigarettes have health risks that are
associated with their use generally. Furthermore, there is no safe
method of using cigarette products, so this warning information has a
different purpose than medical product warning information, in that it
is intended to influence awareness of cigarette-related health risks
and, as a result, encourage cessation and discourage initiation, rather
than to help ensure that a particular cigarette product is safely used.
The exposure to product information is also different for medical
products versus cigarette products. For cigarette products, the
warnings will be printed prominently and conspicuously on all packages.
These required warnings will thus be seen by smokers, such as each time
that smokers buy cigarettes or take a cigarette out of its package (as
discussed in Section III.A, pack-a-day smokers can be exposed to
warnings more than 7,000 times per year). All nine of the required
warnings also will be seen by potential smokers each time they are at a
point-of-sale considering purchasing a package of cigarettes. The same
is not true of prescription or restricted medical products, as the risk
information is specific to each product, is not commonly displayed
prominently and conspicuously for all products at the point of
purchase, and is not likely to be seen by consumers each time they take
or use a product.
In addition, section 1141.14(b) proposes that a cigarette
advertisement or package will be deemed to include a brief statement of
relevant warnings for the purposes of section 903(a)(8) of the FD&C Act
(21 U.S.C. 387c(a)(8)) if it bears one of the required warnings. Under
section 903(a)(8)(B) of the FD&C Act (21 U.S.C. 387c(a)(8)(B)), a
tobacco product is deemed misbranded unless the manufacturer, packer,
or distributor includes in all advertisements and other descriptive
printed matter a brief statement of, among other things, the relevant
warnings. The warnings required by section 4 of FCLAA for cigarette
advertising and packages are ``relevant warnings'' with respect to
cigarettes as that phrase is used in section 903. For the purpose of
this provision, ``descriptive printed matter'' includes the product
package label, which, under this proposed rule, would be required to
bear certain warnings. FDA is thus proposing that packages and
advertisements that bear one of the required warnings in accordance
with the proposed rule would satisfy the requirement to include a brief
statement of the relevant warnings for the purposes of section
903(a)(8). Similarly, FDA is proposing that a cigarette distributed or
offered for sale in any State shall be deemed to be misbranded under
section 903(a)(8) unless the manufacturer, packer, or distributor
includes in all advertisements and packages issued or caused to be
issued by the manufacturer, packer, or distributor with respect to the
cigarette one of the required warnings.
F. Section 1141.16--Disclosures Regarding Cessation
Section 1141.16 proposes that one or more of the required warnings
include specified information about an appropriate smoking cessation
resource. The goal would be to provide a place where smokers and other
members of the public can obtain smoking cessation information from
staff trained specifically to help smokers quit by delivering unbiased
and evidence-based information, advice, and support. There are a number
of possible alternatives here, including use of an existing or new
quitline or Web site, where smokers and other members of the public can
obtain current unbiased, factual smoking cessation information. We are
proposing that the final rule require that a specified reference to a
smoking cessation resource be included in the required warnings. We
propose that the resource that is required to be referenced must meet
specific criteria designed to ensure that the cessation information,
advice, and support provided are unbiased and evidence-based.
Specifically, we are proposing that the referenced resource must meet
the following criteria:
It must provide factual information about the harms to
health from smoking and the health benefits of quitting.
It must provide factual information about what to expect
when trying to quit smoking (e.g., common withdrawal symptoms and their
duration, circumstances that can trigger cravings).
It must provide practical advice (problem-solving/skills
training) about how to deal with common issues faced by users trying to
quit (e.g., how to deal with cravings and withdrawal).
It must provide evidence-based advice about how to
formulate a plan to quit smoking.
It must provide evidence-based information about effective
relapse prevention strategies.
It must provide factual information on smoking cessation
treatments, including FDA-approved cessation medications.
The information, advice, and support provided must be
evidence-based; must be unbiased, including with respect to products,
services, persons, and other entities; and must be relevant to tobacco
cessation. For example, it can include factual information about the
health risks of smoking but it cannot include derogatory statements
regarding cigarette manufacturers, importers, distributors, or
retailers or advocate public policy changes.
Other than as described in the criteria for what
information may or must be provided, the resource must not advertise or
promote any particular product or service. The resource may provide one
or more FDA-approved over-the-counter cessation products, provided it
does so in a manner that does not advertise or promote a particular
product.
It must not selectively present information about a subset
of FDA-approved cessation products or product categories while failing
to mention other FDA-approved cessation products or product categories
or reference any drug or other medical product that FDA has not
approved for tobacco cessation.
It must not encourage the use of any non-evidence based
smoking cessation practices.
If the resource chosen is a Web site, we propose that it meet the
following additional criteria:
The Web site must not contain a link to any Web site
unless it meets all of the listed criteria.
The Web site may refer to one or more toll-free telephone
numbers, provided they meet the applicable criteria.
If the resource chosen is a toll-free telephone number, we propose
that it meet the following additional criteria:
The staff that provide smoking cessation information and
advice are trained specifically to help smokers quit by delivering
unbiased and evidence-based information, advice, and support.
The service has appropriate controls to ensure the
applicable criteria are met.
[[Page 69541]]
The smoking cessation information would be included as part of one
or more of the required warnings and therefore would not appear outside
of the areas specified for the required warning (i.e., 50 percent of
the area of each of the front and rear panels of cigarette packages and
20 percent of the area of advertisements). Thus, no additional space on
cigarette packages or in advertising would be needed to display this
information. Some or all of the images in the two documents that will
be incorporated by reference in the final rule would contain this
smoking cessation referral information where this information, along
with the textual warning statement and accompanying graphic, are clear,
legible, and fit within the specified area. FDA requests comments
regarding the selection of an appropriate smoking cessation resource
and the applicable criteria identified in the bullets above.
Reducing the number of Americans who smoke by increasing the
likelihood that smokers will quit smoking would provide substantial
public health benefits by reducing the life-threatening consequences
associated with continued cigarette use. Moreover, studies have found
that health warnings are more effective if they are combined with
cessation-related information (Ref. 5 at p. C-7). Thus, FDA is
proposing to require information about an appropriate smoking cessation
resource under section 906(d) of the FD&C Act as appropriate for the
protection of the public health.
G. Proposed Effective Date
Section 201(b) of the Tobacco Control Act specifies that the
requirements for health warnings on cigarette packages and
advertisements for cigarettes are effective fifteen months after the
issuance of the regulations that FDA is proposing in this proposed
rule, and that a final rule must be issued not later than 24 months
after the date of enactment of the Tobacco Control Act. Therefore, FDA
proposes that any final rule will become effective fifteen months after
the date the final rule publishes in the Federal Register. During this
time, parties should take whatever steps they need to plan and
implement business operations that will comply with the final rule. As
of the effective date, no tobacco product manufacturer, importer,
distributor, or retailer of cigarettes may advertise or cause to be
advertised within the United States any cigarette product unless the
advertising complies with the final regulation. Also, cigarette
packages that do not comply with the requirements of the final rule
must not be manufactured for sale or distribution in the United States
as of the effective date.
As specified in section 201(b) of the Tobacco Control Act, however,
if a packaged cigarette product was manufactured prior to the effective
date of the final rule but does not contain the warning statements and
graphics required under the final rule, the product may be introduced
into commerce in the United States within thirty days from such
effective date. Therefore, manufacturers, distributors, importers, and
retailers may continue to introduce into domestic commerce existing
inventory that may not contain the warning statements and graphics
required under the final rule for an additional thirty days after the
effective date of any final rule. After the 30-day period,
manufacturers must not introduce into domestic commerce any cigarette
packages that do not contain the warning statements and graphics
required under the final rule, irrespective of the date of manufacture.
While this limitation only applies to manufacturers, we note that
keeping products without the new, updated warnings on the market for an
extended period of time is not in the interest of public health. We
request comments regarding mechanisms for enforcing this rule and its
effective date, such as ways to differentiate cigarette packages sold
from existing inventory from those that were manufactured after the
effective date.
V. Paperwork Reduction Act of 1995
The required warning disclosures are the ``public disclosure of
information originally supplied by the Federal government to the
recipient for th[at] purpose,'' and are, therefore, not within the
scope of the Paperwork Reduction Act. See 5 CFR 1320.3(c)(2).
VI. Executive Order 13132: Federalism
FDA has analyzed this proposed rule in accordance with the
principles set forth in Executive Order 13132. FDA has determined that
the proposed rule, if finalized, would not contain policies that would
have substantial direct effects on the States, on the relationship
between the National Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
Accordingly, the agency tentatively concludes that the proposed rule
does not contain policies that have federalism implications as defined
in the Executive order and, consequently, a federalism summary impact
statement is not required.
VII. Environmental Impact
FDA has determined under 21 CFR 25.30(k) that this action is of a
type that does not individually or cumulatively have a significant
effect on the human environment. Therefore, neither an environmental
assessment nor an environmental impact statement is required.
VIII. Analysis of Impacts
A. Introduction and Summary
FDA has examined the impacts of the proposed rule under Executive
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Order
12866 directs agencies to assess all costs and benefits of available
regulatory alternatives and, when regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity). This proposed rule would
be an economically significant regulatory action under the Executive
order.
The Regulatory Flexibility Act requires agencies to analyze
regulatory options that would minimize any significant impact of a rule
on small entities. This proposed rule would have a significant economic
impact on a substantial number of small entities.
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
that agencies prepare a written statement, which includes an assessment
of anticipated costs and benefits, before proposing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100,000,000 or more (adjusted annually for
inflation) in any one year.'' The current threshold after adjustment
for inflation is $135 million, using the most current (2009) Implicit
Price Deflator for the Gross Domestic Product. This proposed rule would
result in a 1-year expenditure that would meet or exceed this amount.
FDA's estimate of the benefits of the proposed rule is determined
by the predicted reduction in the number of U.S. smokers and the
consequent reduction in the number of people who will ultimately become
ill or die from causes related to smoking. FDA estimates that this
proposed rule will reduce the number of smokers by 537,000 in 2013,
with small additional reductions over the following 20 years. We
estimate the present value of the rule-induced benefits at a 3 percent
discount rate to be $10.1 to $28.4
[[Page 69542]]
billion, including $8.96 to $26.89 billion in gained life-years, $202.1
to $606.2 million in reduced non-fatal emphysema, $393.1 million in
reduced fire losses, and $498.9 million in medical cost reductions. At
a 7 percent discount rate, our estimates of total benefits become $2.29
to $6.03 billion, including $1.80 to $5.41 billion due to the increase
in life-years, $64.9 to $194.7 million in reduced emphysema, $180.6
million in reduced fire losses and $244.0 million in medical cost
reductions. The annualized benefits range from $676.0 million to $1.91
billion with a 3 percent discount rate and from $216.6 to $569.6
million with a 7 percent discount rate. Most of the public health
benefits from the proposed rule would be realized in the future;
perhaps several decades after the rule took effect. In other words, the
benefits estimated here for the typical dissuaded smoker consist of
health gains to be realized decades in the future.
The estimated totals may understate the full public health benefits
of the proposed rule because they fail to quantify reductions in
smokers' non-fatal illnesses other than emphysema, the reduction in
external effects attributable to passive smoking, and the reduction in
infant and child fatalities caused by mothers' smoking during
pregnancy.
Table E1--Benefits of Regulation
----------------------------------------------------------------------------------------------------------------
Annualized benefits ($ mil)
-----------------------------------------------------------------------------
Impacts of the rule 3 percent 7 percent
-----------------------------------------------------------------------------
Low Medium High Low Medium High
----------------------------------------------------------------------------------------------------------------
Smokers' Life-Years Saved......... 602.5 1,205.0 1,807.5 170.4 340.7 511.1
Emphysema Reductions.............. 13.6 27.2 40.7 6.1 12.2 18.4
Fire Loss Averted................. 26.4 26.4 26.4 17.1 17.1 17.1
Medical Expenditure Reduction..... 33.5 33.5 33.5 23.0 23.0 23.0
-----------------------------------------------------------------------------
Total......................... 676.0 1,292.1 1,908.2 216.6 393.1 569.6
----------------------------------------------------------------------------------------------------------------
Note: Table entries are annualized over twenty years, but many of the benefits represented will not be realized
until well beyond the twentieth year of the proposed rule's implementation.
The total estimated costs of the final rule include $219.2 million
to $529.5 million in one-time costs and $6.2 million in annual costs.
Annualized over 20 years, the total costs range from $20.3 million to
$40.6 million with a 3 percent discount rate and from $25.1 million to
$52.5 million with a 7 percent discount rate, as shown in Table E2.
These costs will arise primarily due to the need to change cigarette
package labels and remove point-of-sale promotions that do not comply
with the new restrictions. FDA could not quantify every regulatory
cost. Some commercial sectors will experience costs for short-term
dislocations of current business activities, but the costs would be
mitigated for those businesses that anticipate the industry's
adjustments.
In addition to the costs described above, the rule will lead to
private costs in the form of reduced revenues for many firms in the
affected sectors. These sector-specific revenue reductions are for the
most part distributional effects and cannot be counted as social costs.
Table E2--Costs of Regulation
----------------------------------------------------------------------------------------------------------------
Annualized costs ($ mil)
-----------------------------------------------------------------------------
Requirements of the rule 3 percent 7 percent
-----------------------------------------------------------------------------
Low Medium High Low Medium High
----------------------------------------------------------------------------------------------------------------
Private Sector
Labeling Change............... 11.0 20.0 29.2 14.9 27.0 39.4
Market Testing................ 0.3 0.7 2.4 0.4 1.0 3.3
Point-of-Sale Advertising..... 3.0 3.0 3.0 4.0 4.0 4.0
-----------------------------------------------------------------------------
Subtotal.................. 14.3 23.7 34.6 19.3 32.0 46.7
-----------------------------------------------------------------------------
Government ........... ........... ........... ........... ........... ...........
FDA........................... 6.0 6.0 6.0 5.8 5.8 5.8
-----------------------------------------------------------------------------
Subtotal.................. 6.0 6.0 6.0 5.8 5.8 5.8
-----------------------------------------------------------------------------
Total................. 20.3 29.7 40.6 25.1 37.8 52.5
----------------------------------------------------------------------------------------------------------------
As tobacco industry revenues decline, state and Federal tobacco tax
revenues will also fall. If excise tax rates on tobacco products remain
at current levels, annual state tax revenues would fall by
approximately $106.1 million and annual Federal tax revenues by $80.5
million.
B. Need for Rule
According to the nation's health experts, tobacco use remains the
most important preventable cause of morbidity and premature mortality
in the United States, accounting each year for over 400,000 deaths
(Ref. 58; Ref. 1). Written with the goal of ameliorating the enormous
toll on the public health that is directly attributable to the
consumption of cigarettes, the Tobacco
[[Page 69543]]
Control Act mandates the publication of this proposed rule. Section 201
of the Tobacco Control Act modifies section 4 of FCLAA (15 U.S.C. 1333)
to require that nine new health warning statements, along with color
graphics depicting the negative health consequences of smoking, appear
on cigarette packages and in cigarette advertisements. In the following
analysis, we estimate the costs and benefits of this statutory
requirement.
C. Benefits
We estimate the benefits of the proposed rule by comparing expected
life-cycle events of smokers with those of nonsmokers. Nonsmokers tend
to live longer and contract fewer lung and other diseases, so the
benefits in our analysis include the discounted value of life-years
gained, cases of emphysema avoided and medical services freed for other
uses. We also include an estimate of the monetary value of the property
and lives saved as a result of the rule-induced reduction in the number
of accidental fires caused by smoking.
1. Reduced Smoking Rates
The changes outlined in this proposed rule are projected to
decrease smoking initiation and increase smoking cessation. For each of
the first twenty years of the proposed rule's implementation (2012-
2031),\6\ FDA calculates the predicted decrease in the number of U.S.
smokers by multiplying together the following:
---------------------------------------------------------------------------
\6\ The effects of anti-smoking policies occur over a long
period of time, so we want to include at least one full generation
in our analysis. Using a twenty-year time horizon allows us to do
this while still avoiding the extreme uncertainty regarding effects
occurring in the more distant future.
---------------------------------------------------------------------------
(a) The estimated effect (a percentage point change) of cigarette
warning labels on the national smoking rate, and
(b) The population in a particular year in the absence of the
proposed regulation (as projected by the U.S. Census Bureau).
To obtain estimates of the effect of cigarette warning labels on
smoking rates (item (a) in the list above), we look to the experience
of Canada, which has required the use of graphic warning labels since
December, 2000 (Ref. 59). The advantage of this approach lies in our
ability to observe actual consumer behavior--in the form of changes in
smoking rates--before and after a graphic warning label requirement
went into effect. The warning labels to be required in the proposed
rule are generally similar to those developed by Health Canada and
other international authorities. As in Canada, the labels required by
the proposed rule would occupy at least half the front and rear display
panels of a cigarette package. Moreover, under the proposed rule, there
would be a mix of warning statements and images that depict the
negative consequences of smoking. Although the proposed rule would
follow much the same approach as the Canadian warning label
requirements, it would differ in some ways: Canada has 16 labels in
rotation, rather than 9; warning statements appear in English on one
side of a package and in French on the other; and health and cessation
information is included on leaflets within Canadian cigarette packages
(Ref. 60). These details, combined with general differences in legal
and social trends, indicate that Canada's experience with warning
labels can give only a general idea of the changes in smoking rates to
be expected as a result of the proposed rule. In addition, other
smoking control initiatives, including an increase in the cigarette tax
and new restrictions on public smoking also occurred in both the United
States and Canada during the period of our analysis. These and other
confounding factors make our estimate of the effect of proposed warning
labels highly uncertain.
Health Canada (Ref. 61) reports Canadian smoking rates for ages 15
and above for each year from 1999 through 2008. FDA obtained smoking
rates for adults, aged 18 and above, in the United States from the
National Health Interview Survey (Ref. 62). We used the results from
these two reports to calculate the U.S.-Canada smoking rate difference
for each year.
Using data from Health Canada (Ref. 63), the National Institutes of
Health (Ref. 64) and the National Health Interview Survey (Ref. 62),
FDA finds that Canadian smoking rates followed a roughly linear
downward trend from 1985-2000, while U.S. smoking rates declined
logarithmically over the same time period; the predicted smoking rate
decrease was 0.67 percentage points per year in Canada and, as of the
year 2000, 0.24 percentage points per year in the United States. Using
the estimated trends, we predict smoking rates for the United States
and Canada, and the difference between them, for each year up to 2008.
We then subtract the predicted U.S.-Canada smoking rate differences
from the actual differences observed in the data. Implicit in this
method is the assumption that these otherwise unexplained differences
may be attributed solely to the presence in Canada of graphic warning
labels. We do not account for potential confounding variables; our
method is therefore a rudimentary approach to estimating the smoking
reduction that would be effected by the proposed warning labels and may
be producing results that are off by one or more orders of magnitude.
FDA requests comments on this issue.
Using this rudimentary approach, FDA estimates that the average
unexplained difference between the United States and Canada in national
smoking rates is 0.212 percentage points higher for the 2001-2008
period than for 1999-2000. Applying this estimate to population
projections (Ref. 65) and summing over all age groups yields an
estimate that the rule would reduce (either through cessation or
avoided initiation) the United States' smoking population by
approximately 537,000 in 2013, with the total decrease rising to
approximately 619,000 in 2031 due to population growth.
2. Expected Life-Years Saved
The largest health consequence of smoking is the increased rate of
mortality from cardiovascular disease, cancer, and certain other
illnesses. As a result, the largest benefits of this proposed rule stem
from the increased life expectancies for those individuals who, in the
absence of this proposed rule, would be smokers and thus susceptible to
premature mortality from one of these often-fatal diseases. We
calculate the number of life-years saved using differences in the
probabilities of survival for smokers and nonsmokers. Sloan et al.
(Ref. 66) construct life tables for various categories of individuals,
including ``non-smoking smokers'' and typical 24-year-old smokers. A
non-smoking smoker is someone who does not use cigarettes but otherwise
exhibits the lifestyle and personal characteristics \7\ of the average
smoker. A typical 24-year-old smoker does not necessarily smoke for his
or her entire life, but instead faces cessation probabilities that are
in line with values observed for all ages in the National Health
Interview Survey; the life expectancy effects of cessation at older
ages are netted out of life expectancy effects of avoiding smoking at
age 24 (results reported below). Sloan et al.'s life tables allow us to
calculate how many additional deaths, per 100,000 population, may be
expected among typical smokers than among non-smoking smokers between
the 24th and 25th birthdays, the 25th and 26th, and so on until the
100th birthday. (To simplify the calculation, FDA assumes
[[Page 69544]]
that differences in survival probabilities for smokers and nonsmokers
are negligible below age 24 and above age 100.) Overall, Sloan et al.
find that a typical 24-year-old female smoker can expect to live
another 55.5 years, while a comparable nonsmoker can expect another
57.8 years of life, producing an overall regulation-induced gain of 2.4
life-years per individual who is prevented from starting to smoke.
Comparing male 24-year-old typical and non-smoking smokers, life
expectancy increases from 49.8 to 54.2 years, producing a gain of 4.4
years. The gap between male and female life expectancy results may be
due to different physiological responses to equal amounts of smoking,
different lifetime cessation patterns or different smoking intensities.
Taylor et al. (Ref. 67), for instance, find that male smokers are more
likely than female smokers to consume more than a pack a day. Sloan et
al. do not report how much of the male-female difference in their
estimated life expectancy effects may be attributed to each possible
mechanism.
---------------------------------------------------------------------------
\7\ In their multivariate regression analysis, Sloan et al.
control for alcohol intake, body mass index, financial planning
horizon, race, education and marital status.
---------------------------------------------------------------------------
While FDA considers Sloan et al.'s methodology to be the most
suitable in the literature for purposes of the present analysis,
several other studies of survival probabilities among smokers who quit
early in life compared with smokers who persist in smoking into later
decades suggest that the average life expectancy gains of not smoking
may be much higher for both males and females. Since these other
studies have found larger increases in life expectancy attributable to
smoking avoidance, the Sloan et al. results may be considered
conservative.
We assume that each person who reaches age 24 during the twenty
years (2012-2031) of our analysis and is dissuaded from smoking extends
his or her life by the gender-specific amount Sloan and co-authors
report. For older individuals, whose post-smoking cessation survival
probabilities cannot be plausibly assumed to equal those of individuals
who were nonsmokers at age 24, we predict life extensions using former
smoker life tables that we construct using Sloan et al.'s results and
cessation probabilities from the 1998 National Health Interview Survey
(Ref. 62).
3. Benefits of Reduced Premature Mortality
OMB Circular A-4 (Ref. 68) advises that the best means of valuing
benefits of reduced fatalities is to measure the affected group's
willingness-to-pay to avoid fatal risks. Three life-year values (also
known as values of a statistical life-year, or VSLY) used frequently in
the literature and in previous analyses are $100,000, $200,000 and
$300,000 (Ref. 69; Ref. 70; 74 FR 33030, July 9, 2009), which we update
to $105,000, $210,000 and $315,000 in 2009 prices. These values
constitute our estimates of willingness-to-pay for a year of life
preserved in the present. The economic assessment of a future life-year
requires discounting its value to make it commensurate with the value
of present events. For this analysis, we use 3 percent and 7 percent
discount rates to calculate the present value of the life-years we
predict will be saved.
For each dissuaded smoker, we multiply a VSLY by the relevant age-
and gender-specific life extension and then discount appropriately to
arrive at a per-person value of reduced mortality. For 24-year-olds,
this value ranges from $9,166 (for a female applying a VSLY of $105,000
and a 7 percent discount rate to her 2.4 life-years gained due to
smoking avoidance) to $358,864 (for a male applying a VSLY of $315,000
and a 3 percent discount rate to his 4.4 life-years gained due to
smoking avoidance). Multiplying the per-person values by the predicted
number of dissuaded smokers yields estimates of rule-induced mortality
benefits that range from $3.61 to $53.78 billion.
This range tends to overstate the net benefits of reduced smoking
because it does not account for lost consumer surplus associated with
the activity of smoking. Cutler (Ref. 69) suggests that lost consumer
surplus might equal around fifty percent of the dollar value of life-
year gains, which necessitates dividing the estimated gross benefits in
half. This adjustment is based on a very simple linear model of
cigarette demand that is not definitive; a more data-intensive model
may produce an adjustment factor very different from fifty percent. FDA
requests comments, additional data and research on this adjustment. Net
benefits estimates, for all VSLY ($105,000, $210,000 and $315,000) and
both discount rates (3 percent and 7 percent) and produced using the
Cutler adjustment factor, appear in Table E3.
These totals may understate the full value of rule-induced
reductions in mortality because they fail to quantify any reduction in
either the external effects attributable to passive smoking or the
infant and child fatalities caused by mothers' smoking during
pregnancy. Sloan et al. (Ref. 66) indicate that, historically, the
inclusion of spouse and infant deaths increased estimates of smoking's
mortality effects by approximately 26.3 percent. We do not incorporate
this adjustment into our analysis, however, since recent public smoking
restrictions and educational campaigns have reduced external smoking
exposure to well below historical levels, though not to zero.
Table E3--Present Value of Lifetime Reduced Smoker Mortality
----------------------------------------------------------------------------------------------------------------
Value of a Statistical Life-Year = Value of a Statistical Life-Year = Value of a Statistical Life-Year =
$105,000 $210,000 $315,000
----------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate
----------------------------------------------------------------------------------------------------------------
$8,963,863,457 $1,804,953,192 $17,927,726,915 $3,609,906,384 $26,891,590,372 $5,414,859,576
----------------------------------------------------------------------------------------------------------------
4. Reduced Emphysema
In the previous section, we estimated the benefits that will accrue
as a result of the rule-induced reduction in premature deaths from lung
cancer, cardiovascular disease and other smoking-related illnesses.
Cigarette smoking is also a major risk factor for diseases that are
less immediately fatal. As with premature death, individuals are
assumed to be willing to give up valuable resources in the present in
order to avoid the pain and distress associated with these non-fatal
illnesses.
Emphysema, a form of COPD,\8\ is perhaps the most notable such
illness. Sloan et al. (Id.) estimate young smokers' lifetime illness
profiles and report that smoking has a larger effect on expected years
with emphysema than on expected years with cancer, coronary heart
disease or any of the
[[Page 69545]]
other conditions they study.\9\ In order to quantify the value of rule-
induced reductions in years spent experiencing emphysema, we scale our
estimates of the value of a statistical life-year ($105,000, $210,000
and $315,000, as discussed in section VIII.C.3) by a ratio representing
the tradeoff individuals are willing to make between perfect health and
the state of having emphysema. Sullivan and Ghushchyan (Ref. 71)
estimate this tradeoff with a regression of EQ-5D health index scores
on disease indicators. EQ-5D survey responses--to questions about five
areas of health, including mobility, pain, and ability to perform usual
activities--are mapped so that a score of one represents best-
measurable health, a score of zero represents death, and fractional
values represent intermediate levels of health. Sullivan and
Ghushchyan's regression analysis indicates that a year with emphysema
decreases, on average, a patient's welfare as much as the loss of
0.0667 years of perfect health. Multiplying this average welfare loss
by life-year values of $105,000, $210,000 and $315,000 yields estimates
of $7,000, $14,000 and $21,000 for the amounts individuals are willing
to pay to avoid a year of emphysema.
---------------------------------------------------------------------------
\8\ Chronic obstructive bronchitis is a smoking-related illness
that is closely related to emphysema so that the two conditions are
now generally categorized together as chronic obstructive pulmonary
disease (COPD). Because the sources we use in this section only
report the health and welfare effects of emphysema, our resulting
benefits estimates include only a portion of the total social gains
associated with rule-induced COPD reductions.
\9\ Due to the slow progressive nature of emphysema, patients
with emphysema experience a diminished quality of life for longer
periods than do patients with other smoking-related illnesses, which
more rapidly progress to death.
---------------------------------------------------------------------------
Sloan et al. (Ref. 66) estimate that a 24-year-old smoker can
expect, on average, an extra 0.46 discounted years (using a discount
rate of 3 percent) or 0.22 discounted years (using a discount rate of 7
percent) of emphysema over his or her lifetime, as compared with an
otherwise equivalent nonsmoker. Sloan and co-authors do not report the
effect of smoking on emphysema years for members of other age cohorts,
so FDA takes the conservative approach of estimating benefits only for
those individuals who reach age 24 sometime during the first twenty
years of the proposed rule's implementation. (Smoking cessation brought
about by this rule will almost certainly reduce emphysema for some
individuals who are over age 24 at the time of the rule's
implementation. However, due to data constraints, we omit the benefits
to these older individuals; this is why we describe our estimate as
conservative.)
Multiplying our predictions of per-smoker decreased discounted
disease-years by Sullivan and Ghushchyan's welfare loss per year of
emphysema and FDA's estimates of the rule-induced reduction in the
number of smokers (see section VIII.C.1 for a discussion of
methodology), discounting appropriately, and dividing in half (per Ref.
69) yields a rule-induced welfare gain of $64.9 to $606.2 million.
Results appear in Table E4. Smokers also suffer from other non-fatal
illnesses but we do not include those losses in this analysis. Since we
do not quantify reductions in smokers' non-fatal illnesses other than
emphysema, these estimates represent lower bounds on the value of rule-
induced morbidity reductions.
Table E4--Present Value of 24-Year-Olds' Lifetime Reduced Emphysema
----------------------------------------------------------------------------------------------------------------
Value of a Statistical Life-Year = Value of a Statistical Life-Year = Value of a Statistical Life-Year =
$105,000 $210,000 $315,000
----------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate
----------------------------------------------------------------------------------------------------------------
$202,075,479 $64,886,926 $404,150,958 $129,773,852 $606,226,437 $194,660,778
----------------------------------------------------------------------------------------------------------------
5. Reduced Fire Costs
Each year, fires started by lighted tobacco products kill and
injure people and destroy structures and other property. In the United
States in 2007, civilian deaths caused by smoking-related fires totaled
720, with direct property damage of $530 million (Ref. 72). A reduction
in the number of smokers, and the coinciding number of cigarettes
smoked, will reduce the number of future fires.
The percentage reduction in fires may not equal the percentage
reduction in cigarette consumption, however, because since 2003 forty-
nine states have passed legislation that requires cigarettes to be
self-extinguishing or fire-safe (with the effectiveness dates of some
of these state laws extending into 2011). FDA acknowledges some
uncertainty in the effectiveness rate of fire-safe cigarettes; \10\ for
this analysis, we estimate that 50 percent of apparently rule-induced
future fire reductions would have been avoided even without the
proposed rule due to fire-safe cigarette design.
---------------------------------------------------------------------------
\10\ One of the first states to enact these laws, New York,
requires cigarettes to self-extinguish 75% of the time (Ref. 73).
First-year (2004) data in New York show a reduction in smoking-
caused fires by about 33% from the average of the three previous
years of complete data (Ref. 74).
---------------------------------------------------------------------------
Using a $7.9 million value of a statistical life (Ref. 75, which is
the 2006 value updated to 2009 dollars using Ref. 76), FDA projects
fire-cost savings of $393.1 million (at a three percent discount rate)
or $180.6 million (at a seven percent discount rate); of these totals,
9.7% consists of averted property damage and the rest of lives saved.
These estimated savings may significantly underestimate the potential
benefits because they exclude the value of reduction in fire-caused
non-fatal injuries.
6. Medical Services
Sloan et al. (Ref. 66) estimate that smokers use more medical
services over their life cycles than do comparable nonsmokers, with a
specific net cost of $3,757 per female 24-year-old smoker and $2,617
per male 24-year-old smoker (in 2000 dollars and with a 3 percent
discount rate). If these payments are distributed equally from ages 24
to 100, given FDA's projected 20-year reductions in smoking prevalence,
smoking-related medical expenditures would fall by $1.87 billion, of
which $997.7 million would be realized as savings by smokers themselves
and $870.6 million by nonsmokers (in the form of decreases in private
insurance premiums or taxes used to fund government health programs
such as Medicare). With a 7 percent discount rate, the total decrease
in expenditure becomes $915.5 million, with $488.0 million of those
savings accruing to smokers and $427.5 million to nonsmokers.
In the absence of the rule, some portion of smoking-related medical
expenditures accrues to health service providers as economic rent (also
known as producer surplus). Any reduction of this portion would not
contribute to the social benefit of the rule but would instead be a
transfer of value from producers to consumers and other payers. If,
however, the supply of smoking-related medical services is highly
elastic, especially in the long run, producer surplus would be small.
For this reason, FDA does not adjust for potential rent transfer. We
do, however, include only the decrease in medical expenditure by
smokers as a contribution to the rule's benefits.
[[Page 69546]]
Because nonsmokers' payments take the form of a subsidy for smoking-
related medical services, some portion of their expenditure in the
absence of the rule is greater than smokers' own willingness-to-pay for
medical services. Hence, the avoidance of this portion of the spending
would transfer value from smokers to nonsmokers but not contribute to
an overall social benefit of the rule. We do not know the size of this
portion relative to nonsmokers' overall rule-induced expenditure
change, so we take the conservative approach of excluding nonsmokers'
expenditures from our benefits calculation.
As a final adjustment, we divide the remaining expenditure change
in half to account for smokers' lost consumer surplus associated with
the activity of smoking. This yields a rule-induced benefit of $498.9
million (at a 3 percent discount rate) or $244.0 million (at a 7
percent discount rate).
7. Summary of Benefits
The discussion above demonstrates the considerable magnitude of the
economic benefits available from smoking reduction efforts. Estimates
are summarized in Table E5. FDA requests comments on the sources and
methods used to produce these results.
Table E5--Present Value of Benefits ($ Mil)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VSLY = $105,000 VSLY = $210,000 VSLY = $315,000
-----------------------------------------------------------------------------------------------
3% Discount 7% Discount 3% Discount 7% Discount 3% Discount 7% Discount
rate rate rate rate rate rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-Years.............................................. 8,963.9 1,805.0 17,927.7 3,609.9 26,891.6 5,414.9
Non-Fatal Emphysema..................................... 202.1 64.9 404.2 129.8 606.2 194.7
Fire Loss............................................... 393.1 180.6 393.1 180.6 393.1 180.6
Medical Expenditure Reduction........................... 498.9 244.0 498.9 244.0 498.9 244.0
-----------------------------------------------------------------------------------------------
Total............................................... 10,057.9 2,294.5 19,223.8 4,164.3 28,389.8 6,034.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
8. Uncertainty Analysis
Estimation of the effectiveness of the proposed rule (on reducing
the future U.S. smoking rate) is subject to a large uncertainty that is
not fully reflected in the benefits estimates appearing in the
preceding sections, which only reflect different estimates of the value
of a statistical life year. In this section, we show the uncertainty
associated with our estimate of the effectiveness of the proposed rule.
Our primary estimate, that the U.S. smoking rate will decrease by
0.212 percentage points, was calculated in the following steps. First,
we found the decrease in Canadian smoking rates since 1999 over and
above what would have been expected using the pre-2001 trend. We then
subtracted the analogous unexplained decrease in the U.S. smoking rate
over the same period. This middle step was driven by the idea that the
U.S. experience could proxy for recent social or policy changes (such
as public smoking restrictions) that may have had effects on Canada's
smoking rate and thus needed to be subtracted in order to isolate the
effect of graphic warning labels. The last step was to calculate the
difference between U.S. and Canadian unexplained decreases in smoking
before and after graphic warning labels were introduced in Canada. We
attributed the remaining unexplained difference to graphic warning
labels.
However, the U.S. social and policy climate may have been so
different from Canada's during the years 1999-2008 that this proxy is
inappropriate. To account for this possibility, we calculate the
unexplained difference in Canadian smoking rates before and after
graphic warning labels were introduced, this time omitting any U.S.
adjustments. (Anti-smoking policies and programs other than the graphic
warning labels are assumed to be incorporated in the pre-2001 trend,
with no additional effects of these variables occurring post-
introduction of graphic warning labels.) This approach indicates that
graphic warning labels may have been responsible for a 1.648 percentage
point decrease in the Canadian smoking rate. If the proposed rule were
to achieve this effectiveness level in the United States, benefits
would be approximately eight times larger than those reported earlier
in this analysis.
On the other hand, because FDA has had access to very small data
sets, our effectiveness estimates are in general not statistically
distinguishable from zero; we therefore cannot reject the possibility
that the proposed rule would not change the U.S. smoking rate. In this
case, the proposed rule would not generate any quantifiable benefits,
so the appropriate lower bound on benefits is zero. Ranges of benefits,
representing the zero-effect case and the Canada-only modeling
approach, appear in Table E6. The wide ranges shown in the table
highlight the uncertainty inherent in our approach.
Table E6--Present Value of Benefits, Ranges ($ Billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VSLY = $105,000 VSLY = $210,000 VSLY = $315,000
-----------------------------------------------------------------------------------------------
3% Discount 7% Discount 3% Discount 7% Discount 3% Discount 7% Discount
rate rate rate rate rate rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-Years.............................................. [0, 69.7] [0, 14.0] [0, 139.3] [0, 28.1] [0, 209.0] [0, 42.1]
Non-Fatal Emphysema..................................... [0, 1.6] [0, 0.5] [0, 3.1] [0, 1.0] [0, 4.7] [0, 1.5]
Fire Loss............................................... [0, 3.1] [0, 1.4] [0, 3.1] [0, 1.4] [0, 3.1] [0, 1.4]
Medical Expenditure Reduction........................... [0, 3.9] [0, 1.9] [0, 3.9] [0, 1.9] [0, 3.9] [0, 1.9]
-----------------------------------------------------------------------------------------------
Total............................................... [0, 78.2] [0, 17.8] [0, 149.4] [0, 32.4] [0, 220.1] [0, 46.9]
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 69547]]
D. Costs
The proposed rule would create new burdens for cigarette
manufacturers. In particular, manufacturers would incur the large up-
front costs associated with a major labeling change.\11\ Cigarette
manufacturers and retailers would be responsible for the removal of
noncompliant point-of-sale advertising. Consumers are likely to
ultimately bear a share of these costs in the form of increased prices.
In addition, the tobacco industry and possibly other sectors will
experience lost sales and employment, but these revenue transfers will
be offset by gains to other sectors, as discussed in the
``Distributional Effects'' section of this document.
---------------------------------------------------------------------------
\11\ All of the up-front costs of this rule are assumed to occur
at the beginning of the first period of the time horizon of this
rule (2011). The cost tables present raw undiscounted calculations
of these up-front costs. For summary tables requiring a present
value, these costs are discounted 1 year to the present (2010).
---------------------------------------------------------------------------
1. Number of Affected Entities
Labeling and advertising requirements would affect domestic
cigarette manufacturers and importers of foreign-made cigarettes.
Statistics of U.S. Businesses' data show that there were 24 cigarette
manufacturing firms in the United States in 2007 (Ref. 77). An
undetermined number of importers would also be affected.
Noncompliant point-of-sale advertising would be removed by
manufacturers (or importers) and retailers. We use detailed data from
the 2002 Economic Census report on product line sales for
establishments with payroll to estimate the percentage of various types
of retail establishments that sell tobacco products. Searching by the
Economic Census product line 20150 (cigars, cigarettes, tobacco, and
smokers' accessories), we find accommodation and food service
establishments (NAICS 72) and retail trade establishments (NAICS 44-45)
that report tobacco sales (Ref. 78, Ref. 79). Although some
establishments in other industries may have unreported sales of tobacco
products, the product line sales data provide a reasonable basis to
determine which types of establishments would be affected by the
proposed rule.
Table E7--Establishments With Payroll That Sell Tobacco Products, 2002 Economic Census
----------------------------------------------------------------------------------------------------------------
Percentage
Number in Number selling selling
Kind of business NAICS NAICS tobacco tobacco
products products
----------------------------------------------------------------------------------------------------------------
General merchandise................ 452........................ 40,723 6,991 17
Food & beverage.................... 445 excluding 44512........ 119,592 65,255 55
Convenience \a\.................... 44512...................... 29,212 24,871 85
Gasoline stations with convenience 44711...................... 93,691 86,152 92
\a\.
Gasoline stations.................. 44719...................... 27,755 8,745 32
Health & personal care............. 446........................ 81,797 17,761 22
Other retail establishments........ \(a)\...................... 595,558 3,470 1
Accommodation and food services.... 72 excluding 7224.......... 516,734 12,347 2
Drinking places.................... 7224....................... 48,856 11,490 24
Tobacco stores..................... 453991..................... 6,184 6,184 100
Nonstore retailers................. 454........................ 49,000 848 2
Vending machine operators.......... 4542....................... 5,921 892 15
----------------------------------------------------------------------------
Total.......................... ........................... 1,615,023 245,006 15
----------------------------------------------------------------------------------------------------------------
\a\ Includes NAICS 441, 443, 444, 448, 451, 453 excluding 453991.
Sources: Ref. 79; Ref. 78.
Because the 2007 Census data on product line sales for retail
establishments with employees are not yet available, we update the
number of various types of retail establishments using 2007 Statistics
of U.S. Businesses data but assume the share of establishments selling
tobacco products is unchanged (since 2002) within each category.
Likewise, we lack 2007 Census data on product line sales for
nonemployer establishments. Without additional information, we assume
that, within a NAICS category, the share of establishments selling
tobacco products will be the same for nonemployer establishments in
2007 as for establishments with payroll in the 2002 Census. As shown in
Table E8, we estimate that about 249,000 retail establishments with
payroll and 126,000 nonemployer establishments sell tobacco products.
Table E8--Establishments That Sell Tobacco Products
--------------------------------------------------------------------------------------------------------------------------------------------------------
Establishments with payroll Nonemployer establishments
Percentage ---------------------------------------------------------------
selling Estimated Estimated
Kind of business NAICS tobacco number selling number selling
products \a\ Number \b\ tobacco Number \c\ tobacco
products products
--------------------------------------------------------------------------------------------------------------------------------------------------------
General merchandise stores............. 452............................ 17 47,456 8,147 32,978 5,661
Food & beverage stores................. 445 excluding 44512............ 55 122,858 67,037 104,026 56,761
Convenience stores..................... 44512.......................... 85 28,173 23,986 (\e\)
Gasoline stations with convenience 44711.......................... 92 95,389 87,713 (\e\)
stores.
[[Page 69548]]
Gasoline stations...................... 44719.......................... 32 20,144 6,347 9,454 2,979
Health and personal care stores........ 446............................ 22 89,406 19,413 138,800 30,138
Other retail stores.................... (\d\).......................... 1 600,537 3,499 735,266 4,284
Accommodation and food services........ 72 excluding 7224.............. 2 585,541 13,991 281,104 6,717
Drinking places........................ 7224........................... 24 46,948 11,041 27,170 6,390
Tobacco stores......................... 453991......................... 100 6,458 6,458 (\e\)
Nonstore retailers..................... 454 excluding 4542............. 2 42,565 737 782,759 13,547
Vending machine operators.............. 4542........................... 15 5,158 777 27,595 4,157
----------------------------------------------------------------------------------------------------------------
Total.............................. ............................... 15 1,690,633 249,147 2,139,152 126,477
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Percentage of establishments with payroll from Table E7.
\b\ Ref. 77.
\c\ Ref. 80.
\d\ Includes NAICS 441, 443, 444, 448, 451, 453 excluding 453991.
\e\ Data on nonemployer establishments unavailable for this NAICS category.
2. Costs of Changing Cigarette Labels
In order to estimate the cost of changing cigarette labels to
comply with the proposed rule, FDA used three sources. The
``Methodology Report'' for the forthcoming ``Model to Estimate Costs of
Using Labeling as a Risk-Reduction Strategy for Consumer Products
Regulated by the Food and Drug Administration'' provided the basic
framework (Ref. 81). The Methodology Report contains few numerical
values, but we obtained preliminary estimates of several cost
components and updated product counts through personal communication
with our contractor, RTI International (Ref. 82). Because the
forthcoming model is not yet complete, we filled in missing pieces
using the RTI Final Report entitled ``FDA Labeling Cost Model,'' which
describes an earlier model developed by RTI for FDA to estimate the
cost of food label changes (Ref. 83). We were able to combine the
models because the older food labeling model serves as the basis for
the forthcoming general labeling model.
The front and back of every cigarette package must be redesigned to
incorporate graphic warnings occupying the entire top half. This type
of change requires what is known as a complete redesign in the 2003
model or as a major change in the forthcoming model. In addition, the
requirement to incorporate 9 different warnings will increase costs
beyond what the labeling models estimate. FDA accounted for the
additional warnings by first calculating the cost of a complete
redesign for cigarettes and then inflating the specific cost components
expected to increase due to the requirement for 9 warnings.
The RTI labeling models incorporate three potential cost components
of a labeling change: label design costs (incurred on a per-UPC basis),
testing costs (incurred on a per-formulation basis), and inventory
costs (incurred on a per-unit basis). For this analysis, we restrict
the calculation of market testing costs to the largest firms and
perform certain other modifications to make the estimated cost match
the likely effects of the proposed rule. The large cigarette
manufacturers can plausibly be expected to conduct quantitative studies
and focus group testing for each of their brands to gauge the effect of
the new graphic warnings and to study how they might best be able to
mitigate their effects. By contrast, small manufacturers with lower
sales revenues are highly unlikely to conduct expensive market testing
in response to the new requirements.
We estimate that 3,234 cigarette UPCs (Ref. 82), would be affected
by this proposed rule. FDA conservatively assumes that because the
required change is so radical, none of the labeling changes can be
coordinated with a previously-scheduled labeling change.
Based on communication with RTI about the forthcoming model (Id.),
FDA estimates that, per UPC, administrative labor costs are $375 to
$1,014, graphic design labor costs are $1,120 to $3,206, prepress labor
costs are $1,482 to $3,816, recordkeeping labor costs are $33 to $434,
prepress materials costs are $100 to $2,439, and printing plate costs
are $4,840 to $10,580.\12\ Summing these costs yields a per-UPC design
cost of $7,950 to $21,489. Multiplying by the number of affected UPCs
and inflating by 10 percent to account for rush charges associated with
a compliance period shorter than 24 months results in total label
design costs of $28 million to $76 million (Ref. 83).
---------------------------------------------------------------------------
\12\ Rotogravure, the most expensive printing method, is used
for cigarette labeling.
---------------------------------------------------------------------------
Manufacturers incur inventory costs if they discard unused
inventory at the end of the compliance period. Because cigarette
manufacturers do not keep large inventories of labels, FDA assumes that
all inventory will be exhausted during the 15-month compliance period,
leaving no inventory cost. Table E9 summarizes the total costs of a
standard label redesign for cigarettes.
[[Page 69549]]
Table E9--Cost of a Label Redesign for Cigarettes
----------------------------------------------------------------------------------------------------------------
Low Medium High
----------------------------------------------------------------------------------------------------------------
Label Design Cost \a\
Number of UPCs.................................................. 3,234 3,234 3,234
Administrative labor cost ($)............................... 375 695 1,014
Graphic design labor cost ($)............................... 1,120 2,163 3,206
Prepress labor cost ($)..................................... 1,482 2,649 3,816
Recordkeeping labor cost ($)................................ 33 234 434
Prepress materials ($)...................................... 100 1,225 2,439
Printing plate cost ($)..................................... 4,840 7,710 10,580
Cost per product UPC ($)........................................ 7,950 14,676 21,489
Total label design cost, 24-month compliance ($)................ 25,710,300 47,462,184 69,495,426
Total label design cost, < 24-month compliance ($).............. 28,281,330 52,208,402 76,444,969
Total Cost ($).................................................. 28,281,330 52,208,402 76,444,969
----------------------------------------------------------------------------------------------------------------
\a\ Undiscounted costs assumed to be incurred at the start of the first period of the time horizon of this rule.
Administrative costs, recordkeeping costs, and labor costs
associated with graphic design and prepress activities would probably
be unaffected by the requirement to use 9 different picture-warning
pairs. By contrast, we expect printing plate costs and prepress
materials costs to be 9 times as large as previously calculated because
of the requirement for 9 warnings. Table E10 shows the total costs of
the cigarette labeling change, adjusted for the 9 warnings. The
labeling cost increases to $169 million to $447 million.
Table E10--Cost of a Label Redesign With Nine Warning Labels
----------------------------------------------------------------------------------------------------------------
Low Medium High
----------------------------------------------------------------------------------------------------------------
Label Design Cost \a\
Number of UPCs.................................................. 3,234 3,234 3,234
Administrative labor cost ($)............................... 375 695 1,014
Graphic design labor cost ($)............................... 1,120 2,163 3,206
Prepress labor cost ($)..................................... 1,482 2,649 3,816
Recordkeeping labor cost ($)................................ 33 234 434
Prepress materials ($)...................................... 900 11,025 21,951
Printing plate cost ($)..................................... 43,560 69,390 95,220
Cost per UPC ($)................................................ 47,470 86,156 125,641
Total label design cost, 24-month compliance ($)................ 153,517,980 278,628,504 406,322,994
Total label design cost, < 24-month compliance ($).............. 168,869,778 306,491,354 446,955,293
Total Cost ($).................................................. 168,869,778 306,491,354 446,955,293
----------------------------------------------------------------------------------------------------------------
\a\ Undiscounted costs assumed to be incurred at the start of the first period of the time horizon of this rule.
3. Market Testing Costs Associated With Changing Cigarette Package
Labels
As stated above, FDA expects that only the large manufacturers will
conduct market tests for their brands. Using several state directories
of certified tobacco products, FDA estimates that 75 brands are
marketed by the 4 largest domestic manufacturers (Refs. 84-89). The
cost of focus group tests is estimated to range from $18 to $42
thousand; the cost of a quantitative study is estimated to range from
$47 to $453 thousand (Ref. 82). The total cost of both types of market
testing is estimated to be $65 to $495 thousand per brand. Multiplying
by 75 brands yields a total cost estimate ranging from $5 to $37
million with a medium estimate of $11 million, as shown in Table E11.
We assume that the requirement to use 9 different warning-text pairs
does not affect these costs.
Table E11--Cost of Market Testing
----------------------------------------------------------------------------------------------------------------
Low Medium High
----------------------------------------------------------------------------------------------------------------
Market Testing Cost \a\
Number of brands to be tested................................... 75 75 75
Cost of focus group testing ($)............................. 18,000 30,000 42,000
Cost of quantitative studies ($)............................ 47,000 114,000 453,000
Market testing cost per brand ($)............................... 65,000 144,000 495,000
Total Market Testing Cost ($)................................... 4,875,000 10,800,000 37,125,000
----------------------------------------------------------------------------------------------------------------
\a\ Undiscounted costs assumed to be incurred at the start of the first period of the time horizon of this rule.
4. Advertising Restrictions: Removal of Noncompliant Point-of-Sale
Advertising
The principal effect of the restrictions on advertising in the
proposed rule stem from the requirement that retailers and
manufacturers of cigarettes remove any point-of-sale advertising for
cigarettes that fails to conform to the requirements. In this analysis,
we estimate the social resource costs for the removal. In the analysis
of FDA's 1996 final tobacco rule, we based much of our estimate of the
cost of removing noncompliant point-of-sale advertising on a report
from the Barents Group that
[[Page 69550]]
used average removal costs for seven types of retail establishments,
calculated using in-store surveys conducted by A.T. Kearney, Inc (61 FR
44580). We use the same baseline and retain our assumptions from 1996
about the level of effort required. We acknowledge, however, that this
approach may overstate or understate the costs for a particular action
or type of business.
Table E12 regroups the information from Table E8 according to the
categories studied by AT Kearney. Because our analysis considers only
the removal of point-of-sale advertising from physical retail
locations, we do not include non-store establishments. Table E13 shows
that in current dollars one-time per-establishment costs range from
about $12 for ``other establishments'' to about $198 for convenience
stores. To estimate the total costs to comply with the restriction on
point-of-sale advertising, we apply the updated per-establishment costs
from Table E13 to affected establishments. As shown in Table E14, the
one-time costs to remove point-of-sale materials would total $45.4
million.
Table E12--Estimated Number of Establishments Selling Cigarette Products Affected by the Proposed Rule
----------------------------------------------------------------------------------------------------------------
Establishments Nonemployer
Kind of business with payroll establishments Total
\a\ \a\
----------------------------------------------------------------------------------------------------------------
AT Kearney Category
General Merchandise......................................... 8,147 5,661 13,808
Supermarket & Grocery....................................... 67,037 56,761 123,799
Convenience Stores.......................................... 23,986 .............. 23,986
Convenience Stores with Gas................................. 87,713 .............. 87,713
Service Stations............................................ 6,347 2,979 9,326
Drug Stores................................................. 19,413 30,138 49,552
Specialty Tobacco Stores.................................... 6,458 .............. 6,458
Other establishments \b\.................................... 28,531 17,391 45,922
-----------------------------------------------
Total................................................... 247,633 112,931 360,564
----------------------------------------------------------------------------------------------------------------
\a\ Source: Table E8.
\b\ Includes miscellaneous retail establishments and accommodations and food services establishments (including
drinking places), but excludes nonstore retailers.
Table E13--Estimated Average Per-Establishment Costs To Remove
Prohibited Materials a
------------------------------------------------------------------------
Remove promotional materials ($)
AT Kearney business category -------------------------------------
1996 dollars Current dollars
------------------------------------------------------------------------
General Merchandise............... 23.42 30.94
Supermarket & Grocery............. 125.14 165.30
Convenience Stores................ 150.02 198.16
Convenience Stores with Gas....... 146.43 193.42
Service Stations.................. 36.09 47.67
Drug Stores....................... 11.72 15.48
Specialty Tobacco Stores.......... 123.21 162.75
Other establishments \b\.......... 9.37 12.38
------------------------------------------------------------------------
\a\ Sources: 61 FR 44585, Table 8; 1996 to 2009 (most recent) GDP
deflator rose 32.1% (Ref. 76).
\b\ Excludes adult-only establishments, nonstore retailers and vending
machine operators.
Table E14--Estimated One-Time Costs To Remove Point-of-Sale Materials From Affected Establishments
----------------------------------------------------------------------------------------------------------------
Total one-time
A.T. Kearney category Number of Average cost costs \b\ ($
establishments ($) million)
----------------------------------------------------------------------------------------------------------------
General Merchandise............................................. 13,808 30.94 0.4
Supermarket & Grocery........................................... 123,799 165.30 20.5
Convenience Stores.............................................. 23,986 198.16 4.8
Convenience Stores with Gas..................................... 87,713 193.42 17.0
Service Stations................................................ 9,326 47.67 0.4
Drug Stores..................................................... 49,552 15.48 0.8
Specialty Tobacco Stores........................................ 6,458 162.75 1.1
Other establishments \a\........................................ 45,922 12.38 0.6
-----------------------------------------------
Total....................................................... 360,564 .............. 45.4
----------------------------------------------------------------------------------------------------------------
\a\ Excludes adult-only establishments and non-store retailers.
\b\ Undiscounted costs assumed to be incurred at the start of the first period of the time horizon of this rule.
[[Page 69551]]
Sources: Tables E12 and E13.
5. Government Administration and Enforcement Costs
FDA's estimated internal costs for administering and enforcing this
regulation are uncertain. As a best estimate, however, FDA projects
that 25 full-time equivalent employees (FTEs) would be needed to
implement the proposed rule. Fully loaded employee costs vary with the
type of employee (e.g. field inspectors versus administrative), but an
average of $247,049 per FTE places the dollar cost at approximately
$6.2 million per year.
6. Summary of Costs
Table E15 summarizes the cost estimates from the preceding sections
and Table E16 displays the present value and annualized value of costs.
Table E15--Summary of Costs
----------------------------------------------------------------------------------------------------------------
One-Time ($m) \b\
Requirements of the rule Annual ($m) -----------------------------------------------
\a\ Low Medium High
----------------------------------------------------------------------------------------------------------------
Private Sector
Labeling Change............................. .............. 168.9 306.5 447.0
Market Testing.............................. .............. 4.9 10.8 37.1
Point-of-Sale Advertising................... .............. 45.4 45.4 45.4
---------------------------------------------------------------
Subtotal................................ .............. 219.2 362.7 529.5
---------------------------------------------------------------
Government
FDA......................................... 6.2 .............. .............. ..............
---------------------------------------------------------------
Subtotal................................ 6.2 .............. .............. ..............
---------------------------------------------------------------
Total................................... 6.2 219.2 362.7 529.5
----------------------------------------------------------------------------------------------------------------
\a\ Undiscounted annual costs assumed to be incurred at the end of each period for a total of 20 years.
\b\ Undiscounted one-time costs assumed to be incurred at the start of the first period of the time horizon of
this rule.
Table E16--Present Value and Annualized Value of Costs a
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present value ($ mil) Annualized costs ($ mil)
-----------------------------------------------------------------------------------------------
Requirements of the rule 3 percent 7 percent 3 percent 7 percent
-----------------------------------------------------------------------------------------------
Low Med. High Low Med. High Low Med. High Low Med. High
--------------------------------------------------------------------------------------------------------------------------------------------------------
Private Sector
Labeling Change..................................... 164.0 297.6 433.9 157.8 286.4 417.7 11.0 20.0 29.2 14.9 27.0 39.4
Market Testing...................................... 4.7 10.5 36.0 4.6 10.1 34.7 0.3 0.7 2.4 0.4 1.0 3.3
Point-of-Sale Advertising........................... 44.1 44.1 44.1 42.5 42.5 42.5 3.0 3.0 3.0 4.0 4.0 4.0
-----------------------------------------------------------------------------------------------
Subtotal........................................ 212.8 352.2 514.1 204.8 339.0 494.9 14.3 23.7 34.6 19.3 32.0 46.7
-----------------------------------------------------------------------------------------------
Government
FDA................................................. 89.2 89.2 89.2 61.2 61.2 61.2 6.0 6.0 6.0 5.8 5.8 5.8
-----------------------------------------------------------------------------------------------
Subtotal........................................ 89.2 89.2 89.2 61.2 61.2 61.2 6.0 6.0 6.0 5.8 5.8 5.8
-----------------------------------------------------------------------------------------------
Total....................................... 302.0 441.4 603.3 266.0 400.2 556.0 20.3 29.7 40.6 25.1 37.8 52.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The present value of upfront costs differs from previous tables because here these costs have been discounted 1 year back to 2010. Similarly, annual
costs have been discounted back to 2010 before being annualized, resulting in a slight difference between annual and annualized costs.
E. Cost-Effectiveness Analysis
We measure the effectiveness of the proposed rule as the sum of
saved life-years and quality-adjusted life years. In order to assess
the cost-effectiveness of the proposed rule, we must adjust the costs
to account for effects that are not captured by life-years or quality-
adjusted life years. As shown in detail in the previous section, we
calculated the first twenty years' costs attributable to the proposed
rule and found present values of $266.0 to $556.0 million (using a 7
percent discount rate) or $302.0 to $603.3 million (using a 3 percent
discount rate). We add to each total the estimated monetary value of
lost consumer surplus (previously netted out of life-years and
emphysema benefits estimates); this yields overall costs of $2.14 to
$6.17 billion (using a 7 percent discount rate) or $9.47 to $28.10
billion (using a 3 percent discount rate). In order to focus on the
costs associated with extensions of quality-adjusted life (see Ref. 68
at pp. 11-12), we then subtract both medical cost reductions and the
value of property savings due to reductions in accidental fires and
arrive at a net cost of $1.88 to $5.91 billion (using a 7 percent
discount rate) or $8.93 to $27.57 billion (using a 3 percent discount
rate).
Discounting over the same twenty-year time period, we calculate
that this proposed rule would lead to 476,000 to 549,000 discounted
smoking preventions or cessations. Similarly, we find that 34,627 to
171,660 discounted quality-adjusted life-years would be saved (this
includes both fractional life-years associated with reduced emphysema
and full life-years associated with reduced premature
[[Page 69552]]
mortality).\13\ This yields a cost per smoking prevention of $3,940 to
$50,204, and a cost per life-year saved of $52,047 to $170,552.
---------------------------------------------------------------------------
\13\ This total reflects reduced premature mortality for smokers
themselves and for others caught in the path of cigarette-related
fires. The National Fire Protection Association (Ref. 90) reports
the percentages of fire fatalities by age category; along with the
CDC's estimate of average American life expectancy (Ref. 91), these
data allow FDA to calculate that the expected number of life-years
lost by fire victims is 37.3.
Table E17--Cost-Effectiveness
----------------------------------------------------------------------------------------------------------------
3 Percent 7 Percent
Cost ($) -----------------------------------------------------------------------------
Low Medium High Low Medium High
----------------------------------------------------------------------------------------------------------------
Per Smoking Prevention............ 16,271 33,217 50,204 3,940 8,149 12,403
Per Life-Year Saved............... 52,047 106,255 160,594 54,176 112,050 170,552
----------------------------------------------------------------------------------------------------------------
F. Distributional Effects
This proposed rule would bring about a variety of distributional
effects not yet discussed in detail. Sectors affiliated with tobacco
and tobacco products would lose sales revenues. Simultaneously, non-
tobacco-related industries would gain sales, because dollars not spent
for tobacco products would be spent on other commodities.
1. Tobacco Manufacturers, Distributors, and Growers
FDA estimates that implementation of the proposed regulation may
reduce the annual cigarette consumption of U.S. smokers by 80 million
packs. Meanwhile, the FTC (Ref. 39) reports that, in 2006, 1.75 billion
cigarette packs were manufactured and distributed to consumers. These
numbers imply that tobacco manufacturer revenues would be 0.68 percent
lower in the rule's first year, and 0.79 percent lower in 2031, than
they were in 2006. The U.S. Census Bureau (Ref. 92) reports that
tobacco manufacturers' revenues totaled $41.6 billion in 2006; hence,
the rule-induced decrease in annual tobacco sales would range from
approximately $284 to $328 million. These estimates would rise somewhat
higher if we were accounting for the decrease in price that accompanies
the decrease in demand for a good (in this case, cigarettes).
Experimental evidence from Mexico (Ref. 93) indicates that graphic
warning labels may decrease smokers' willingness-to-pay for cigarettes
by 17 percent; however, without supply elasticity data, we cannot
determine how much this decline in willingness-to-pay would change
cigarettes' market price.
We estimate that the tobacco manufacturing, warehousing and
wholesale trade sectors employ about 74,000 full-time workers (Ref.
77). Under the assumption of constant production-to-employment ratio,
we project that a 0.68-0.79 percent reduction in sales would result in
the displacement of 500-600 jobs among manufacturers, warehouses, and
wholesalers.
Effects of the rule would also be observed in the agricultural
sector. According to USDA's 2007 Census of Agriculture (Ref. 94), there
are 16,234 tobacco farms. Upon implementation of the proposed rule,
these farms may shift some of their acreage from growing tobacco to
producing other agricultural products.
2. National and Regional Employment Patterns
Several studies estimate the contribution of tobacco to the U.S.
economy or, alternatively, the losses to the U.S. economy that would
follow a decline in tobacco-related consumption. Economists have shown
both theoretically and empirically that, for the nation as a whole,
employment gains from spending on other products would offset any
employment losses from reduced spending on tobacco products (Ref. 95).
The major tobacco-growing states, however, would experience some
adverse economic effects. An economic simulation of the regional
impacts of spending on tobacco products carried out in 1994 found that
after 8 years, a 2 percent per year fall in tobacco consumption (which
substantially exceeds the FDA forecast for this regulation) would cause
the loss of 36,600 jobs for the Southeast Tobacco region of the United
States (0.2 percent of regional employment), whereas the nontobacco
regions of the United States would gain 56,300 jobs (Ref. 96). That
study, if carried out today, would find a much smaller net effect
because total employment in tobacco-related industries has fallen.
Overall, FDA finds that the income and employment impacts associated
with reduced tobacco consumption would be quite small.
3. Retail Sector
As would tobacco growers, distributors and manufacturers, tobacco
retailers would be affected by any decrease in cigarette sales.
Retailers would, however, be in a position to shift shelf space and
promotional activities to non-tobacco products, in order to take
advantage of the increase in demand for other products that would be
expected to accompany the decrease in spending on cigarettes.
4. Advertising Industry
The overall impact of the proposed rule on the advertising industry
is uncertain. Advertiser revenue may decrease because advertisements
with graphic warning labels are less desirable from a cigarette
seller's standpoint and thus tobacco manufacturers would choose to
conduct less advertising. On the other hand, advertising industry
revenue may increase due to cigarette sellers' need to re-design ads to
accommodate new warning labels and to devise new promotional
strategies. In either case, few net social costs or benefits would be
generated. Moreover, the effect on advertising would likely be
relatively small since spending on cigarette advertising has been
declining substantially in recent decades. By 2006, expenditures on
magazine advertising had fallen to about $50 million and outdoor
advertising to under $1 million. Most of the remaining affected
advertising expenditures were point-of sale promotions, which totaled
$240 million (Ref. 39).
5. Excise Tax Revenues
In 2009, Federal tobacco tax revenues totaled $16.3 billion, while
state and local tax revenues totaled $16.5 billion (Ref. 97). The
proposed rule would decrease government tobacco tax revenues as fewer
Americans consume cigarettes.
FDA estimates this change in excise tax revenues by multiplying
together the percentage change in smoking, whose calculation was
described in section C1, the projected population in a given year (Ref.
65), age-appropriate discounted lifetime cigarette consumption (in
[[Page 69553]]
packs) per smoker, and current Federal and average state tax rates
(Ref. 98; Ref. 99). FDA calculates average consumption for 15-year-
olds, 16- to 17-year-olds, and 18- to 23-year-olds using the May 2006,
August 2006, and January 2007 Tobacco Use Supplements to the Current
Population Survey (Ref. 100). Sloan et al. (Ref. 66) report lifetime
discounted consumption for typical 24-year-old smokers.
FDA estimates that annual rule-induced decreases in excise tax
collections would be approximately $106 million for state governments
and $80.5 million for the Federal government. Assuming that excise
taxes rise, on average, at the rate of inflation allows us to sum these
values over the time horizon of our analysis, yielding an overall
revenue loss to state governments of $1.35 to $2.93 billion and to the
Federal government of $1.03 to $2.23 billion. Given inelastic cigarette
demand (Ref. 95), some state governments could raise tobacco product
excise rates to offset these revenue losses.
G. International Effects
Of the $87.9 billion worth of tobacco products consumed in the
United States in 2009 (Ref. 101), only $156 million consisted of
imported cigarettes, with another $897 million imported as tobacco in a
less-processed state (Ref. 102; Ref. 103). As in the United States,
foreign manufacturers, distributors, and growers of tobacco and tobacco
products would lose revenue as a result of the proposed rule, though
their loss would be a small fraction of the overall revenue loss. As
consumers who would have been smokers purchase other products, there
would be a shift in patterns of international trade. If the preferred
substitute products are American-made, there would be a (very small)
decrease in overall imports into the United States; otherwise, there
would be a small increase in imports from the source countries of the
newly-demanded goods and services and a corresponding decrease in
imports from tobacco-producing countries.
The proposed rule does not apply to cigarettes manufactured for
export, whose value totaled $417 million in 2009 (Ref. 102).
H. Regulatory Alternatives
We compare the proposed rule to two hypothetical alternatives: An
otherwise identical rule with a 24-month compliance period and an
otherwise identical rule with a 6-month compliance period. Even though
we estimate costs and benefits for these alternatives, they do not
provide viable regulatory options, as they are inconsistent with FDA's
statutory mandate.
1. 24-Month Compliance Period
The cost of the labeling changes for this proposed rule depends far
less than most labeling rules on the compliance period. The main effect
of a longer compliance period would be to eliminate the 10 percent
premium for overtime and rush charges added to the per-UPC label design
activities for compliance periods shorter than 24 months (Ref. 83). All
other costs are the same as in the 15-month analysis.
Table E18 shows that extending the compliance period to 24 months
would reduce the up-front labeling change cost by $15 to $41 million,
to a total of $154 to $406 million.
Table E18--Cost of a Cigarette Label Redesign With Nine Warnings With a 24-Month Compliance Period a
----------------------------------------------------------------------------------------------------------------
Low Medium High
----------------------------------------------------------------------------------------------------------------
Label Design Cost
Number of UPCs.................................................. 3,234 3,234 3,234
Administrative labor cost ($)............................... 375 695 1,014
Graphic design labor cost ($)............................... 1,120 2,163 3,206
Prepress labor cost ($)..................................... 1,482 2,649 3,816
Recordkeeping labor cost ($)................................ 33 234 434
Prepress materials ($)...................................... 900 11,025 21,951
Printing plate cost ($)..................................... 43,560 69,390 95,220
Cost per product UPC ($)........................................ 47,470 86,156 125,641
Total label design cost, 24-month compliance ($)............ 153,517,980 278,628,504 406,322,994
Total Cost ($).............................................. 153,517,980 278,628,504 406,322,994
-----------------------------------------------
Change from 15-month Compliance Period.......................... -15,351,798 -27,862,850 -40,632,299
----------------------------------------------------------------------------------------------------------------
\a\ Undiscounted costs assumed to be incurred at the start of the first period of the time horizon of this rule.
Extending the compliance period to 24 months would delay the
accrual of health and fire reduction benefits by nine months. An
approximation of the effect of this delay may be found by discounting,
at three and seven percent discount rates, the previously-calculated
total benefits. As shown in Table E19, FDA finds that a 24-month
compliance period would decrease benefits by between $113.5 and $622.5
million.
Table E19--Present Value of Benefits With 24-Month Compliance Period ($ Mil)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VSLY = $105,000 VSLY = $210,000 VSLY = $315,000
-----------------------------------------------------------------------------------------------
3% Discount 7% Discount 3% Discount 7% Discount 3% Discount 7% Discount
rate rate rate rate rate rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-Years.............................................. 8,767.3 1,715.6 17,534.7 3,431.3 26,302.0 5,146.9
Non-Fatal Emphysema..................................... 197.6 61.7 395.3 123.4 592.9 185.0
Fire Loss............................................... 384.5 171.7 384.5 171.7 384.5 171.7
Medical Expenditure Reduction........................... 487.9 231.9 487.9 231.9 487.9 231.9
-----------------------------------------------------------------------------------------------
Total............................................... 9,837.4 2,180.9 18,802.4 3,958.3 27,767.3 5,735.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 69554]]
Change from 15-Month Compliance Period.................. -220.5 -113.5 -421.5 -206.0 -622.5 -298.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
2. Six-Month Compliance Period
In the 2003 labeling-cost model, overtime and rush charges equal 10
percent of the per-UPC label design costs with a 6-month compliance
period. The model further assumes that 12 months is the shortest
compliance period that can be met without resorting to covering up the
old labels with stickers as a temporary solution. Therefore, the cost
of discarded inventory is the same as under a 12-month compliance
period, but there is an additional cost for applying appropriate
stickers to cover the old package label design for a period of 6
months.
FDA assumes that no additional inventory will remain unused after 6
months of applying stickers. The number of units sold annually is about
10.7 billion.\14\ Therefore, 5.3 billion units would be relabeled with
stickers. We estimate the per-unit cost for the sticker and application
cost to be between $0.017 and $0.045 (Ref. 83). Reducing the compliance
period to 6 months would then increase compliance costs by $91 to $239
million to a total of $259 to $686 million. The use of 9 graphic-text
combinations is not expected to materially affect this cost.
---------------------------------------------------------------------------
\14\ The AC Nielsen data for total equivalent units show sales
totaling 38,632 million sticks in 2008 (Ref. 104), whereas The
Maxwell Report states that industry volume was 345,300 million
sticks in 2008 (Ref. 105). Thus the Nielsen data capture 38,632/
345,300 = 11.2 percent of cigarettes sold. Nielsen data show total
sales units of 1.195 billion in 2008. Dividing by 0.112 yields an
estimate of 10.7 billion sales units per year.
Table E20--Cost of a Cigarette Label Redesign With Nine Warnings With a Six-Month Compliance Period a
----------------------------------------------------------------------------------------------------------------
Low Medium High
----------------------------------------------------------------------------------------------------------------
Label Design Cost
Number of UPCs.................................................. 3,234 3,234 3,234
Administrative labor cost ($)............................... 375 695 1,014
Graphic design labor cost ($)............................... 1,120 2,163 3,206
Prepress labor cost ($)..................................... 1,482 2,649 3,816
Recordkeeping labor cost ($)................................ 33 234 434
Prepress materials ($)...................................... 900 11,025 21,951
1Printing plate cost ($).................................... 43,560 69,390 95,220
Cost per product UPC ($)........................................ 47,470 86,156 125,641
Total label design cost, 24-month compliance ($)................ 153,517,980 278,628,504 406,322,994
Total label design cost, < 24-month compliance ($).............. 168,869,778 306,491,354 446,955,293
Sticker Costs
Stick and application costs per unit ($).................... 0.017 0.031 0.045
Number of units sold in 6 months............................ 5,338,051,475 5,338,051,475 5,338,051,475
Total sticker cost ($)...................................... 90,501,325 168,073,889 239,182,072
Total Cost ($).................................................. 259,371,103 474,565,243 686,137,366
-----------------------------------------------
Change from 15-month Compliance Period.......................... 90,501,325 168,073,889 239,182,072
----------------------------------------------------------------------------------------------------------------
\a\ Undiscounted costs assumed to be incurred at the start of the first period of the time horizon of this rule.
Reducing the compliance period to six months would hasten the
accrual of health and fire reduction benefits by nine months. An
approximation of the effect of this change in timing may be found by
compounding, at three and seven percent discount rates, the previously-
calculated total benefits. As shown in Table E21, FDA finds that a six-
month compliance period would increase benefits by between $119.4 and
$636.4 million.
Table E21--Present Value of Benefits With Six-Month Compliance Period ($ Mil)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VSLY = $105,000 VSLY = $210,000 VSLY = $315,000
-----------------------------------------------------------------------------------------------
3% Discount 7% Discount 3% Discount 7% Discount 3% Discount 7% Discount
rate rate rate rate rate rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-Years.............................................. 9,164.8 1,898.9 18,329.6 3,797.8 27,494.4 5,696.7
Non-Fatal Emphysema..................................... 206.6 68.3 413.2 136.5 619.8 204.8
Fire Loss............................................... 401.9 190.0 401.9 190.0 401.9 190.0
Medical Expenditure Reduction........................... 510.0 256.7 510.0 256.7 510.0 256.7
-----------------------------------------------------------------------------------------------
Total............................................... 10,283.4 2,413.9 19,654.8 4,381.1 29,026.2 6,348.2
-----------------------------------------------------------------------------------------------
Change from 15-Month Compliance Period.................. 225.5 119.4 430.9 216.8 636.4 314.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 69555]]
3. Summary of Regulatory Alternatives
Table E22 summarizes the regulatory alternatives by displaying
ranges for the present values of the total benefits and total costs.
Estimated ranges for the cost ratios (per smoking prevention and per
life-year saved) of the proposed rule and its regulatory alternatives
appear in Table E23.
Table E22--Summary of Regulatory Alternatives
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present value of total benefits ($ mil) \a\ Present value of total costs ($ mil) \b\
Compliance period ------------------------------------------------------------------------------------------------------------------------
3% 7% 3% 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
24-Month Total................. 9,837.4 to 27,767.3.......... 2,180.9 to 5,735.6.......... 285.2 to 561.9.............. 248.6 to 515.0.
(Proposed Rule) 15-Month Total. 10,057.9 to 28,389.8......... 2,294.5 to 6,034.1.......... 302.0 to 603.3.............. 266.0 to 556.0.
6-Month Total.................. 10,283.4 to 29,026.2......... 2,413.9 to 6,348.2.......... 391.9 to 837.5.............. 353.8 to 782.7.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Range in benefits is based on a VSLY of $105,000 to $315,000.
\b\ Range in costs is based on low cost and high cost values.
Table E23--Incremental Cost-Effectiveness of Regulatory Alternatives
--------------------------------------------------------------------------------------------------------------------------------------------------------
Discount rate = 3 percent Discount rate = 7 percent
---------------------------------------------------------------------------------------------------
Incremental Incremental Incremental Incremental
Low CE * High CE * Low CE * High CE *
--------------------------------------------------------------------------------------------------------------------------------------------------------
24-Month Compliance:
Per Smoking Prevention.......................... $16,252 N/A $50,152 N/A $3,819 N/A $12,024 N/A
Per Life-Year Saved............................. 51,986 N/A 160,426 N/A 52,512 N/A 165,336 N/A
15-Month Compliance:
Per Smoking Prevention.......................... 16,271 $17,121 50,204 $52,545 3,940 $9,337 12,403 $29,324
Per Life-Year Saved............................. 52,047 54,768 160,594 168,081 54,176 128,383 170,552 403,225
6-Month Compliance:
Per Smoking Prevention.......................... 16,419 23,021 50,597 68,133 4,207 16,118 13,170 47,376
Per Life-Year Saved............................. 52,521 73,641 161,852 217,946 57,847 221,637 181,095 651,438
--------------------------------------------------------------------------------------------------------------------------------------------------------
* As the compliance period decreases, the number of rule-induced smoking preventions and life-years saved increases. Hence, the incremental costs of 15-
Month Compliance are calculated relative to 24-Month Compliance, and the incremental costs of 6-Month Compliance are calculated relative to 15-Month
Compliance.
I. Impact on Small Entities
The Regulatory Flexibility Act requires agencies to prepare an
initial regulatory flexibility analysis if a proposed rule would have a
significant effect on a substantial number of small entities. We expect
this proposed rule to have a significant effect on a substantial number
of small entities. Consequently, this analysis, together with other
relevant sections of this document, serves as the Initial Regulatory
Flexibility Analysis, as required under the Regulatory Flexibility Act.
1. Description and Number of Affected Small Entities
The proposed rule would affect small entities in several
industries, from tobacco farming to the retail industry. Most of the
nation's 16,234 tobacco farms are small; between 90.7 and 95.8 percent
(between 14,732 and 15,555) of the farms growing tobacco in 2007 had
total farm sales under the U.S. Small Business Administration (SBA)
small business size standard of $750,000 (Ref. 94; Ref. 106).
Table E24 shows the breakdown of domestic cigarette manufacturers
by employment size. Census data indicate that most cigarette
manufacturing firms are small businesses, with only 4 of 24 firms
employing more than 500 employees, while the small business size
standard established by the SBA for this industry is 1,000, so a
minimum of 20 small cigarette manufacturers would be affected (Ref. 77;
Ref. 106).
Table E24--Cigarette Manufacturers by Number of Employees
------------------------------------------------------------------------
Number of
Size by number of employees firms
------------------------------------------------------------------------
Less than 20............................................... 9
20 to 99................................................... 7
100 to 499................................................. 4
------------------------------------------------------------------------
Source: Ref. 106.
SBA size standard: 1,000 employees.
Statistics of U.S. Businesses data show that 1,067 of 1,159 tobacco
wholesale trade firms (92 percent) employ fewer than the 100-employee
threshold that constitutes a small business according to the SBA (Ref.
77; Ref. 106). If the size distribution of cigarette importers is
similar to that of all tobacco wholesale trade firms, then 92 percent
of them would be affected small businesses.
Also likely to be affected by the regulation are small retail and
service entities that sell cigarettes. Retail establishments bear
shared responsibility with manufacturers for the cost of removing
noncompliant advertising. SBA size standards for the retail trade and
the accommodations and food services industries differ from size
categories used by the U.S. Census. Table E25 shows the 2002 Census
size categories that most closely match the SBA size standards. In all
cases, the closest Census size category is smaller than the SBA size
standard. As a consequence, any estimate based on the Census size
categories may underestimate the number of small entities.
[[Page 69556]]
Table E25--SBA Size Standards and Census Size Categories for Retail and Service Firms in NAICS Categories With
Tobacco Product Line Sales a
----------------------------------------------------------------------------------------------------------------
SBA size standard Census size category
NAICS with tobacco product line Description of NAICS (employees or $ (employees or $
sales category million) million)
----------------------------------------------------------------------------------------------------------------
General Merchandise
452990......................... Other General Merchandise.. 11.................... 10.
452 excluding 452990........... Department, Discount 27.................... 25.
Department, Warehouse
Clubs, and Superstores.
Supermarket and Grocery
4452 and 4453.................. Other Food and Beverage 7..................... 5.
Stores.
445110......................... Supermarkets and Grocery... 27.................... 25.
445120......................... Convenience Stores......... 27.................... 25.
447110......................... Convenience Stores with Gas 27.................... 25.
447190......................... Service Stations........... 9..................... 5.
446............................ Health and Personal Care 7..................... 5.
Stores.
453991......................... Specialty Tobacco Stores... 7..................... 5.
B.............................. Other Kinds of Business.... Varies................ Varies.
----------------------------------------------------------------------------------------------------------------
Source: Refs. 106-108.
\a\ Includes only firms with payroll.
\b\ Includes NAICS 4413, 443112, 444, 448, 451, 4532, 453998, 72 (excluding 72231), 722310.
The Census reports establishment numbers for business by product
line, and establishment and firm size by type of business, but provides
no size data by type of business and product line. To estimate the
number of affected entities that SBA classifies as small, we begin by
counting the number of firms that fall below the Census size standard
shown in Table E25, including only firms in NAICS categories with
tobacco product line sales. Next, we calculate the percentage of small
firms in each NAICS category. Depending on the type of business, the
percentage of small firms ranges from 41 percent for Discount
Department, Warehouse Clubs, and Superstores to almost 100 percent for
Convenience Stores.
Table E26--Estimated Percentage of Small Retail and Service Firms in NAICS Categories With Tobacco Product Line
Sales a
----------------------------------------------------------------------------------------------------------------
Number of
firms below Percentage
NAICS Description of NAICS category Number of census size of small
firms standard firms
\b\
----------------------------------------------------------------------------------------------------------------
General Merchandise
452110, 452910.......................... Discount Department, Warehouse 88 36 40.9
Clubs, and Superstores.
452990.................................. Other General Merchandise...... 7,451 7,320 98.2
General Merchandise Subtotal ............................... 7,539 7,356 97.6
Supermarket & Grocery
445110.................................. Supermarkets & Grocery......... 34,017 33,328 98.0
4452 and 4453........................... Other Food and Beverage Stores. 34,807 34,082 97.9
Supermarket & Grocery Subtotal...... ............................... 68,824 67,410 97.9
--------------------------------------
445120.................................. Convenience Stores............. 18,705 18,676 99.8
447110.................................. Convenience Stores with Gas.... 37,437 36,848 98.4
447190.................................. Service Stations............... 19,822 18,103 91.3
4461.................................... Drug Stores.................... 36,198 33,894 93.6
453991.................................. Tobacco Stores................. 3,238 3,017 93.2
Other Kinds of Business........ 589,400 572,619 97.2
----------------------------------------------------------------------------------------------------------------
Source: Refs. 107, 108, 78, 79.
\a\ Includes only firms with payroll.
\b\ Based on the Census size standards shown in Table E25.
Finally, we apply the percentages in Table E26 to our current
estimate of the number of affected establishments with payroll (Table
E7). This approach implicitly assumes that small establishments are
similar whether or not they sell tobacco products. In addition, we
classify all nonemployer establishments as small. In total, we estimate
that about 355,000 small retail and service establishments would be
affected by the proposed rule. This number represents about 98 percent
of the estimated 361,000 establishments selling tobacco products.
[[Page 69557]]
Table E27--Estimated Number of Small Establishments With Tobacco Product Line Sales by Kind of Business
----------------------------------------------------------------------------------------------------------------
Estimated
Percentage of Number with Small with Non- employers total number
Kind of business small \a\ payroll \b\ payroll \b\ of small
establishments
----------------------------------------------------------------------------------------------------------------
General Merchandise............. 97.6 8,147 7,949 5,661 13,611
Supermarket & Grocery........... 98.0 67,037 65,679 56,761 122,441
Convenience Stores.............. 99.8 23,986 23,949 0 23,949
Convenience Stores with Gas..... 98.4 87,713 86,333 0 86,333
Service Stations................ 91.3 6,347 5,797 2,979 8,775
Drug Stores..................... 93.6 19,413 18,178 30,138 48,316
Specialty Tobacco Stores........ 93.2 6,458 6,017 0 6,017
Other Establishments............ 97.2 28,531 27,719 17,391 45,110
-------------------------------------------------------------------------------
Total....................... .............. 247,633 241,621 112,931 354,552
----------------------------------------------------------------------------------------------------------------
a From Table E26.
b From Table E12.
2. Description of the Potential Impacts of the Final Rule on Small
Entities
a. Effect on manufacturers. In order to estimate how much of the
label design and inventory costs would be incurred by small domestic
cigarette manufacturers, FDA subtracts the proportion of those costs
estimated to be incurred by large domestic manufacturers and foreign
manufacturers. Scanner data indicate that, approximately 55 percent of
UPCs can be readily identified as belonging to a brand marketed by one
of the 4 largest cigarette firms by volume (Ref. 105; Refs. 84-89).
Because the costs of labeling changes are roughly proportional to the
number of UPCs, FDA then attributes 55 percent of the total label
design and inventory costs to the 4 firms employing at least 500
people. FDA attributes an additional 3 percent of the labeling change
costs to foreign manufacturers.\15\ These adjustments leave 42 percent
of labeling change costs, or $71 to $188 million, to be incurred by the
20 small manufacturers. Assuming costs are equal among these firms
implies a per-firm cost of $3.5 to $9.4 million. Table E28 compares
this estimated compliance cost to average annual receipts in order to
gauge the potential impact of labeling change requirements on small
cigarette manufacturing firms. Because the number of UPCs is probably
larger for larger firms, costs are likely greater for larger firms than
for smaller firms; if so this method overstates the impact on the
smallest firms and understates the impact on the largest firms (within
the category of firms employing fewer than 500 people).
---------------------------------------------------------------------------
\15\ In 2008, 9.9 billion out of 345.3 billion individual
cigarettes sold were imported. FDA assumes the same proportion holds
for UPCs. These UPCs should not overlap with those produced by the 4
largest domestic producers.
Table E28--Potential Impact of Labeling Change Compliance Costs on the 20 Small Cigarette Manufacturers
----------------------------------------------------------------------------------------------------------------
Average labeling Average labeling
Average compliance costs compliance costs as a
Number of annual ($1,000) percent of average
Size by number of employees firms receipts -------------------------- annual receipts
($1,000) -------------------------
Low High Low High
----------------------------------------------------------------------------------------------------------------
Less than 20...................... 9 11,195 3,546 9,386 32 84
20 to 99.......................... 7 21,265 3,546 9,386 17 44
100 to 499........................ 4 147,896 3,546 9,386 2 6
----------------------------------------------------------------------------------------------------------------
Source: Ref. 77.
SBA size standard: 1,000 employees.
b. Effect on retailers. As shown in Table E29, retail trade
businesses account for almost all sales of tobacco products (Ref. 78;
Ref. 79). About 90 percent of tobacco product line sales occur at
gasoline stations, food and beverage stores, general merchandise
stores, or tobacco stores. Convenience stores (with gasoline stations
and stand-alone convenience stores) account for about half of all
tobacco product line sales.
Table E29--Sales of Tobacco Product Line by Kind of Business and Industry Sector a
----------------------------------------------------------------------------------------------------------------
Sales of tobacco product Sales of tobacco product
line by kind of business line by industry sector
Kind of business and industry sector ---------------------------------------------------
($ bil) (%) ($ bil) (%)
----------------------------------------------------------------------------------------------------------------
Retail Trade
NAICS 447--Gasoline Stations................................ ........... ........... 22.2 43.3
Convenience Stores with Gas............................. 21.2 41.3 ........... ...........
[[Page 69558]]
Gasoline Stations....................................... 1.0 2.0 ........... ...........
NAICS 445--Food and Beverage Stores......................... ........... ........... 13.4 26.2
Supermarket & Grocery................................... 7.7 15.0 ........... ...........
Convenience Stores...................................... 4.5 8.8 ........... ...........
Liquor Stores........................................... 1.2 2.4 ........... ...........
NAICS 452--General Merchandise.............................. ........... ........... 7.1 13.9
General Merchandise..................................... 7.1 13.9 ........... ...........
NAICS 453--Miscellaneous Store Retailers.................... ........... ........... 5.8 11.3
Tobacco Stores.......................................... 5.7 11.1 ........... ...........
Miscellaneous store retailers........................... 0.1 0.3 ........... ...........
NAICS 446--Health and Personal Care Stores.................. ........... ........... 1.5 3.0
Drug Stores............................................. 1.5 3.0 ........... ...........
NAICS 454--Nonstore Retailers............................... ........... ........... 0.7 1.3
Nonstore Retailers...................................... 0.5 1.0 ........... ...........
Vending machine operators............................... 0.2 0.4 ........... ...........
Other Subsectors \b\........................................ ........... ........... 0.1 0.2
Other Kinds of Business................................. 0.1 0.2 ........... ...........
Accommodation & Food Services
NAICS 72.................................................... ........... ........... 0.4 0.8
Other establishments.................................... 0.3 0.5 ........... ...........
Drinking places......................................... 0.1 0.3 ........... ...........
---------------------------------------------------
Total............................................... ........... ........... 51.2 100
----------------------------------------------------------------------------------------------------------------
\a\ Includes establishments with payroll with tobacco product line sales.
\b\ Includes establishments in NAICS 441320, 443112, 444130, 444220, 448110, 448320, 451110, 451211, 451212, and
451220.
To illustrate the effects of the proposed rule on a typical small
retail store, we look at one-time costs for a convenience store and a
convenience store with gasoline. We select these businesses because, as
illustrated in Table E29, sales of tobacco products in these stores
account for about 50 percent of all tobacco sales. In addition, tobacco
products are an important part of overall revenue for these stores,
composing over 12 percent of total sales (as shown in Table E30).
Table E30--The Importance of Tobacco Sales by Kind of Business: Ranked
by the Percentage of Total Sales From Tobacco Product Line
------------------------------------------------------------------------
Percentage
Sales from Total sales of total
tobacco from all sales from
Kind of business product product tobacco
line a ($ lines ($ product
bil) bil) b line
------------------------------------------------------------------------
Tobacco Stores................... 5.7 6.5 86.9
Convenience Stores............... 4.5 18.1 25.0
Nonstore Retailers............... 0.5 2.4 20.3
Convenience Stores with Gas...... 21.2 173.4 12.2
Vending Machine Operators........ 0.2 1.7 11.2
Miscellaneous store retailers.... 0.1 1.2 11.2
Liquor Stores.................... 1.2 12.8 9.7
Other Kinds of Business.......... 0.1 1.4 6.5
Drinking places.................. 0.1 3.9 3.5
Gasoline Stations................ 1.0 29.4 3.5
General Merchandise.............. 7.1 246.1 2.9
Supermarket & Grocery............ 7.7 383.5 2.0
Drug Stores...................... 1.5 80.0 1.9
Other Accommodation & Foodservice 0.3 33.3 0.8
--------------------------------------
Total........................ 51.2 993.9 5.2
------------------------------------------------------------------------
a Tobacco sales from Table E29.
b Includes total sales for firms with tobacco product line sales. Refs.
78, 79.
For both types of convenience stores, Table E31 shows that for the
smallest firms with less than $250,000 in annual sales, the one-time
costs of the proposed rule would equal less than 2 percent of annual
average sales of tobacco products. Furthermore, one-time costs total
less than 0.1 percent of annual average sales of tobacco products for
stores with $1 million or more in average annual sales. Although the
impact on other small retail and service entities is uncertain, this
example suggests that the proposed rule would be unlikely to create a
significant direct
[[Page 69559]]
burden on small retail stores or service establishments.
Table E31--One-Time Costs as a Percentage of Average Sales of Tobacco Products for Convenience Stores and
Convenience Stores With Gasoline
----------------------------------------------------------------------------------------------------------------
Sales of tobacco
products
-------------------------
Sales size of firm Number of Sales ($ One-time
establishments mil) Average ($ costs as
mil) percentage
of average
----------------------------------------------------------------------------------------------------------------
Convenience Store--NAICS 445120 \a\:
Less than $250,000................................... 4,231 653 0.0 0.5
$250,000 to $499,999................................. 5,296 1,920 0.1 0.2
$500,000 to $999,999................................. 5,150 3,646 0.2 0.1
$1,000,000 to $2,499,999............................. 3,586 4,915 0.3 0.1
$2,500,000 to $4,999,999............................. 659 1,601 0.6 0.0
$5,000,000 to $9,999,999................................. 324 712 0.5 0.0
$10,000,000 to $24,999,999............................... 215 440 0.5 0.0
Convenience Stores with Gasoline--NAICS 447110 \b\:
Less than $250,000................................... 2,246 343 0.0 1.0
$250,000 to $499,999................................. 3,801 1,425 0.0 0.4
$500,000 to $999,999................................. 7,667 5,624 0.1 0.2
$1,000,000 to $2,499,999............................. 14,309 22,303 0.2 0.1
$2,500,000 to $4,999,999............................. 7,977 22,786 0.3 0.1
----------------------------------------------------------------------------------------------------------------
Source: Ref. 108.
\a\ Tobacco product line sales account for 25.0 percent of sales for all firms in NAICS 445120 (see Table E30);
One-time costs equal $198.16 (see Table E13).
\b\ Tobacco product line sales account for 12.2 percent of sales for all firms in NAICS 447110 (see Table E30);
One-time costs equal $193.42 (see Table E13).
3. Alternatives To Minimize the Burden on Small Entities
a. Increase the compliance period to 24 months for small
manufacturers or all manufacturers. Allowing all manufacturers, or only
small manufacturers, 24 months to comply with the labeling changes
would reduce overtime and rush charges. Under a 24-month compliance
period, labeling change costs would fall on average by $0.32 to $0.85
million per small firm. Table E32 compares the reduced estimated
compliance cost to average annual receipts in order to gauge the
potential impact of this regulatory alternative on cigarette
manufacturing firms employing fewer than 500 people. As a comparison
with Table E28 shows, this option would provide only modest relief. It
would also delay the public health benefits of the proposed rule and be
inconsistent with the statutory requirement.
Table E32--Potential Impact of Labeling Change Compliance Costs on the 20 Small Cigarette Manufacturers With a
24-Month Compliance Period
----------------------------------------------------------------------------------------------------------------
Average labeling Average labeling
Average compliance costs compliance costs as a %
Number of annual ($,1000) of average annual
Size by number of employees firms receipts -------------------------- receipts
($1,000) -------------------------
Low High Low High
----------------------------------------------------------------------------------------------------------------
Less than 20...................... 9 11,195 3,224 8,533 29 76
20 to 99.......................... 7 21,265 3,224 8,533 15 40
100 to 499........................ 4 147,896 3,224 8,533 2 6
----------------------------------------------------------------------------------------------------------------
Source: Ref. 77
SBA size standard: 1,000 employees
b. Exempt small manufacturers from the labeling change
requirements. Exempting small manufacturers from the labeling change
requirements would eliminate their incremental labeling costs (an
average reduction of $3.5 to $9.4 million), thus providing maximum
relief. The combined market share of the 4 largest manufacturers was
89.7 percent in 2008 (Ref. 105). The immediate impact would therefore
be to allow 10.3 percent of cigarettes to be marketed without graphic
warning labels when the rule went into effect. This proportion would
grow over time, however, as some consumers would be expected to switch
to brands marketed without graphic warnings. This approach would be
inconsistent with both the statutory mandate and the public health
objectives of this rule.
c. Exempt small cigarette retailers from the point-of-sale
advertising requirements. Exempting small cigarette retailers from the
point-of-sale advertising requirements would eliminate their need to
remove noncompliant advertising, reducing their direct costs to zero.
However, Table E27 shows that the overwhelming majority of retail
establishments selling cigarettes are small. Although the few
establishments operated by large firms might be expected to have higher
volume, a significant proportion of consumers would continue to be
exposed to advertising lacking the new graphic warnings. This situation
would be inconsistent with the public health
[[Page 69560]]
objective of the proposed rule as well as FDA's statutory mandate.
IX. Comments
Interested persons may submit to the Division of Dockets Management
(see ADDRESSES) either electronic or written comments regarding this
document. As noted above, if you have comments on specific provisions
of the proposed regulation, we request that you identify these
provisions in your comments. In addition, if you have concerns that
would be addressed by alternative text for the regulation, we request
that you provide this alternative text in your comments. It is only
necessary to send one set of comments. It is no longer necessary to
send two copies of mailed comments. Identify comments with the docket
number found in brackets in the heading of this document. Received
comments may be seen in the Division of Dockets Management between 9
a.m. and 4 p.m., Monday through Friday.
X. References
The following references have been placed on display in the
Division of Dockets Management (see ADDRESSES) and may be seen by
interested persons between 9 a.m. and 4 p.m. Monday through Friday.
(FDA has verified Web site addresses, but FDA is not responsible for
any subsequent changes to the Web sites after this document publishes
in the Federal Register.)
1. Centers for Disease Control and Prevention, ``Smoking-
Attributable Mortality, Years of Potential Life Lost, and
Productivity Losses--United States, 2000-2004,'' Morbidity and
Mortality Weekly Report, 57(45); 1226-1228, Nov. 14, 2008, available
at http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5745a3.htm.
2. U.S. Department of Health and Human Services, ``The Health
Consequences of Smoking,'' A Report of the Surgeon General; 2004,
available at http://www.surgeongeneral.gov/library/smokingconsequences/index.html.
3. U.S. Department of Health and Human Services, ``Youth &
Tobacco; Preventing Tobacco Use Among Young People,'' A Report of
the Surgeon General; 1994, available at http://www.surgeongeneral.gov/library/reports/.
4. H.R. 1108, Family Smoking Prevention And Tobacco Control Act:
Hearing Before the House Subcommittee on Health of the Committee on
Energy and Commerce, 110th Cong. 42 (2007) (testimony of Richard
Bonnie).
5. Institute of Medicine of the National Academies, ``Ending the
Tobacco Problem: A Blueprint for the Nation,'' 2007, available at
http://www.iom.edu/Reports/2007/Ending-the-Tobacco-Problem-A-Blueprint-for-the-Nation.aspx.
6. Centers for Disease Control and Prevention, ``Vital Signs:
Current Cigarette Smoking Among Adults Aged 18 Years--
United States, 2009,'' Morbidity and Mortality Weekly Report,
59(35); 1135-1140, Sept. 10, 2010, available at http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5935a3.htm.
7. Centers for Disease Control and Prevention, ``Surveillance
for Cancers Associated with Tobacco Use--United States, 1999-2004,''
Morbidity and Mortality Weekly Report, 57(SS08); 1-33, Sept. 5,
2008, available at http://www.cdc.gov/mmwr/preview/mmwrhtml/ss5708a1.htm.
8. Substance Abuse and Mental Health Services Administration,
``Results from the 2008 National Survey on Drug Use and Health:
National Findings,'' Rockville, MD: 2009, available at http://www.oas.samhsa.gov/nsduh/2k8nsduh/2k8Results.pdf.
9. Centers for Disease Control and Prevention, ``Tobacco Use
Among Middle and High School Students--United States, 2000-2009,''
Morbidity and Mortality Weekly Report, 59(33); 1063-1068, Aug. 27,
2010, available at http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5933a2.htm.
10. Centers for Disease Control and Prevention, ``Trends in
Smoking Initiation Among Adolescents and Young Adults--United
States, 1980-1989,'' Morbidity and Mortality Weekly Report, 44(28);
521-525, July 21, 1995, available at http://www.cdc.gov/mmwr/preview/mmwrhtml/00038190.htm.
11. Centers for Disease Control and Prevention, ``Youth Risk
Behavior Surveillance--United States, 2009,'' Morbidity and
Mortality Weekly Report 2010, 59 (No. SS-5); June 4, 2010, available
at http://www.cdc.gov/mmwr/pdf/ss/ss5905.pdf.
12. Johnston, L.D., O'Malley P.M., Bachman J.G., and
Schulenberg, J.E., ``Smoking continues gradual decline among U.S.
teens, smokeless tobacco threatens a comeback.'' University of
Michigan News Service: Ann Arbor, MI, Dec. 14, 2009, available at
http://www.monitoringthefuture.org/data/09data.html#2009data-cigs.
13. Centers for Disease Control and Prevention, ``Cigarette Use
Among High School Students--United States, 1991-2009,'' Morbidity
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List of Subjects in 21 CFR Part 1141
Advertising, Incorporation by reference, Labeling, Packaging and
containers, Tobacco, and Smoking.
Therefore, under the Federal Cigarette Labeling and Advertising
Act, the Federal Food, Drug, and Cosmetic Act, and under authority
delegated to the Commissioner of Food and Drugs, it is proposed that
chapter I of title 21 of the Code of Federal Regulations be amended by
adding part 1141 to subchapter K to read as follows:
PART 1141--CIGARETTE PACKAGE AND ADVERTISING WARNINGS
Subpart A--General Provisions
Sec.
1141.1 Scope.
1141.3 Definitions.
Subpart B--Cigarette Package and Advertising Warnings
1141.10 Required warnings.
1141.12 Incorporation by reference of required warnings.
1141.14 Misbranding of cigarettes.
Subpart C--Additional Disclosure Requirements for Cigarette Packages
and Advertising
1141.16 Disclosures regarding cessation.
Authority: Secs. 201 and 202, Pub. L. 111-31, 123 Stat. 1776; 15
U.S.C. 1333; 21 U.S.C. 371, 387c, 387f.
Subpart A--General Provisions
Sec. 1141.1 Scope.
(a) This part sets forth the requirements for the display of health
warnings on cigarette packages and in advertisements for cigarettes.
FDA may require additional statements to be displayed on packages and
in advertisements under the Federal Food, Drug, and Cosmetic Act or
other authorities.
(b) The requirements of this part do not apply to manufacturers or
distributors of cigarettes that do not manufacture, package, or import
cigarettes for sale or distribution within the United States.
(c) A cigarette retailer shall not be considered in violation of
this part as it applies to the display of health warnings on a
cigarette package if the package:
(1) Contains a health warning;
(2) Is supplied to the retailer by a license- or permit-holding
tobacco product manufacturer, importer, or distributor; and
[[Page 69563]]
(3) Is not altered by the retailer in a way that is material to the
requirements of section 4(a) of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1333(a)) or this part, including by
obscuring the warning, by reducing its size, by severing it in whole or
in part, or by otherwise changing it in a material way.
(d) A cigarette retailer shall not be considered in violation of
this part, as it applies to the display of health warnings in an
advertisement for cigarettes if the advertisement is not created by or
on behalf of the retailer and the retailer is not otherwise responsible
for the inclusion of the required warnings. This paragraph shall not
relieve a retailer of liability if the retailer displays, in a location
open to the public, an advertisement that does not contain a health
warning or that contains a warning that has been altered by the
retailer in a way that is material to the requirements of section 4(b)
of the Federal Cigarette Labeling and Advertising Act (15 U.S.C.
1333(b)), this part, or section 4(c) of the Federal Cigarette Labeling
and Advertising Act (15 U.S.C. 1333(c)), including by obscuring the
warning, by reducing its size, by severing it in whole or in part, or
by otherwise changing it in a material way.
Sec. 1141.3 Definitions.
For the purposes of this part,
Cigarette means:
(1) Any roll of tobacco wrapped in paper or in any substance not
containing tobacco; and
(2) Any roll of tobacco wrapped in any substance containing tobacco
which, because of its appearance, the type of tobacco used in the
filler, or its packaging and labeling, is likely to be offered to, or
purchased by, consumers as a cigarette described in paragraph (1) of
this definition.
Commerce means:
(1) Commerce between any State, the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa,
Wake Island, Midway Islands, Kingman Reef, or Johnston Island and any
place outside thereof;
(2) Commerce between points in any State, the District of Columbia,
the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American
Samoa, Wake Island, Midway Islands, Kingman Reef, or Johnston Island,
but through any place outside thereof; or
(3) Commerce wholly within the District of Columbia, Guam, the
Virgin Islands, American Samoa, Wake Island, Midway Island, Kingman
Reef, or Johnston Island.
Distributor means any person who furthers the distribution of
cigarettes at any point from the original place of manufacture to the
person who sells or distributes the product to individuals for personal
consumption. Common carriers are not considered distributors for the
purposes of this part.
Front panel and rear panel mean the two largest sides or surfaces
of the package.
Importer means any person who introduces into commerce any
cigarette that:
(1) Was not manufactured inside the United States; and
(2) Is intended for sale or distribution to consumers in the United
States.
Manufacturer means any person, including any repacker or relabeler,
who manufactures, fabricates, assembles, processes, or labels a
finished cigarette product.
Package means a pack, box, carton, or container of any kind in
which cigarettes are offered for sale, sold, or otherwise distributed
to consumers.
Person means an individual, partnership, corporation, or any other
business or legal entity.
Required warning means the combination of one of the textual
warning statements and its accompanying color graphic, which are set
forth in ``Cigarette Required Warnings--English and Spanish'' and
``Cigarette Required Warnings--Other Foreign Languages,'' which are
incorporated by reference at Sec. 1141.12.
Retailer means any person who sells cigarettes to individuals for
personal consumption, or who operates a facility where vending machines
or self-service displays of cigarettes are permitted.
United States, when used in a geographical sense, includes the
several States, the District of Columbia, the Commonwealth of Puerto
Rico, Guam, the Virgin Islands, American Samoa, Wake Island, Midway
Islands, Kingman Reef, and Johnston Island. The term ``State'' includes
any political division of any State.
Subpart B--Cigarette Package and Advertising Warnings
Sec. 1141.10 Required warnings.
(a) Packages--(1) It shall be unlawful for any person to
manufacture, package, sell, offer to sell, distribute, or import for
sale or distribution within the United States any cigarettes the
package of which fails to bear, in accordance with section 4 of the
Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1333) and
this part, one of the required warnings on both the front and the rear
panel.
(2) The required warning shall be obtained and accurately
reproduced from the electronic images contained in ``Cigarette Required
Warnings--English and Spanish,'' which is incorporated by reference at
Sec. 1141.12, except that it must be adapted as necessary to meet the
requirements of section 4 of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1333) and this part.
(3) The required warning shall appear directly on the package and
shall be clearly visible underneath the cellophane or other clear
wrapping.
(4) The required warning shall be located in the upper portion of
the front and rear panels of the package and shall comprise at least
the top 50 percent of these panels; Provided, however, that on
cigarette cartons, the required warning shall be located on the left
side of the front and rear panels of the carton and shall comprise at
least the left 50 percent of these panels.
(5) The required warning shall be positioned such that the text of
the required warning and the other information on that panel of the
package have the same orientation.
(b) Advertisements--(1) It shall be unlawful for any manufacturer,
importer, distributor, or retailer of cigarettes to advertise or cause
to be advertised within the United States any cigarette unless its
advertising bears, in accordance with section 4 of the Federal
Cigarette Labeling and Advertising Act (15 U.S.C. 1333) and this part,
one of the required warnings.
(2) The text in each required warning shall be in the English
language, except that:
(i) In the case of an advertisement that appears in a non-English
publication, the text in the required warning shall appear in the
predominant language of the publication whether or not the
advertisement is in English; and
(ii) In the case of an advertisement that appears in an English
language publication but that is not in English, the text in the
required warning shall appear in the same language as that principally
used in the advertisement.
(3) For English-language and Spanish-language warnings, each
required warning shall be obtained and accurately reproduced from the
electronic images contained in ``Cigarette Required Warnings--English
and Spanish,'' which is incorporated by reference at Sec. 1141.12,
except that it must be adapted as necessary to meet the requirements of
section 4 of the Federal Cigarette Labeling and Advertising Act (15
U.S.C. 1333), including area and other formatting requirements, and
this part.
[[Page 69564]]
(4) For foreign-language warnings, except for Spanish-language
warnings, each required warning shall be the color graphic obtained and
accurately reproduced from the electronic images contained in
``Cigarette Required Warnings--Other Foreign Language Advertisements,''
which is incorporated by reference at Sec. 1141.12, and into which a
true and accurate translation of the textual warning is inserted in
accordance with ``Cigarette Required Warnings--Other Foreign Language
Advertisements,'' except that the required warning must be adapted as
necessary to meet the requirements of section 4 of the Federal
Cigarette Labeling and Advertising Act (15 U.S.C. 1333), including area
and other formatting requirements, and this part.
(5) The required warning shall occupy at least 20 percent of the
area of each advertisement, and shall be placed in accordance with the
requirements in the Federal Cigarette Labeling and Advertising Act.
(c) Irremovable or permanent warnings. The required warnings shall
be indelibly printed on or permanently affixed to the package or
advertisement. Such warnings, for example, must not be printed or
placed on a label affixed to a clear outer wrapper that is likely to be
removed to access the product within the package.
Sec. 1141.12 Incorporation by reference of required warnings.
Certain material entitled: ``Cigarette Required Warnings--English
and Spanish,'' (edition 1.0, June 2011, Food and Drug Administration),
appearing in Sec. Sec. 1141.10(a)(2), (b)(3), and 1141.16(a); and
``Cigarette Required Warnings--Other Foreign Language Advertisements,''
(edition 1.0, June 2011, Food and Drug Administration), appearing in
Sec. Sec. 1141.10(b)(4) and 1141.16(a) are incorporated by reference
into this part with the approval of the Director of the Federal
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. You may
obtain a copy from the Food and Drug Administration, Center for Tobacco
Products, Office of Compliance, 9200 Corporate Blvd., Rockville, MD
20850, 1-877-CTP-1373, and from the Web sites listed in paragraphs (a)
and (b) of this section. Also, this material is available for
inspection at the National Archives and Records Administration (NARA).
For more information on the availability of the following material,
call NARA at 202-741-6030 or go to http://www.archives.gov/Federal_register/codeof_Federal_regulations/ibr_locations.html:
(a) ``Cigarette Required Warnings--English and Spanish,'' available
from FDA at http://www.fda.gov/Tobacco, referred to at Sec. Sec.
1141.10(a)(2) and (b)(3) and Sec. 1141.16.
(b) ``Cigarette Required Warnings--Other Foreign Language
Advertisements,'' available from FDA at http://www.fda.gov/Tobacco,
referred to at Sec. Sec. 1141.10(b)(4) and Sec. 1141.16.
Sec. 1141.14 Misbranding of cigarettes.
(a) A cigarette shall be deemed to be misbranded under section
903(a)(1) of the Federal Food, Drug, and Cosmetic Act unless its
labeling bears one of the required warnings in accordance with section
4 of the Federal Cigarette Labeling and Advertising Act (15 U.S.C.
1333) and this part. A cigarette shall be deemed to be misbranded under
section 903(a)(7)(A) of the Federal Food, Drug, and Cosmetic Act unless
its advertising bears one of the required warnings in accordance with
section 4 of the Federal Cigarette Labeling and Advertising Act (15
U.S.C. 1333) and this part.
(b) A cigarette advertisement or package will be deemed to include
a brief statement of relevant warnings for the purposes of section
903(a)(8) of the Federal Food, Drug, and Cosmetic Act if it bears one
of the required warnings in accordance with section 4 of the Federal
Cigarette Labeling and Advertising Act (15 U.S.C. 1333) and this part.
A cigarette distributed or offered for sale in any State shall be
deemed to be misbranded under section 903(a)(8) of the Federal Food,
Drug, and Cosmetic Act unless the manufacturer, packer, or distributor
includes in all advertisements and packages issued or caused to be
issued by the manufacturer, packer, or distributor with respect to the
cigarette one of the required warnings in accordance with section 4 of
the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1333) and
this part.
Subpart C--Additional Disclosure Requirements for Cigarette
Packages and Advertising
Sec. 1141.16 Disclosures regarding cessation.
(a) The required warning shall include a reference to a smoking
cessation assistance resource in accordance with, and as specified in,
``Cigarette Required Warnings--English and Spanish'' (incorporated by
reference at Sec. 1141.12) or ``Cigarette Required Warnings--Other
Foreign Language Advertisements'' (incorporated by reference at Sec.
1141.12), whichever is applicable.
(b) The smoking cessation assistance resource required to be
referenced by paragraph (a) of this section must:
(1) Provide factual information about the harms to health
associated with cigarette smoking and the health benefits of quitting
smoking;
(2) Provide factual information about what smokers can expect when
trying to quit;
(3) Provide practical advice (problem solving/skills training)
about how to deal with common issues faced by users trying to quit;
(4) Provide evidence-based advice about how to formulate a plan to
quit smoking;
(5) Provide evidence-based information about effective relapse
prevention strategies;
(6) Provide factual information on smoking cessation treatments,
including FDA-approved cessation medications;
(7) Provide information, advice, and support that is evidence-
based, unbiased (including with respect to products, services, persons,
and other entities), and relevant to tobacco cessation;
(8) Other than as described in this section, not advertise or
promote any particular product or service;
(9) Not selectively present information about a subset of FDA-
approved cessation products or product categories while failing to
mention other FDA-approved cessation products or product categories or
reference any drug or other medical product that FDA has not approved
for tobacco cessation; and
(10) Not encourage the use of any non-evidence-based smoking
cessation practices.
(c) If the smoking cessation assistance resource required to be
referenced by paragraph (a) of this section is a Web site, it:
(1) Must not contain a link to any Web site unless it meets all of
the criteria described in paragraph (b) of this section; and
(2) May include references to one or more toll-free telephone
numbers only if they meet the criteria described in paragraphs (b) and
(d) of this section.
(d) If the smoking cessation assistance resource required to be
referenced by paragraph (a) of this section is a toll-free telephone
number, it must:
(1) Ensure that staff providing smoking cessation information,
advice, and support are trained specifically to help smokers quit by
delivering unbiased and evidence-based information, advice, and
support; and
(2) Maintain appropriate controls to ensure the criteria described
in paragraph (b) of this section are met.
[[Page 69565]]
Dated: November 8, 2010.
Margaret A. Hamburg,
Commissioner of Food and Drugs.
Dated: November 8, 2010.
Kathleen Sebelius,
Secretary of Health and Human Services.
[FR Doc. 2010-28538 Filed 11-10-10; 8:45 am]
BILLING CODE 4160-01-P