WASHINGTON – The Senate approved a plan Thursday to put new restrictions on cigarette makers and pay tobacco farmers (search) $12 billion to give up federal quotas propping up their prices.
An unlikely alliance of anti-smoking advocates and tobacco-state senators teamed up to secure the 78-15 vote to combine a 10-year buyout for tobacco growers with new Food and Drug Administration (search) powers.
The measure was added as an amendment to a corporate tax bill (search) and broke weeks of deadlock over how to proceed with negotiations on that bill. The Senate approved the tax bill by voice vote and sent it to a House-Senate conference committee, where negotiators will attempt to work out differences between the two chambers' versions of the legislation.
Supporters had worked to get the buyout and new FDA authority to regulate cigarettes (search) attached to the tax bill so talks could begin with the House on a compromise. The FDA would regulate tobacco not as a drug but as an entirely separate product category.
A bill the House passed last month included a smaller $9.6 billion tobacco buyout over five years and no new FDA regulations on manufacturing and marketing cigarettes and other tobacco products.
The Senate would make tobacco companies pay for the buyout through a user fee that could be passed on to smokers. The House would spread the cost of its version to all taxpayers.
"It's now time to end the tobacco program with a fair buyout, not on the backs of taxpayers," said Senate Majority Leader Bill Frist, R-Tenn.
As part of an appropriations bill this week, House members also voted to forbid the Agriculture Department from carrying out a buyout financed by general tax revenues, putting the House on record as being on both sides of that issue.
House Majority Leader Tom DeLay, R-Texas, has opposed giving the FDA authority to regulate cigarettes.
Sen. Mitch McConnell, R-Ky., said, "I'm not a great fan of FDA regulation today, but these two issues needed to be married here ... if we're to get either one of them out of the Senate and on the way down the legislative road toward some accomplishment."
The buyout would pay roughly 400,000 tobacco quota owners -- most of them in the Carolinas, Kentucky, Tennessee, Virginia and Georgia -- to give up federal allotments limiting how much they can sell each year. With no quotas to keep prices up, about half of the roughly 100,000 active tobacco growers may give up the crop altogether, said Keith Parrish, executive director of the National Tobacco Growers Association.
Farmers have been clamoring for a buyout in recent years after seeing the volume of leaf they can sell decline as more Americans gave up smoking and cigarette makers turned to cheaper leaf from abroad.
The Senate measure forbids the FDA from banning cigarettes. The agency could restrict but not eliminate addictive nicotine in tobacco products. It also could order the removal of certain ingredients and force cigarette makers to disclose more details about their product ingredients.
"Current law makes sure we know what's in products designed to help people quit smoking, like the patch or Nicorette gum, but not the very products that get people addicted in the first place to cigarettes themselves," said Sen. Mike DeWine, R-Ohio. "Isn't that crazy?"
Marketing terms such as "light" and "ultra-light" would be prohibited unless the FDA approved them. Studies have shown those cigarettes haven't reduced health risks faced by smokers.
The FDA asserted authority over cigarettes in 1996, but the Supreme Court later ruled that only Congress can give the FDA that power.
Philip Morris USA is the only major tobacco company to support FDA regulation of cigarettes. Company executives say it could better communicate with customers about new, safer products in a regulated environment with clear, uniform rules.
The other major companies say the new advertising restrictions would make it harder for them to gain new customers while ensuring that Philip Morris retains its market share.
Tommy Payne, senior vice president of R.J. Reynolds Tobacco Co., called the FDA provisions of the Senate amendment "onerous."
Payne said he worried the FDA might order changes to cigarettes that would make them unacceptable to consumers. "You may have an awful cigarette that no one wants to buy," Payne said.