New Insights into The Global Tobacco Wars – Big Tobacco and Farmers Seek to Continue Sellings

Last week brought new insights into the global tobacco wars. The insights are contained in information from four sources:

1) the US Food and Drug Administration’s proposed new visual warnings for cigarette packages (click here to go to zipped package of the pictures)

2) Duff Wilson’s Sunday front page NYT article detailing tobacco regulation litigation around the globe;

3) this Foley Hoag media piece regarding Uruguay retaining the law firm to defend it in a lawsuit filed by tobacco industry members; and

4) this international treaty aimed at reducing the devastating human and financial tolls inflicted by sales of the packaged carcinogens commonly referred to as cigarettes.

According to Mr. Duff’s article, “Uruguay’s groundbreaking law mandates that health warnings cover 80 percent of cigarette packages. It also limits each brand, like Marlboro, to one package design, so that alternate designs don’t mislead smokers into believing the products inside are less harmful.” According to Foley Hoag, the litigation against Uruguay “was initiated by FTR Holdings SA, a Swiss conglomerate that owns fellow plaintiffs Philip Morris as well as Abal Hermanos SA, the second-largest Uruguayan tobacco company.”

The big picture? Big tobacco, aided by tobacco farmers, has created a vast network to execute its strategy. The strategy? Four steps. First, sell packaged carcinogens to the addicted, uninformed and ignorant of the world. Second, maintain the ability to sell by seducing governments with tax revenues or bludgeoning governments with litigation when meaningful regulations are imposed. Third, hire really smart litigation lawyers and settle litigation with agreements which perpetuate the opportunity to sell cigarettes. Fourth, create a vast web of corporate entities structured and operated to limit the assets reachable by disease victims, with litigators keeping the companies free of massive losses; losing slowly and in small amounts is acceptable because the companies remain wildly profitable.

Fighting back are some national governments, but many are woefully too small to effectively argue with big tobacco. 1As detailed by Mr. Duff, 171 countries meet this week in Uruguay to try to counter big tobacco. As detailed in an NYT article linked below, “the conference beginning on Monday in Punta del Este, Uruguay, will try to add specific terms to a public health treaty known as the Framework Convention on Tobacco Control, which since 2003 has been ratified by 171 nations. It would eventually oblige its parties to impose tighter controls on tobacco ingredients, packaging and marketing, expand cessation programs and smoke-free spaces and raise taxes — proven tactics against smoking.”

The stakes are enormous in both lives and dollars. Globally, millions die every year from tobacco. WHO foresees 8 million annual tobacco cancer deaths by 2030. And, as described in this prior post, The American Cancer Society estimates that tobacco-caused cancer deaths impose annual direct and indirect global economic costs of between $1.5 and 2 trillion. Remember, that’s an annual number. No doubt it’s also too low because most cancer victims are left to die with no real fight to save them because their countries lack the necessary medical infrastructure.

What is the US doing? Not enough. In the US, we face daily headlines regarding medical care costs bankrupting companies and governments. Accordingly, one would think the United States would do all it can to stamp out sales of the leading and obvious cause of rampant, expensive diseases. But that’s not been the case. President Bush focused his eight years on escalating multiple wars, but never found the time or courage to escalate the war against cancer deaths and big tobacco. “President George W. Bush signed the treaty in 2004 but did not send it to the Senate, where a two-thirds vote is needed for ratification. President Obama hopes to submit it to the Senate next year, a White House spokesman said on Thursday.” (The betting window is open as to the votes of tobacco state senators, and some but not all of their Blue Dog brethren.)

Additional specifics follow, beginning with big picture information provided by Mr. Duff’s article, and concluding with specifics on big tobacco’s – shameful – litigation against Uruguay.

NYT Excerpts

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“They’re using litigation to threaten low- and middle-income countries,” says Dr. Douglas Bettcher, head of the W.H.O.’s Tobacco Free Initiative. Uruguay’s gross domestic profit is half the size of the company’s $66 billion in annual sales.”

But Philip Morris International, the separate company spun out of Altria in 2008 to expand the company’s presence in foreign markets, has been especially aggressive in fighting new restrictions overseas.

It has not only sued Uruguay, but also Brazil, arguing that images the government wants to put on cigarette packages do not accurately depict the health effects of smoking and “vilify” tobacco companies. The pictures depict more grotesque health effects than the smaller labels recommended in the United States, including one showing a fetus with the warning that smoking can cause spontaneous abortion.

In Ireland and Norway, Philip Morris subsidiaries are suing over prohibitions on store displays.

In Australia, where the government announced a plan that would require cigarettes to be in plain brown or white packaging to make them less attractive to buyers, a Philip Morris official directed an opposition media campaign during the federal elections last summer, according to documents obtained by an Australian television program, and later obtained by The New York Times.”

Foley Hoag Excerpts

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In a first-of-its-kind case focusing on areas of conflict between a nation’s tobacco control regulations and the treaty rights of a multinational corporation, the government of Uruguay has retained Foley Hoag LLP to represent it in an arbitration case brought by Philip Morris, at the International Centre for Settlement of Investment Disputes (ICSID).

The Foley Hoag team is led by international law specialists and Washington-based partners Paul Reichler and Ronald Goodman.

The current ICSID arbitration was initiated by FTR Holdings SA, a Swiss conglomerate that owns fellow plaintiffs Philip Morris as well as Abal Hermanos SA, the second-largest Uruguayan tobacco company. The cigarette manufacturers contend that Uruguay’s restrictions on sales and marketing of tobacco products, violate the bilateral investment treaty between Switzerland and Uruguay by harming the companies’ business operations and trademarked brands.

Uruguay enacted the measures as part of a broad effort to safeguard and enhance public health. In 2005 it became one of 170 countries to sign the World Health Organization’s Framework Convention on Tobacco Control, a global initiative to reduce or eliminate tobacco use. Soon after, the Uruguayan government introduced restrictions on cigarette marketing and packaging, including:

Limiting each brand of cigarette to a “single representation,” that is, forbidding multiple iterations of a brand such as “light,” “menthol,” etc.;

Requiring pictograms on tobacco packages to graphically illustrate the possible adverse health effects of sustained tobacco use;

Mandating that 80 percent of the surface area of cigarette packages be covered with health warnings to consumers.

Cigarettes sold in Uruguay include such well known Philip Morris brands as Marlboro and L&M, as well as locally made Casino and Premier brands. As a result of the regulations Philip Morris has ceased marketing Marlboro varieties called “Gold,” “Green (Fresh Mint),” and “Blue.” The claim alleges that the government’s actions violate both the 1988 Switzerland-Uruguay bilateral investment treaty and international law, by imposing unreasonable restrictions and subjecting FTR and its subsidiaries to unfair treatment.

Mr. Reichler believes the plaintiffs have targeted Uruguay as a test case. “Our view is that Philip Morris is hoping to use this case to deter not only Uruguay but other signatories to the WHO’s Framework Convention from taking effective measures to safeguard the public health against the known hazards of tobacco consumption,” he said.

“Sovereign states are normally given wide discretion in enacting legislation or promulgating regulations to protect and promote public health,” Mr. Reichler noted. “Indeed, that is one of the fundamental aspects of sovereignty. This is not a case of economic regulation, but of government action strictly in the name of public health.”

Mr. Goodman said, “Uruguay’s regulations are aimed at tobacco products which, it is scientifically proven, kill people or cause grave illnesses to those who smoke and to those around them. Because of the widespread illness, disease and mortality created by smoking, tobacco products impose tremendous burdens on a country’s public health system. In many countries the state pays for or subsidizes the care and treatment of sick people. The financial burdens on states caused by smoking are enormous.”

“Philip Morris and its associated companies are challenging the right and discretion of Uruguay to make its own determination on how to protect public health – which in our view is a sovereign right that no private company can overrule,” Mr. Goodman added.

The Campaign for Tobacco-Free Kids, a U.S.-based research and advocacy organization funded by the Bloomberg Foundation, has agreed to help finance Uruguay’s defense.

The arbitral tribunal will be comprised of one arbitrator selected by each side and a third whom the parties agree on.

Philip Morris is represented by the Swiss firm Lalive

#Tobacco

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Since becoming a lawyer in 1983, Kirk’s over 30 years of practice have focused on advising a wide range of corporations, associations, and individuals (as both plaintiffs and defendants) on both tort and commercial law issues centered around “mass torts.”

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