sample="quota" bates="TIMN0088964" isource="ti" decade="19xx" class="ui" date="19000000" Waxman file File No. 792-3204 COMMENTS OF THE TOBACCO INSTITUTE ON THE FTC STAFF REPORT ON THE CIGARETTE ADVERTISING INVESTIGATION T036950 The Tobacco Institute 1875 I Street, N.W. Washington, D.C. 20006 TABLE OF CONTENTS Page INTRODUCTION, SUMMARY AND CONCLUSION INTRODUCTION ... 1 SUMMARY ... 3 1. The Staff's Analysis of Public Awareness of the Alleged Health Hazards of Smoking (Chaps. III and IV(II)) Is Fundamentally Defective ... 3 2. The "Facts" That the Staff Claims Have Been Discovered About the Alleged Health Hazards of Smoking (Chap. 1) Have Not Been Established as Facts ... 7 3. The Staff's Discussion of Cigarette Advertising (Chap. II) Misstates the Purpose and Effect of Such Advertising ... 9 4. The Staff's Legal Analysis (Chap. IV) Is Incomplete and Incorrect ... 11 5. The Staff's Proposed "Remedies" (Chap. V) Are Ill-Considered and Inconsistent With the First Amendment ... 15 CONCLUSION ... 18 CONTENTS I. PUBLIC AWARENESS OF THE SMOKING AND HEALTH CONTROVERSY ... 19 A. The Public Is Highly Aware of the Claims About the Asserted Health Hazards of Cigarette Smoking ... 19 B. Neither the Report Nor the Studies Upon Which It Relies Demonstrate That a Significant Portion of the Public is Unaware of the Specifics and the Severity of the Alleged Health Hazards That the Staff Attributes to Smoking ... 21 T036951 - ii - Page 1. The Staff Misinterprets and Misuses the Studies to Understate Awareness ... 22 2. The Staff Confuses Public Awareness with Public Belief ... 26 II. THE SMOKING AND HEALTH CONTROVERSY ... 30 A. The Staff's Review of the Evidence on Smoking and Health Is Biased ... 30 B. The Staff's Discussion of Smoking's Alleged Connection With Specific Health Hazards Is Biased ... 32 C. The Staff's Discussion of the Tobacco Industry's Position With Respect to the Smoking and Health Controversy Is Biased ... 38 III. THE NATURE AND PURPOSE OF CIGARETTE ADVERTISING ... 44 A. Cigarette Advertising Is Intended To Sell a Particular Brand of Cigarettes to Smokers ... 45 B. Cigarette Advertising Has Not Had the Effect of Increasing the Number of People Who Smoke ... 48 C. Cigarette Advertisements Are Brand Promotional and Make No Explicit or Implicit Health Claims ... 50 IV. THE REPORT'S RECOMMENDATIONS ARE CONTRARY TO LAW ... 56 A. The Commission Is Barred by Congressional Policy and by Its Own Previous Actions From Altering the Warning Statement ... 56 1. The Staff's Proposal To Change the Warning Statement Is Contrary to Congressional Policy ... 56 T036952 - iii - Page 2. The Staff's Proposal To Change the Warning Statement Is Contrary to the 1981 Consent Judgments and 1972 Consent Orders Entered Into by the FTC ... 60 B. Cigarette Advertising Is Not Deceptive Within the Meaning of Section 5 ... 64 V. THE STAFF'S PROPOSED REMEDIES ... 69 A. The "Remedial Action" Proposed in the Report Is Unnecessary and Ill-Advised ... 69 1. The Staff Has Not Shown That the Present Warning Is Ineffective ... 69 2. The Staff Has Failed To Demonstrate That the Proposed Rotational Warning System Is Likely To Be More Effective Than the Current Warning Statement ... 71 B. The Staff's Proposals Are Inconsistent With the First Amendment ... 73 C. The Report Mischaracterizes Industry Self-Regulation of Advertising Practices ... 74 APPENDIX The Tobacco Institute, Smoking and Health 1964 - 1979; The Continuing Controversy (1979) This Appendix is not attached but is available upon request from The Tobacco Institute. T036953 - 1 - INTRODUCTION The FTC Staff Report on the Cigarette Advertising Investigation ("Report") culminates a five-year investigation ostensibly directed to the purpose and effect of cigarette advertising. Yet despite over 300 pages of text, with numerous footnotes and appendices, the Report does nothing more than confirm what has long been apparent: the FTC Staff does not approve of cigarette smoking and will find cigarette advertising objectionable as long as anyone continues to smoke. The essence of the Report is the claim that, despite the Surgeon General's warning, which has appeared in its present from on every cigarette package since 1970 and in every cigarette advertisement since 1972, cigarette advertising is deceptive and misleading because it does not single out certain claimed health hazards that the FTC Staff attributes to smoking. Lack of such specificity renders the warning statement ineffective, the Staff claims. The Report utterly fails, however, to support this conclusion. The truth is that the smoking and health controversy is familiar to virtually everyone; the warning statement, mandated by Congress to inform the public about this issue, has fulfilled its intended function. The Tobacco Institute submits these Comments on behalf of the major manufacturers of cigarettes to point out the most The American Tobacco Company, A Division of American Brands, Inc.; Brown & Williamson Tobacco Corporation; Liggett & Myers Tobacco Company, Inc.; Lorillard, A Division of Loew's Theatres, Inc.; Philip Morris Incorporated; and R.J. Reynolds Tobacco Company. important deficiencies of the Report. Supporting materials for each of the points summarized below are included in the tabbed sections of this submission. Not the merits of the Report but rather its length and distortions dictate the length of the tabbed sections. Although the Report purports to analyze public awareness of smoking and health issues, the Staff's primary concern is with public behavior. The Staff's position is that the warning statement is "ineffective" not because too few people are aware of the message conveyed but because despite the warning statement more people continue to smoke than the Staff deems desirable. That position represents an inappropriate regulatory attitude. The Warning statement that the Staff criticizes as ineffective is included in all cigarette advertising precisely because the FTC chose in 1972 to resolve its charges that cigarette advertising was deceptive by entering into negotiated Consent Orders that provide for the inclusion of the warning statement. In July 1981, two months after the Staff issued its Report, the Commission entered into an overall settlement of civil penalty actions that it brought against the major cigarette manufacturers for alleged violations of the 1972 Consent Orders. As part of the settlement, pursuant to which the cigarette manufacturers agreed to place the current warning statement for the first time on vending machines and elsewhere, the Commission agreed to entry of Consent Judgments which provide that the original Consent Orders respecting the warning statement shall remain in full force and effect." These Consent Judgments foreclose the Staff's recommendations for a change in the warning statement. The law precludes the Commission from unilaterally repudiating consent decrees. Moreover, public policy strongly favors the resolution of disputes by negotiated settlements such as that already entered into between the Commission and the companies. This policy would be frustrated if, within a few months of entering into Consent Judgments reaffirming the 1972 Consent Orders, the Commission repudiated the current warning statement and sought to impose a totally different set of requirements on the cigarette industry. In fact, the Commission confirmed the existing regulatory approach after the Staff had a full opportunity to challenge the approach. The industry is entitled to rely on the Commission's approval of the 1981 Consent Judgments. SUMMARY 1. The Staff's Analysis of Public Awareness of the Alleged Health Hazards of Smoking (Chaps. III and IV(II)) Is Fundamentally Defective. The central thesis of the Report is the Staff's insistence that the current warning statement in cigarette advertisements is "ineffective" because it does not adequately inform the public of claimed "new findings" and specific charges about the asserted relationship between cigarette smoking and health. The Staff's attempt to demonstrate this thesis by reviewing various consumer surveys and studies simply shows that some people do not see eye to eye with the Staff about the alleged hazards that the Staff attributes to cigarette smoking. The Staff's attack (at pp. 1-58 through 1-65) on the positions set forth in a 1979 review of the smoking and health controversy by The Tobacco Institute reveals the extent of the Staff's bias and the consequent flaws in the Report's review of the evidence concerning smoking and health. Thus, for example, the Staff attempts to refute the position that epidemiological studies cannot establish causation, and in doing so reveals a basic misunderstanding of epidemiology and its legitimate uses. Consider a few scientific comments on the subject: "(T)he elementary but highly seductive fallacy of identifying association with causation continues to plague many studies." "In medicine, much more than correlation is necessary to establish causation." The Tobacco Institute review also demonstrates that the 1979 Surgeon General's Report (heavily relied upon by the Staff) itself failed adequately to report on the state of the scientific literature. Burch, Pathology, Inference, and Carcinogenesis, Pathol. Annu. Part II, 15:21-44 (1980). Colton, Statistics in Medicine (1974). "Epidemiological studies, even prospective ones like the Seven Countries Study, cannot prove cause-and-effect when the end-point, 'effect', is an outcome of a chronic noncommunicable condition...epidemiological evidence can be cited only as being consistent, or inconsistent, with the hypothesis in question." Distinguished scientists continue to adhere to the basic premise asserted by Fisher, Berkson and others that statistical comparison between smokers and nonsmokers cannot establish cause and effect. People self-select whether they will smoke or not, how much they will smoke and whether they will quit. This remains as true today as it was a quarter-century ago. The tobacco industry is not "attacking epidemiology in pointing out these limitations. Rather, it is raising legitimate criticism of the extrapolation and decision-making that can occur when such limitations are ignored. The Staff -- anxious to make a point -- has ignored more than the warnings about the limitations of epidemiology. It has also disregarded the many shortcomings of epidemiological studies used against smoking. While the Report criticizes the tobacco industry for challenging "the design and methodology of the studies relied upon to show the health hazards of smoking" (Report at 1-63), this comment simply illustrates the Staff's unwillingness to acknowledge the questionable quality Keys, The Diet and All-Causes Death Rate in the Seven Countries Study, Lancet II: 58-61 (July 11, 1981). Fisher, Smoking. The Cancer Controversy (1959); Berkson, Smoking and Cancer of the Lung, 35 Proceedings of the Staff Meetings of the Mayo Clinic 367-85 (June 22, 1960); Burch, The Biology of Cancer. A New Approach (1976). of many population studies. It would be hard to believe, for example, that the Staff has never considered the work of Dr. Alvan Feinstein, Professor of Medicine and Epidemiology at Yale University. Dr. Feinstein has described repeatedly how detection bias (looking harder for lung cancer in smokers and therefore finding it more often) can distort statistical data about smoking and lung cancer. The Staff similarly has omitted mention of Dr. Theodor Sterling, an expert in computerized health information, who has reviewed the data from two large epidemiological studies frequently cited as "proof" that smoking causes disease. In one such study, he found basic errors in classifying people according to their smoking habits. In the other, he found that certain disease patterns in the study population ( e.g. , breast cancer, lung cancer, emphysema) were considerably higher in the U.S. population it is supposed to represent. Government scientists have also criticized these studies: "While several significant studies had Feinstein, Cigarette Smoking and Lung Cancer Sterling, What Happens When Major Errors Are Discovered Long After an Important Report Has Been Published, Presentation Before the American Statistical Association Annual meeting, Washington, D.C., August 16, 1979. Sterling been conducted earlier, such as those by Hammond and Horn, they were for the most part not based on scientifically designed probability samples, and were therefore more subject to the criticism that the finding could not be generalized to the total population." Since 1976, it has been clear that the First Amendment protects "commercial speech" i.e., speech which does no more than propose a commercial transaction." Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748, 762 (1976). The Supreme Court recently articulated the degree to which commercial speech may be regulated, consistent with the First Amendment, in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980). The Court traced the prior commercial speech cases and noted that "we have rejected the 'highly paternalistic' view that government has complete power to suppress or regulate commercial speech." 447 U.S. at 562. The Court then determined that commercial speech may be regulated only if the regulation directly advances a substantial state interest and is no more extensive than is necessary to serve that state interest. Id. at 556. The Court stressed that the remedy "must be designed carefully to achieve the State's goal"; "may not be sustained if it provides only ineffective or remote support for the government's purpose"; and may not be "excessive." Id. at 564. The Staff's proposed rotational warning system clearly cannot survive this constitutional scrutiny. C. The Report Mischaracterizes Industry Self-Regulation of Advertising Practices. In the course of reaching its conclusion about the best potential "remedies," the Staff disparages past voluntary industry action. Report at 5-10 through 5-16. As with the rest of the Report, the discussion of industry action on advertising and the smoking and health issue is misguided. The Staff's position apparently is that the industry has been remiss because it has not fully agreed with the Staff's position on smoking and health. Any objective review of past industry action with respect to advertising reveals that the position of the tobacco industry has been a responsible one. Since the Surgeon General's initial Report on Smoking and Health was issued in 1964, the tobacco industry has taken a number of significant steps to modify its advertising and promotional practices, especially to avoid influence on teenagers. It has eliminated advertising in student publications and the distribution of cigarette samples on campuses or near schools. It has eliminated the use of testimonials by athletes and public figures in cigarette advertising, and has required that all models used in cigarette advertising be, and appear to be, 25 or older. It supported the ban on broadcast advertising of cigarettes. When, in 1959, the FTC decided that "all representations of low or reduced tar or nicotine, whether by filtration or otherwise, will be construed as health claims," the industry voluntarily agreed to eliminate all references to "tar" and nicotine from cigarette advertising. A few years later, when the Commission reversed its position, the industry acceded to its request that cigarette advertising disclose "tar" and nicotine content. In 1972 the members of the industry agreed to the Consent Orders requiring the warning statement in all cigarette advertising. The industry to date has committed more than $91 million, on a no-strings-attached basis, to fund independent scientific and medical research on smoking and health questions. While its views on smoking and health questions differ from those of the FTC Staff, it does not use cigarette advertisements to argue those views or to discredit the Surgeon General's conclusions. The industry will continue to maintain a responsible advertising policy. It will not, however, submit to each annual flight of fancy by the FTC Staff. Voluntary Initiatives of the Cigarette Companies in Self-Regulation of Advertising and Promotion 1954 Founded the Council for Tobacco Research to pursue independently, with all necessary funds, the many unanswered scientific and medical questions about smoking. 1963 Withdrew cigarette promotion to students, setting the policy that smoking is a custom of personal choice to be decided upon by more mature persons in light of all available information. 1965 Established a strict advertising code, the principles of which are still observed by all companies. 1967 Began a continuing program of technical assistance to the Federal Trade Commission on the Commission's "tar" and nicotine testing. 1968 Participated through cigarette company scientists, who continue to serve in individual capacities, in the Tobacco Working Group of the Lung Cancer Task Force of the National Cancer Institute, the smoking and health research program of the Public Health Service. 1969 Volunteered to withdraw from broadcast advertising, principally because its increasing competitive level coupled with steady growth of youth audiences made it an inappropriate medium. 1970 Volunteered to begin to include FTC "tar" and nicotine ratings in advertising. 1971 Voluntarily agreed to depict cigarette packages legibly showing the Congressional package warning in all newspaper, magazine, billboard and other advertising. 1972 Entered agreement with Federal Trade Commission on terms of display of package warning in print advertising. The Tobacco Institute June 1979 T037030