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Food & Drug Insider Report • March 21, 1994 Volume 4, No. 5 Who is Happiest Politician in Washington Over Whitewater? Alfonse D'Amato - Newt Gingrich - David Kessler? . Inside the Insider Report • Whitewater Drowns Clintons, Buoys Up Kessler : . . . . . . . . . . 1. . 2 Hillary Clinton Drug Stock Investments Under Scrutiny. . . . . . . 5 Federal Register Notices ....... 6 Kessler Gets Low Job Approval Ratings ......... 10 FDA Insider Report FAXPoll ..... 12 For Your Subscription Call (703) 709-1224 Fax (703,} 709-1225 Capitol Insiders, Inc. P.O. Box 1846, Herndon, Virginia 22071 , K.R. Pearson, Publisher and Editor

N March 21,1994 ~ Page 2 Volume 4, No. 5 Whitewater Drowns Clintons, - Buoy's Up Kessler Whenever you make a colossal mistake, the first thing you hope is that nobody saw you make it. Your second wish, and it is one that often is nothing more than a fantasy, is that the error will not be noticed because someone else has committed an even bigger blunder that makes your mistake seem small and trivial by comparison. David Kessler had his fantasy come true when he stepped into quicksand with the nicotine issue, only to have the whole controversy play out against the backdrop of an ever-expanding Whitewater controversy that has immersed Bill and Hillary in their own problems. It would be difficult to argue that anyone in Washington might be happier than Senator Alfonse ~ D'Amato (R-New York) or House Whip Newt Gingrich (R-Georgia) over the now roaring Whitewater river of controversy. But just as the Whitewater mess was building to critical mass and threatening to flow over its banks, David Kessler jumped head first into his own whirlpool of controversy. Kessler penned a letter to an anti-smoking activist in which he offered the opinion that cigarettes may be considered to be drug-delivery devices subject to the full regulatory weight and authority of FDA. Kessler's claim for such oversight is premised on reports that cigarette manufacturers have been modifying nicotine levels in their products to maintain addictive levels. But a typically sordid tale is now emerging about why this long-simmering issue has been placed squarely on the front burner at FDA. ~ Day One, an ABC news magazine show, had reportedly been attempting to convince Kessler to agree to an interview on a story they had been researching on artificial manipulation of nicotine levels by cigarette manufacturers. FDA Insiders in the Commissioner's Office report the initial reaction by advisors was to keep Kessler away from this issue because it is far too explosive an issue politically. Day One producers took the unusual step of sharing the research data they had accumulated as an inducement for Kessler to grant them an interview. The conflict within FDA was a classic one. Staffers quickly picked sides and began to develop arguments to support their respective positions. Risk analysis evaluations were made weighing the relative hazards versus rewards of taking one position or another. Policy wonks engaged in numerous debates trying to refine a recommendation, and the issue soon became all-consuming among top staffers at FDA. This process does not, as one might easily conclude, describe the process by which a policy position is developed at FDA. The issue focused solely on the merits and disadvantages to David Kessler personally of appearing on the show to discuss allegations of nicotine manipulation by cigarette manufacturers. Concerns about the public health were simply not a part of the debate. In the end, a compromise was reached and a delicate game plan was developed to implement a protective public image strike for Commissioner Kessler. A key part of that strategy was to determine the timing of the Day One story. One staffer claimed his impression was the story was going to air ©Copyright 1994 CAPITOL INSIDERS, Inc. - PHOTOCOPYING ILLEGAL 2046 9-3-n95

. ~ • S Marcll 21, 1994 within days, and so the gears of the public relations team at FDA kicked into high gear. A call was made to Day One to ask about the proposed date of airing for the story. The FDA staffer called on Thursday, February 24 under the guise of checking whether time remained for Kessler to be interviewed. Day One jumped at the bait, and confirmed the story was going to air on Monday. That required FDA to push for approval of the letter to the anti-smoking group for release the next news day, Friday. Waiting for release until the following Monday would not provide sufficient cover for Kessler when the Day One story might raise questions why Kessler was not acting on the information the story contained damning the cigarette industry. In advance of the letter being released, calls were placed to producers of news shows and newspapers to assure the story would be given high priority. When FDA released the Kessler letter on Friday, Kessler had seized the high ground of claiming a deep concern for the public health interest, but was deferring to the U.S. Congress for authority to proceed against the tobacco industry. It was, from a purely political standpoint, a master stroke of genius for Kessler. But no (continued on page 5) Page 3 Smoking Out the Story Washington Post, 3/3/94 Howard Kurtz Volume 4, No. 5 The Food and Drug Administration has used a neat bit of spin control to beat ABC at its own game. "Day One," the ABC magazine show, had spent almost a year investigating allegations that tobacco companies artificially manipulate the nicotine levels in cigarettes to increase their addictive quality. ABC reporters shared their findings, disputed by the industry, with the FDA months ago in an effort to land an interview with Commissioner David Kessler. Kessler, undoubtedly concerned about the issue's political sensitivity, declined repeated requests to appear on camera. But last Thursday, according to ABC sources, a top Kessler aide called "Day One" and asked if the cigarette segment was set for the following Monday. ABC confirmed that it was and began promoting the story that night. On Friday, the FDA released a Kessler statement announcing that the agency is prepared to consider regulating tobacco products on grounds that manufacturers may intend to use the nicotine content as a drug. Rather than appearing defensive on television, Kessler reaped plenty of favorable publicity, including front-page stories in the New York Times and Los Angeles Times and similar reports in The Washington Post, the Washington Times, Newsday and the Wall Street Journal, and on ABC's "World News Tonight" and "NBC Nightly News." Some ABC staffers were, well, smoking mad. Correspondent John Martin told viewers that the FDA had issued its statement after "learning of our'Day One' broadcast tonight." "While I wish the FDA would not have tried to steal our thunder, I'm not angry at them," said Walt Bogdanich, the former Wall Street Journal reporter who produced the "Day One" piece. "I wish they would have gone on the air with us. But that doesn't mean I don't greatly admire what they've done." Cliff Douglas of the American Cancer Society, a key source for the ABC broadcast, said the FDA "did not want a TV program to beat them to the punch. They did everything they could to get this letter together and run it by the White House before ABC ran its program. It was a preemptive strike." But FDA spokesman James O'Hara said that "this issue was being debated within the agency before we were contacted by ABC... . We just wrote the letter when we were ready to write the letter. The timing of the letter and the show are coincidental." ©Copyright 1994 CAPITOL INSIDERS, Inc. - PHOTOCOPYING ILLEGAL 2046936"794

t 1 • • Mar!qh.21,1994 "C . Page 4 Scheming and Scamming at the FDA Washington Times, 3/6/93 Editorial Page It definitely was not a good week for smokers. First, McDonald's announced it would ban smoking in all of its 1,400 company-owned restaurants. Then U.S. Surgeon-General Joycelyn Elders unleashed another of her broadsides against smoking, this one aimed at young people who light up. Finally, the Food and Drug Administration, not to be outdone by Ronald McDonald and Dr. Elders, came up with a devilish stratagem to increase its own power and interfere even further with the private preferences of smokers. Indeed, the FDA plan threatens to be the most onerous of all, and it shows how big government and dubious science ally with each other at the expense of private rights and property. The FDA exists to regulate food and drugs -- drugs, that is, in the sense of pharmaceuticals rather than narcotics. The reason it has never regulated cigarettes and other tobacco products is -- obviously -- that they are neither food nor drugs. Except that now maybe they are. New research being peddled by the FDA and the anti-smoking lobby claims that the cigarette companies artificially manipulate the level of nicotine in cigarettes so as to ensure that cigarette smokers remain addicted to them and keep buying them. The evidence for this claim seems to be not very compelling, and it is categorically denied by the cigarette companies themselves. But it's important, because if it were true, the FDA would have a legal basis for regulating tobacco. The legal basis would lie in the legislative language that authorizes the FDA and its regulation of drugs. Under that language, the FDA can regulate a substance if the seller of the substance intends that it be used as a drug -- "for therapeutic or diagnostic" purposes or "to affect the structure or function of the body." If the cigarette companies are manipulating the level of nicotine in their products so as to induce people to smoke for the drug effects of nicotine, then there would be a legal basis for FDA regulation of tobacco. This strategy -- more properly, scheme -- was explicitly laid out in a letter from FDA Commissioner David Kessler to the anti-smoking zealots of the "Coalition on Smoking OR Health," as it calls itself. "Evidence brought to our attention is accumulating that suggests that cigarette manufacturers may intend that their product contain nicotine ...to achieve drug effects in some smokers," Mr. Kessler wrote. If so, FDA regulation of such tobacco products "could mean, ultimately, removal from the market of tobacco products" containing addictive levels of nicotine. In short, the evidence that tobacco companies are manipulating nicotine levels in their products is conveniently pegged to extending the power of a federal bureaucracy and to pushing the political agenda of the anti-smoking lobby. One reason why this scheme is being devised now is that the Clinton Administration's earlier plan to wipe out smoking by raising taxes on cigarettes to prohibitive levels is becoming a cropper. The effort to pass such a tax would involve a bruising battle with the tobacco lobby, not to speak of consumers who don't want to pay the taxes. Hence, it's much easier to pad the scientific evidence and use the bureaucracy to do what can't be passed in Congress. The scientific merits of anti-smokers' claims about what the tobacco companies are doing need to be evaluated, but with strong doubt already being cast on the anti-smoking lobby's claims about "Environmental Tobacco Smoke," with the obvious political motivations of the lobby and with the obvious political utility of the new claims, citizens and taxpayers -- and, not least, smokers -- are entitled to greet the new scheme skeptically. It looks too much like an excuse for more bureaucratic aggrandizement and therapeutic Do-Good to be taken very seriously as real science or public health. ©Copyright 1994 CAPITOL INSIDERS, Inc. - PHOTOCOPYING ILLEGAL Volume 4, No. 5 ? ,.V 204693679-7

1 .~ ~. . • March 21, 1994 ` ' Page 5 one had anticipated there would be criticism focused on alleged shameless media- mongering by Kessler. But the criticism came in torrents, and the coup that generated exfiilaration among the Kessler media managers on Friday quickly sunk to the depths of depression the following week. The strategy went sour when it was clear that Kessler was seeking to use the media to thwart criticism of FDA and his leadership. And the political risk to Kessler was considerable except for the shennanigans of Bill and Hillary in Little Rock some eight to ten years ago, and continuing to the present day, which has Volume 4, No. 5 diverted any attention from the missteps of any Administration official not directly involved in the Whitewater scandal.. It would be difficult to argue that any political animal in Washington could now be any happier than Senator D'Amato or Congressman Gingrich, but the plain fact is David Kessler dodged an arguably fatal blow while no one was looking. When the riptides of Whitewater subside, however, the political opportunism of David Kessler may well be a fully developed political hurricane as the Congress attempts to deflect the shark attacks of the tobacco industry. Hillary Clinton Drug Stock Investments Under Scrutiny . • Bill and Hillary Clinton knew they had a winning political issue on their hands when they started bashing the pharmaceutical industry during the 1992 Presidential Campaign. It was an issue that hit such a responsive chord with the electorate that the Clintons kept up the rhetorical attack as they developed their health care reform package. No one likes to pay for prescription drugs when they are sick, and the high costs place low-income and fixed-income consumers in a particularly difficult economic position when they need to pay for drugs needed to treat illness and physical problems. The high costs of research and development for new drug products, combined with a voracious appetite by investors for solid returns on high-risk drug research projects, created a fertile field for the Clintons to be political demagogues. And they were quick to jump on the backs of drug manufacturers for every possible political advantage. But it now appears Hillary Clinton may have violated federal conflict-of-interest laws by benefiting from stock transactions while acting as the head of the White House Health Care Reform Task Force. Eighty Republican Congressmen joined in a complaint against Hillary Clinton to the Office of Government Ethics alleging Mrs. Clinton was a member of a partnership that garnered at least $275,000 in profits on drug company stock prices that fluctuated after her highly critical speeches. At the time Mrs. Clinton was making these critical speeches, she held an interest in a non- public limited partnership that made investments that would benefit in drops in pharmaceutical and health-care stocks. A college case study demonstrated that Hillary Clinton's speeches caused drug firms stocks to drop as much as 27 percent. It will be a long summer for Hillary when she gets by the Whitewater mess. ©Copyright 1994 CAPITOL Iti'SIDERS, Inc. - PHOTOCOPYING ILLEGAL 26 46 33098