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Subject: Corporate Support for Biomedical Research To: Mr. J. Paul Sticht Oate; June 12, 1980 The assig-nment to look at all of the biomedical research_ supported by RJR funds has been completed. Contributions supporting biomedical research are presently being made indepen- dently by the- Tobacco Company a-nd by, Industries., The Tobacco Company's invoZvement with biomedical rese-arch bega-n in 1954 ten ye_ars prior to the 1964 Surgeon Ge-neral's report. Since then-more than $58 million has been channeled into a11 aspects of tobacco use and h-uman health by the companies which compxise-the tobacco industry. The industry prog.ram was begun thro-ugh the Tobacco Industry Research Committee-; which was-l.ater reorganized as the Council for Tobacco Research (CTR). .. . . ,. The objective of industry-sponsored -research has related directly to -smoking and= health and has provided an extensi-ve body of scientifically, well-gro-unded data in an continuing, effort- to answer the questions that hav.e been raised about tobacco and health. R._J. Re-ynolds Tobacco Company,. as a supporting member of CTR, has mana-ged this involvement by the company since- its inception and has provided the largest single share of supporting funds. In 1978, R.J. Reynolds Industries decided to substantially increase overall support of worthwhile biomedical research. Unlike the CTR program, where supported programs looked at links between smoking and various diseases, the Industries-sponsored research was aimed ultimately at the mechanisms by which deg-e-nerative diseases afflict man. The purpose stated at the time was three-fold:,

-2- • To discharge an obligation of corporate citizenship. • Esta blish credibility in the community. scientific prevention and cure of the • diseasestforowh ich tobacco,.products have been blamed. Within the past several years, the company's efforts to publi_cize its contributions to biomedical research have with few exceptions been limited to i.nternal employee publication s. Withi n the context of employee publications, Tobacco Company support of research through the CTR has not been differentiated from that -spo~ssor-ed sole.ly, by R.J. Reynolds Industries. As a o conseguen~e, a sharp delineation of the objectives of the tw eff orts has not been drawn. /When ahe- two efforts are consider,ed .separately, the objectives and gflals of the research sponsored by the tobacco ind-ustry as a whole thr-ough CTR is business related, a-nd -can be . . . . . ... fully ju-s-tified- on the basis of the support it provides for defending the tobacco industry against fundamental att.acks--on its business. The procedures-within the Tobacco Company for h.a.ndling b n h ug T d monitoring progress are well establshedandreq-uireno~modif ication. , . ,.. .., Indus_trie-s-sponsore.d biomedical research has been handled by Jack Roemer, outside the purview of the Corporate Contribu- tions Committee-, with the advice and counsel of a scientific- . .. . . . . .. . ..... .. ad.visory panel hea.ded by Dr. Frederick Seitz. At one -time the format-ion of a biomedi.cal research foundation was considered and i rejected and the present system cont nues to „ operate. In little more than two years,- Industries support has been given to a number of re-search projects at some of the nation's 1-eading medical research facilitie-s under Jack Roemer's direction and with the counsel of Dr. Seitz. Recently members of the Board's Contributions Committee i a corporate contribu- tonswe~e concern that touts ide pthe ~no ormal coversight of the Committee. At the most recen_t. quarterly session of the Contribu- tions Committee, Dr. Seitz made a presentation outlining all of the investigations currently receiving Industries' support and detailed the means by which he and his colleagues monitor the- progress of individual research projects. This followed your letter directing me to study the situation and answer thre-e u, questions. a

Before answering the questions posed in your letter and making recommendations, I am convinced that biomedical research contributions to CTR by the Tobacco Company are thoroughly justified and are being supported at an appropriate level. The procedures for providing support and monitoring progress are well esta blished and have worked very well for more than 25 years. For this reason, the questions you posed, as they relate to CTR research, have'been answered. The balance of this report, therefore, will be confined to Industries-sponsored bio- me-dical research. The first question was: What objectives are we seeking through -biomedical research 'contributions? Analysis and evalua- tion of the Industries' s-upported research suggests that consid- erable -val-ue has already been realized. The value is not quantifiable, but must be assessed on the ba-s-is of appropriate overs-ight, -expert_ counsel and sound judgm-ent. The objective- for the program should be as fol lows : R.J. Reynolds Industries, through a program of contri:butions supporting basic biome-d-ical research, seeks to enhance its credibi-lity within the medical-scientific community_, contribute directly to the cure and prevention of degenerative diseases in man, and to dis- charge a hig-hly worthwhile obligation of corporate citizenship. The second question asked which individuals -a-n-d groups within the RJR family should have oversight over bi.omedical rese_arch expenditures? We have concluded t-hat biomedical research contributions should be brought u-nder the oversi-qht of the Corporate Contributions Committee f-ollowing the procedur-es de-tailed in Enclosure 1 to this memorandum. The t°hird question asked how we can best communicate with different audiences about our research efforts? This is a sub- ject that is quite sensitive and one which must be han.dled with great care. Some communication through internal publications has already taken place aimed at our own employees. Publication of research results in professional journals credit RJR support and word-of-mouth supplements this channel of commun.icatio.n within the scientific and medical research community. Discussions with Dr. Seitz and others suggest that some additional steps can be taken and these are outlined in Enclosure 2.

mmendations„ are„as follows: In summary, our reco Continue Tobacco Company support of CTR-sponsored, tobacco-related, biomedical research ~. ,. Industries-sponsored basic biomedical • research withinrthe purview of the objective stated above • Assign oversight responsibility for Industries- sponsored biomedical rese-arch to the Contribution Committee of the Board in accordance with the procedures detailed in Enclosure 1. • Carry out an appropriate program of communications about biomedical re-sear-ch support along the lines outlined in Enclosure 2. ~ ,r 3M i1 ~//J WDFf/s c CCr Mr. Albert L. Butl-er, Mr. Herschel H. Cu,dd Dr. Juanita M. Kreps Jr._ Mr. Richard G. Landis Mrs. Margaret S. Wilson Mr. John L. Bacon Mr. Dennis Durden Mr. Rona.ld Sustana BC: Mr. Joseph F. Abely Jr.

ENCLOSURE 1 - Procedures for Managing and Progress Monitoring of R.J. Reynolds Industries Support of Biomedical Research Management - The following procedures govern the commitment of funds to biomedical research and the role of various individuals an authorities in consi 'dering requests and granting approvals: , • Requests for funding support will be referred to Dr. Frederick Seitz. • Dr. Seitz and other members of his advisory panel will review fund requests and prepare recommend-ations based on these criteria: * Project viability * Researcher's qualifications * Adequacy of facilities * Consistency with overall program objective • Prior to presentation to the Contributions Committee for disposition, Dr. Seitz will informally discuss recom- mendations with Mr. H.C. Roemer, ge-neral co-unsel. His , .. comments will be appended- to the written evaluations and recommendations presented to the Contribution-s Committee. Mr. Roemer would be free, of course, to cons.ult outside counsel, such as Ed Jacob, as he deems necessary or desirable. • Twice each yea-r, at the 2nd an-d 4th quarter meetings of the Contributions Committee, Dr. Seitz or -a member of his panel wili.pres-ent funding reque-sts and the panel's recommendations. Research„ targets of opportunity may be presented to the Committee at other times with the per- mission of the chairman. Dr. Seitz's presentation of each new request to the Committee will include: * Assessment of scientific merit * Recommended budget * Time f rame -of the proj e.ct * Recommendation for o-r against approval • Contribution Committee gives approval or disapproves. f

-2- Program Monitoring and Oversight - Program monitoring will be accomplished by means of written reports and site visits. Written semi-annual reports from researchers will be reviewed by the Director of Corporate Contributions and be distributed to appropriate persons for review, comment or other action. The Director of Corporate Contributions will also establish and schedule a program of site visits by small delegations representing the Contributions Committee of the Board, the scientific advisory panel, inside and outside counsel and appropriate Ind-ustries executives. A site visit to each supported program will generally be scheduled once each year by a del-egation of two or three pers-orrs. Following each site visit a report will be prepared by the delegation and furnished to the Director, Corporate Contribu- tions for appropriate distribution. Such reports will be made a part of the file for a pa-r.ticular project and will be used in preparing progress reports for the Contributions Committee-of the Board. Persons scheduled for site visits will be drawn from the following: • • Directors of the corporation serving on the Contributions Commi.ttee. Inside and_ outside counsel Relations Vice President and Group Director, Corporate Public • Officers- of subs-id-i7ary companies as designated by th-e Chairman of th-e Contributions and Membership Committee Director, Corporate Contributions The Chairman and CEO., the President and the Vice Chairman of the Board may, at their discretion, join th-e delegation in any site visit.

ENCLOSURE 2 - Concept for Internal and External Communications Concerning R.J. Reynolds Industries' Support of Biomedical Research Part of the corporate objective for supporting biomedical research presumes that thee company's role in fostering such research can and will be communicated to appropriate audiences. Sensitivity of the subject matter and the chances of offending researchers dictates a carefully controlled and highly targeted approach. ,, , The primary means of communications will be the publication of research findings within scientific and professional journals and word-of-mouth communications•w-ithin the scientific and medical community. These means are admittedly passive and beyond the company's control, however, more active approaches will be sougfit to gain notice among certain internal and external audi-ences when appropriate. These efforts will be under the direct control and supervision of the Group Director, Corporate- Publ-ic Relations. The following communications initia-tives will be undertaken by Corporate Public Relations: • Monitor -research reports. 'and publications in scie_ntific journalsr for us-e in preparing news an-de feature storie-s for employee-and shareholde-r_publications. • Publish news and feature stories in employee and s-hare- hol-d-e-r publications. n appropriate. • Publish summary articles whe • Publish a summ-ary article in corporate responsibility- publications-. • On a selective basis, seek joint news releases on major discoveries or breakthroughs through liaison and coordination with researchers through the Advisory Pa-nel (Dr. Seitz). •- On a selected basis, schedule Dr. Seitz (and other Advisory Panel members) for meetings with daily newspaper editorial boards, science and medical editors to explain need for private support of biomedical research using RJR program as an example of what can be done. • Securing of legal (inside counsel) and scientific (Dr. Seitz) clearance of all materials intended for publication inside or outside the company regarding corporate support for biomedical research.