CDC Report Shows Tobacco Companies Manipulating Products to Avoid Taxes and Encourage Smoking - Congress and FDA Must Act to Protect Public Health

WASHINGTON, Aug. 2, 2012 /PRNewswire-USNewswire/ -- The following is a statement from Matthew L. Myers, President, Campaign for Tobacco-Free Kids.

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A new report released today by the U.S. Centers for Disease Control and Prevention (CDC) shows that tobacco companies are manipulating their products to avoid taxes and regulations aimed at reducing smoking, undermining the fight against the nation's leading cause of preventable death.  In particular, tobacco companies have mislabeled roll-your-own tobacco as pipe tobacco and increased the weight of many cigars to escape higher tobacco taxes imposed by a 2009 federal law.  By keeping the prices of these products low, tobacco companies are attracting kids and keeping smokers smoking.

This report demonstrates the need to equalize taxes on all tobacco products and for the Food and Drug Administration to regulate all tobacco products.  Congress and the states should increase tax rates on all tobacco products to the same rate as cigarettes to prevent tobacco companies from taking advantage of tax disparities to increase use of lower-taxed products.  Congress must also reject pending legislation (H.R. 1639 and S. 1461) that would exempt some cigars from FDA regulation, which would create yet another loophole that tobacco companies would exploit to market their products to kids and discourage smokers from quitting.

Today's CDC report shows that from 2000 to 2011, total consumption of all smoked (combustible) tobacco products decreased by 27.5 percent.  However, while cigarette consumption fell 33 percent during this period, consumption of loose tobacco (roll-your-own and pipe tobacco) and cigars rose 123 percent.

The largest changes occurred from 2008 to 2011, which the CDC (like the Government Accountability Office in a report earlier this year) attributed to large disparities in tobacco tax rates created by the Children's Health Insurance Reauthorization Act of 2009.  On April 1, 2009, that law increased the federal tax on cigarettes to $1.01 per pack and taxed small cigars and roll-your-own tobacco at the same rate as cigarettes.  However, larger cigars (those weighing more than three pounds per 1,000 cigars), pipe tobacco and smokeless tobacco were taxed at dramatically lower rates, spawning widespread tax avoidance schemes.  In particular, roll-your-own tobacco has been blatantly misbranded as pipe tobacco, while many cigar manufacturers made their small cigars slightly heavier to qualify for the lower tax rate on large cigars.

As a result, pipe tobacco consumption increased by 573 percent from 2008 to 2011, while roll-your-own consumption decreased by 76 percent.  Similarly, large cigar consumption increased by 126 percent over this period, while small cigar consumption fell by 86 percent, according to the CDC report.  Overall, there was a 36 percent increase in consumption of non-cigarette smoked tobacco from 2008 to 2011.  The CDC report raises concerns that the availability of these lower-priced products is blunting overall efforts to reduce smoking, with consumption of all smoked tobacco products falling less than one percent in 2011.

There are clear steps that Congress, the states and the FDA must take to address this growing public health problem:

• Congress and the states should increase tax rates on all tobacco products to the same rate as cigarettes.  We strongly support the legislation introduced by U.S. Sen. Richard Durbin (D-IL) to equalize federal tax rates on all tobacco products.
• The FDA should quickly assert jurisdiction over all tobacco products, as authorized by the 2009 law giving the agency authority over tobacco products.  The law directed the FDA to regulate cigarettes, cigarette tobacco, roll-your-own tobacco and smokeless tobacco, and it authorized the FDA to extend its jurisdiction to all other tobacco products.  The FDA announced in December 2010 that it intended to issue regulations asserting such jurisdiction, but it has yet to do so.  By regulating all tobacco products, the FDA can prevent tobacco companies from exploiting regulatory loopholes in the same way they have exploited tax disparities.  It is also important that Congress reject the legislation that would exempt some cigars from regulation, which would help tobacco companies to market cheap, sweet-flavored cigars to kids.
• The FDA should exercise its authority under the 2009 law to prevent the misbranding of roll-your-own tobacco as pipe tobacco.  The law states that a tobacco product shall be deemed to be misbranded "if its labeling is false or misleading in any particular."  Labeling roll-your-own tobacco as pipe tobacco is both false and misleading.  The FDA has broad authority to prevent the sale of misbranded tobacco products, including the authority to seize the product.

As the CDC concluded in today's report, the availability of low-taxed and less regulated tobacco products threatens efforts to reduce tobacco use.  Congress and the FDA must close these loopholes that are harming public health and helping tobacco companies target our children.

The report was published in the CDC journal Morbidity and Mortality Weekly report. It can be found at www.cdc.gov/mmwr.

SOURCE Campaign for Tobacco-Free Kids