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/ REPORT ON THE THIRD GROUP SMOKING AND HEALTH CONFERENCE [%"" HELD AT CHEWTON GLEN, ENGLAND IST - 5TH JUNE, 1975 DISTRIBUTION: Mr. P. Macadam Mr. J. Edens Mr. P. Pare Dr. H. Stutzer Mr. H. Widdup Mr. E. Ricard Mr. G. Bartels Mr. D. Bryant Dr. D.G. Felton Dr. S.D..:Green U,Ko U.S.A. Canada Germany Australia Canada Australia U.S.A. U.K. U°K. Mr. G. Hargrove Dr. I.W. Hughes Mr. C.I. McCarty Mr. P. Sheehy Mr. H. Sottorf Mr. C.H. Stewart Lockhart U,K. U.S.A. U.S.A. U.K. Germany U.K. O O ~4 ~D ~D BATCo document for PFSFC 2 March 1999

REPORT ON THE THIRD GROUP SMOKING AND HEALTH CONFERENCE HELD AT CHE~'FfON GLEN, ENGLAND, FROM IST - 5TH JUNE, 1975 Io AIMS OF THE CONFERENCE Mr. P. Macadam welcomed the delegates and then reviewed some of the main developments since the last Group Conference at Tegernsee. He then tabled the following Conference aims, which were agreed:- (I) To keep fully informed those responsible for the major companies in Tobacco Division where this area presents a continuing problem and to this end to exchange ideas and current thinking of the managements concerned. (2) To evolve on a continuing basis guidelines with respect to response to differing and developing external constraints. (3) To develop suitable strategies aimed at the protection of tobacco companies and their consumers. (4) (5) TO ensure, as far as possible, that actions by companies in the Tobacco Division which have a bearing on smoking and health shall not adversely affect other companies in the Division. To this end to ensure that the managements of all companies in the Tobacco Division are aware of the effects that their actions may have on other con~anies in the Division. To enhance the standing of the B.A.T. Group as a responsible organisation which contributes with advantage to the countries in which it operates. O O J~ ~O O BATCo document for PFSFC 2 March 1999

2. REVIEW OF THE STRATEGIC AND POLITICAL SITUATION IN THEIR OWN COUNTRIES BY THE DELEGATE COt:~ANIES (1) U.S.A. It was reported that, although there had been no new developments in the literal sense since the last Conference, there had been significant new emphasis and alterations in momentum in certain areas on the smoking and health front. These were:- (a) Increasing momentum in the trend towards smoking becoming a socially unacceptable habit combined wit~ increasing restrictions (in terms of locality) on the freedom of consumers to smoke. [b) Increasing activity aimed at producing further limitations on the tar yield of cigarettes. (c) Attempts to impose certain measures in the field of advertising. As regards (a), it was reported that there are now 23L Bills in 45 States (of which 82 were active in 22 States) and most of these Bills represented a change in emphasis from concentrating on dangers to the smoker to concentrating on the danger or nuisance that the smoker represents to those around him. In the matter of (b), Senator Moss had made a formal approach to the Consumer Product Safety Commissior the object of which was to pressurise it into imposing maximum tar levels for all cigarettes. The Commission had, however, voted 4 to 1 against Moss's proposal on the grounds that it was not so empowered. As a result there was now a Bill before Congress the effect of which would be to remove tobacco from the purview of the Consumer Product Safety Commission. This Bill had passed the House of Representatives and was shortly to come before the Senate Committee, where the industry is optimistic for passage. Last week Moss had written a letter to the industry asking that tar yield informatic should be made available at all points of sale and the industry was currently considering what its reply should be. In general the industry was not finding it difficul~ to deal with these pressures in the short-term, although it recognised that there could be long-term dangers in this trend towards tar level limitation. The main move in (c) had been the Federal Trade Commission's recon~nendations for health warnings on advertisements and also the printing of tar and nicotine figures on advertisements. The industry had"-~ taken voluntary action in this area and the Federal O O Trade Commission was extremely active in monitoring ~, all cigarette advertisements. ~O ~-4 The Ad Hoc Committee of the National Cancer --~ Advisory Board had recommended a ceiling on tar/ nicotine level. This recommendation has not been --" BATCo document for PFSFC 2 March 1999

-2- (2) acted on yet by the President since no new evidence was submitted by the Committee in support on any ceiling. On the general political front, one particular development had been the fact that some of the senior Congress members from the southern (tobacco) states had been voted out at the last election - for example, Mr. Cook who was a member of the Senate Commerce Committee. This had had some effect on the tobacco lobby but on the whole the industry felt that it was still fairly well placed in Congress. As a generalisation, it could be said there was now emerging rather a different type of Congressman, particularly in the House of Representatives. The new men seemed less business orientated than their predecessors and much more consumer orientated. Some southern Congressmen had actually associated themselves with anti-smoking measures. Previously the anti-smoking moves had almost always been initiated by Federal State Governments, but latterly there had been pressures on State Governments from "grass-roots" sources - usually from vocal minority groups who saw anti-smoking activities as an easy means of increasing their power. CANADA It was reported that there had been no really radical change in the situation since the last Conference. The industry had established a relation- ship whereby Government accepted that the industry would keep them abreast of developments in other key countries and the indus'try, while realising that the Government would be influenced by such developments, had achieved a position where it would not be asked to make concessions in advnnce of these developments. Industry relations with the current Health Minister and with his Deputy Minister were good and the industry did not anticipate any serious problems in the near future. Meetings with the Minister took place about every six months and the industry had been able to date to give way slowly when asked to make concessions - for example, it had been enabled to delay the printing of tar and nicotine figures on packs over a period of three years. IMASCO was convinced that the only hope for the future was to retain the unity of the industry. If the industry split the Department of Health would undoubtedly intervene and legislation could be affected by it in about three weeks if it so decided. The main problem in the industry was the attitude of Reynolds, which had recently acquired MacDonalds, whose largest brand was declining, and of course the O attitude of B. & H. (Philip Morris). These two O companies which each had a small share of the market~ were indulging in brinkmanship in fighting against concessions and only abandoning the fight at the "~4 last moment before there was total collapse of BATCo document for PFSFC 2 March 1999

-3- (3) industry unity. It seemed likely that the two main issues for the industry in the future were the matter of the declining social acceptability of smoking and the whole question of "safer" cigarettes. The industry recognised that it could not afford to be complacent but it thought that it had a satisfactory policy of gradual retreat which would last it for three or four years. Its main concern was not to reach a point where a Price Commission for tobacco was set up, because the Minister decided that this would be a useful form of control. The beer industry in Canada had been extremely severely d.amaged by such a Commission. The industry had agreed to a new code of behaviour in the smoking and health field as from the ist January. This had been accepted by Reynolds and B. & H. with great reluctance and because of their ultimate fear of legislation the code had been cleared with little trouble with the Ministry of Health, but the Ministry of Consumer Affairs had proved a stumbling block in its desire for the Combines Group to initiate investigations. However, the industry had modified certain points in the code and the code would be printed and published in the near future. Copies will be sent to Millbank for circulation as soon as it was printed. As regards advertising expenditure, the allocation of funds for above the line advertising was already in in existence and the M/nister of Health was pressing for below the line advertising expenditure to be included in this allocation (e.g. give-aways, promotional activities at points of sale, etc.). This would mean, of course, and additional limitation on the industry because the Min/stry wanted the total allocation figures to be frozen with no allowance for the effects of inflation. The industry has introduced tar and nicotine figures on packs. Average figures are shown as agreed by the industry after each company carried out its own tests. The Waterloo Universities would be monitoring the figures. If their figures differed from a Company's by 1 mg they would inform the company immediately, but they would only insist on a change of figures on the pack if the variation amounted to 2 mg or more. AUSTRALIA --~ O O It was reported that over the 12 months since x~ the last Conference the attack on smoking had shifted ~o from one based on causation to an offensive based on --~ passive smoking and the decline in the socialaccept- -~u ability of smoking. The industry's chief public opponents continued to be Dr. Nigel Gray of the Victorian ~ti-Smoking Council and Dr. N.D. Everingham, BATCo document for PFSFC 2 March 1999

the Federal Health Minister. At the XI International Cancer Conference of Florence, in 1974, the former had reported that lung cancer rates in the 55-59 and 60-64 age groups had declined and claimed the credit for the fall for his Organisation. He based this claim on the fact that his Council had campaigned with success for the reduction of tar yields in cigarettes. In this connection the fact is that the industry has now no brands over 20 mg, although to date there has been no demand for the establishment of maximum tar levels. ! In general, the media coverage of smoking and health has been somewhat scrappy. In the political arena, Aldermen and Local Councillors have begun to use smoking and health matters as means to achieve public attention. This area has previously been the preserve of Federal and State Legislators. Their activities have not stemmed from grass-roots agitation. On the contrary they have generally been inspired by public health officers with their own axes grind. On the industry side, the Managing Directors of three manufacturing companies had redefined the responsibilities of the industry group previously known as the Public Relations Committee. As a result a more formalised group called the Co-Ordinating Committee on Smoking and Health was set up in January, with representatives of all three companies under the Chairmanship of Mr. B.E. White, AMATIL's Manager for Victoria. Under its terms of reference this new Committee is responsible for alerting the Companies to development or trends affecting the industry and where statements are made by the Anti-Smoking Lobby which ~annot be supported by evidence, to write letters to the authors of these statements asking for substantiation of them. Over the 12 months there had been a number of instances of the opponents of smoking taking action in various areas - mos~ often operating by stealth. In May, for instance, the State and Federal Health Ministers had issued a press release at the beginning of their annual conference in which they announced the extension of health warnings, worded as, for the packet warning, on various forms of advertising, including billboards, point of sale, and even clothing. This action was taken after the industry had been assured that smoking and health was not on the agenda. Faced by this situation, the industry had taken steps directed at ensuring that action would not be taken to implement the measures recommended unless there was agreement at Cabinet level. To this end, individual manufacturers were lobbying State Governments basing their arguments on economic rather than health grounds, particularly in the tobacco States. Approaches were being made at State Premier level and to Party 100427754 BATCo document for PFSFC 2 March 1999

-5- officials. Additionally, if this was not successful, the point would be made that, as in Hobart, Tasmania, advertisements already carried sufficient health warning because a warning appeared on the front of packs featured in advertisements. To date Queensland had made it clear that it would not follow the recommendations and the industry was hopeful that New South Wales would take the same attitude. The industry was hopeful that if there was a change of Governemnt between now and September next year it would be allowed to carry on with the use of electronic media with the existing limitations. Surprisingly enough, however, certain Liberal pclitician~ were in a way more of a menance to the industry than their Labor counterparts despite the fact that the Labor Party had a plank in its platform against smoking. In the area of "safer" cigarettes the industry had made a proposal for co-operation with his Ministry to the Minister of Science, Mr. W.L. Morrison. However, industry was not now pursuing this with any enthusiasm because Mr. Morrison was in charge of Consumer Standards which could be a potentially dangerous area for the industry. Furthermore, his department was responsible for tar and nicotine testing in each area. The department's analyst, Dr. F.E. Peters, was working already in liaison with Waterloo University in Canada. As regards the Australian Tobacco Research Foundation, the five year period of financial sponsorship by the industry had now expired and it had been agreed that it should be renewable on an annual basis for not more than three years in the first instance. In any case, however, long-term commitments (maximum 3 years) would be completed. As regards the problem of maintaining industry unity, this was not proving too difficult because none of the three manufacturers was struggling for existence. The other two manufacturers were both in favour of a Tobacco Institute on the U.S. lines, but AMATIL was opposed to this as it provided an easy focus for all attacks on the industry. AMATIL still take the lead for the industry in all matters concerning smoking and health and prepared the policy papers. In reply to a question it was reported that the unattributed health warning now used in Australia had not been agreed voluntarily by the industry but was covered by State and Federal legislation. It was also pointed out that the warning used in electronic media carries an attribution. m C In Australia there was a Price Justification C Tribunal for all industries with a turnover of over 20million dollars per annum. Over the last two ~c years the industry had had, after an initial set- back, some success in its dealings with this Tribunal ~F BATCo document for PFSFC 2 March 1999

• --6-- (4) GERMANY It was reported that over the last 12 mont~hs there had been three major developments in the smoking and health situation in Germany:- (1) An enormous increase in the Anti-Smoking campaign. (ii) Intensification of the competitive situation in low tar and nicotine cigarettes, together with the introduction of N.T.M. cigarettes. (iii) The reaction of the medical authorities and the Government to (ii) above, i.e. intensive competition. As regards (i) above, the most serious issue was the declining social acceptability of smoking. The situation had been worsened by the advice given by Government to all concerns and establis.hments. In addition, the market had been seriously hit by an Anti-Smoking campaign, specially effective was a television report in March. This campaign had been run for a half or three-quarters of an hour at the peak viewing time of the day and the results it achieved had been about as great as the impact of the Surgeon General's Report. As regards the low tar and nicotine brand competitive situation, 18 months ago the industry had agreed to have lOO brands tested in three neutral research institutes. The resulting tar and nicotine yields would then be agreed by the brand manufacturing companies and published every six months, preceded by a press conference. Some days before the initial press conference the results were published in tar yield precedence in the press. This pre-emption was undoubtedly inspired by Reemstma, who must have extensively planned over the preceding 18 months to achieve this. The move was successful in that R.6 was top of the league and rose from 1OO million a month to 4OOmillion a month in three months. The seriousness of the situation for the industry was, however, with the press coverage for these figures emphasised the risks of smoking so the overall market volume suffered as a result. J In addition to this, a Consumer Association in Berlin, Government sponsored, published the tar and nicotine yields of 37 brands in March, including B-A.T.'s brand, AUSLESE. The list included Reemstma's brand, California, which came out top of the league in spite of the fact that it was not yet on the marketl ~ghen challenged about its inclusion, the Institute replied that it had been assured by Reemstma that California's tar and nicotine yields were the same as Delta, which did not sell. c C t~ BATCo document for PFSFC 2 March 1999

-7- (5) The list also included Carbon Monoxide and Nitrogen Oxide yields and AUSLESE had the highest Carbon "Monoxide figures. Details of the N.T.M. cigarette situation in Germany would be dealt with under a later item. It should, however, be mentioned that B-A.T., Germany, have never wanted to market N.T.M. brands with a declaration on the pack. The reason for this was that; without a declaration, N.T.M. could be included in the blend of any brand and also a no declaration situation avoided any unfavourable reactionby the consumer against artificial substances. This could have been achieved if the industry had been unanimous on the subject but Reemstma had refused and obtained a licence involving declaration on the pack. Reemstma's attitude in all these matters had destroyed the unity of the industry and, in the matter -/ of publication of tar and nicotine results, B-A.T., Germany, was considering whether it would be better to priht tar and nicotine figures on the packs rather than to have figures.published every six months. It might be advanteous in that figures that were constantly before the consumer gradually became meaningless. The reaction of the medical authorities and the Government to intensive competition in the low tar and nicotine sector of the market had been a strong one. Their fear was that the public could easily get the idea that such cigarettes were safe. Only last Tuesday the Government had put out a statement that cigarettes of this type might be safer but they were certainly no~ safe. It might come to a situation where the law would be changed but the industry was in close touch with the Government on this subject. In fact, a study carried out by B-A.T., Germany, show._/ that there was no evidence that the smoker of low tar/ nicotine cigarettes smoked more than the smoker of normal cigarettes and, indeed, he appeared to smoke about i to 1½ cigarettes a day less than the smoker of normal cigarettes. Nevertheless, the Government was somewhat concerned about the possibility of increased consumption per capita in this sector. U~K° It was reported that, as mentioned at the last Conference, Mrs. Barbara Castle had taken over from Sir Keith Josepth as Secretary of State for Health when the Socialist Government was elected in February 1975. Since then she had confined her activities -- largely to the Social Services and had handed O responsibility for smoking and health to Dr. David O Owen, the Minister of State for Health and Social Services. In July last year Dr. Owen had summoned --4 the T.A.C. to a meeting in the House of Commons and BATCo document for PFSFC 2 March 1999

-8- asked the industry to agree to a number of proposals in the smoking and health field which would be referred to late~ in the talk. The industry had decided to play for time on the grounds that the proposals would need much consideration and had not, in fact, written to the Minister until shortly before the October election when the Minister was engaged in canvassing in his own constituency. This letter merely stated the industry's willingness to meet Ministry representatives to discuss. the proposals and, in fact, no meeting took place until 4th February this year, when Dr. Owen and his officials met T.A.C. No conclusions were reached at this meeting and the industry, in fact, offered no positive concessions except on one or two minor matters. By the beginning of April, Dr. Owen had clearly lost patience with the industry and he then made a statement in the House of Commons in which he said that the industry had been resistant or unco-operative with regard to the various proposals which he had made to them. He also pre-empted the negotiating situation over the new health warning wording by stating that J the publication of tar and nicotine results would, in future, carry the following wording:- "Warning: Smoking causes lung cancer, bronchitis, heart diseases", and that he had asked the industry to use this warning in future on packs and advertisements. About a month later, on the 12th May, a debate took place in the House of Lords in which an extremely efficient attack on smoking and the industry was made by Baroness White supported by Lord Wells-Pestel and others. Both this debate and the previous Commons statement by Dr. Owen received tremendous press and television coverage. Furthermore, over this period two extremely damaging television programmes entitled "Dying for a Fag" were produced, on the second of which Dr. Owen himself appeared and was highly critical of the industry. The programmes sh~ed horrifying lung cancer operations and attracted considerable attention in the press. The industry had refused to nominate a representative to appear on the programmes and so did individual companies. The producer of the programme then appeared at the Imperial Annual General Meeting and attempted, unsuccessfully, to obtain an answer from Imperial as to why it had not been willing toappear on the programme. J Concurrently with all this publicity, N.S.M. Limited, the I.C.I./Imperial substitute company, was being pilloried in the press and electronic media for its N.T.M. cigarette experiments on beagles. At least 70 M.P.'s signed a motion in the House, -~ organised by the Anti-Vivisection. Lobby, and some 0 two million members of the public are estimated to 0 have signed petitions. ~o In all these circumstances, there were not many ~-4 critics of the tobacco duty increase imposed by the Chancellor in his budget. Co BATCo document for PFSFC 2 March 1999

--7-- As will be clear from the above, the industry has never in its history been in worse odour than it is at present and the credibility and integrity o~ T.A.C. is now at stake. Moreover, the situation was considerably worsened by the totally unsatisfactory T.A.C. meeting with the Ministry of Health officials on the 24th April when the industry showed that it was divided on Dr. Owen's proposals and was unwilling or unable to make any positive concessions. As a result, Mr. Macadam. wrote to the No. l's of the other four companies on the 29th April, informing them that B-A.T. regretfully would have to consider leaving both the T.A.C. and the T.R.C. unless the industry could decide on positive concessions it would be prepared to make, since B-A.T. was not prepared to be associated with bodies which would have lost the respect of the public and the Government unless the industry changed its attitude. Immediately following this letter, Messrs. Stewart Lockhart and Sheehy visited the recipients to emphasise to them personally B-A.T.'s views. Mr. Macadam, who was by then in the U.S.A., also spoke on the telephone to Mr. Hugh Cullman of J Philip Morris to point out to him that his U.K. company were acting against industry interests in their attitude over sponsored racing cars. Imperial and Gallaher then met and produced a paper for T.A.C. which outlined the points on which they were prepared to make concessions and also the points on which the industry must stand firm and insist on legislation if necessary. A T.A.C. meeting then took place on the 21st May and the following conclusions were reached on the proposals which Dr. Owen had made:- (a) Tar qroups on packs T.A.C. would offer to print tar groups on the tear-tape in spite of the legal reservations it had. Individual companies could qualify the wording for legal reasons if they so desired. (b) Reduced wordinq of health warninq T.A.C. would offer the following wording: J (c) "Warning byH.M. Government. Smoking is dangerous to your health." If Dr. 0wen insisted on no Government attribution or on the inclusion of diseases in the warning, T.A.C. would refuse and make it clear that he would have to legislate. Television advertisinq of ciqarillos (rod made0 cigarette style products) O T.A.C. would offer to withdraw from the advertising of cigarillos on television. ~-j t24 ~D BATCo document for PFSFC 2 March 1999

(d) Free samples • T.A.C. would offer to confine free samples to:~ (i) Person to person distribution (by Company representatives or retailers). (ii) Personally addressed mail to known adults. (e) Advertising Standards Authority cigarette advertising code T.A.C. would accept the amendment proposed bl the Ministry with one or two exceptions. (f) Cinemas T.A.C. would offer to remove cinema adverti from all films except "X" films from which child~ were totally excluded in any case. ("X" films represent 46% of total films shown). Philip Morris alone refused to accept this. (g) Sponsorship T.A.C. would agree with the Ministry code of practice for sponsorship. Ch) Imperial and Philip Morris are the only two companies to sponsor racing cars. The former wou agree to withdraw all names, symbols and insignia from these and similar vehicles of other kinds. Philip Morris, however, refused to agree to this. Coupons It was agreed that T.A.C. would offer to reduce the two coupon brands in the high tar group so that these brands came into the middle tar group but no other concession could be made. (i) Voluntary contribution to the Health Eduction Council based on a percentage of advertising expenditure T.A.C. would not agree to this under any circumstances and would make it clear to Dr. Owen that he would have to legislate to ~h~-~ h~, p opo l 100427751 During this meeting Philip Morris d~up~u a completely maverick attitude. It stated that it considered that the Imperial/Gallaher paper was • merely aimed at preserving the present U~K. market status quo. Cinema advertising and sponsored racing cars were most important to Philip Morris but these j had ~t been included in the concessions made, j whereas coupons had been virtually omitted. BATCo document for PFSFC 2 March 1999

-!!- (6) Since these concessions only affected small shares of the market competitors, Philip Morris reserved its right to go unilaterally to the Ministry and to submit its own proposals. If the T.A.C. made a submission outlining these concessions the Ministry quoting Philip Morris by name as an exception, Philip Morris would feel at liberty to state its views to the press as well as to the Ministry. Mr. Stewart Lockhart, on behalf of B-A.T., then said that if Philip Morris persisted with this unreasonable attitude and if the industry could not reach prompt agreement, B-A.T. might have to consider taking the action indicated in Mr. Macadam's previous letter. A draft T.A.C. letter to the Ministry was being cleared with the companies involved but it was not known yet what Philip Morris's attitude would be. It seemed likely they would submit a minority view. It was reported that the Hunter Committee report and guidelines were to be published on the 9th June or shortly thereafter as a H.M. Stationery Office publication. Further detailed information on this subject would be made available at the meeting under item 5 on the agenda. WORLD TRENDS IN SMOKING Mr. Sheehy tabled eight charts on various aspects of this subject, and his comments on the charts are attached as Appendix 'A'. C~ CD tjn ~O BATCo document for PFSFC 2 March 1999

3. SCIENTIFIC RESEARCH (a) (c) Comparison of smokinq with other health hazards Lunq cancer rates in different countries Mr. Widdup enquired, on behalf of Mr. Foley, whether any data was available which permitted a comparison of mortality statistics for lung cancer with other causes of death such as road accidents, heart attacks, cancer at other sites and other diseases. In reply, Dr. Green tabled some charts on lung cancer rates in various countries, based on the latest published W.H.0. Statistics up to 1970. Delegates from Germany and the U.S.A. indicated that there were more recent data available for their countries which extended the findings to 1974, and, in the case of Germany, showed a stabilisation in the overall mortality statistics. J v It was pointed out that intercomparisons between countries were not feasible for a variety of reasons, including different standards of death certification and attribution of the primary cause of death, variations in the population distribution across the age groups and so forth. Nevertheless, the W.H.O. figures were probably the best data available. How the data might be used was discussed and it was suggested that it gave no support for the emotive statements by anti-smokers that there was an "epidemic" situation. Dr. Hughes offered to make available studies by Dr. Kastenbaum, the statistician of the Tobacco Institute. Mr. Widdup foresaw the danger that a reduction in the incidence of lung cancer would be attributed to lowering levels of T.P.M. and would lead to increased pressure by anti-smokers for even greater reductions in T.P.M. He, therefore, wanted to j get lung cancer deaths put into perspective against other causes of death. The suggestion that each Company should collect data for their own country and send it to the Centre was qualified by the need to define the data to be collected. Although the industry is often attacked on the social cost to the community in terms of days lost due to illness associated with smoking, it was pointed out that morbidity statistics, as opposed to mortality data, are seldom available. In parenthesis, Mr. Pare noted that in Canada, the social costs of alcoholism and drug addiction were both rated greater than that of tobacco. I CD C~ It was agreed that a number of causes of death would be selected and the W.H.O. statisticis on these would be collated and compared, and the data circulate~ BATCo document for PFSFC 2 March 1999

{b) Hiqhliqhts of recent external research - . % Dr.-Felton reviewed this subject. Papers contxnue % to appear on components in tobacco smoke which might be considered hazardous. These included nitrosonornicotine C (a breakdown product of nlcotine), vlnyl chlorlde monc~e~ and polonium-210. A suggestion that nic~ne correlated ~ Ilwithtum°rigenicityinm°use-skintests~~uire~ confirmation in a specific experiment~gaT~T~t~antlme, T.R.C. had decided against publishlng'~esults it already had obtained. The advent of league tables in Germany \ for carbon monoxide and oxides of nitrogen was noted and attention was drawn to a recent publication in the U.K. advocating a low tar/high nicotine cigarette. Work aimed at defining a susceptible minority of smokers An terms of the inducibility of a specific enzyme system (AHH) was reviewed. Reference was made to a recent lO-year follow-up epidemiological study in Sweden which reiterated most of the earlier findings of the association of various J diseases with smoking, but, in addition, appeared to demonstrate that pipe smokers had an equally high risk of lung cancer as c~garette smokers ana zha~ %he same risk~as men, when the data-were balanced for e~uai ~on~,pti~, i=vel~. Although it is as yet unpublished, it was understood that Wynder was about to claim that smokers in the U.S.A. of low tar (not exceeding 15 mg T.P.M.) cigarettes who consumed only 20 cigarettes a day over the last 15-20 years ran no greater risk of lung cancer than non-smokers. Mr. Bryant and Dr. Stutzer confirmed that Wynder had recently told them the same figure and he was said now to be turning his attention away from lung cancer to the association of nicotine with heart disease. (d) In connection with susceptible minorities, Dr. Hughes reported that the project at Washington J University, St. Louis, had failed to provide immuno- logical evidence of such groups. Despite the claims of Wynder, it was considered that lung cancer was still an important subject in the U.S.A. partly because it was easier to investigate than other smoking-associateddi eases such as emphysema and coronary heart disease. However, in Australia, it had been alleged that the preoccupation of the industry with lung cancer was to divert attention away from the bigger problem of heart disease. Dr. Hughes reported that independent medical O scientists who published objective reviews of, e.g. C~D passive smoking, were then subject to virulent attack ~o by anti-smoking doctors. ~-4 Is there sufficient research on the association of smokinq with diseases? This was raised by Mr. McCarty and Dr. Hughes added that the aim was to develop work to break the casuality lin . ........ BATCo document for PFSFC 2 March 1999

(e) (f) It was said that T.R.C. did not do much defensive research and that it was difficult to find any U.K. medical" researchers prepared to undertake such w~rk or even to work on the susceptible minority concept. Thls did not appear to be the case in the U.S.A. and Australia. It was pointed out that for very many people smoking had positive benefits and that these should be demonstrated. Mr. Widdup recalled that such a .... review had been promised following the first conference in Montreal and Professor Rand had agreed to undertake it, but subsequently backed out. Mr. Ricard questioned the need for further work on benefits of smoking because the consumer was already aware of these. Dr. Green suggested that more work was needed on why people smoked and drew attention to the risk that nicotine might be indicted. It was pointed out that considerable sums had been expended in the U.S.A. and Canada on the subject of smoking as a relief from stress. . Hiqhliqhts of internal research Dr. Green surveyed the Group progran~ne of biological research, recalling that the main effort had been put on mouse-skin painting. This would now be given credibilit~ by the Hunter guidelines which would call for such studies. A parallel series of initiator/promoter tests on mouse-skin would not be endorsed by Hunter despite efforts by the industry to indicate its potential importance. Progress had been made in the development of inhalation tests and delegates would have an opportunity of seeing this during the forthcoming visit to Southampton. Dr. Green then summarised the results of the biological research programme (see Appendix 'B'). ~~e possibility of'removing initiitors~rom smoke was not considered feasible in view of their nature. The belief that atmospheric pollution or previous smoking history could have already caused initiation underlined the importance which was attached to promoters. GroupR. & D. objectives in the smokinq and health context Dr. Green's paper, which had been precirculated, was discussed. Dr. Hughes felt that the item which read "Interpretation of Smoking and Health Discoveries" created a difficulty in that it called for medical ~udgments for which the necessary background and training was lacking. It was pointed out that judgments had been made in the past in respect of lowering tar deliveries and eliminating materials which might be alleged to be hazardous to the consumer. After further discussion, Dr. Green proposed an alteration to "Commenting on Smoking and Health Discoveries" and this was agreed. 100427755 BATCo document for PFSFC 2 March 1999

(g) (h) Publication of bioloqlcal/product research Mr. McCarty and Dr. Hughes sought the views of the Conference as to the desirability of publishing the results of sponsored biological research on product modifications which may be highly positive. While it was generally agreed that any reliable scientific work should be submitted for publication, it was felt that it would be a health claim, and therefore improper, for the publication to be referred to, even obliquely, in advertisements. Any reference to the product development should depend upon the media picking it up from the scientific literature. Mr. Pare, in particular, counselled against using the smoking and health issue as a marketing tool and suggested that conflicting health claims between competing companies would result in Government intervention and the discrediting of the industry. Mr. Macadam warned that, unless care was taken, the introduction of non-tobacco materials into the U.K. market could lead to a breakdown into a competitive situation with claim and counter-claim. Dr. Stutzer indicated that an unscrupulous competitor could circlunvent industry agreements by arranging for the publication of slanted reports. Mr. Sheehy suggested that such advantages could be of a very temporary nature, in that it would lead to retaliatory articles and adverse reactions. The use of publications by a manufacturer was a very questionable point. Life expectancy of smokers Mr. Widdup referred to published statements that smoking a cigarette shortened a smoker's life expectancy by iO or so minutes and said that Australia were looking ~or authoritative data on this subject. Although some delegates felt the validity of such : data was questionable and the conclusions unjustifiable~ the crude arithmetical calculation was about right for smokers of 20 cigarettes a day if the life expectancy of smokers was about 4 or 5 years less than that of non-smokers. It was pointed out that the position was complicated by variations in consumption level and by variations in smoking habit. Mr. Pare drew attention to some Life Assurance companies which offered modified rates for non-smokers and, while it was pointed out that it was difficult to isolate the risk from smoking from that of drinking alcohol and other factors, it was agreed to seek data in this area from actuaries and, perhaps, the Tobacco Institute statisticians and T.R.C. O O ~O BATCo document for PFSFC 2 March 1999

4. EXTERNAL RELATIONS AND POLICY IN THE FACE OF CONSTRAINTS AND THREATS TO THE INDUSTRY "" (a) Social unacceptability It was reported that the momentum of this trend was growing in the U.S. The U.S. industry accepted that action was needed, particularly in response to initiative" taken by small local groups to influence State and Municipal legislation in this field. The Tobacco Institut Executive Committee had recently agreed to test two advertising campaigns (attributable to the Tobacco Institute), although no final commitment to them would be made until the industry was satisfied that the tests had proved satisfactory. The tests would be conducted under controlled distribution. The campaigns were as follows:- (i) Magazine and newspaper advertisements based on the historic contribution to the U.S.A by the tobacco industry - the key note being "mother- hood". Philip Morris was particularly keen on this idea although other companies had reservations. (ii) A campaign built on the recognition that smoking is indeed a prominent social issue - with advertisements on the following lines:- (a) Conversations in which the views of the "reasonable man" were expressed. (b) Advertisements pointing to the excessive . concern of Government to control people's (c) private lives. "._J Advertisements making the point that the answer to the problem was common courtesy rather than legislation. In addition, the Tobacco Institute had hired a young man and a young woman to talk about the smoking problem to clubs and other organisations and to appear on television programmes. Both these people were non-smokers and attractive personalities. The line that they took was in no way provocative: they merely presented the other side of the question. So far, the public had appeared to be very receptive to them and the tobacco industry planned to engage more people for the same purpose. In areas where legislation was pending the Tobacco Institute had also hired lobbyists to organise the forces opposed to such legislation. There were eight such lobbyists in all, each having responsibility for 100427757 BATCo document for PFSFC 2 March 1999

a geographical area, and to date they had quite a good success record. It should be emphasised that in all the above activities a conciliatory tone was adopted and this was the first time that the industry was publicly recognising that smoking could be criticised on social grounds. In a related area a woman in Texas had organised a "courteous smoking" campaign, originally aimed at would-be legislators, but now addressed to smokers and neutral non-smokers in general, using the slogan "Smoke Friendly". It was reported that in Germany the industry was thinking on somewhat similar lines but they planned to achieve results through articles and editorial comment rather than paid space advertising. In this respect it was fortunate that B-A.T. had very good relations with the press. Australia was facing a somewhat different problem in that up and coming politicianb and administrators saw smoking and health as a bandwagon on which they could climb to make their reputations. As mentioned under item 2 of the agenda, the industry was taking steps to deal with this situation which was really a political problem rather than a "grass-roots" movement. This did not mean, however, that the "socially unacceptable" issue would not emerge on a broader front in the future. In Canada social unacceptability was the biggest single problem at present but it was not yet acutely serious. The canadian industry was concerned about the danger of causing back-lash by any action it took and was watching carefully developments in the U.S.A. arising from the Tobacco Institute's activities there. ~. An attempt had been made to co-operate with the Ministry of Health in planning a moderation programme but the Minister decided that he could not involve his Ministry in such a project because he feared that the programme would only make people smoke more. In the U.K. there was much evidence that social unacceptability was becoming a major threat and it was recognised that the T.A.C. would have to consider very seriously what could be done about it. It was agreed that B. & W. would submit to Millbank, for circulation to all delegate countries, a description of the activities of the two young people 8ngaged by the Tobacco Institute, together with newspaper reports on these activities, and that when the test results of the two advertising campaigns were available these should also be sent to Millbank and circulated. C~ CD tj1 co BATCo document for PFSFC 2 March 1999

--3-- (b) Passive smokinq In G~rm~nymany articles on this subject hgd continued to appear over the last year and one disturbing development was that people were increasingly getting a conscience about the effect of their smoking on other people, to the extent that they were beginning to ask people next to them if they minded their smoking. The German industry was attempting to build up a group of scientists with whom politicians could have discussions on this subject. An unwelcome development in Germany was that the Minister of the Interior had set up a group of scientists to look into the effect of aromatic poly- cyclic hydrocarbons. This group had dealt with car exhausts, factory fumes and latterly passive smoking. In this last area, one scientist had claimed to have identified APH in smoke-filled rooms. He had been persuaded to do a reassessment of this study but there might be a danger that APH could become a threat in addition to carbon monoxide and nicotine. In the U.K. a recent development had been the statement by the Minister of State for Health in the Commons on the 8th Max which was considered to be reasonably objective in that, although it had made some criticisms, it had admitted that passive smoking was unlikely to be injurious to normally healthy adults. Perhaps the most useful statement or article to date that had appeared in the U.K. was the publication by Ash which had exonerated passive smoking on most accounts and which had been circulated within the Group when it first appeared. Reference was then made to Dr. Wynder's paper on the subject recently publishe~in "Preventive Medicine" which had been circulated by~.R. & D.~. on the group . scientific network. This parer was, fn effect, a review of all published work on the subject. Although it did not constitute an indictment of passivesmoking based on hard facts, it did leave areas of suspicion in the mind of the reader. It was reported that the industry, with the exception of American brands, was sponsoring outside research on:- (i) Children and mothers. (ii) People prone to allergies. (iii) Carbon monoxide and nicotine. O (iv) Psychogenic effects. ~D The results of these studies would be published in --4 due course and thus become available to the industry ~-~ in other countries. In addition the U.S. industry t~n BATCo document for PFSFC 2 March 1999

-4- (c) (d) (e) would be conducting research on sidestr~am smoke in its own laboratories. It was agreed that all delegate companies should take action to persuade their industry associations to sponsor research in the field of passive smoking, since this was a vital area in the whole issue of social acceptability. Smokinq in preqnanc7 A paper on this subject, prepared by Dr. Felton, was tabled and, in introducing the paper, he referred to various aspects of the publishedresearch. The general conclusion was that most of the evidence in this area pointed to nicotine in the mothers' blood as being the likely cause of the problem. A suggestion was made that there should be some work on dose response undertaken in terms of the pregnant mothers' reaction to nicotine. A further point made was that low nicotine cigarettes might well be recommended by doctors if they thought that mothers who were'patients of theirs would not be able to give up smoking during pregnancy. It,~as agreed that this matter should be handled on the ~.R. & D.~. =zi_.~ifi~ network and as much information as ~ossible should be collected and circulated. Punitive taxation A short review of the expected effects of the recent very heavy duty increase in the U.K. was given. It was recalled that in a letter to the "Times" on the 21st February last year, the President of the Royal College of Physicians and the presidents of the other three Royal Colleges which would be producing the next R.C.P. Report in March 1976, had advocated punitive taxation as the best means of reducing total cigarette consumption. "It could be that this view would be featured as a recommendation in the forthcoming Report, although there did not appear to be any evidence of other Governments deliberately using heavy taxation for this particular purpose. It was reported that in Germany regular studies were made by the industry into the average butt length left by smokers and it had been found that the average length of them was always less after the imposition of heavy taxation. This was thought to be a good argument if any Government contemplated the idea of reducing smoking by these means. Advertisinq levies Reference was made to the proposal made by the Minister of State for Health in the U.K. that the O CD ~o O BATCo document for PFSFC 2 March 1999

-5- (f) (g) (h) industry should mare a voluntary donation of IC~/~ of its annual advertising expenditure, including coupons, to th~ Health Education Council, which on his estimated figures would amount to 7 million pounds a year. No otl delegate company had information of similar moves by other Governments. There was unamimous agreement that the U.K. industry had been totally justified in refusing to co-operate at all with this proposal. Animal experiments The position paper on this subject attached to the agenda was accepted. With re~ard to S~ztion 6of this paper, it was reported that~.R. & D.~. subscribed to an organisation in the U.K.~called "Frame" and received its abstracts. It was agreed that a Public Relations statement for use in answer to press enquiries on animal experime, should be produced by Millbank and circulated to all No. l's in the Group. The basis for this statement would be Section 3 of the position paper. Need for marketinq environment forecasts It was reported that this matter had come to the fore during discussions in the Group in Canada. The conclusion had been reached that there was a real need for Marketing Managers to be aware of rapidly changing situations in marketing terms caused by the effects of imposed restrictions or voluntary concessions made as a result of the pressures of the smoking and health problem. Information of this kind from other countries would be extremely useful to Managers when trying to assess the future effects on their own market. It was, therefore, proposed that a special Group Marketing Conference should be called for this purpose. It was reported that in this connection Millbank was preparing summaries of the operations in various countries of Rothmans, Philip Morris and Lorillard. These summaries would be circulated as soon as ready and would be up-dated on an annual basis. The information, thus set out, should Me of considerable assistance to Marketing Managers, but it did not, of course, meet the Canadian request per se. Delegates welcomed the proposal for a special Marketing Conference and it was agreed that Millbank should put preparations in hand for its organisation~-~ This would entail discussions as to the subjects to O be covered by the Conference, the delegates to be O invited and other administrative details. As regards~ the location, IMASCO said that it would be pleased t~ act as hosts. ~-4 C~ Aqqressive approach of competitors --- There was a general discussion about the current BATCo document for PFSFC 2 March 1999

-6- attitudes and operational plans of the leading international competitors. In the U.S.A. it was reporte~ that the most notable recent development had been the changed role of Reynolds, who were now extremely aggressive and outward looking. They were spending $i00 million per annum on media alone, of which $35 million was spent on Winston which Reynolds was determined to maintain as the leading U.S. brand. Reynolds was in an extremely strong cash position and appeared to have committed itself to an all out international effort for which purpose it had formed an international Advisory Board on which there were outstanding personalities from countries outside the U.S.A. Philip Morris appeared to be having some internal troubles and was under considerable attack from Reynolds. In general, new figures were emerging at the head of the U.S. companies many of whom had not the long associations with the tobacco industry which their predecessors had in the past. In Canada it was reported that Philip Morris's attitude had been the main problem for the last five years. For a company which had only 14% of the market it was ironic that it should have taken up 95% of the industry's time and posed lO0~ of the industry's problems. Now that Reynolds had acquired MacDonalds, IMASCO and Rothmanswere faced by two aggressive companies with minority shares, but in certain areas they were able to use the smoking and health situation in Canada to keep matters under control. Rothmans was having its own financial problems largely owing to its heavy investment in beer. In Australia it was reported that AMATIL was able to work reasonably well with Philip Morris. Reynolds were still operating on an import only basis and were still able to match Wills' brands for price. They were involved in very heavy promotional expenditure but still had only less than 2% of the market. As regards Brazil, Souza Cruz had taken certain steps in preparation for intensified competition with Philip Morris and Rothmans, although the latter was in some trouble in Brazil. The new Philip Morris factory was expected to come into production soon. In Germany B-A.T. had found Reynolds very co-operativ~ in recent years but their No. 1 was now being replaced and the situation could change. Philip Morris was more aggressive than Reynolds and its share of the market was rising steadily. As already described in item 2, Reemstmarepresented by far the biggest problem. --~ O From Europe it was reported that Philip Morris wasO very aggressive in Switzerland and appeared to have no cash flow problem. It was operating successfully in ~-4 Italy and Finland and making progress in Sweden and Norway. Rothmans International had recently closed BATCo document for PFSFC 2 March 1999

--/-- (i) (j) (k) its Monaco headquarters. It had a cash flow problem in the U.K. and was not doing well in Italy and Switzerland. B-A.T. 's relations with Rothmans remained good. With reference to the use of smoking and health issues for marketing purposes by aggressive competitors, samples of Winston, Vantage and True advertising were tabled. Examples were also given of Philip Morris's aggressive approach in the matter of industry relations with Governments on the smoking and health front. It was the general view of delegates that Reynolds were likely to become just as aggressive as Philip Morris on all fronts. Financial support for Wynder A report was made on the financial support which had been given to research projects currently being carried out by Dr. Wynder. Reference was also made to a study which Dr. Wynder was expected to publish in the near future relating to smokers of cigarettes with relatively low tar and nicotine yields. New York World Smokinqand Health Conference It was reported that a representative of the German industry had been asked to deliver a paper at this Conference but it had been decided to decline the invitation. It was the unanimous view of the delegates that the industry should not participate at all in these conferences since they were merely used as platforms for anti-smoking publicityand if reputable industry figures attended they would only enhance the reputation of the conference. World Tobacc° Symposium A synopsis of the proceedings of this symposium was tabled, as was a transcript of Dr. Hunter's talk at the symposium. A short report was also made on Dr. Green's statement at the symposium that B-A.T. was confident that it could with all-tobacco cigarettes match N.T.M./ tobacco cigarettes on all accepted criteria and on Mr. Walmisley's statement on the support which B-A.T. had given for many years to tobacco growers around the world. Some concern was expressed about a remark made byDr. Hunter in his talk regarding his wish to establish contacts with other Governments. It was __ suggested, however, that his motive might not be so 0 much to exert influence on them as to obtain their 0 support for the Report which his Committee would shortly be publishing, it was thought that he ~o would like to have the responsibility shared by --4 other Governments and leading scientists in other O~ countries, t~4 BATCo document for PFSFC 2 March 1999

| j ''i • ° 5. PRODUCTS (a) N.T.M. Under this item copies of the Hunter Report "were tabled and the Cytrel film was shown. Dr. Stutzer reviewed the circumstances of the " launch of B-A.T. Germany's N.T.M. brand, LEICHTE CLASSE~ B-A.T., Brinkmann and Reemstma had all obtained licences from the Government to manufacture N.T.M. brands - licences for two years with stipulated maximum production and with the proviso that not more than 25% of N.T.M. was permitted in the cigarette. Although the rest of the industry had wished to avoid having to make a declaration on the pack, Reemstma had acted unilaterally, against this and declarations were therefore now obligatory. B-A.T.'s market research had showed that "artificial material" was unpopular with the public. Hence the LEICHTE CLASSE advertising referred to N.R.P. (New Smoking Products) only, and stressed that such products were composed of vegetable material similar in base to tobacco. No claims were made but the advertising referred to mildness and aromatic taste. Brinkmann, on the other hand, referred specifically to cellulose in their advertising of Peer Leicht. DM 12 million was spent over three months on the nation-wide launch of Peer Leicht. LEICHTE CLASSE launch cost DM 4% million in the Westphalia test area over the same period. Mon£hly sales figures from January onwards had been Peer Leicht 85/22/5/1% : LEICHTE CLASSE 27/4/r%/almost zero. The timing of these launches had been unfortunate in that the consumer was confused by the recent launches of I~; ta~ nlcotinz nc~.=l cigarettes such as AUSLESE and California. There was no doubt whatever that the declarations on the packs were harmful and so were the headlines in the press referring to the new products as "synthetic". The consumer-reaction tests had shown that 28% of smokers feared that N.T.M. could be more harmful than tobacco while some criticised the product on taste grounds and some thoug6t that N.T.M. was only included to save the manufacturer money. \ " !. It was reported that in Australia respondents to a study of this kind had not been averse to synthetics but in the U.K. a study carried out only four months ago had shown serious consumer concern about tobacco _., Substitutes. O O --4 BATCo document for PFSFC 2 March 1999

- 2- A short report was made on the PEER SPECIAL launch ir Switzerland. There was a declaration on the packet but in other respects the launch was made under more favourable circumstances than those in Germany. The February to May figures for the brand had been - 5.9/0.9/1.89/1.7. It was thought sales would level out at between 1 and 1.5 million in a 1200 million market. Current sales were mostly on hypochondriac grounds through specialist outlets. It was reported that a competitor was making available in Germany and elsewhere in Europe the results of Tobacco Working Group tests on Cytrel and other materia and these results taken superflcially did not reflect well on Cytrel. It was further reported, however, that the T.W.G. report was unlikely to claim biological advantage for any one material and would probably emphasise the non-significance of the difference in the test figures. The report would place emphasis on the diluent value of N.T.M. AS regards declarations on packs all delegate countri. expressed the view that declarations would be necessary in their countries. It was pointed out, however, that the Danish Government had said it would not require a declaration. In Canada N.T.M. products, if launched, would present problems in relationships with the tobacco growers. It was not envisaged that there would be commercial usage of N.T.M. in the short term, but there were still the unknown factors of consumer acceptance in the U.K. and the public attitude which the Canadian Government would take up in the future to products of this type. In Australia the situation was in many ways similar to that in Canada. The Health Department was awaiting with considerable interest publication of the Hunter Report. The view was expressed that in the U.S.A. there was now less chance of the launch of an N.T.M. brand than there had been a year ago, although L. & M. was an unknown quantity. The situation had been changed to a considerable degree by the three law suits brought by the growers, by the expectation of a high yield leaf crop and by the recent experiences of N.T.M. brands in Germany. B. & W. was therefore willing to accept the continuanc of an eighteen months time lag in the supply of N.T.M. In Germany the likelihood of f~rther launches of -~ N.T.M. brands appeared to depend on whether permission O could be obtained from the Government to launch them O without declarations. LEICHTE CLASSE would be withdraw~ from the price list but the licence would be maintained ,v through user sales. --4 tJ~ BATCo document for PFSFC 2 March 1999

- 3- (b) (c) (d) It was agreed to recommend to Group companies that they should not launch N.T.M. brands,for the next year at least. It was also agreed to accept the continuance of the eighteen months notice situation as regards Cytrel. It was confirmed that the Group had sufficient N.T.M. stocks available for experimental purposes. Reconstituted Tobacco New Smoking Hybrids Use of Stem It was reported that at the recent Group Research Conference there had been considerable discussion as to the best route to follow to achieve low delivery from cigarettes. After an exchange of views between delegates on this subject it was agreed that the order of priority should be: (i) All-tobacco products. (ii) Hybrids (tobacco sheet with non-combustible material added to it). (ill) Non-combustible material added to normal blends. (iv) N.T.M. cigarettes. As regards the use of stem it was pointed out that the paper reconstitution process had advantages over the normal band method, but it was only profitable at a minimum production rate of I0 million lbs per annum. On this basis it would be a viable proposlticn for the Group companies in the U.S.A., Germany and Brazil but probably not for those in Canada and Australia. It was reported that B. & W. were considering the possibility of moving over to the paper reconstitution process but a number of factors would have to be assessed before a decision could be taken and there was the Schweizer patent position to be considered in the U.S.A. 0 O~ BATCo document for PFSFC 2 March 1999

7. ~UARTERLY REPORTS There was some discussion as to whether the Quarterly Smoking and Health Reports were satisfactory as to contents and format. It was agreed that in future the Reports should be produced three times a year:- February, June and October - the next reports being su/mnitted in October. It was further agreed that the Reports should be under four headings: (i) Local strategic and political developments, including any scientific research w~ich had particular impact on the Government and public. (2) External relations and policy in the face of constraints. (3) Product development (new brands, etc.) affecting the political and public area. (4) Local publicity in the reporting country given to developments in the smoking and health situation in other countries. It was also agreed that the U.K. Report should include anything of particular importance which had occurred outside the U.K. and the other key countries. c~ ~o BATCo document for PFSFC 2 March 1999

8. ANY OTHER BUSI.krESS (a) Marijuana A press cutting was tabled referring to the legalisation of Marijuana in Alaska. It was agreed that B. & W. would find out if this ruling was to be challenged in the U.S. Supreme Court and, if so, what the result was likely to be. A report would then be sent to Millbank. (b) Cateqories of confidential information It was agreed that the proposal made on this subject at the Tegernsee Conference was not a practical proposition and that the idea should be abandoned. (c) Smokinq and health coveraqe at Chelwood (a) It was stated that reports submitted in Australia indicated that the situation was n~ satisfactory. (e) Concessions on the provision of tar and nicotine information A discussion on this subject took place with particular reference to the situation in Germany. It was recognised that decisions in this area must depend on the pressures placed upon the industry by the Government in the particular country concerned. The general feeling was that, where possible, the industry should offer tar and nicotine league tables as the least damaging method, followed by tar and nicotine groups of figures on advertising, and finally tar and nicotine figures on packs. (f) Warninq notices on packs and advertisements It was reported that the Ministry of Health in the U.K. was exerting pressure on the industry to change the wording of its present warning and to have no attribution to Government or the medical authorities in the wording of the new warning. B. & W. was asked to report to Millbank as soon as possible as to what the effect would be on the legal situation for B. & W. in the U.S.A. if the health warning in the U.K. was changed in this way and if wording admitted causation. Group Research Conference at Merano I~wa~reported that this Conference had~ confi~~he Tegernsee Conference decision that the criterlon to be used for N.T.M. testing should be activity per cigarette as opposed to specific activity. O O ~o ~j O~ Co I BATCo document for PFSFC 2 March 1999

The Conference confirmed that this should not preclude further investigation into specific activity and that N.T.M. cigarettes should be regarded as a subject for further experimentation. The Conference also conf~rmed that further research work on the gas phase of cigarette smoke should continue. Q i CD r~D ~UD BATCo document for PFSFC 2 March 1999

A~PE~DIX ~A WOIU,D TI~ENI)S IN SHOKIN(~ With the publication of the Royal College of Physicians' Report in March 1962 and the Surgeon General~s Report in February 196~, the so-called "smoking and health" debate started in earnest in the developed western countries where~ with the odd exception, it has continued ever since, although with fluctuations in emphasis, formI and impact. This debate has been a predominant feature in markets for cigarettes over the past 15 years, although in most instances there has been a high degree of standardisation in terms of impact upon overall consumption and upon trends within the overall situation. However, before looking at the main trends, what of the overall cigarette cake? Chart i. Since the start of the 'modern' health debate, there have been hiccups in the growth pattern, notably in 196~, 1969 and 1971, the'first and last being for health reasons, the middle one for price increase reasons. But, notwithstanding the pressures, con- sumption of cigarettes has increased steadily at an average rate of 3.~ a year in the free world and ~.2% a year in the Communist Blocs making a worldwide average growth rate of 3-7~ per annum. In no year has world consumption actually declined, which probably makes cigarettes unique as far as consumer products are concerned since 1960. There is no marked difference in growth rates before or after the start up of health pressures except, of course, the temporary interruptions to growth which have invariably been followe by above average growth in the following year. Even within specific markets, health pressures have customarily resulted in either a decline in sales or a lower growth rate for a period of anything up to a years but invariably this has been followed by a recovery which in most cases has taken only a further year. This overall picture is even more remarkable when compared with the 2.2~ per annum growth in free world population. Within this overall picture, there have been a number of trends most of which are known to you already, although not necessarily in the context o£ the health debate. The data supporting these trends relates only to the free world. Chart 2. The trend from plain to filter is probably the biggest single feature of markets over the past 25 years and is apparent in virtually every region of the world. It has occurred for a variety of reasonss ranging from price pressures in the U.K. and health pressures, to just plain simple changes in smokers' preferences ovex time. The rate of switching from plain to filter increased noticeal between 196~ and 1970 when the health pressures to do so were probal at their peak, but havinE reached 70~ in 1970, a degree of levellin~ off was inevitable~ which is in fact what has happenedI although th, 100427770 BATCo document for PFSFC 2 March 1999

. ~rend still remains. Variations at the national level exist around this overall trends dependinE upon local circumstancep - filters are i00~ in Jamaica, 86~ in the U.S.A. and U.Kos 51~ in Denmark, 9~ in Pakistan - but the trend to filter remains a major market feature throuEhout the world. Chart 7- The trend in the size of the product is also one of the major features of world markets and, as the chart shows, is equally dramatic as that of plain to filter. The emergence of the long/ king size products (80 - 85 mm) from only 37~ of sales in 1960 to in excess of 60~ currently, coupled with the rapid emergence o£ the extra length products (90 mm+), particularly since 1966, are both evidence o£ the continuing trend towards longer products around the world, and the decline of regular and smaller products. Within this trend to length, the first cycle was undoubtedly the iong/~ing size cycle of the 5O's and 6O's which one can expect to continue until probably the end of the 7O's, but there is now the second cycle of 90 mm+ products which came 15 years or 20 years after the first one and which could easily start to make major inroads into the current 60~ share of long/king size products by the end of the ?O's. Obviously the influence of the 25% share of I00 mm. brands in the U.S.A. and the ~0~ share in Argentina, have a major influence on the 9~ figure for extra length brands, but not- withstandinE these two, there is a steady trend in this direction in many other markets, albeit at a small rate and ~th many excepti~ Chart ~. Trends in cigarette packings have been less marked, although one has seen the decline of 10's in preference over 20's and the emergence of special vendinE packs and others to meet local demands However~ as the chart shows, the main trends have beent- - the decline in shell and slide to ll~ of current sales - the slower decline of soft cup to 69~ of current sales - the impressive growth of the hinge lid pack from 8~ to 18~ of sales in less than i0 years (~ row, 2 row twin lO's) Chart 5. Trends in the ma~or blends are a little more difficult to monitor in a meaningful way because of the numerous variations in local markets. If only to demonstrate that these are only minor trendsI I have included a chart on blendsI the main features of whi are:- - marginal decline in U.S. blend - marginal growth in U.K. blend - marginal decline in black blend CZ) CD BATCo document for PFSFC 2 March 1999

. Chart 6. Cutting across the blends, there has been a growth in menthol cigarettes, although outside the U.S.A. this has been limited to a few major markets and the trend is a slow one. Specifically on the smoking and health front, the main trends, apart from the ones already mentioned, which have a varyinE relevance to the debate in different markets~ have been in three principal directions:- - emergence of special filters - emergence of products specifically promoted on a health platform - reduction in tar : nicotine levels Charts 7 and 8. With wide variances in the means of measuring these three trends throughout the world, it is not possible to adopt a standard approach for .all markets. I have, therefores selected a number of specific markets with different measures in each in order to illustrate the extent of these trends. In terms of filters, several varieties have emerged over the years but the charcoal filter is the only major one to have had any degree of permanences and even this has by no means had univers appeal. Others such as Micronite in KENT have emerged but their appeal has either been orientated to one product or has not been permanent. Our own Duolite could be somethinE in the future~ The chart demonstrates the penetration of charcoal filter brands, the range beinE from O% in Germany and Canada to 22~ in Switzerland and 2~ in Venezuela. Mild brands (common definition of img nicotine : 16mE tar) have progressively penetrated markets around the world over a relatively short period of time~ most of the growth having come over the past five years. Tar : Nicotine levels have also fallen steadily in many market and although to a certain extentj this is a different way of expressing the rise in importance of mild brands, it goes further than this, because the non-mild brands have similarly been affected However, they have risen in Venezuela where the charcoal filter is the chief health factor whereas the degree of decline has varied ~dely. ~8.5.1975 O CZD r~ BATCo document for PFSFC 2 March 1999

APPENDIX ' B' A SUMMARY OF BIOLOGICAL RESEARCH DATA INTRODUCTION The first long-term experiment started in Battelle in July 1966. To date 30 different samples have been examined in ii experiments: a further iO samples are currently under investiga- tion in long-term tests. Some of these, and other, samples have also been examined in promotion (skin-painting) experiments. Such experiments use animals already treated with a carcinogenic initiator and are designed to examine the effect of smoke condensate on the second stage of carcinogenesis. More recently, a number of inhalation experiments have been undertaken in an attempt to develop more sensitive (and possibly more rapid) bioassay procedures for smoke. l Finally, samples of foamed BATFLAKE at multiple levels in two blends are being examined 'in-house' in short-term inhalation experiments working to a protocol designed to meet the requirements for a Phase I submission to the Hunter Committee. Long-term mouse-skin experiments are now being undertaken by Life Science Research Limited (Essex) and a promotion experiment has been carried out at WickhamResearch Laboratories Limited (Hants.). It is planned to continue to use Battelle for some specialised inhalation studies until the necessary expertise is available to us in the U.K. O O ~o t~4 BATCo document for PFSFC 2 March 1999

-2- LONG-TERM SKIN PAINTING EXPERIMENTS : In the initial experiments single samples were examined and, by means of calibration groups, it was hoped to interc~npare the results. Experience has shown that the use of calibration groups for such intercomparisons can lead to equivocal results. Never- theless, the following major conclusions can be drawn. Single Sample Experiments The tumorigenic activity of condensates in the four experiments can be summarised by:- PCL *< F.C. stem (50%) = U.S. blend (K.S.F.T.) < F.C. lamina Note: (a) *< = significantly less tumorigenic than. (b) This PCL contained an excess of stem from the dry side of the process. B Effects of Smoking Conditions i. " Puff Volume Tumorigenicity is significantly lower at higher puff volumes. Over the range iO ml to 50 ml tumour and malignant tumour response can be related to puff volume. Note: The reduced delivery of TPM at low puff volumes more than compensates for the increase in specific activity. e Puff Fre~/_enc[ Smoking at 3 puffs per minute does not significantly alter the tumorigenicity of condensate compared with 1 puff per minute. C Interim Analysis of Terminated Experiments The following conclusions are based on experiments with multiple samples and incorporated an internal control. Except for 'i', all subject to detailed histology and validation. i. Fermentation/CPI: Statistical Analysis Complete (i) Fermented F.C. tobacco = F.C. tobacco. (ii) CPI has no effect (30, 60, 120 cpi). Note: Compared with the above al__!l tumour data, the malignant tumour results show:- Fermented F.C. tobacco *< F.C. tobacco. High CPI *< low CPI. . X-PCL-5 (iO0~) *< X-PCL-5 (60~) "4 F.C. blend = CYTREL I 308 (60~ an__dd iOO~) *< Silica Gel Filter 0 0 ~0 ---4 BATCo document for PFSFC 2 March 1999

The experimental X-PCL-5 was no___ttmanufactured from the F.C. blend (50% lamina/50~CRS) which was otherwise used as the control. The silica gel filter was attached to the F.C. blend cigarettes. 3. Ethanol Extraction/Gerlach/PCL The F.C. blend (60% lamina/40~CRS) was used as control for all process modifications. If ethanol extracted tobacco is abbreviated to EXT, the results are summarisedby:- Gerlach from EXT *< Gerlach *< PCL + Gerlach additives *< EXT *< control blend. . BATFLAKE In an experiment with an early (unfoamed) BATFLAKE the following results were found:- PCL < control < BATFLAKE (25%) ,< BATFLAKE (50%) = Modified BATFLAKE (5OPt) Note: (a) The results for PCL were just no___tt significant: the final analysis could alter this result. (b) The trend with percentage inclusion of BATFLAKE is clear; the significance is marginal for 25% level, but (provisionally) definite for the 5~ level vs control. (c) The lack of difference, at the 5~% level, between BATFLAKE and the modified BATFL~(E indicates that sodium carboxymethylcellulose has no significant tumorigenic effect. . In the long-term test to compare Schweitzer (SRT) with PCL the provisional results on the virtually completed experiment are:- SRT *< PCL *< control F.C. blend Note: (a) The activity of SRT condensate is about 50~of that from PCL which is approximately 2~ lower than that of the control. (b) See also promotion results. PROMOTION (SKIN-PAINTING) EXPERIMENTS Ethanol Extraction/Gerlach/PCL Although a detailed statistical analysis has not been undertaken the tumour incidence data show that: Samples are ranked in same order as found in the long-termtest. O ~O tJ~ BATCo document for PFSFC 2 March 1999

A series of samples containing 40~ BATFLAKE (unfoamed) manufactured with different levels of chalk, binder and extract were examined. No differences in promoting activity were found with:- chalk 76% and 83% sodium carboxymethylcellulose 7%and 14% extract level 7% and 14% or between stem and lamina extracts. In contrast with the results of the long-term experiment, those from promotion test show:- (a) Activity of PCL condensate slightly hiqher than control. (b) Activity of SRT condensate slightly lower than control. (c) SRT condensate promotion activity is significantly lower than that of PCL at 91.7% level of confidence. PRT Varian~s_ex_G!2{z_M!!! This experiment incorporates two objectives (a) to examine the effect of apparent specific volume (ASV), grammage and the level of impregnation (solubles) and (b) to compare the activity of condensate from PRT cigarettes with that from the tobacco blend. On the basis of an analysis undertaken at week 24 (i.e. 4-6 weeks prior to termination), the following provisional conclusions can be drawn. (1) The promoting activity of the condensate is lower for PRT produced at a higher base weight, other variables being held constant. (2) The promoting activity of the condensate is higher for PRT sheets with higher percentage solubles (other variables constant). Changes in ASV do not significantly affec£the promoting activity of the condensate although an interaction between ASV and dose level was noted. Note: (a) It will be some time before the results of the corresponding long-term skin painting results reach a meaningful level of significance. (b) The differences relating to the second objective have not been subjected to detailed analysis. INHALATION EXPERIMENTS A Possible Mutaqenic Effects Male mice were exposed to smoke to assess whether there O O ~O C~ BATCo document for PFSFC 2 March 1999

-5- _B C were any effects on sperm cells which, following mating, could lead to dominant lethal effects in the offspring. These effects were examined in terms of malformation, stillbirth, embryonic and fetal death. N__oodominant lethal effects were found using this method for smoke from a flue-cured control or from X-PCL-5. Tumour Promotinq Activit~ A method has been developed to examine the promoting activity of inhaled smoke. In this case the hamster larynx is pre-treated with initiator. In an initial experiment (flue-cured lamina blend) it was shown that epidermoid carcinomas could develop within 6 months in an appreciable proportion of the animals. Compared with the control, the increase in the incidence of benign and malignant tumours was about four-fold. A second experiment to determine whether differences can be detected between (a) cigarettes (control and "median" PRT) and (b) exposure levels has been terminated recently. The results of animals which died prior to termination appear encouraging but the detailed histological findings have still to be assessed. Studies for the Hunter Committee Extensive studies on foamed BATFLAKE in B. & H. and Pall Mall in progress include dosimetry, respiratory and biochemical monitoring and pathology. Initial results from the first B. & H. study show that rats exposed to smoke for 6 weeks develop:- (i) squamous metaplasia in the larynx: (ii) hyperplasia and keratinisation in the larynx: (iii) goblet cell hyperplasia: (iv) increased macrophage activity in lung. For BATFLAKE groups all values of hyperplastic response was lower with the inclusion of higher proportions of substitute. The number of large macrophages also (a) decreased with samples containing a higher proportion of BATFL~E, and (b) was related to the level of exposure. It has been demonstrated that a high proportion of the 0 particulate smoke is deposited in the lungs, o ~D --4 BATCo document for PFSFC 2 March 1999