Where There’s No Smoke, Altria Hopes There’s Fire

FOR years, Altria, home to Philip Morris and its popular Marlboro cigarette brand, was a corporate pariah

marlboro brand

blamed for the deaths of millions of people and sued for hundreds of billions of dollars by attorneys general in every state. After eventually acknowledging, like others in its industry, that cigarette smoking was, indeed, addictive and caused disease, Altria went a step further. It broke from the Big Tobacco pack and began supporting legislation that would ultimately put the company under the regulatory thumb of the Food and Drug Administration.
Altria’s motives for submitting to strict oversight have long been a mystery. Did the company and its executives, who were internally pursuing a strategy of “societal alignment,” suddenly embrace a true partnership on public health? Or was this a case, as its longtime foes and competitors have argued, of Altria seeking to generate good P.R. or lock in its market dominance by cozying up to a regulator that could restrict rivals from marketing new products?
Another possible answer was highlighted this month, as the federal government began fine-tuning aspects of a law that President Obama signed last summer that gives the government sweeping new powers to regulate the production and marketing of tobacco products.
A series of letters that that Altria submitted to the F.D.A. as part of that process argues that the government should, effectively, sign off on the notion that smokeless tobacco products are less harmful than cigarettes — and that Altria and other companies should be allowed to market them as such to consumers.
It is a pivotal and divisive claim. While public health doctors agree that the smokeless products are far less hazardous to individuals than cigarettes, they still have concerns because all tobacco products contain nicotine and carcinogens. They also contend that promoting smokeless products — some in tiny packages in the shape of cigarette packs — would attract new, perhaps younger customers and maintain the addiction for smokers who might otherwise quit. They note that Altria is adding flavorings to its smokeless products that have long been used in candy.
Furthermore, critics say, Altria’s suggestion to the F.D.A. that it be allowed to market its products as less risky is part of an effort to dodge indoor-smoking laws (which are credited with encouraging more smokers to quit) and to encourage smokers to use oral tobacco products as supplements.
“If you look at how they’re marketing smokeless now, they’re marketing for dual use, and to protect the cigarette market, which is their big money maker,” says Stanton A. Glantz, a professor of cardiology and a specialist in tobacco research at the University of California, San Francisco.
UNDER its gregarious chief executive, an occasional smokernamed Michael E. Szymanczyk, Altria is treading carefully when it comes to talking about its business strategies or its relationship with the F.D.A. After its letters to the regulator made headlines this month, the company canceled interviews for this article with top executives at its headquarters in Richmond, Va.
An Altria spokesman says the executives declined to comment because “we don’t want to be perceived as leading the discussion” on the regulatory front.
Brendan J. McCormick, another Altria spokesman, says the company supported the legislation enacted last summer because it believed that the F.D.A. offered the best way to settle the debates about tobacco use and marketing, which have raged for decades. He says the company believes that F.D.A. standards will create more predictability in the industry and a level playing field for competitors.
Moreover, he says, the F.D.A. provides a forum to evaluate products that are potentially less harmful — and if the agency agrees with its argument, the company could market them with a federal imprimatur.
Mr. McCormick says Altria doesn’t agree with criticisms that the new tobacco law and the company’s willingness to work closely with its regulator cement its market dominance. “This is a dynamic industry,” he says.
And Altria is a changing company. It spent $11.7 billion last year to acquire UST, formerly the United States Tobacco Company and home to popular snuff brands like Copenhagen and Skoal.
The merger made Altria the biggest cigarette and chew company in the country, controlling 50 percent of the cigarette market and 55 percent of the smokeless market.
The deal also solved several quandaries facing the company. The biggest was that, after its spinoff of Kraft Foods and the less-regulated, faster-growing Philip Morris International units in recent years, Altria had become a stand-alone domestic cigarette company in a declining industry. Bans on indoor smoking, along with rising federal and state excise taxes, have accelerated a long-term decline in the volume of domestic cigarette sales.
Volumes may be declining, but cigarettes remain Altria’s biggest business by far, accounting for $14.4 billion in revenue in 2009. (Smokeless brought in $1.2 billion.) Cigarette profits are growing thanks to price increases and a customer base of people who haven’t kicked the habit. About 70 percent of the nation’s 46 million smokers say they want to quit, government surveys show, and about 40 percent try every year. But only 2.5 percent succeed, the surveys say. The government estimates that 400,000 Americans die of smoking-related diseases each year.
Critics and public health officials contend that in focusing the F.D.A.’s attention on smokeless products, a much smaller but growing industry, Altria and other tobacco companies are diverting regulators’ attention from the source of the real public health problem: cigarettes.
Consider so-called light cigarettes, which have captured nearly 90 percent of the United States market, based largely, analysts say, on the false perception among consumers that they are safer. (Many studies have shown that smokers inhale those cigarettes more deeply.) While manufacturers are required by the new law to drop words like “light,” low” and “mild” from their labels by this summer, the companies may still be able to use pale blue, green or silver packaging, which critics say signifies the same thing to consumers.
“They’re taking the F.D.A. debate and making it on smokeless rather than ‘light’ cigarettes, which is where the real harm is,” says Gregory N. Connolly, a professor at the Harvard School of Public Health who was head of tobacco control for Massachusetts. “It’s brilliant, in a way.”
WHEN Mr. Szymanczyk joined Philip Morris as head of sales in 1990, the company was No. 2 on Fortune magazine’s list of America’s “most admired” companies. Four years later, it had fallen to No. 204, after taking a bashing in court and in the press.
Mr. Szymanczyk, who started his career selling bar soap at Procter & Gamble, faced a huge clean-up job when he was handed the reins to the domestic cigarette business in 1997.
He grew up in Lansing, Ill., a working-class town not far from the steel mills of Gary, Ind. Physically imposing at 6-foot-8, he attended Indiana University on a basketball scholarship.
He graduated from college in 1971, married and started a job at Procter & Gamble — all in the same week, according to court testimony he provided during the tobacco wars. He is a veteran of those battles. One Christmas, an anti-tobacco choir led by Michael Moore, the documentarian, decorated a tree outside his home with Marlboro boxes.
Shortly after Mr. Szymanczyk was named head of the domestic cigarette business, Philip Morris and other major tobacco companies signed a master settlement agreement with states, which imposed strict restrictions on cigarette marketing and advertising and required the companies to pay $206 billion to state governments over 25 years.
Marlboro Snus is smokefree and comes in flavors. Its packaging looks more like that of cigarettes than chewing tobacco.
The settlement left him facing three major challenges. First, he needed to repair Philip Morris’s badly tarnished image. To address that, the company began acknowledging that cigarettes were harmful, executives pursued the “societal alignment” strategy emphasizing good corporate citizenry, and the parent company eventually rebranded itself as Altria.
Mr. Szymanczyk also needed to maintain the company’s cigarette market share, even though the industry could no longer use mass advertising on billboards and products like hats and T-shirts. So the company focused more on direct mailings, store signs and shelf space.
And, finally, at the most fundamental level, he needed to make the business grow. As for that hurdle, Mr. Szymanczyk initially chased after ways to develop a less-harmful cigarette, but even after years of research little progress has been made on that front.
Then the company headed down the smokeless route, developing its own brand of Marlboro snuff, which was dropped from test marketing after the acquisition of UST. It then worked on several iterations of a spit-free smokeless pouch called snus (rhymes with “loose”) that is placed under the upper lip and has been popular in Sweden.
Last week, Altria told its distributors that Marlboro Snus would move out of test marketing and be available nationwide in March. But some analysts say that there have been very few successful new product introductions in the tobacco industry for decades, suggesting that snus is up against steep odds.
“It’s a pipe dream,” says David Adelman, an analyst at Morgan Stanley, of the prospects for snus.
While Altria tried to buy growth with the UST deal, the merger has been a disappointment so far. Even as the company has cut costs by combining cigarette and snuff sales forces and distribution, Mr. Szymanczyk is struggling to get the financial returns he initially promised in the deal.
Some of this is because UST’s higher-priced premium snuff brands have struggled against aggressive, less-expensive competitors. But a great deal of Altria’s woes have to do with how the UST acquisition was financed. A week after the merger was announced in September 2008, the Wall Street investment bank Lehman Brothers filed for bankruptcy and the banking system clammed up. Altria wound up paying interest rates of as much as 10.2 percent to borrow the $11 billion it needed to get the deal done.
“They needed to raise debt at a bad time in the world,” says Christopher Growe, an analyst at Stifel Nicolaus, the investment bank.
Like other analysts, Mr. Growe says smokeless could be a business with strong potential growth for Altria. “There’s an opportunity that, in the long run, the F.D.A. could treat smokeless tobacco differently than cigarettes,” he says.
That, of course, is exactly what Altria is betting on.
EARLY this month, Mr. Connolly, the Harvard public health professor who is also a dentist and an adviser to the World Health Organization, fired off an e-mail message to 48 leading scientists, doctors and other people who have long tracked the tobacco debate, to alert them to the letters Altria had filed with the F.D.A. The letters have fueled a firestorm over Altria’s position on “reduced-harm products.”
Among other things, Altria wants the F.D.A. to allow it to promote snuff and other smokeless products as being less harmful to their users. An Altria official wrote in one of the letters that the company planned to market its smokeless products “to complement proven prevention and cessation strategies, not to compete with them.”
Big Tobacco’s push with the F.D.A. is setting the stage for more big battles between tobacco companies and public health experts.
On one side are people like Matthew L. Myers, president of Campaign for Tobacco-Free Kids, an advocacy group in Washington, who argues that there is no evidence that smokeless products are effective tools to help people quit smoking. On the contrary, he says, there is “a serious increase in youth smokeless use” with no corresponding evidence of a decrease in smoking. A federal survey last year found smokeless products gaining popularity with 10th and 12th graders.
On the other side of the debate are people like Dr. Joel L. Nitzkin, chairman of a tobacco control task force of the American Association of Public Health Physicians and a consultant in New Orleans. Dr. Nitzkin, who supports the tobacco industry argument on this issue and adds that he has never been paid by the industry, says the new law places unfair burdens on companies like Altria because it makes it too hard for them to promote smokeless products as safer alternatives to cigarettes.
Altria, he said, realizes that there is growth potential and less health risk in smokeless products. “We have to give Altria some credit for doing their homework,” Dr. Nitzkin says.
Altria is making similar appeals to the F.D.A. In its letters, Altria has written that the nation would enjoy “a significant public health benefit” if the government allowed more “truthful information” to be made available to adult consumers of smokeless tobacco — meaning that the company would be allowed to make such claims in its marketing.
One of the letters included a chart showing a range of risks that placed cigarettes on one side of the scale and smokeless products on the other, near pharmaceutical nicotine replacement products and quitting. The letter cited a 2009 report in Tobacco Control, a research journal, by a group of 26 experts inside and outside government who spent two years examining the merits of various arguments about reducing the harm from tobacco. The report recommended, among other things, that the government explore the use of less-harmful tobacco products.
But Mitch Zeller, the public health expert who was co-chairman of that group, accused Altria of misrepresenting the report’s conclusions. The key consensus, said Mr. Zeller, a lawyer who was a top federal official on tobacco issues in the Clinton administration, was that people should be directed to the cleanest and safest form of nicotine delivery. That, he said, is medicinal nicotine products — “not smokeless.”
Mr. McCormick, the Altria spokesman, said that Altria did not misrepresent data from the report and that the company’s letter to the F.D.A. cited the full report in a footnote.
Mr. Zeller says he further believes that the F.D.A. needs to focus on reducing addictive nicotine in cigarettes. “The companies,” he says, “have not wanted us to focus on nicotine.”
The F.D.A. is just starting to dig into all these issues. It is setting up its new Center for Tobacco Products, led by Dr. Lawrence R. Deyton, a longtime Veterans Affairs public health physician who was not involved in the decades of political wrangling over tobacco regulation. The F.D.A. principal deputy commissioner, Dr. Joshua M. Sharfstein, was an aide to Representative Henry A. Waxman, Democrat of California and a critic of the industry, as the legislation was being written.
Dr. Sharfstein, viewed by some as having a closed mind on issues of smokeless tobacco, said in an interview that that perception of him was wrong. “The law provides a path for the approval of those modified-risk tobacco products that are supported by evidence,” he said, in one of his first public statements on regulating tobacco. “We look forward to basing our decisions on the careful evaluation of scientific data and then monitoring the impact of these products on public health.”
Once a new product is introduced, the F.D.A. can require companies to extensively study how it is actually used, after which the agency can review the product further.
ONE early sign of the F.D.A.’s stance on smokeless tobacco could be how it regulates flavored snuff. Flavors have emerged as a huge growth market for smokeless tobacco. In fact, the leading mint-flavored products have 50 percent more menthol flavoring cigarettes, on average, than Tic Tacs, Altoids and other popular candy products, according to research published last month in the journal Food and Chemical Toxicology.
Altria’s Skoal and Husky wintergreen products had eight times as much methyl salicylate flavoring (better known as wintergreen) than Wint-O-Green Life Savers, the research showed.
Flavors account for 56 percent of Altria’s smokeless sales, Mr. Szymanczyk said in a speech last September to analysts and shareholders. And the company sees even more prospects for growth in that market with a new Copenhagen wintergreen product and the introduction of snus products in peppermint and spearmint flavors.
“They’re clearly trying to make the product more palatable and more appealing to a broad audience,” says James F. Pankow, a professor of chemistry and engineering at Portland State University in Oregon who was a researcher involved in preparing the journal report.
That audience, public health experts say, includes children. “The flavors are designed to attract kids,” says Kenneth E. Warner, dean of the University of Michigan School of Public Health and a founding director of its Tobacco Research Network.
Altria says that while it supports all efforts to prevent underage tobacco use, it doesn’t have any research indicating whether such flavors would appeal to young consumers more than the traditional tobacco flavor.
Mr. McCormick says Altria adds such flavorings to smokeless tobacco products in response to market opportunities and to create “products that are meant to address the preferences of adults who are interested in smokeless products.” He says Altria is evaluating findings about mint and wintergreen flavorings and had no immediate comment on them.
Smokeless products are coming under fire in some communities. Last October, local officials in New York City moved to ban sales of fruit-flavored snuff in the city, considering them enticing to children. The ban — which excludes menthol, mint or wintergreen flavors — is supposed to go into effect in late February, but two subsidiaries of Altria have filed a lawsuit in federal court in Manhattan to block the ban, arguing that it is superseded by federal law and F.D.A. regulation. The case is pending.
Critics point to Altria’s marketing for its Marlboro Snus to buttress their argument that the company’s smokeless push with the F.D.A. is intended to keep regulators focused on a less dangerous and less used product while protecting a bigger and more lucrative business: cigarettes.
Ads for snus position it as a convenient alternative when a smoker can’t light up in a public place, something that provides a bridge from the last cigarette to the next. “Whenever smoking isn’t an option, reach for new Marlboro Snus,” states one ad that shows a small foil packet of the product, complete with the Marlboro logo. “The foilpack fits perfectly alongside your smokes.”
A marketing brochure for snus states: “Marlboro when you want it.”
Mr. Connolly, the Harvard public health professor, says Altria’s arguments for smokeless tobacco present a public health threat if either the F.D.A. or the public health experts end up agreeing with them.
“It is worth noting that for every pack of snuss sold in the U.S., about 3,000 packs of lights are sold,” he wrote in his message to public health experts this month. “Maybe we need to better understand our priorities for F.D.A. regulation.”
By DUFF WILSON and JULIE CRESWELL
January 30, 2010

Profit from the Demise of Big Tobacco

Cigarette makers must be worried. A tiny U.S. company has a drug that could all but destroy nicotine addiction in smokingAmerica and beyond, and its shares give investors a chance to profit from this potentially world-changing drug.
About 46 million Americans smoke. But most of them don’t want to. According to the Centers for Disease Control and Prevention, about 70% say they want to quit. In fact, 40% of U.S. smokers try to quit every year by abstaining for at least one day. Of course, most do not succeed. And according to public health officials, half of those who fail to quit will eventually die of smoking-related disease.
Without treatment, the chances of someone quitting on any given attempt are about 1.5%. Current remedies improve these results, but the failure rate is still daunting. Use of a nicotine replacement therapy — such as nicotine patches or gum — increases the success rate to about 3%.
Prescription drugs have been more successful — but even their results leave a lot be desired. Quit rates for GlaxoSmithKline’s (NYSE: GSK) Wellbutrin and Zyban, which reduce the severity of nicotine cravings, stand at about 15%. And the quit rate for Pfizer’s (NYSE: PFE) Chantrix — a drug that partially blocks nicotine from stimulating the brain — approaches 26%; however, this drug has received the most severe warning the U.S. Food and Drug Administration gives to medications for the serious psychological side effects it may cause.
Here’s the good news: A new drug currently in Phase III clinical trials could dramatically improve the rates at which people successfully quit smoking.

Nabi Biopharmaceuticals
(NASDAQ: NABI) is a $250 million company that has a treatment that appears to beat the success rates of what’s currently on the market and which so far has caused no serious side effects. Called NicVAX, the drug not only helps people quit, it also helps prevents relapses.
NicVAX works by stimulating the immune system to produce antibodies that bind to nicotine in the bloodstream, preventing it from entering the brain. What’s more, once NicVAX is administered, the effects are irreversible for up to a year. This means that once the patient has decided to receive the treatment, there’s no going back, as the nicotine can no longer get to the brain.
The 46 million American smokers present a huge market for NicVAX. But consider this: There are more than 1 billion smokers worldwide.
Nabi recently inked a deal with GlaxoSmithKline that gives GSK the option to obtain the exclusive worldwide license to develop, commercialize and manufacture NicVAX and related drugs. For that option, GSK is paying $40 million, and could pay up to $500 million if certain regulatory and sales milestones are reached. Nabi will also collect royalties on both NicVax and second generation drugs that GSK may develop.
The drug is currently being tested in several studies, including a Phase III study on its effectiveness in helping people quit smoking long term. The company has received a $10 million grant from the U.S. National Institute on Drug Abuse — part of the National Institute of Health — to help fund the first NicVAX Phase III trial. Nabi has said that the drug will not be ready for FDA approval before 2012.
Nabi’s latest filing dated September 2009 reported $28 million in cash in the company’s coffers and just $5 million in debt. As a small pharmaceutical company with no drugs on the market, Nabi has no significant revenue stream, but the deal inked with GSK should allow it to continue to operate through the Phase III trials.
For risk tolerant investors with the patience to wait until 2012 for Nabi’s big potential payday, the shares still offer a lot of upside as the company progresses through its Phase III clinical trials toward FDA approval and world-wide commercialization.
Anthony Haddad, Streetauthority
January 28, 2010

Altria '09 Cigarette, Smokeless Business Income Up

RICHMOND, Va. — Altria Group Inc., the parent company of tobacco companies Philip Morris USA (PM altria groupUSA), U.S. Smokeless Tobacco Co. (UST) and John Middleton, reported improved performance in the fourth quarter 2009 over the comparable quarter thanks to higher operating companies income from cigarettes, cigars and financial services, as well as operating income contribution from the UST acquisition, lower corporate asset impairment and exit costs, and higher earnings from Altria’s investment in beer maker SABMiller plc.
However, fourth quarter results were partially offset by higher interest expense, income taxes and general corporate expenses vs. the prior-year period
“Altria performed very well in last year’s challenging environment as it delivered strong adjusted earnings per share growth, which met our increased earnings guidance,” Michael E. Szymanczyk, chairman and CEO of Altria, said in a statement. “This result was driven by the solid performance of the four premium brands of Altria’s tobacco operating companies. Marlboro displayed resiliency in an intensely competitive promotional environment, and we are also pleased with the strong retail share and volume growth of Copenhagen in the fourth quarter of 2009, behind the successful launch of Copenhagen Long Cut Wintergreen.”
PM USA
While its cigarettes segment’s results for the fourth quarter and full year 2009 were impacted by the April 1, 2009, federal excise tax (FET) increase on tobacco products, net revenues for the quarter and full year increased 18.9 percent and 11.6 percent, respectively, over the prior-year periods, due to higher pricing related to the FET increase.
In the fourth quarter of 2009, reported operating company income for the cigarettes segment increased 2.9 percent vs. the prior-year period to $1.2 billion, due to higher list prices and cost savings, which were partially offset by lower volume.
For the full year 2009, reported operating income for the cigarettes segment increased 3.9 percent to $5.1 billion, due primarily to higher list prices and cost savings, and again partially offset by lower volume along with higher pre-tax charges related to the previously announced closure of its Cabarrus manufacturing facility.
However, PM USA’s domestic cigarette shipment volume for the 2009 fourth quarter and full year were negatively impacted by the FET increase, a decline in trade inventories, and changes to PM USA’s pricing and promotional strategies, the company stated. In the fourth quarter, PM USA’s domestic cigarette shipment volume fell 11.4 percent compared to the prior year period, and down 12 percent when adjusted for changes in trade inventories.
For the full year, PM USA’s domestic cigarette shipment volume was 12.2 percent lower than the prior-year, but was estimated to be down approximately 10.5 percent when adjusted for changes in trade inventories and calendar differences, according to the company.
Retail share of PM USA’s cigarette-store.biz/online/marlboro for the fourth quarter and the full year declined 0.4 share points and 0.1 share point, respectively, compared to the comparable periods, due to higher levels of competitive promotional spending.
UST/Smokeless Products
In the fourth quarter 2009, net revenues for the smokeless products segment were $343 million, and net of excise taxes, revenues totaled $317 million. For the full year, net revenues reached $1.4 billion, with revenues net of excise taxes being $1.3 billion.
Operating company income for the smokeless products segment in both the 2009 fourth quarter and full year were negatively impacted by costs related primarily to the acquisition of UST, including employee separation costs, asset impairments, integration costs and inventory adjustments. Other costs negatively impacting the income were associated with PM USA’s smokeless tobacco products, and value-enhancing activities of USSTC’s moist smokeless tobacco brands.
Adjusted operating income was $137 million in the fourth quarter 2009 and $632 million for the full year of 2009.
Domestic shipment volume of USSTC and PM USA’s combined smokeless products in the fourth quarter was up 3.6 percent compared to the year-ago quarter. For the full year, domestic shipment volume for these products declined 2.4 percent compared to the full year 2008, due to changes in trade inventories and other factors. When adjusted for these factors, shipment volume for the three- and twelve-month periods was estimated to be up approximately 2 percent and 1 percent, respectively.
Copenhagen and Skoal’s combined fourth-quarter volume increased 7.8 percent during the quarter, thanks to its new Copenhagen Long Cut Wintergreen product, the company stated.
Combined retail share of USSTC and PM USA’s smokeless products increased 0.9 share points in the fourth quarter 2009 vs. the third quarter 2009, while Copenhagen’s retail share grew 1.5 share points during the fourth quarter over the previous quarter. Skoal’s retail share, though, declined 0.2 share points compared to the previous quarter.
In addition, Altria reported its UST integration is substantially complete and within budget. The company incurred pre-tax charges of $438 million in acquisition-related charges as well as restructuring and integration costs in 2009, $75 million of which were pre-tax charges incurred in the fourth quarter of 2009.
In 2010, Altria expects to incur additional integration and restructuring charges of approximately $50 million.
John Middleton
Altria’s cigars segment was also impacted by the FET increase in the fourth quarter and full year 2009. Net revenues in the fourth quarter increased 38.1 percent to $134 million compared to the year ago quarter, reflecting higher pricing related to the FET increase. Revenues net of excise taxes for cigars increased 6.2 percent to $86 million, also due to higher pricing.
For the full year 2009, net revenues increased 34.4 percent to $520 million, reflecting higher pricing and excise taxes, while revenues net of excise taxes increased 9.8 percent to $358 million, again due to higher pricing.
During the fourth quarter 2009, operating income increased 2.8 percent vs. the prior-year period, to $37 million, and attributed to higher pricing and lower integration costs, which were partially offset by higher costs for trade programs and new products. Adjusted operating income — which excludes integration costs — decreased 7.1 percent in the fourth quarter 2009 to $39 million.
For the full year, operating income increased 7.3 percent to $176 million compared to the prior-year period, also due to higher pricing and lower integration costs, and were partially offset by higher costs for new trade programs and products. Excluding integration costs, 2009 adjusted operating income increased 1.6 percent to $185 million.
Fourth quarter volume for Middleton’s cigars decreased 2.7 percent compared to the year-ago period to 303 million units, due primarily to trade inventory reductions. For the full year, Middleton’s cigar shipment volume declined 3.6 percent over 2008, also due to declines in trade inventories.
These trade inventories declines were due partially to the movement to a more efficient Altria Sales & Distribution system, which reduced wholesale delivery lead times, the company stated. And after adjusting for changes in trade inventories, Middleton’s shipment volume was estimated to be up slightly for the full year.
Retail share of Middleton products increased in the fourth quarter and full year 2009, thanks to its leading brand, Black & Mild. In the fourth quarter, retail share was up 1.1 share points versus the prior-year period, to a 31.1 percent share of the machine-made large cigars segment.
Black & Mild’s fourth-quarter retail share increased 1.2 share points over the prior-year period to 30.6 percent, thanks to the introduction of Black & Mild Wood Tip and Black & Mild Wood Tip Wine.
For the full year, Black & Mild’s retail share increased 1.3 share points vs. the prior-year period.
Cost Management
Altria and its companies achieved $157 million in cost savings in the fourth quarter 2009, and $398 million for the full year. By 2011, Altria expects to achieve approximately $462 million in additional cost savings for total anticipated cost reductions of $1.5 billion compared to 2006, the company stated.
PM USA’s Manufacturing Optimization Program, which included the closure of its Cabarrus cigarette manufacturing facility in July 2009, is expected to deliver ongoing cost savings of $188 million by 2011, according to the company, although it incurred pre-tax charges of $74 million in the fourth quarter 2009 and total pre-tax charges of $254 million for the full year due to exit and implementation costs. In 2010, Altria expects to incur pre-tax charges of approximately $100 million related to this initiative.
2010 Full-Year Guidance
Noting the business environment in 2010 is likely to remain challenging, Altria forecasts its 2010 full-year guidance for reported diluted earnings per share (EPS) will be in the range of $1.78 to $1.82, while its 2010 full-year guidance for adjusted diluted EPS will increase to a range of $1.85 to $1.89, a growth rate of 6 percent to 8 percent compared to 2009.
The company also outlined several challenges it expects to face in the coming year, including the continuing consumers’ economic pressure and high unemployment. In addition, Altria expects continuing state budget issues could lead to excise tax increase proposals in many states in 2010.
And as PM USA saw profitable federal excise tax (FET) related pricing strategies last year ahead of the April 2009 increase, the company expects the first and second quarters of 2010 to be more challenging for income growth comparison purposes.
January 28, 2010

Smokeless tobacco products contain heavy metal

Smokeless tobacco products that are manufactured in India contain heavy metal, reveals a study report published in The Scientific World Journal.
The study—Determination of Toxic Metals in Indian Smokeless Tobacco Products— was carried out on 30 Indian smokeless tobacco brands by the Indian Institute of Environmental Medicine (IIEM), Mumbai.
As per the report, high levels of lead and cadmium content were found in some gutkha brands— lead in four brands and cadmiun in two. One of the gutkha brands contained high levels of arsenic content and four other brands exceeded the permissible levels of copper content in them, says the report.
“Exposure to each of these (brands) were calculated using an average consumption of 10 pouches per day,” said Dr Aditi Deshpande, research scientist at the analytical laboratory at IIEM and co- author of the research paper.
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“Several food products in India have recommended certain limits for some heavy metals. However, smokeless tobacco products are classified under foods for regulatory purposes. The limits for metals have not been specified. Therefore, the daily intake of these elements was compared with the provisional tolerable weekly intake (PTWI). The proposed maximum permissible level has been suggested by the Food and Agriculture Organisation (FAO) and World Health Organisation (WHO),” said Dr Deshpande.
According to statistics, India has 250 million tobacco consumers of which 80 per cent are smokeless tobacco consumers.
“Intake of tobacco damages the genes. However, presence of mercury or lead in the product is far more dangerous as it can be lethal to kidneys, blood producing cells and human organs,” said Dr Pankaj Chaturvedi, associate professor of head and neck surgery at Tata Memorial Hospital.
Cadmium is also extremely toxic and causes prostate cancer, renal cancer, breast cancer, testes cancer and bladder cancer, he said.
Meanwhile, the researchers said they need to carry out further study. “It was observed that gutkha had significant levels of metals as compared to other brands of smokeless tobacco products,” said Dr Deshpande.
All for a smoke-free city
Medical students on Wednesday joined the Smoke-free Mumbai (SFM) campaign launched by KEM Hospital and conducted a signature campaign to urge the government to effectively implement the ban on smoking in public places. As part of the campaign, volunteers wore T-shirts displaying a message: “Khaasi Sunao Sutta Bujhao”
Jan 29, 2010, Indianexpress

Statewide smoking ban bill introduced

CHARLESTON, W.Va. — Sen. Dan Foster, D-Kanawha, introduced legislation Thursday to ban smoking in public places statewide (SB360) but conceded the bill is primarily intended to spur discussion.
“It’s as much for the discussion of the issue, and to make sure people recognize the success of what has been done at the local level,” said Foster, a surgeon and medical administrator.
Foster’s bill would prohibit smoking statewide in all public places, including restaurants, bars, clubs and gaming facilities, as well as in all college dormitories.
The only exemptions would be for private residences, retail tobacco stores, and for designated rooms in hotels, motels and nursing homes.
Individuals caught smoking in prohibited areas would be subject to fines of between $100 and $250 per offense. Owners of businesses that permit smoking would be fined $250 for a first violation, $500 for a second violation, and $2,500 for each additional violation within one year.
Foster said the bill would provide a base standard for the Clean Indoor Air Act statewide. Currently, health departments in each county set their own standards.
Under the proposed legislation, health departments could impose tougher countywide restrictions on smoking, in addition to the statewide standards, Foster said.
However, Chuck Hamsher, who represents several anti-tobacco organizations including the Coalition for at Tobacco-Free West Virginia, said the anti-smoking groups prefer keeping the policy at the local level.
“Our preference is to keep it local,” he said. “It makes sense to leave it in the hands of the county Boards of Health, who are mandated to protect public health.”
Hamsher said all 55 counties in the state have Clean Indoor Air acts, with most prohibiting smoking in workplaces and restaurants.
“The bars and gaming facilities are the wild cards out there right now,” he said, noting that smoking policies for those facilities vary from county to county.
Hamsher said there are also concerns among anti-smoking groups that tobacco lobbyists would get amendments put in the bill to provide statewide exemptions for bars, gaming facilities, and as many other businesses as possible.
Foster agreed that could be an issue.
“The problem with dealing with it on a statewide level is the influence from special interests that could make it more difficult,” he said.
Although chances for passage of a statewide ban are slim, Foster said he hopes debate over the bill will be an opportunity to showcase how successful county regulations have been.
In the eight years since Kanawha County’s Clean Indoor Air regulations took effect, the number of cases of coronary artery disease reported at hospitals in Charleston and South Charleston have dropped by one-third, he said.
Foster said that is strong evidence that the county’s smoking ban is having a positive effect on the public’s health, especially by limiting nonsmokers’ exposure to second-hand smoke.
Foster’s bill was sent to the Senate Health and Human Resources Committee.
Also Wednesday, the Senate unanimously approved a resolution opposing federal cap-and-trade legislation intended to reduce carbon dioxide and other greenhouse gas emissions.
The resolution, requested by Gov. Joe Manchin, urges the state’s congressional delegation to oppose the legislation, contending it would cost the state 10,000 jobs and $750 million in lost revenue by 2020.
On the Senate floor Wednesday, several senators spoke in favor of the resolution, including Energy, Industry and Mining Chairman Mike Green, D-Raleigh.
“This attack on coal must stop,” he said. “The nation will suffer, and we will be brought to our knees.”
The Senate adopted the resolution on a 33-0 vote, with Sen. John Pat Fanning, D-McDowell, absent.
The resolution goes to the House of Delegates. If it is adopted there, it will represent the official position of the Legislature on the issue, but otherwise carries no weight in law.
January 27, 2010
By Phil Kabler

Electronic Cigarette Wholesale – Decision Against FDA

Mobile Media Unlimited Holdings Inc.
On the eve of one of the most important and influential decisions to hit the United States of America within the last decade, electronic cigarettes now have a chance to leap forward and compete with the tobacco empire. This, in itself represents a tremendous opportunity for investors looking to make big bucks from a once struggling e-cigarette industry. Opportunity amongst uncertainty speaks front, right and center for this little company out of the United Kingdom. Up until January, the uncertainty aspect undoubtedly outweighed the two factors, however, times have changed drastically since then. The headlines couldn’t be more foretelling of the unmistakable opportunities lying within Mobile Media Unlimited Holdings (OTC:MMUH). For readers who are new to the company, we recommend you read our introductory company article entitled, “Landmark Victory for E-Cigarette Industry Against the FDA Leaves Plenty of Opportunities”, written and introduced by our Publisher, Michael Vlaicu. The first article was from a much more technical standpoint, gearing towards those chart scanning, number crunching fanatics out there. Consequently, this one will take a look at the fundamental business model, as well as the economic conditions surrounding the company and its future prospectus.
Earlier this month, in a sharply worded decision, U.S. District Judge Richard Leon scolded the Food and Drug Administration for trying to assert jurisdiction over the cigarettes, which are battery-powered or rechargeable devices that vaporize a liquid nicotine solution. It is a $100 million industry, with at least 3 million users in the U.S.
“This case appears to be yet another example of FDA’s aggressive efforts to regulate recreational tobacco products as drugs or devices,” he said in granting an injunction barring the FDA from regulating the cigarettes as a drug-device combination. E-cigarettes were first made in China and are sold mostly on the Internet. The battery-powered devices work by a emitting a “puff” or fine mist of nicotine in the lungs. A law passed last year gave the FDA power over regular cigarettes and other tobacco products. But while e-cigarettes contain nicotine, they do not contain tobacco and are not subject to the new oversight.
Although the facts on cigarettes and the harmful side effects of smoking tobacco have been out for quite some time, conversely, little is known about e-cigarettes. Cigarettes and their smoke contain more than 4,000 chemicals; among them are more than 60 known carcinogens, according to the American Cancer Society.
FDA Scrutny Against E-Cigarettes
The U.S. Food and Drug Administration (FDA) looks at the electronic cigarette as an unapproved new drug due to the lack of scientific evidence of the safety and effectiveness of this smoking substitute. As such, the FDA has been detaining and blocking imports of electronic cigarettes since at least last summer, though they are not pulling e-cigarettes from U.S. store shelves presently.
One of the ways that the government managed to pass its recent tobacco reform bill was by enlisting big tobacco’s support. So the FDA and big tobacco have a symbiotic relationship. The government gets billions of dollars from excise tax revenue on and lawsuits related to cigarettes. Big tobacco gets regulation that makes it harder for smaller companies to compete. So the FDA needs to keep up its end of the bargain here and not allow a threat like e-cigarettes to take hold in the U.S. — even if they did turn out to be good for the American people.
In a statement issued in September of 2008, the World Health Organization warned consumers that there is no solid evidence to support contentions that electronic cigarettes are a safe smoking alternative — or an effective way to help people quit smoking. This statement becomes all the more interesting when drawing up a comparison between the two:
A Few of the Ingredients that Goes into the Making of Cigarettes:
* Acetone – ingredient in nail polish remover tobacco ingredients
* Methanol – used as rocket fuel
* Naphthylamine – a carcinogenic
* Pyrene – a carcinogenic
* Naphthalene – moth repellent
* Cadmium – used in batteries, a carcinogenic
* Carbon monoxide – poisonous gas
* Vinyl Chloride – used in plastic materials
* Cyanhydric acid – was used in gas chambers
* Ammonia – detergent
* Arsenic – lethal poison
* Dibenzacridine – a carcinogenic
* Polonium 210 – a radioactive element
* DDT – insecticide
* Formaldehyde – used as an embalming fluid
Ask a person on the street how or what poisonous chemicals an e-cigarette produces, and they will give you the same puzzled facial expression Mr.Bean has been giving his fans worldwide for the last ten years. Now that we are well acquainted with the toxicities present in cigarettes, lets analyze the containments of e-cigarettes.
Mind Games played by the FDA
So what really is it really about the e-cigarette that makes it so bad, so repelling for the human body as appose to the number one all-time over-the-counter human killer? Well, let’s take a look: E-Cigarette is an electronic device consisting of a battery and a heating element. When activated, the heating element boils a small amount of liquid in the device, creating a vapor, which is then inhaled by the user. The experience of inhaling the vapor closely mimics the experience of inhaling smoke from a regular cigarette.
The liquid and vapor contain three main ingredients: nicotine, propylene glycol, and flavoring.
These three ingredients are also found in regular cigarettes and are known not to be carcinogenic, and are approved by the FDA.
Puzzled? So were we, until we dug further.
Many of you by now must be wondering, well, we’ve seen the hype, we’ve seen the ramblings on message boards and forums, now let’s see some tests conducted on these e-cigs by some sort of reputable sources. Lucky for you we have some really dedicated staff here at TheMarketFinancial.com which spent sleepless days digging up raw data for you to feast your eyes on.
FDA Report Validates Previous Scientific Data. Findings Verify Claims By Manufacturers That Electronic Cigarettes Are Safer Than the Leading Tobacco Brand Cigarette.
On July 22, 2009 the FDA released the results of its own independent study of the electronic cigarette. The findings verify previous test results (1) which validate the electronic cigarette is up to 1,400 times safer than the leading brand of cigarettes. This is GREAT news for Electronic Cigarette users.
Previous studies on the e-cig (verified by the FDA Report) only show that electronic cigarettes contain very low levels (8.2 ng/g) of Tobacco-Specific Nitrosamines versus 11,190 ng/g for the leading tobacco cigarette.
Product NNN NNK NAT NAB Total
Electronic cigarettes (2) 3.87 1.46 2.16 0.693 8.2
Camel (1) 3100 1400 2800 150 7450
Skoal (1) 4500 470 4100 220 9290
Marlboro (1) 4300 1800 4900 190 11,190
(1) Laugesen M. Safety Report on the Ruyan e-cigarette Cartridge and Inhaled Aerosol. Christchurch, New Zealand: Health New Zealand Ltd, 2008. (Link)
Perhaps even more important than the findings of the FDA is what the FDA did NOT find. The test did not reveal any of the 60 other known carcinogens (shown below)2 that are found in traditional tobacco products nor stated any other new dangers or findings that could conclude that the electronic cigarette is dangerous.
2 Known carcinogens found in tobacco cigarettes.
Acetaldehyde Acetamide Acrylamide Acrylonitrile 2-Amino-3,4-dimethyl-3H-imidazo(4,5-f)quinoline (MeIQ) 3-Amino-1,4-dimethyl-5H-pyrido (4,3-b)indole (Trp-P-1) 2-Amino-l-methyl-6-phenyl-1H-imidazo (4,5-b)pyridine (PhlP) 2-Amino-6-methyldipyrido(1,2-a:3′,2′-d)imidazole (Glu-P-1) 3-Amino-l-methyl-5H-pyrido {4,3-b)indole (Trp-P-2 2-Amino-3-methyl-9H-pyrido(2,3-b)indole (MeAaC) 2-Amino-9H-pyrido(2,3-b)indole (AaC) 4-Aminobiphenyl 2-Aminodipyrido(1,2-a:3′,2′-d)imidazole (Glu-P-2) 0-Anisidine Arsenic Benz(a)anthracene Benzene Benzo(a)pyrene Benzo(b)fluoranthene Benzo(j)fluoranthene Benzo(k)fluoranthene Benzo(b)furan Beryllium 1,3-Butadiene Cadmium Catechol (1,2-benzenediol) p-Chloroaniline Chloroform Cobalt p,p’-DDT Dibenz(a,h)acridine Dibenz(a,j)acridine Dibenz(a,h)anthracene 7H-Dibenzo(c,g)carbazole Dibenzo(a,e)pyrene Dibenzo(a,i)pyrene Dibenzo(a,h)pyrene Dibenzo(a,i)pyrene Dibenzo(a,l)pyrene 3,4-Dihydroxycinnamic acid (caffeic acid) Ethylbenzene Ethylene oxide Formaldehyde Furan Glycidol Heptachlor Hydrazine Indeno(1,2,3-cd)pyrene IQ 92-Amino-3-methyl-3H-imidazo(4,5-f)quinoline) Isoprene Lead 5-Methyl-chrysene 2-Naphthylamine Nitrobenzene Nitrogen mustard Nitromethane 2-Nitropropane N-Nitrosodi-n-butylamine (NDBA) N-Nitrosodi-n-propylamine (NDPA) N-Nitrosodiethanolamine (NDELA) N-Nitrosodiethylamine (DEN) N-Nitrosodimethylamine (DMN) N-Nitrosoethylmethylamine (NEMA, MEN) 4-(N-Nitrosomethylamino)-1-(3-pyridinyl)-1-butanone (NNK) N’-Nitrosonornicotine (NNN) N-Nitrosopiperidine (NPIP, NPP) N-Nitrosopyrrolidine (NPYR, NPY) Polonium-210 (Radon 222) Propylene oxide Safrole Styrene Tetrachloroethylene o-Toluidine (2-methylaniline) Trichloroethylene Urethane (carbamic acid, ethyl ester) Vinyl acetate Vinyl chloride 4-Vinylcyclohexene 2,6-Xylidine (2,6-dimethylaniline)
Dr. Michael Siegel MD, Boston University states “The FDA and anti-smoking groups are comparing electronic cigarettes to a solution of spring-fresh Maine mountain stream water. What they need to compare electronic cigarettes to is something known as a Marlboro cigarette.”
Dr. Siegel continues, “In addition, recent research conducted by Dr. Murray Laugesen and Health New Zealand, LTD. reveals that the toxic emissions score for electronic cigarettes is much lower than that of conventional cigarettes. In fact, the toxic emissions score – which is a score based on the levels of 59 priority toxicants was zero for electronic cigarettes. In contrast, it was 126 for Marlboro and it was no lower than 100 for any brand of conventional cigarette tested.”
Testimonials Regarding E-Cigarettes
Though there are many different sites offering a wide variety of testimonials regarding this product, we would like to highlight one story which captured the heart of our entire staff here at TMF:
The article introdues a woman named Sharon Bosworth, a chronic smoker who has tried just about every known anti-smoking aid on the market. “Sharon Bosworth is running out of ways to break the grip of the cigarette. Suffering from emphysema, the Overland Park woman, 51, has tried gum, the patch and even classes on how to quit. Now she is turning to a cigarette for the 21st century, one that relies on electricity, batteries and liquid nicotine instead of matches, fire and tobacco.”
It is both compelling and informative, offering a true sense of the potential exhibited by this marvelous innovation.
To read the full story, “The E-cigarette Lights Up a Debate”, follow this link.
One Company Already Experienced Explosive Sales After the Ruling
As with any investment decision, the competitive environment is among the top of the quintessential factors to be considered. Thus, it is not surprising we take a look at a recent press release made by E Cigarettes National, in which they claim that customers have been in a frenzy over the product.
The e-cigarette has been flying off of the shelves over the last week, likely due to a recent decision by a federal judge that blocked the FDA from stopping shipments of the new alternative to tobacco that is making waves across the US and around the world.
“I did not want to make the investment in them and then have them banned, and no way to get the refills for them,” states Judy Durhan of Tennessee. “So I waited for the ruling to make sure I was not wasting my hard earned money to turn around and lose it. Thank God this federal judge made the decision in e-cigarettes’ favor.”
According to Tiffany Ellis of E Cigarettes National, this is a common story they get from customers that have been on the fence over the electronic cigarettes legal issues. “We believe that now we can sell our product in peace while the remainder of the process is completed in a court of law, and we also believe that the e-cigarette, like our Firelight e cigarette kits, will continue to be sold to the public as a tobacco product or tobacco alternative. Our brand has seen a considerable jump in sales and we expect this trend to continue as more and more smokers make the switch and more people learn about them.”
Another reason E Cigarettes National may be seeing an increase in sales is the popular Firelight series of e-cigarettes that add many extras at a much lower price point than most of the competitors online and at retail locations across the US. With this kit being just under 50 dollars, this may be a determining factor in the sudden increase in the sites popularity.
FDA Finally Coming to Terms?
In a recent headline which made news around the world, the FDA seems to at last come to grips with reality and do that which they are supposed to do, care for its own people.
U.S. regulators are working to lift the smokescreen clouding the ingredients used in cigarettes and other tobacco products.
In June, tobacco companies must tell the Food and Drug Administration their formulas for the first time, just as drugmakers have for decades. Manufacturers also will have to turn over any studies they’ve done on the effects of the ingredients.
It’s an early step for an agency just starting to flex muscles granted by a law that took effect last June that gives it broad power to regulate tobacco far beyond the warnings now on packs, short of banning it outright.
To read the full story entitled, “Tobacco Companies Must Reveal Ingredients, Formulas to FDA”, visit this link.
The Future of Mobile Medial Holdings
It is undoubetly certain this company has a bright future ahead of itself. As Robert Paterson, President of TzuFuma Inc. stated in a recent phone interview, “We anticipate gross revenues from domestic sales to be in the region of 12-14% of our total gross revenue for fiscal 2010. We fully anticipate 2010 to be a bumper year.” TzuFuma’s unaudited financial statements for the period of 2nd Qtr-4th Qtr 2009 is expected to be released in early 2010, leaving much excitement for current shareholders as they anticipate sales figures to beat last year’s in light of the recent developments.
With $5,000,000* (Five Million USD) (*unaudited) in gross sales over the last year, as per TzuFuma’s 11/01/09 Summary of Business Operations, the company has a solid amount of liquid assets to sustain strategic business opportunities for the months ahead. Advertising campaigns, distribution channels and labour costs should all be covered under their current revenue model, paving the way for a prosperous new beginning in 2010.
Dislcosure: Long MMUH
TheMarketFinancial is not paid, compensated or in any way incentivized to report news and developments about publicly traded companies, unless otherwise stated.

Avatar cigarette remark lights up smoking debate

Along with buckets of money — more than $1.6 billion so far, worldwide — and a couple of Golden Globes, James Cameron’savatar “Avatar” has collected a smattering of controversy. Some of the hue and cry has involved matters of political allegory and theological implication.
But the fiercest attack on “Avatar” has focused on what may seem, compared to such lofty matters, like a minor detail — a line uttered by Grace Augustine, the scientist played by Sigourney Weaver, demanding to know where her cigarette is.
In the view of anti-smoking activists, the correct answer should be: Nowhere, at least not in any real or imaginary world governed by a PG-13 rating. The logic of the Smoke-Free Movies campaign, which seeks an R rating for almost all instances of on-screen puffing, is straightforward enough. If the Motion Picture Association of America’s ratings board advises parents about sex, violence, language and drug use, why should it not also shield children from exposure to a lethal (if legal) product that hooks, sickens and kills hundreds of thousands of people a year? Since 2007 the MPAA has considered smoking when it makes its judgments, and one studio, Disney, has since then made all its family films smoke free.
In the movie-smoking debate, even clear positions — that children must be protected from images that might influence their behavior, or that filmmakers should be immune from censorship and interference — tend quickly to be fogged with questions of context and nuance. That is because underneath the public discussion about smoking (or gun violence, or sexual promiscuity, or whatever social problem has seized the momentary spotlight) is another, much more confused discourse: about movies and about the ways they mirror and occlude reality.
Social scientists doggedly pursue evidence of correlations between on- and off-screen behavior, while some commentators insist that no such connections could possibly exist. In recognition of the unique and dazzling impact of an art form that is also a mass medium compounded of big pictures and good-looking people, movies have always attracted the attention of censors. In the United States, regulation has been voluntary, a way for private enterprise to forestall the interference of the government. Elsewhere the state weighs in, either with outright prohibitions on certain content or with restrictions on who can see what.
Hollywood’s self-imposed system has tried both approaches. From the mid-1930s to the mid-’60s the Production Code kept a tight rein on what all audiences could see, and promised that “no picture shall be produced that will lower the moral standards of those who see it.” It is easy enough, in retrospect, to laugh at the starchy Victorianism of that language. But at the same time the idea that movies might ennoble their audiences and even improve us as we watch them, affirms a faith in cinema that is almost Utopian.
The code may have withered, but the ideal of movies as a universal and fundamentally benign form of entertainment has hardly gone away, and is indeed what informs many of the efforts to broaden and strengthen the ratings system.
In 2154, when “Avatar” takes place, it is possible that tobacco use will no longer exist. But if movies are still around, there will still be arguments about what they should be showing, and to whom. Such arguments are built into the medium and our complicated bond with it. We want movies to acknowledge what is real, but also to improve on reality, to give us a vision of a perfect world in which everything is permissible — a world that’s sexy, dangerous, scary and smoky and safe for children, too.
A.O. Scott / New York Times

Tax and Spend: U.N.'s Rx for New World Medical Order

A member of a World Health Organization (WHO) panel of experts that is pondering new global taxes on e-mails, World Health Organizationalcohol, tobacco, airline travel and consumer bank transactions, has charged that she was given only selective information at group meetings, that deliberations were rushed and that group was “manipulated” by the international pharmaceuticals industry.
All of her charges were strongly denied by the head of WHO’s Expert Working Group on Research and Development Financing (EWG), a 25-member panel of medical experts, academics and health care bureaucrats which is due to present a 98-page report in Geneva on Monday, after 14 months of deliberations on “new and innovative sources of funding” to reshape the global medical industry.
A copy of the executive summary of the report was obtained by Fox News on January 15 — the same day, as it happens, that the EWG’s dissident member first aired her charges in a letter to members of WHO’s 34-member supervisory Executive Board.
The executive summary first revealed the possibility of a multibillion-dollar “indirect consumer tax” as one means of financing an epic shift of drug-making research, development and manufacturing capabilities to the developing world that is the central aim of WHO’s fund-raising strategy.
Fox News has obtained a copy of the full EWG report, Research and Development: Coordination and Financing, in advance of its publication Monday, which lays out in greater detail the working group’s proposals for fund-raising. These include not only indirect consumer taxes but also greater donations by wealthy governments as a percentage of gross domestic product, voluntary individual payments tied to such things as individual mobile phone use, health care lotteries, new commitments from charitable and philanthropic organizations, and the possible diversion of current philanthropic giving from developed-world causes into developing world health care.
The report lays out, and generally endorses, a number of public-private partnerships in the developing world with some of the world’s biggest pharmaceutical firms. But it also raises the idea of a tax on pharma-profits from low-income countries that could raise as much as $160 million a year.
The report labels that tax idea a “particularly attractive” option for funding health research and development, and says that revenues from it would “rise considerably if the profits from one or more high income countries was included.”
One dissident member of the working group, Cecilia Lopez Montano — a federal senator of Colombia and former national environmental minister — insisted that working sessions of the group she attended were truncated, that her suggestions of looking critically at intellectual patent rights held by Big Pharma companies were ignored, and that neither she nor “the majority of the members of the group” actually participated in the findings “in a full manner.”
In a telephone interview on Thursday with Fox News, Lopez Montano declared that she did not “understand, if we are talking about getting cheaper medicines for poor people, how we could discuss this without talking about intellectual property rights.”
Frustrated, she says, she walked out of the group’s last working session in December 2009, and did not return.
“The only comment I would make for public consumption is that her allegations are completely unfounded,” replied the EWG chairperson, Sir George Alleyne, to an email query by Fox News about the incident. A tropical medicine specialist from Barbados who served as a onetime U.N. Secretary-General’s special envoy for HIV/AIDS in the Caribbean, Alleyne wrote that “to my knowledge, not a single member of the group has associated himself or herself with her comments.”
The tempest created by Lopez Montano’s accusations is liable to fade quickly as people around the world — especially Americans, who are far and away the world’s biggest funders of medical research and development — absorb the variety of the EWG’s revenue ideas and the full extent of WHO’s ambitions to reshape the international health care industry in favor of research and development for the “neglected” diseases of developing countries.
The full EWG report lays out in some detail a battery of other possible consumer taxes on citizens of rich countries for such things as alcohol and tobacco use, weapons sales, and airline travel, to create a burgeoning medical R&D industry spread across the developing world.
A 5 percent to 10 percent increase in alcohol taxes in developing countries, it notes, could raise anywhere from $5.5 billion to $11 billion per year.
It also cites approvingly a 0.38 percent Brazilian tax on bills paid online and unspecified “major withdrawals” that was raising an estimated $20 billion a year before it was revoked. “There is scope globally for expansion of bank transaction taxes,” the report notes.
The Internet or “digital” tax offered up as an example by the EWG would amount to 1 cent per 100 emails, yielding a conservative $3 billion a year. It “might be appealing to politicians and consumers, who will accept a low tax across a broad base with an altruistic purpose.” But almost in the same breath, the document observes a complication, that “introducing a new tax or expanding an existing tax may require legal changes, nationally and internationally, and ongoing regulation to ensure compliance.”
Getting mobile phone users to sign up for a voluntary medical fee per call could yield anywhere from $280 million to $1.8 billion, depending on the tax bite and the consumer enthusiasm for the idea, while a voluntary fee tied to airline ticket purchase, the document says, could raise nearly $1 billion.
The report estimates WHO would raise $7.4 billion a year if donor nations hiked their percentage of GNP targeted on the new health care model. But the report still holds out hope for substantially more money if “donors diverted current financial support” from medical research that meets their own current requirements to WHO’s agenda.
After itemizing all those potential sources of new money, however, the report suggests that only a “balance” of options be selected, which it projects would amount — again, conservatively — to about $4.6 billion a year. That would “nearly triple current research and development funding for neglected diseases in developing countries.”
How would all the money be channeled? Mainly, it appears, through institutions that in many of cases have close ties with WHO.
The report that will be released Monday suggests that a global blossoming of developing-world research networks, many of which appear to be rapidly sprouting up in tandem with WHO’s efforts to create new ways of financing them, could be “coordinated” via an “effective global health governance structure” by WHO itself — an organization whose 34-member executive board is made up largely of non-elected health bureaucrats from around the world.
Funding for the burgeoning medical research industry would be dispensed by a not-yet-created “global health research and innovation, coordination and funding mechanism.”
The new money-dispensing machine would ladle out funds for “new drugs, vaccines, diagnostics and intervention for the poor, as well as medical research in low- and middle-income countries, new centers for the collection and analysis of research and development data, and new authority to distribute research assignments among public and private entities.
Its estimated cost, in the early stages: anywhere from $3 billion to $15 billion per year.
Many of the new parts of the proposed medical industry network in developing countries would also appear, according to the report, to be fostered by WHO itself, with collaboration from other parts of the United Nations’ system of funds, programs, agencies and other institutions.
The report singles out favorably, for example, a new and fast-growing group of research institutions known as the African Network for Drug Discovery and Innovation (ANDI), launched in 2008. ANDI was created under the auspices of an institution known as TDR, a tropical disease research program that is part of WHO, and is now jointly sponsored by WHO, UNICEF, the United Nations Development Program, and the World Bank (also a U.N. institution).
According to the EWG report, networks like ANDI, which could involve a welter of local public and private financing, government participation, international agencies and global pharmaceutical firms, could not only coordinate regional research policy in such areas as traditional African medicine, but also fund-raise, allocate funds between different developing countries in Africa, and work to harmonize local medical regulations.
It would all be, as the report puts it: “a multi-level, multi-party, multi-purpose partnership for global health governance, a platform coordinated by WHO and supported by high-level political commitment and policy coherence.”
Not by coincidence, new health research networks like ANDI cropped up in 2008 — at about the same time that WHO’s legislative World Heath Assembly adopted a global strategy and plan of action that mandated the organization, as the EWG report puts it, to “play a strategic, central role in the relations between public health and innovation and intellectual property.”
Among other things, that meant driving the global health-care agenda “to promote a new approach to innovation and access to medicines, which would encourage needs-driven rather than market-driven research.” The aim: “to target diseases that disproportionately affect people in developing countries.”
Behind that new direction is the U.N. organization’s belief, evidently shared by many medical researchers, that medical research and development in rich countries aims to cure the ailments of their rich citizens, while the diseases that afflict poor nations, like malaria, tuberculosis and HIV/AIDS, are “neglected.” Even when the medicines are appropriate, the EWG report relates, they are too expensive.
“In 56 of the 58 countries in which the bottom billion [poorest people] live, virtually every person has at least one neglected tropical disease,” the report states. It adds that “95% of the 33 million people living with HIV are in low- and middle-income countries (68% in sub-Saharan Africa), and 27% of new cases and 31% of registered deaths from tuberculosis were in Africa.”
Only a massive shift in research and development capacity to low- and medium-income countries — fueled by funds from rich ones — will correct that imbalance, the report, and the WHO strategic plan, argue.
The EWG report maintains that argument even as it also reveals that poor countries are increasingly afflicted with the same non-communicable diseases as rich ones: cancer, cardiovascular ailments, diabetes. Indeed, the report cites a projection that $84 billion in lost income will result between 2006 and 2015 in 23 low- and middle-income countries as a result of heart disease, stroke and diabetes alone.”
Regardless of the afflictions, the WHO remedy remains “the production of new knowledge, especially through the investments in research and development.” Especially under the many-faceted initiatives of WHO.
George Russell, Fox News
January 22, 2010

Cigarette Smoking During Pregnancy

Pregnancy is a wonderful and mysterious period in every woman’s life. The expectation of a miracle that will become the sense of pregnancy smokingyour life, who will be all for you and, finally, who will change completely your life is impossible to describe. Still, it is quite difficult state. During this period of time, woman has to think not only of herself but also of her baby. Women give up their vicious habits in favor of their future baby. Unfortunately, nowadays there are many women who do not seriously take their situation and continue to live their previous life.
Smoking is the most frequent pernicious habit among pregnant women. Regardless, the harm which smoking causes to person’s health, the percentage of women-give-up-smoking-harder considerably increased. Although smoking affects either mother’s health or her future baby, just 20% of women give up this drug during pregnancy.
If mother puffs during her pregnancy, this may lead to awful consequences for baby’s health, as in the physiological aspect so in the mental one. The most visible result of smoking during pregnancy is small-for-date-fetus development, in simple words, the height and weight decreasing of fetus. It is connected with smoking occur various abnormalities in placenta, thus, fetus receives less oxygen and nutrients. The more smoke is inhaled by mother, even if she doesn’t smoke herself but is often in smoky room, the more is expressed the level of baby’s hypotrophy.
Babies, whose mothers are exposed to smoking, suffer from colic in gastrointestinal tract twofold more often than those of non-smoking ones.
The research people from South California University discovered that children, whose mothers and grandmothers smoked, have risk of asthma appearance. This risk increases in 1.3 times even though only mother had smoked, in 1.8 times- if smoked only grandmother and in 2.6 times scales up in case both mother and grandmother smoked during pregnancy.
The scientists of Western Australia University measured children’s concentration of some important proteins in immune system. And they found out the significant lack of two substances, which respond for the acquired immunity formation to allergens in those children, who were exposed to nicotine in mother’s womb.
Smoking during pregnancy enhance the risk of miscarriage and loss of baby, in other words, it contributes to misbirth.
Because of woman’s unwillingness to quit smoking, many babies are born with heart birth defects, brain defects, mental abnormalities.
The international research group from Amory University, Atlanta, state Georgia, disclosed a link between the pregnant women smoking and the subsequent tendency to criminality. They generalized the data about 4 thousand men, who were born in Copenhagen during the period September 1951 to December 1961 and their arrest history. It was found that those men, whose mothers smoked being pregnant, twofold more often found themselves in jail for crime of violence.
We can provide lots of facts referring smoking impact on pregnant women, as the similar examples are infinite set.
So, if you desire to give birth to healthy baby without any aberrations, you just need to give up this smoking addiction as early as possible. The health of your future baby depends only on you!

Smoke-Free Policy Triggers Strange Debate

The decision by a Tennessee hospital not to hire smokers is apparently provoking some controversy, even though both private firms and governmental bodies have been doing it for more than 30 years, several courts have held that it is both legal and constitutional, and an ever growing number of major companies have similar policies, says public interest law professor John Banzhaf, the father of the movement who recently debated the issue on Fox News.
The major incentive for a smoke-free (like a drug-free) workforce is generally that hiring an employee who smokes, even if only at home, imposes huge and totally unnecessary additional costs on the company for health care, disability, absenteeism, lost time for smoke breaks, etc. This total cost averages $12,000 a year per smoker, according to a court which heard testimony under oath in a case in which Banzhaf was involved, and which ruled that the plan was perfectly legal.
If companies hire smokers, these huge additional expenses mean less money for other employees in the form of health insurance, salary, and other benefits — which unfairly forces nonsmokers to subsidize the deadly habits of a small minority (about 19% of adults). Perhaps telling prospects that they may not have a job if they continue to smoke is simply one way of finally imposing personal responsibility on them for the consequences of the risky behavior, suggests Banzhaf.
The hospital is primarily concerned about its health message and mission. A hospital employing smokers sends the wrong message, suggests Banzhaf, and is akin to an animal welfare group employing hunters or a women’s rights group hiring guys who attend strip shows. Indeed, patients are increasingly complaining about seeing employees in hospital garb smoking around hospital entrances, or being nauseated by the smell of tobacco smoke on their persons inside the hospital, he says.
Under our free enterprise system, the companies which create jobs are largely free to set the employment criteria. The marketplace then determines if the decision is a wise one — something which is obviously happening, since more and more firms now hire only nonsmokers, either openly or without public announcement.
The common exceptions to the rule — prohibiting hiring criteria based upon race or gender — occur only because these are immutable characteristics, and because there is no logical reason not to hire a black or a women. But smoking is a habit and a choice, and saving $12,000 per employee is a very logical reason to prefer nonsmokers. If hospitals can be forced to hire smokers, then presumably smokers’ rights groups might have to hire nonsmokers as their spokesmen or role models.
Many firms restrict what employees can do off the job if they believe their actions will adversely affect the company. Major media organizations, for example, frequently prohibit their employees, even in their off hours, from going on junkets or accepting valuable gifts, or even participating in demonstrations about controversial issues like abortion — even though the latter involves freedom of speech. In contrast, courts have repeatedly held there is no legal right to smoke.
In the Fox debate it was suggested that the country’s smokers would soon wind up on unemployment lines. But most smokers already wish to quit, and many no doubt would quit if necessary to gain employment. After all, many workers are already being forced to relocate, spend weekends away from families, take a cut in pay, or even give up tenure to work at a major hospital. Giving up a deadly habit is a much smaller price to pay for good employment, suggests Banzhaf.
Some states do have laws which purport to prevent companies from insisting on a smoke-free workforce, but they are virtually never enforced, says attorney Banzhaf who heads an antismoking organization. Moreover, most have such big loopholes that any company which wants to hire only nonsmokers can easily do so, as both Banzhaf and the American Medical Association recently pointed out. www.pr-inside.com/smoker-discrimination-laws-easily-evaded-r1632 ..
“Smokers should accept the fact that there is no legal or moral right to smoke, and to force others either to put up with their secondhand smoke or the huge costs their smoking imposes on others. Stop whining about ‘discrimination’ when companies make perfectly logical decisions not to hire people whose personal choices impose huge unnecessary costs on the firm and its nonsmoking employees! It’s time to begin accepting personal responsibility,” argues Prof. Banzhaf.
Action on Smoking and Health (ASH) is America’s first antismoking and nonsmokers’ rights organization, and the one primarily responsible for starting the nonsmokers’ rights movement in the U.S., and more recently in promoting smoking bans in many foreign countries
PROFESSOR JOHN F. BANZHAF III
Executive Director and Chief Counsel
Action on Smoking and Health (ASH)
America’s First Antismoking Organization
2013 H Street, NW
Washington, DC 20006, USA
(202) 659-4310 ** ash.org