Tobacco Documents Online

LOG START at 8:37:54 pm on September 25, 1997 [1] READ 1: CQ's WASHINGTON ALERT U.S. SENATOR JOHN MCCAIN (R-AZ); CHAIRMAN; SENATE COMMERCE, SCIENCE AND TRANSPORTATION COMMITTEE; HOLDS HEARING ON ADVERTISING AND MARKETING RESTRICTIONS FOR THE TOBACCO INDUSTRY; SEPTEMBER 16, 1997 *Congressional Hearings* (TRANSCRIPTS 09/16/97; 2990 Lines) Item Key: 2420 HOLDS HEARING ON ADVERTISING AND MARKETING RESTRICTIONS FOR THE TOBACCO INDUSTRY September 16, 1997 This transcript by: FEDERAL DOCUMENT CLEARING HOUSE, INC. 201 PENNSYLVANIA AVENUE, S.E., 2nd Floor WASHINGTON, D.C. 20003 Tel: 202-547-4512 Fax: 202-546-4194 COPYRIGHT 1997 BY FEDERAL DOCUMENT CLEARING HOUSE, INC. NO PORTION OF THIS TRANSCRIPTION MAY BE COPIED, SOLD OR RETRANSMITTED WITHOUT THE EXPRESS WRITTEN AUTHORITY OF FEDERAL DOCUMENT CLEARING HOUSE, INC. U.S. SENATE COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION HOLDS HEARING ON TOBACCO ADVERTISING SEPTEMBER 16, 1997 SPEAKERS: U.S. SENATOR JOHN U.S. SENATOR U.S. SENATOR U.S. SENATOR U.S. SENATOR U.S. SENATOR U.S. SENATOR U.S. SENATOR U.S. SENATOR U.S. U.S. MCCAIN (R-AZ), CHAIRMAN TED STEVENS (R-AK) CONRAD BURNS (R-MT) SLADE GORTON (R-WA) TRENT LOTT (R-MS) KAY BAILEY HUTCHISON (R-TX) OLYMPIA J. SNOWE (R-ME) JOHN ASHCROFT (R-MO) WILLIAM FRIST (R-TN) SENATOR SPENCER ABRAHAM (R-MI) SENATOR SAM BROWNBACK (R-KS) 09/25/97 1 Walrya'a:ANd - Caverrdur'Ocafery

don't think the circuit is going to allow the freedom of speech we hear so much around here now, you know. It becomes paid speech instead of free speech. Mr. Chairman, I, too, want to thank you for calling today's hearing and your fair attitude that has been displayed. And I think that it's important that that be made a part of the record and to review the so-called global tobacco settlement. Of course, the settlement isn't global yet anyhow, because it leaves out my farmers and farmers in all the tobacco-growing states. In any case, we will be reviewing a settlement that was drafted to stop youth smoking. But before the ink was even dry on the settlement, the anti- tobacco groups were attacking it even though the settlement includes just about every idea to stop youth smoking that public health groups have ever come up with. FORD: Just yesterday, the White House said that any settlement with the tobacco companies must achieve the public health goal of, and I quote, "protecting America's children." White House spokesman Mike McCurry went on to say that the FDA rule "achieves those public policy goals." Now everything Mr. Kessler said -- Dr. Kessler -- that his rules would do is in this bill, and more. And I'm going to ask these witnesses in a minute, which Dr. Kessler do you believe? Well, Mr. Chairman, the settlement we're reviewing includes the entire FDA rule, even though most of it -- MCCAIN: Could you withhold a second? FORD: Sure. MCCAIN: Could I say, officer, we're hearing your or someone's... (UNKNOWN): His. It's -- FORD: Mr. Chairman, if we put that up there, we won't be able to see the witnesses and they're very handsome. (LAUGHTER) Particularly Matt. I enjoy seeing him. MCCAIN: Thank you very much. I'm sorry, please proceed, Senator Ford, I didn't want to 6 #'artiyltn AEC - Ca~rtudna'OVr/c~

regulations came out in 1994. SAMSHA requires the states to pass and strictly enforce laws against underage access to tobacco products. It puts real teeth in these requirements by coordinating federal grant money on progress in reducing underage access to tobacco products. I think we can all agree that the only sure-fire way to keep children from smoking is to keep cigarettes from children. Now let's go home for a minute. In my own state of Kentucky, SAMSHA has had a dramatic impact. Before SAMSHA inspections and compliance checks were implemented, Kentucky had a compliance rate of about 40 percent. But with SAMSHA, our compliance rate has gone to nearly 80 percent in one year. And I have a letter from Margaret Platter (ph), the director of Kentucky's teen tobacco enforcement program, containing this information. And, Mr. Chairman, I'd like to see that this letter is incorporated in the record. MCCAIN: Without objection. FORD: And I think Ms. Platter's (ph) letter makes it clear that consistent and aggressive enforcement of the SAMSHA requirement will ensure that the good statistics achieved in 1997 remain or are even lowered in the years ahead. The purchaser is fined in Kentucky. And the purchaser will be required -- the teenager, the underage -- and they'll be required to do community service. I think that's something a little bit different, and it is working, and it's gone, it's doubled in one year, the compliance rate. Today we'll talk about why children start using tobacco, and what additional steps need to be taken to reduce underage tobacco use. Our witnesses will present a number of theories, particularly in relation to advertising. They might not mention that in 1994 cigarette sales rose even though advertising expenditures dropped by nearly 20 percent. You won't find that in any of their statements today. Or that five years of an advertising ban in Canada has brought smoking rates down just one point. Or that without any new federal regulations, any new federal regulations, use of smokeless tobacco by children has declined to just 1.9 percent in''96, and that's a decline of almost 40 percent, so less than 2 percent are using smokeless tobacco. I hope they will discuss these statistics and I hope they will explain to us why similar efforts that have been tried and failed in other countries will succeed in the United States. B !Ks/Mn,~'enA¢A-Ca~+errdxr'~r6

/ FORD: That's all right. We're even now aren't we. (LAUGHTER) MCCAIN: I didn't want you to be interrupted. FORD: Oh well, it's all right. If we lose our good humor around here, we might as well go fishing, hadn't we. (UNKNOWN): I'll go with you. I? FORD: OK. Well, Snake River's not bad for trout. Now where was MCCAIN: On the issue of Dr. Kessler. FORD: Yes. Well, no. That was kind of an afterthought. It wasn't down on my notes here. (UNKNOWN): On the Snake River. FORD: Even though most of the FDA rule was struck down by a federal court in Greensboro, it goes way beyond the FDA rule by including complete bans on certain types of advertising, even though the Constitution prevents us from legislating those bans, and includes i severe penalties on the companies if youth smoking isn't reduced -- now think about this -- even though tobacco manufacturers have no control over whether the billions of dollars they pay is used effectively by public health groups. It just doesn't make sense, Mr. Chairman, that I give you money, you advertise, and if my income isn't reduced, then I'm fined. It just doesn't make sense, but I didn't sign the agreement. Mr. Chairman, it's unclear to me how a settlement that goes so dramatically beyond the FDA rule can be characterized, as it has been and probably will be today, as a sell-out to tobacco companies. It seems to me that with all the add-ons being discussed, the settlement is in danger of collapsing under its own weight. And with the FDA rule still in litigation, that means the public health community could find itself without any tools it says are critical to reducing youth smoking. We continue this debate today. Meanwhile in the states, concrete and effective steps are already being taken to fight underage use of tobacco products. I'm talking about SAMSHA otherwise know as the Synar Amendment. We passed this law back in 1992, and the final 1 "~WMAfV - d.oW1sira'Auxkk

cigarettes -- not coincidentally,~the.three"mosti'heaviTy"'advertis'ed brands -- while.these-rsame thre@,brands,attracted„significantly „., smaller.share'of'the adult market. SNOWE: Unless anyone still claim that these marketing campaigns were primarily targeted to adults, consider that between 1992 and 1993, when advertising for the Joe Camel campaign jumped from $27 million to $43 million. Camel's share among youth increased more than 50 percent, while its adult market share did not change at all. Anyone who claims that the industry hasn't been targeting children is ignoring the facts. Mr. Chairman, as we review this agreement and seek ways to strengthen it, we should do it with an eye towards not only reducing youth smoking, but with a goal of eliminating it all together. Therefore, because we know that advertising has an unquestionable impact on behavior, it is critical that the restrictions that this agreement imposes on youth advertising and marketing be strong and unyielding. Any compromise in these restrictions would be a compromise in the health and safety of our children, and that option is simply not acceptable. I would like to thank our witnesses for being here to testify today and I thank you, Mr. Chairman, for calling this hearing. I look forward to an in depth discussion to proposed advertising and marketing restrictions in the settlement. Ultimately, these restrictions will have a profound impact on the broadest goals of this settlement, which is a major reduction in youth smoking. So, today's hearing does carry a great deal of significance as we prepare for any forthcoming deliberations. Thank you, Mr. Chairman. MCCAIN: Senator Bryan? BRYAN: Thank you very much, Mr. Chairman. Let me preface my comments by thanking you for holding this hearing and to the fairness in which you've approached it. Smoking is the leading preventable cause of death in this country. We all know that. More than 80 percent of the people who smoke had their first cigarette before reaching the age of 18. And the startling fact is that most young people who experiment with the use of tobacco products, do so at age 12 and 13. That means by the time those youngsters have attained their legal majority at the age of 18, hundreds of thousands -- if not millions -- are already addicted. Tragically, of the nearly 3,000 teenagers who have become regular smokers each day, 1,000 of them will die prematurely due to smoking- related illnesses. Consequences of this are not just with respect to D lYarti~Ia A~l - Cay efrpaaOua7n`

television industry's guidelines on the TV rating system. The National PTA thanks you for this opportunity to express our view points on an extremely important public health issue. We are willing to work with you as you begin to craft policies that will spare this next generation of children the hazards of smoking and tobacco use. Children are our primary concern in this issue. Thank you, sir. MCCAIN: Thank you very much, Ms. Igo, and again I want to thank you for you and your organization's involvement in this issue and we appreciate very much not only your verbal statement but I read your complete written statement and it was very helpful. Mr. Myers welcome. We again want to express our appreciation for the efforts of your organization has'made long before this tobacco settlement was reached and we view you as one of the most knowledgeable -- your organization among the most knowledgeable -- organizations on this issue and we appreciate you being before the committee today and please proceed. MYERS: Thank Mr. Chairman and members of the committee, and I want to thank you for holding this hearing. You have touched on an incredibly important point as part of the global settlement or any discussion of tobacco use. Let me briefly summarize my statement and then move on to a discussion of the issues orally. There's a few points I think need to be headlined in what we are talking about here. First, as many members of this committee have correctly noticed, despite the headlines and the sense that we are winning the war against tobacco, we are in a time of crisis. We are in a time of crisis because tobacco use rates among children have increased every year for the last five years. Among high school seniors, smoking is at a 17 year high. Any illusion that we are about to succeed in what is the really important battle, and that is the battle to reduce the number of kids who start, the number of adults who stop, is simply misplaced. We have a need to act and to act now. Two, tobacco marketing and advertising practices do affect children and do contribute to the problem. In my testimony, I have cited a number of comprehensive studies. I don't want to get into that today. But for the record, we would be happy to put into the record, the very substantial record that has been examined not only by the Food & Drug Administration but 15 H'ofAirfin APd - Ca~arrd»Ourte~

every major public health organization in this nation, by the governments of New Zealand, Canada and Great Britain and others, they all reached the same conclusion. Tobacco advertising works. Three, we cannot adequately address the problem of tobacco and children without restricting the type of advertising that has the greatest influence on kids. As Dr. Kessler has said so eloquently so often, it is one thing to cut off the illegal sale of tobacco products, but unless we deal with the factors that make those products appealing to kids, we will be swimming upstream for a long time. Four, there is no single magic bullet. Any serious effort over the long run to reduce tobacco use among children must include a comprehensive effort. We shouldn't fool ourselves about that. This isn't going to be easy. It isn't a one-time shot. In addition to restricting the type of advertising that directly influences kids, we need to do as Senator Ford said, cut back on youth access. But we also have to do more. We have to take serious the impact of public education. Public education works. We need to have periodic and significant price increases because of their impact on children. We need a regulatory system to keep this industry honest, not to put it out of business but to keep it honest. We need it to make adjustments to whatever system of restrictions and incentives we come up to adjust to new circumstances that we can't possibly envision today. We need it to ensure that the products that people continue to use are less hazardous and less addictive than today's products. And finally, we do need to restrict the impact of environmental tobacco smoke. For children we need to do so because we have concrete evidence of the impact on the respiratory system of these. But it is also incredibly important for role modeling purposes. And finally in terms of my key points, while the proposed proposal negotiated by the state attorney generals and the tobacco industry is flawed, and we agree should not be enacted without being strengthened significantly, it provides the right vehicle for the most fundamental change in tobacco control policy in this country in history. And we should be certain that whatever happens in the coming days, that that opportunity is not lost. MYERS: It really is time for us to move beyond the rhetoric and 16 #'alr~'mAtv( - Cau+eltmnOurlei~

discusses the various reasons individuals use tobacco. As to adolescents, Kluger says the following: "One should not minimize the usefulness of smoking as coded defiance of authority, of the hand fate has dealt you, of sweet reason itself. It is most favored in the first instance by juvenile smokers as an initiator into the mysteries and empowerment of the adult world. The accompanying displeasures of nausea and dizziness assaulting the novice inhaler are tolerated as rights of passage and the price to be paid for partaking in forbidden fruit. And how easy to defy the tyranny of grownups by illicitly taking up a favorite habit of theirs all the better for the reek of seriousness with no risk of rejection. "For youth or adult like, the habit may serve to compensate for profound feelings of inadequacy, inferiority or an abiding bitterness that stems from degraded social status. Such victims of social pathology are suspected of smoking not in spite of the hazards associated with it but because of them." Education will do much to solve these problems. But there are other more immediate solutions available, such as changing the way cigarettes are advertised. I hope that our witnesses here today will share their thoughts on this matter with the committee. It is widely believed that tobacco advertising helps create in children a sense that smoking is the cool thing to do and a way of expressing one's adult like independence. Criticism of tobacco advertising campaigns vary from the allegation that they create a social norm of smoking acceptance to assertions that children are directly targeted when they are most susceptible. Some research also suggests that children become addicted -- excuse me, Senator Ford, I would like to finish my... FORD: I apologize. MCCAIN: It's no problem. FORD: I was over here trying to work out something that -- but -- and it was on the verge of working out. MCCAIN: I... FORD: I whisper loud. MCCAIN: I thank my friend from Kentucky who has always shown me great courtesy. Some research also suggests that children become addicted to smoking after alarmingly few cigarettes. 3 b?x6np'mAkd - Gavertdua'Orafer

MYERS: I am concerned about that. But it is more important that we do it right. And I think that's got to be the fundamental question. There will be a balance in order to come up with'something that is tough enough to work, but realistic enough to pass. MCCAIN: Mr. Humphrey argues, Attorney General Humphrey argues that we should allow the states to move forward with their litigation in order that the concessions that were made in this agreement do not have to be made. And in light of the Florida agreement and Mississippi agreement that we might, that we would be better off, is his argument. How do you respond to that? MYERS: No one has a crystal ball. We can't predict whether we will be stronger or weaker in six months. Whether the Fourth Circuit will rule one way or the other. Whether the Texas state case will come out one way or the other. Or, whether the many cases that are currently pending will actually... MCCAIN: I think exactly what Mr. Humphrey's argument is, let us see what happens in our case before you act. And yet, the other attorneys generals are saying that they want Congress to act immediately otherwise there may be action taken by the courts that could fundamentally undermine the agreement. Where do you come down on that? MYERS: I come down that the first and foremost responsibility of all of us is to make sure that we have, we're supporting a policy that has the best possible opportunity to work and only then, to move that policy. If there is risk taking in waiting, we should take the risks. But we should also recognize that waiting does pose some additional risks. The key to me is for us to roll up our sleeves and make sure that we have a game plan for enacting the best possible policy that will reduce tobacco use the most over the long run. We shouldn't be rushed into action by artificial deadlines. We also shouldn't think that there is an endless summer. MCCAIN: But the -- again I -- in all due respect, we are getting severe criticism from the states attorneys general for not moving forward. And people like me and Ms. Igo, I think are the referees here to some degree as to whether you think they are correct, that somehow we're derelict in our duties by not coming, rapidly endorsing that settlement. Or, should we do as Attorney General Humphrey and others have 21 IYmMyymANd - Ca~reudaOwtei`

As a physician, I'm especially concerned about the epidemic of youth smoking. we know each year that an additional one million young people become regular smokers. When the dust is cleared from this settlement, my primary goal will be to ensure that we have used our resources in the most effective way possible to put an end to teen smoking. I have three young sons and I urge them relentlessly and I hope and pray that they never smoke. As a parent, I want laws at the state and federal level to ensure that my children cannot purchase tobacco. I'm excited about the opportunity we have today to thoughtfully examine some of the methodologies for reducing teen smoking. It's important that we do hear from the experts and target our efforts toward scientific strategies, rather than bureaucratic non-solutions. In addition, we as parents, as school teachers, as responsible adults can no longer look the other way when we see a young person smoking. New federal standards and funding for state enforcement will make it absolutely clear that our children are not free to do permanent damage to their bodies through illegal use of tobacco. Our society requires that young people reach an appropriate age of maturity before they vote, before they drive a car, before they drink alcohol. we should certainly require that these young people reach 18 before they make a decision about smoking. In closing, I'll note very briefly that I do continue to remain concerned about people who were not at the bargaining table in the tobacco settlement. While today's hearing is focused on youth smoking and advertising portions of the global settlement, we must continue to remember the interest of the tens of thousands of hard working Tennessee tobacco farmers when making our decisions. Thank you, Mr. Chairman. MCCAIN: Thank you, Senator Frist. Now, we'll call our first two witnesses: Mr. Matt Meyers, who's the executive vice president and general counsel of National Center for Tobacco Free Kids, and Ms. Shirley Igo, who's the vice president for legislation, the National Parent Teacher Association. Welcome to both witnesses. You and all the witnesses' written statement will be made part of the record and you're free to summarize your statements or make statements in whatever way you feel would be most helpful to the committee. Ms. Igo, we'll begin with you -- and welcome. IGO: Thank you. MCCAIN: And thank you for the involvement of your organization in this very important issue, along with your involvement of 12 /Y~tiY(cnAtd - Ca~ errznN~nlnb

they get there, they're used to; they're comfortable and they positively associate these products with these things. Look at these t-shirts turning children into literally walking bill boards; allowing them to become the icon of the race car drivers that they would all like to be -- the risk taking people. You know, in the '60s, the tobacco industry promised they wouldn't use sports stars as models because young kids role model after them. Well, what is the race car driver of today? And you have to look at t-shirt after t-shirt and you begin to see -- who wears these? Who do these appeal to? We can't just deal with direct advertising. But this too is only the start of a long plan for the tobacco industry. In front of me, I have a CD giveaway. For what? Virginia Slims "It's A Woman Thing" music concert tour. Young women associated Virginia Slims with this reaching out to those teenagers and young adults on a daily basis in every part of their life. Joe Camel -- while Joe Camel's gone, the giveaways are not. Buy two packs, get one free, get a t-shirt. Forty percent of the kids who smoke in this country have one of these sorts of items. Even when you go to work out, you have your Marlboro bag. It literally never moves away from you. Every place you go -- it associates tobacco use with all of the traits that young adolescents -- boys and girls -- are looking to discover during that early period of adolescence. But we also ought need to be careful as we move forward because this industry is clever and it's one of the reason why you need to combine specific advertising restrictions with mechanisms for making change. Even as advertising restrictions were being discussed, the RJ Reynolds tobacco company introduced for this country a whole new advertising gimmick: package of cigarettes which themselves become walking, talking advertisements. Now, Joe Camel may be gone, but the concept of cool characters on cigarette packs means that we can't ignore the fact that these become the marketing tool of tomorrow if we're not careful, and the packs are combined with Camel cash, so that if you haven't gotten one of these t-shirts on your own, you're going to be able to use the Camel cash, if you smoke enough, to get these and other cool toys. Mr. Chairman and members of the committee, the tobacco industry isn't spending $5 billion a year on this form of advertisement to reach you or me. It's no, no coincidence that kids smoke the brands that are heavily image advertised. It's no coincidence that the magazines that contain these types of advertisements are the magazines with the heaviest youth readership -- magazines like "Sports 1 B lYmt~a'm d~d - Ca~eudur'Ourlc~

said. Look, look at this thing, the president is going to make some recommendations today to strengthen the agreement. Which, from what I hear, I think all of us would welcome to some degree. Let the Minnesota case move forward. Where do you -- and Ms. Igo, I would ask you -- where do you come down on that issue? Because very frankly, we're not very comfortable with being accused of failing to act on an issue that's so important to the American people. MYERS: Let me try to be as specific as I can. I participated in those discussions as you know. I understand the sensitivity and the balances that comes out with any discussion. And I think that has to be taken into consideration. However, the first and foremost responsibility is to do it right. In doing it right, we have to take into consideration not that the sky is going to fall, whether we don't do it tomorrow. And not delay for delay's sake. But to take the amount of time that's going to be necessary to analyze this correctly, make the adjustments to ensure we have a policy that we'll be comfortable with into the next century. if we can do that quickly, we should. But we shouldn't respond to artificial deadlines. MCCAIN: Ms. Igo, do you have a view on that? IGO: Our primary concern is that children have protection and that the marketing pieces as well as the other pieces that I indicated in our written testimony, be there to give parents, one more time, some help in combating this insidious problem. I would agree that this does not need to be rushed into. I would, however, say that I am concerned that state-by-state agreements may not address the entire problem for all of our children. I would also say that as this settlement, proposed settlement stands now, we would not be in support of it because of the deficiencies that we see in it. However, I would agree with Mr. Myers that... MCCAIN: Let me put the question to both of you this way. Because I'm trying to deal with the realities of the situation. And that's what is, I think, important to all the members of this committee. Apparently, the president's recommendations will not be specific. 22 lYmNpm tE?- Ca~.errdaaOvrle6

U.S. SENATOR ERNEST F. HOLLINGS (D-SC), RANKING U.S. SENATOR DANIEL K. INOUYE (D-HI) U.S. SENATOR WENDELL H. FORD (D-KY) U.S. SENATOR JOHN D. ROCKEFELLER IV (D-WV) U.S. SENATOR JOHN F. KERRY (D-MA) U.S. SENATOR JOHN B. BREAUX (D-LA) U.S. SENATOR RICHARD H. BRYAN (D-NV) U.S. SENATOR BYRON L. DORGAN (D-ND) U.S. SENATOR RON WYDEN (D-OR) SHIRLEY IGO, VICE PRESIDENT FOR LEGISLATION, NATIONAL PARENT TEACHER ASSOCIATION MATTHEW MYERS, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL, NATIONAL CENTER FOR TOBACCO FREE KIDS DR. JOSEPH DIFRANZA, UNIVERSITY OF MASSACHUSETTS MEDICAL CENTER DR. ALFRED MUNZER, FORMER PRESIDENT, AMERICAN LUNG ASSOCIATION D. SCOTT WISE, PARTNER, DAVIS, POLK, AND WARDWELL [*] MCCAIN: This hearing will come to order. This is the committee's second in a series of hearings that will explore the proposed global settlement of tobacco litigation. The focus of the hearing is simple: What can the Congress and the tobacco industry do to stop youth smoking? Our long-term goal is clear, to reduce smoking over all. But the facts are clear. They tell us that if we are to reduce adult smoking, we must first reduce underage smoking. Very few adults take up smoking. It is a habit begun in adolescence, or all too often, even before adolescence is reached. Over 90 percent of those who smoke regularly start before they are 19. Approximately 3,000 kids start smoking every day. Estimates vary as the average age of children who begin smoking. But those estimates vary between 12.5 and 14.5 years of age. I know reducing the number of children who smoke is difficult and no single solution will simply accomplish the task. But it must be our primary goal. The complexity of this problem is evident in Richard Kluger's discussion of why adolescents smoke. In the introduction to his book, "Ashes to Ashes," Kluger 2 WmWm AM - Cay,~zrtmd0eerle#

the young, but have an impact upon all of us. The statistics of my own state are insightful. According to some surveys, Nevada ranks at the top in terms of smoking prevalence. Not a ranking, I must say, that we're proud to say we have. This prevalence correlates in terms of significant medical costs to Nevada for the health care and treatment of the many individuals who smoke -- who suffer from smoking-related diseases. The most recent statistic indicates that $198 million of direct medical costs were directly related to smoking-related diseases in Nevada. Specifically, in 1997, it is estimated that 1,100 Nevadans will die of lung cancer. All of this is preventable. Although the tobacco litigation settlement seeks to prevent underage use of tobacco products and many of its provisions are significant, there are still questions to be answered. The advertising restrictions are focused on children, as well they should be. Will the remaining advertising allowed for adults still reach children? Can any advertising be allowed that could have a public health impact on children or young adults? Are the look back penalties strong enough to ensure a sustainable reduction in future smoking by underaged children? Arid finally, I was curious to note that there are no penalties provided for underaged youngsters either seeking to purchase or to possess tobacco products, much as we have for underaged youngsters who seek to purchase alcohol or to possess alcohol products. Chairman, I look forward to hearing our witnesses and the distinguished panel respond to these and other questions, that I know that will arise during the course of these discussions this morning. MCCAIN: Thank you. Senator Burns? BURNS: I have no speech. MCCAIN: Senator Frist? FRIST: Thank you, Mr. Chairman -- and I too want to thank you and commend you for holding these important hearings. As a physician, as someone who has operated on thousands of patients who have suffered from the damages of smoking, I feel that I have a special responsibility in this debate over the proposed tobacco settlement. First, let me repeat that I -- again, as a physician and as someone who is aware of the scientific data -- do urge my patients in the past and my constituents today, to stop smoking if they've started, and more importantly, not to start. 11 N'mlirYmAE~-Cayreffim'Oeafa`

citing up of statistics to rolling up our sleeves and making hard choices and beginning to make progress on the issue. Now, the committee asked us to talk a little bit about tobacco advertising today. I mentioned to you that there are a number of comprehensive studies. But you know, you don't need detailed econometric data to know what's going on here. 86 percent of all kids who smoke, the three most heavily advertised brands. 60 percent of all kids smoke one brand, Marlboro. The Marlboro cowboy is the perfect icon -- the rebellious, independent, strong image that attracts young boys and young girls alike. It's also no coincidence that smoking among children of Camel cigarettes skyrocketed with the introduction of Joe Camel and equally as important, not only did kids switch to Camel, kids started smoking for the first time. Joe Camel was accompanied by the first major overall increase in tobacco use rates among kids. How does the tobacco industry do it? Well, it isn't a simple and direct thing and the analysis in the Food and Drug Administration August 28 rule, provides a comprehensive review. But, we can't get away from looking at what's going on here. Now, we've brought a couple of examples because traditional advertising is just the tip of the iceberg. Take a look at two traditional advertisements that are running today -- currently today. When the RJ Reynolds tobacco company eliminated Joe Camel, don't for a moment think they stopped their marketing efforts to kids. The advertisement I had in front of us with what I call the "vamp ad" -- this sensually looking woman whose major and direct appeal is to young adolescent boys -- is unproven in its effectiveness because it hasn't been on the market long enough. But anybody who's looked at tobacco advertising over any prolong period understands that, that's not aimed at anybody the age of anyone of us in this room today. In the ad I have behind me -- a Kool ad... (LAUGHTER) ...the Koo1 advertisement associating smoking with race car driving -- the sleek, slick risk taking is about the best way one can imagine reaching young adolescent boys. The data shows it works. But, that form of traditional advertising is truly the tip of the iceberg. Look at the type of toy cars with Camel and Skoal images. These aren't meant for adults. Let's not kid ourselves. It's the beginning of association of these tobacco products with young children long before they reach that smoking age decision, so that by the time 17 /Ymti~lmAlvl - Cm retrznaOare6

television ratings. IGO: Good morning, Mr. Chairman and members of the Senate Commerce committee. My name is Shirley Igo. I am vice president for legislation for the National PTA, which is the nation's largest child advocacy organization with over 6.5 million members -- all of whom are concerned about the health, education, and protection of children and youth. And we thank you for this opportunity to comment on the proposed tobacco settlement. National PTA passed its first resolution concerning tobacco use by children in 1926. At that time, we urged our members to help eliminate smoking by minors. We passed numerous resolutions since that time and it continues to be a primary goal for our organization. Our bottom line: to eliminate or at least significantly reduce the use of tobacco products by young people through public education, reduction in tobacco marketing promotions, and other means. And while the National PTA believes that many of the settlement provisions related to children and youth are a step in the right direction, we cannot approve the package until stricter provisions are added. Any final settlement must guarantee that tobacco companies cease advertising to young people and if they do recruit them, the companies must be required to pay dearly so that it hurts. IGO: This hearing should concentrate, first and foremost, on children and their health. It should be about the 3,000 children who become smokers every day. It is about the estimated 4.5 million children and adolescents who smoke. It is about the one out of three young people who will die prematurely as a result of tobacco use. It is about smoking among high school seniors now at a 17 year high. It is about tobacco companies making millions of dollars every year pushing a hazardous product and exploiting children's vulnerabilities to future addiction. It is about developing policies that immediately reduce and eliminate the tobacco industry's hold on many of our children. In the proposed settlement, we find many provisions in concert with our own positions. However, we believe that more stringent provisions must be added and those are in our written testimony. And the changes that we would recommend are extensive. However, there are provisions in this program that we agree with and which we want to see retained. These marketing techniques directly affect children and youth and their decisions to use tobacco products and we strongly support a number of them. 13 IYrs/v4'ai1#d - Cavefrdva'6irAed

This agreement took a hard look at the hard question of the Internet advertising which is just now coming into focus. Arid with the voluntary agreement of the tobacco industry, but to be enforced through consent decrees, it will eliminate the problem before it starts and in a way that will avoid the First Amendment problems that other restrictions on Internet advertising have had -- a critical step to cut off an advertising avenue before our children become nailed by the newest technology. In short, on this issue, the agreement with the tobacco industry is by no means perfect. But it does represent the most extensive change in tobacco marketing and advertising ever seriously discussed in this country. And by focusing like a laser beam on the type of advertising which appears to have the greatest impact on kids, everything I've shown you today would be prohibited under the agreement. It allows us to take a giant step forward as part of our comprehensive effort by giving the Food and Drug Administration the authority to adjust these rules as circumstances dictate. It means we won't be locked into solutions permanently that the tobacco industry learns how to circumvent. This agreement, on its advertising restrictions, takes into account the very best we know without attempting to over-reach. Now, in the rest of my testimony, I have also talked about the other components of the agreement in a comprehensive plan. But I want to conclude with a simple statement. The hearings before this committee and other committees, have demonstrated that the agreement with the tobacco industry needs to be strengthened in very significant and important ways. The discussions between the tobacco industry and the state attorneys general, however, have moved us forward in ways that would have been unimaginable only months ago. The tragedy will be if we don't figure out how to translate how far we've come to the enactment of a truly comprehensive policy that has the opportunity for working in the coming months. Thank you. MCCAIN: Thank you very much, Mr. Myers. In a previous hearing, Mr. Myers, the states attorneys general with the exception of the attorney general of Minnesota, said that if we change this agreement significantly, then the whole agreement falls apart. Are you concerned about that? ?n JYatia'mAlrl - CmrPrJiau/Oir~teb

Some studies apparently found withdrawal symptoms after only two or three packs of cigarettes have been consumed. This research is particularly worrisome because it shows how very wrong kid can be about their ability to stop smoking even when they many think they are just trying it out. As I noted, since.the causes of and motiva'tion for youth-smoking.,, are complex and sometimes confusing, it is not a surprise.that we know-- little for certain about how to stop youth smoking. It seems clear, however, that no single action will solve the problem. Youth smoking must be attacked on a number of fronts, including more firmly limiting the access to tobacco products, increasing the price of those products, using education and counter advertising campaigns, and changing the way tobacco products are advertised and marketed. During this hearing, I look forward to exploring the causes of youth smoking and how we might reduce it. I thank the witnesses for their willingness to testify. Today, it's being reported that the president will oppose the universal tobacco settlement or support the universal tobacco settlement with significant modifications. in light of that, certainly the president -- the information we have is that the president does not intend to come forth with specific a legislative proposal. In light of that disclosure, congressional action on this subject will become more difficult. Regardless of the outcome of the global tobacco settlement, our primary duty remains clear, to aggressively address the issue of kids smoking. Let me repeat that statement. Regardless of what transpires with the universal tobacco settlement, we must first seek to address the issue of kids smoking. That will be this committee's top priority. I look forward to working with my fellow committee members and the witness to achieve that goal. Senator Ford. Excuse me, I'm sorry, Senator Wyden. WYDEN: Mr. Chairman, thank you, and let me begin by commending you for the thoroughness with which this committee is going at this issue. It is very clear that we are going to systematically go through the key issues, and I commend you for doing it this way. Today's hearing is particularly important, Mr. Chairman, because ! WarWmQd - CnVemd a'OW.4

the tobAOOo industry survives by placing sick and dying smokers with new and naive ones, and advertising is the premiere survival tool for this industry. My view is that the key to demobilizing the army of 3,000 kids who start smoking each day is to have an effective blockade against the industry's advertising and marketing that targets our children. It seems to me, Mr. Chairman, that this advertising issue is so important that if you don't do that, everything else is uphill. Kids get hooked, we face then the prospect of paying for the medical bills, and everything else represents an uphill challenge. There are three primary reforms that the attorneys generals have looked at with respect to advertising. They seek to eliminate the billboards, the tombstone ads, and of course, give the FDA full authority to judge and restrict content of that. I support these proposals. But my concern is that this cynically created industry is going to spend vast sums to constantly try to get around these rules. For example, we saw new evidence this weekend of this industry's capability of changing the channels. We„learned, for example, of their.efforts to°recruit'newtsmokers at the.next demographic level. The:older>teenagers and.the 20-,w, something crowd with what are called Camel Clubs.- So I.am very<., hopeful, Mr. Chairman, we will look at more creative and bolder approaches to deal with this advertising issue. And I noted that you said, Mr. Chairman, in your statement that your interested especially in exploring this`>issue o€ counter advertising. There's a substantial body of evidence that shows that that is pertiap's the premiere way to reach these young people. And I just want you to know, Mr. Chairman, I very much appreciate your leadership and look forward to working with you and all of our colleagues on this. MCCAIN: Thank you, Senator Wyden. Senator Stevens. STEVENS: I have no comments right now. MCCAIN: Senator Ford. FORD: Thank you, Mr. Chairman. I might say to my good friend, advertising will only be accomplished -- your problem with advertising will only be accomplished if the agreement is agreed to. Otherwise, I wllie-~- S IYardvatmAh? - Ca~ertd~ 0areid

signed. Now, is 368 billion the total figure in your agreement, or is that just the core tobacco settlement? MYERS: I'm sorry, Senator Ford, I'm not sure I understand the question. FORD: $368 billion over 25 years basically is the core agreement. MYERS: That's correct. FORD: And so there is add-ons in addition to that, is that correct, under the agreement that you participated in? MYERS: The only add-ons were the penalty provisions under look- back, that I'm aware of. FORD: Oh. Oh. What about the attorneys' fees? MYERS: The attorneys' fees were outside the agreement. FORD: Yes, well, they were a part of the agreement, though, that when -- that the attorneys' fees now will be paid by the defendant. And I'm not worried so much about attorneys right now. But the point is that when you add up the tort liability, and when you add on the look-back and now you want to increase that, and then you worry about the attorneys' fees that are a part of the agreement, now the look- back is and the additional tort liability is, but it's outside of that 368 billion. FORD: So, now that gets us up to about $434 billion without attorneys fees. And, now we've got the $2 billion annual increase in excise taxes. That's $50 billion more over the 25 years. That gets us to $484 billion. Now, we're going to increase the look-back and that could be another $2 billion. And that would be $22 billion over the 25, so we're at $526 billion and we don't know what the attorneys fees are going to be, or their cut of the deal is going to be. Aren't we getting close to -- when you add up all those figures -- aren't we getting close to the dollar and a half a pack that everybody's talking about? MYERS: You and I have obviously done this wrong. You and I are the only two who aren't going to make any money off of this deal in any way, shape or form. FORD: No, you're getting paid to do what you're do what you're 31 1Yrxti~la RN( - Ca~retrina'Ouderp

And Mr. Chairman, I thank you for all the time. MCCAIN: Thank you, Senator Wyden. Senator Snowe. SNOWE: Thank you, Mr. Chairman. And thank you both for your testimony here this morning. And obviously, there are a number of issues to consider in terms of the effectiveness and the impact of what is included in the global settlement. Obviously, we're dealing with an industry that has been historically reliant in attracting new customers to essentially become addicted to tobacco products before the age of 18 or 19. So my question is this. Mr. Myers and Ms. Igo, could you tell us whether or not you think, under the proposed settlement on these restrictions, as to whether or not the industry could conceivably circumvent these proposed restrictions? IGO: I think it's very obvious, and my testimony indicated that I do believe they could circumvent. And that's why I believe there is a need for additional guidelines. I think we have -- and I think we have one opportunity to make this right. IGO: I think we need to look at all of the circumstances surrounding this settlement and make sure that the things that are put in place address all of the concerns that we have about this issue as it affects our children. MYERS: Senator Snowe, I don't think it's possible to write an agreement that the industry could not circumvent, and that's why I think any agreement has to combine two things: the toughest and fairest rules about what we know how to do, and a process for imposing additional rules when the tobacco industry comes up with things we haven't been able to think of. That was the goal of combining specific rules and regulations with full FDA authority to look at this issue in the future. SNOWE: I would concur with you. I think that obviously there is the potential, and I could see down the road that we would find ourselves in exactly the same situation with essentially little if no penalty to the industry, because the other question that I wanted to ask you is -- and I know it's not within the jurisdiction of this 2 1 MmhWmAE? - Cayreudm'Oerrln`

COMMAND HISTORY: LOG START at 8:37:54 pm on September 25, 1997 CHOOSE TRANSCRIPTS SEARCH tobacco, DATE: 9/16/97 [1) READ 1 LOG STOP at 8:39:16 pm on September 25, 1997 11 Walv~lmA@vf - Cr~resrd»'Dirr/er`

every single provision of. The question is can we use this opportunity to come after this problem in a broad way that will truly make a long-term impact. And if we can, then it's worth waiting a couple of extra months. What we shouldn't do is allow this opportunity to pass because we simply can't afford to have another generation of kids without meaningful, determined national activity. (AUDIO GAP) WYDEN: Thank you... MCCAIN: I have a number of other questions. WYDEN: Thank you, Mr. Chairman. Let us -- if Mr. Myers says "roll up our sleeves," specifically on this advertising issue, because to me this is the industry's survival operation. I mean, this is the only way they can go from folks who are sick and dying today to get new young people. And my concern is you've almost made your case too well. You have shown how this cynically created industry has an enormous capacity to get around virtually all of this stuff. I mean, in once sense -- take sharks, for example. Sharks in effect stop swimming, they die. This industry, if they stop marketing and promoting, they're going to die as well. And they're not going to do that. I mean, what we saw this weekend, for example, with respect to the Camel clubs and the way their marketing firm operates -- and just let me quote from this. I mean, they're working under the radar. They've got a new way to associate Camels with being cool and targeting young people. My question is why not just say the best way to keep kids from starting to smoke is to raise the price, raise the price significantly and get on with it. I mean, isn't that a better way than to try to figure out all these kinds of approaches that, by your own evidence, they seem to be awfully good at circumventing? MYERS: My short answer is no. You need to do both if you're going to be successful. I mean, 11 IYmhyr'enAEv -Gmaend»Oafcp

And there will not be a legislative proposal presented to the Congress, which is the normal procedure here. Which then leads everyone to say well, for this year, since we are going out of session, in some weeks, that we probably will not move forward with some overall settlement, or perhaps any settlement, of any kind. Would it then behoove us to focus -- sort of following up with what you just said, Ms. Igo -- to focus our attention on the more serious problem and look for some proposal that we could enact possibly this year. But certainly, early next year, if not this year that would focus entirely on the children's aspect of this issue and leave some of it up to further negotiation. In other words, a piecemeal approach addressing the most serious aspect of this issue first. And then, a follow on with the other agreements. Does that make any sense? Or, have you got a better strategy? IGO: I would not offer to you a better strategy. I would point out to you that national PTA passed its first resolution in this regards in 1926. We have been working state by state in a piecemeal operation. We've been continually thwarted by lack of cooperation and by a lack of initiation and by laws that are absolutely ignored. IGO: Our concern is that we lose thousands of children every year. I lost my husband, who was a teenage smoker, to lung disease this year. I don't want to lose any of my children because we've taken it in a piecemeal step-by-step process. But I agree that children should be our primary focus at this point. MCCAIN: Well, let me just quickly add -- some of the proposals here, which I don't have time to go over that you made, I think the people who made the settlement would not find acceptable. That's another reason why I think perhaps we ought to prioritize. Mr. Myers. MYERS: Senator McCain, before we move to piecemeal legislation, I think we ought to make a determined effort to see if we can come up with a comprehensive proposal, because piecemeal change hasn't been shown to have a substantial or long-term effect. If we have no choice, it's better than nothing. But I do think we are better off rolling up our sleeves and trying to get our arms around this. There will never be any single proposal that everyone endorses 23 Wm/~'mAlw!- Ca~rerrY~ Oared

Throughout the years, National PTA has worked carefully and cooperatively with the Centers for Disease Control and Prevention and with the Coalition for Tobacco Free Children and with numbers of health organizations and volunteer operations to spread the word to children from concerned parents and community members that we know the dangers of smoking inherent in children's use. However, our people, our members have been consistently thwarted by the other message that has come from the tobacco companies. Therefore, we would encourage that the settlement include prohibitions on sponsorship of events by tobacco brands by prohibiting advertising of non-tobacco items like clothing and gear, product placement on TV, Internet advertising, use of human images and cartoon characters in ads, outdoor and billboard advertising and payment of fees to celebrities who smoke or glamorize tobacco. We would encourage that the settlement include a ban on the sale of cigarettes in vending machines, penalties for vendors who violate youth access laws, that it include tobacco education programs, that it increase the size of health warning labels and changing product placement, that there be a requirement for warning labels on all tobacco advertisements and an increase in the price of cigarette and smokeless tobacco. The issue of restricting advertising targeted at children precipitated considerable discussions at the National PTA level as we reviewed the settlement. Historically, PTA's telecommunications positions demonstrate healthy respect for the First Amendment guarantee of free speech. Our position on this settlement does not include a full ban on tobacco advertising. But it does reflect a balance between protecting children and recognizing First Amendment guarantees. Our leaders, however, are fully aware that the tobacco industry will push the envelope as far as it can. Because there is a fine line between youth and adult advertising, certain questions must be addressed. What is the distinction between ads targeted to children and those targeted to adults? Who makes this distinction? What procedures should be established for citizens to easily challenge ads that they consider to be a violation of the settlement? We believe guidelines should be developed around these concerns. National PTA offers to provide input and work with the appropriate parties in this area much as we did in helping to develop the 1 ! IYaM~tm,d~~ - Cs+~rertd»'Oratei6

Mr. Chairman, we've known for a long time how to fight youth smoking -- keeping tobacco from children. We passed SAMSHA to make sure that happens. And I've introduced a bill that is pending before this committee to build upon SAMSHA's success. My bill contains provisions that we all can agree on. We ought to focus on what we can do now to reduce teen smoking, not on how we can further restrict adult choice. And so, Mr. Chairman, I thank you again, and I look forward to today's testimony. MCCAIN: Thank you, Senator Ford. Senator Snowe. SNOWE: Thank you, Mr. Chairman. Thank you for holding this hearing. It's a very important hearing and I commend you for it. Clearly it's an issue that this committee should focus on, and I appreciate the fact that you said, Mr. Chairman, that r„egardless?>rof,jA what,happens;.to..the,global settlement that-this is an:issue,that this;~ committee will focus>on with respect to=restrictions of-marketing.and, promoting tobacco products. I think there's no question that the proposed settlement will either be viewed successfully if it effectively reduces teen smoking and youth smoking in this country, but it clearly will be regarded as an abject failure if it does not reduce teen smoking. And that's why I think the committee's proceedings on this issue become critically important because I think that this issue is pivotal to the entire issue particularly when you look at the statistics on youth smoking in America. One million of our children become addicted to tobacco every year. That's 3,000 new children developing this habit each and.every day. In my home state of Maine we have one of the highest teen - smoking rates in the country, with 38 percent of high school children smoking. Not surprisingly, Maine also has the highest smoking rate of any state for individuals between the ages of 18 and 30. So needless to say, the impact of these kids acquiring this habit will be devastating. As the Center for Disease Control has estimated that nationally more than 5 million children living today will die early because of their decision to use tobacco, including, I might add,' 31,000 premature smoking-related deaths in the state of Maine. In light of these statistics I find it appalling that over the years the tobacco industry has actively marketed, knowingly, an addictive product in a manner that is appealing to children. Consider that according to a study by the Center for Disease Control, 86 percent of kids who smoke prefer Marlboro, Camel, and Newport brand 9 lYm'2y~'enAEsP - Cr~r'ettzna'Ourlrr`

Illustrated." The young women's magazines where they use the Virginia Slims woman to associate smoking as a young person with thinness. Now, let me talk about the tobacco agreement for a brief moment, if I can, because it does represent the most dramatic recommended change in how we deal with tobacco advertising in the history of this nation. It is not -- it is not, I repeat, a total advertising ban. It does not seek to prevent the tobacco industry from either advertising to adults or advertising containing product characteristics that adults would take into consideration. You know, the reality is kids look at pictures; adults read words. The tobacco industry will remain free to use words, but they won't be free to use these pictures. This advertising -- this agreement starts with the base of the Food and Drug Administration rule -- it will eliminate all of this color advertising in magazines and newspapers read by large numbers of kids. Thus, we will no longer see this type of advertisement in "Sports Illustrated" or a host of other young people oriented magazines and newspaper. It will give the Food and Drug Administration the power to review these rules to see if the tobacco industry has chosen other venues later on for us to be able to move. It will eliminate all cartoon characters and human images -- not an answer by itself, but it means that the next time RJ Reynolds announces that it's eliminating an image, it won't replace it with a woman like this one. It will eliminate all billboards because while the FDA eliminated bill boards within a thousand feet of schools. How many of our children come to school much further than that and on a daily basis pass billboards everywhere? It will eliminate sports sponsorship, so that the Marlboro race team no longer becomes an icon for our young children. It will eliminate advertising in sports stadium and it will eliminate outdoor -- outward facing advertising in convenience stores -- a loophole in other rules so that kids won't face these sorts of ads. It takes into account that in other countries with similar restrictions, the tobacco companies have used tobacco brand advertising on non- tobacco products to circumvent the rules. Go to Malaysia; go to another country. MYERS: You'll find, for example, travel agency under Marlboro country. Or clothing lines, under Marlboro or Camel or Salem. What they literally do is turn non- tobacco products into ads for tobacco. This agreement would prevent that and cut it off now. 19 WmM'ylmA£d - Capnrim'Ovr&r`

committee, but certainly is essential to the overall proposal -- and that is a look-back provision. As 1 see it, the $2 billion is a negligible penalty in the final analysis. And then they could enjoy a rebate if they achieved the objectives that have been established in this settlement with respect to reducing teen smoking. So they could basically be in a break-even position with respect to that penalty in the final analysis. And I think, frankly, the other part of it is the potential for the loopholes that could be developed in order to circumvent these restrictions. MYERS: Well, let me say two things, because you raise a very important point. We shouldn't lose sight of the importance of the concept of the look-back provisions. It would be the first time the tobacco industry would be penalized based on smoking rates. As a concept, it is an important introduction to deal with their ability to circumvent rules and regulations. Therefore, it would seem to me that it's a concept on which we ought to build and correct the flaws of the negotiated agreement rather than discard. And I think that's a critical point. Two -- the rebate provision needs to be looked at very carefully, because in some respects, the rebate provision can also be a strengthening provision. The way the rebate provision was drafted, it was designed to say you couldn't get a rebate unless (a) you obeyed all the rules, but (b) and (c) are important for good reasons. They say you can't get a rebate unless you also take additional other actions that may be reasonable to reduce tobacco use among kids. What it was designed to do was to impose burdens on the industry to take actions that may be outside the rule that would take the FDA two years to put in rule form, but say to the industry, if the FDA points out something additional that you should be doing and you don't do it, even though they haven't had the opportunity to put it in a rule, it may cut off your right to a rebate. So it can be a powerful offensive tool for us. And three, it says you're not entitled to a rebate if you take any action which undermines the goals. And that's very important, because Senator Ford said in his opening statement, how do you explain the fact that in 1994, advertising and marketing dollars of the tobacco industry went down, but smoking rates among kids went up. Well, there's a very easy explanation. In 1993, the major tobacco companies dropped dramatically the price of all of their premium brands. In fact, by 1994 we were feeling the effect of the price decrease. Cigarettes of the brands kids smoke most were t8 Wia1Wm APr( - GmarrtduYOealsr/~

in black-and-white text. I think we also need to be candid. And that is the Food and Drug Administration was trying to draw a very careful line. How do you, within the First Amendment, continue to permit advertising to adults while restricting those forms of advertising that have the greatest impact on children? One of the reasons why it's going to be important for FDA to continue to have authority is that we need that type of research. One of the benefits of legislation or a comprehensive plan is that it has built into it funds for research on exactly those sorts of questions, so that if you and I come together again in four years, we'll have solid data about whether the tobacco industry has been able to circumvent that rule, as it affects kids. SNOWE: Thank you. Thank you, Mr. Chairman. MCCAIN: Senator Ford. FORD: Mr. Chairman. I'm getting mixed signals here. And I'm trying, and I've tried to -- everything focuses on me, you know, at meetings like this. It makes me nervous and want to go outside and smoke a cigarette. But everybody wants to keep the package, don't want to lose the package, but they want to add on. And it is disturbing that you get around the First Amendment with this agreement, in my judgment, because as we've talked, this has to be protocol or a side agreement. It cannot be fixed into law. And so we're here saying that we want to stop all this advertising and the only way we can do it is to get the tobacco companies to agree. And they've agreed. Now we're worried about black and white, better known as tombstone. And we talk about increasing the price. Well, I listened to Dr. Koop the other day, and he gave four reasons why you can't control teenagers or underagers. He said if you can stand those four reasons, you might get to them. And it is that when you tell them no, they'll do it, is one of the reasons he gave, I believe. And Mr. Myers, as I understand it, you were part of this agreement, at least you participated in the negotiations. And I believe I saw you standing there and getting applause for all the hard work you've done to put it together when the agreement had been 3D Wmtir(nAEf-Ca~renea»OrAe6

however, is we have an opportunity for bringing about fundamental change whether the format is the settlement or some other format, the key measure is whether we take some action that will most dramatically, most rapidly and over the most long run reduce tobacco use among kids. I will support whatever that is. BRYAN: And I appreciate that. So, let's talk about specifics if we may. Specifically, what provisions in the settlement agreement ought we to strengthen? And I am not asking you to cast it in legislative language but give us enough specificity and the priorities that you would attach to those recommended changes. Rank them one through three, four or five. If you have got more than that you are wanting us to consider, I would welcome that as well. MYERS: Well, what I invite is the opportunity not just for my organization but for other public health organizations to work closely with you in setting those priorities. It shouldn't be a single individual or a single organization. BRYAN: No, but you're our witness this morning and... MYERS: No I understand. I was about to answer. I wasn't going to duck it. Don't worry. There are a number of things that leap out at us. Certainly, top priority from my perspective is that FDA's authority to act must not be diminished in any meaningful way and in fact, given the District Court's decision on advertising, needs to be enhanced in a thoughtful way. Two, since it's clear that the tobacco industry will find a way to circumvent any set of rules that we come up with, the concept of the look-back provision needs to be built upon. The data needs to be developed so that the penalty is large enough to actual disincentivize the industry, but reasonable enough so that we can enact it into law. The goal isn't to punish. It is to change behavior. I think that's fundamentally important. Three, we need to look at the provisions carefully that relate to the disclosure of internal tobacco industry secrets and the narrow area that relates to health, addiction and marketing to kids. This isn't about finding out trade secrets. This isn't about competitive advantage whatsoever. It is ensuring that we have the information to make sound, public policy decisions. And we need to come up with a way that recognizes the unprecedented request that are being made about waiving attorney-client privilege. That isn't something that should be done willy nilly or easily and there's a very difficult and very careful balance there that has to be addressed. J 1 lYaleylmA~A- Cwyresreaw'O~aln~

MYERS: I can't speak one way to the other about that. BURNS: Well, I can tell you, I can because I was in that business and the radio and television sold time and produced time and that's why I think, it will be very very difficult to make the judgment on what Ms. Igo says, whether we've got ads aimed at children or are we aiming at adults at selling anything. BURNS: And I would ask Ms. Igo, in this whole thing if we go through the process of this, and I think it's a very important process and a process that we have to go through, the government is being asked to do something here. And I. would ask you, what is the role of the individual in this country? What is the role of the parent? IGO: The parent is the primary concern -- the parent's primary concern is their child and the parent has a primary concern to protect that child. Our association has, through the years, utilized that parental concern in countless campaigns to educate both young people and their parents about the dangers of tobacco. That continues to be our focus. However, we are looking at the conditions of this settlement, particularly the marketing, as one tool that will enable us, as parents and as concerned community people, to tread a more level field in what we say to our children. We can say and we do say and we have put out countless reams of materials to both children and to adults concerning the dangers of tobacco and its use. However, when you balance that against the kind of multi-million dollar, billion dollar campaigns that the industry is able to put up on the television and on billboards and in print ads, we are not able to combat that kind of advertising and I would tell you that we will not stop our part of the campaign to educate our children and our parents. BURNS: Don't think you should. But how many instances have you ever seen in a family -- now, I'm just talking about a guy out here that lives in a neighborhood and goes to work everyday because that's kind of where I come from -- is that if you see a young person smoking cigarettes, how often do you see that he or she is smoking the same brand as their parents are? 3S IYm/ay~mAk9 Ca~erd~aOnlery

IGO: I would not disagree with you that there is a patterning. But I think the research that I have read indicates to me that peer pressure is a greater indicator of what brand a young person smokes as well and then followed by advertising. And if I am wrong, I'm sure Matt will proof it. MYERS: No you are 100 percent right. Senator, 40 years ago, the data showed exactly what you suggest and that is the best predictor of which kids would smoke was whose parents smoked and the best predictor of which brand they would smoke would be their parents. It's changed today. Tobacco advertising has contributed to that in a very significant way. Kids smoke in packs. Kids are both fiercely independent and totally part of the pack and the advertising that we see creates a culture, an attitude and an atmosphere about particular brands that makes those brands appealing to those kids who want to be fiercely independent and the same time just like everybody else. And that's in part the way that advertising works here. It makes it much more difficult for you and I as a parent to sit down with our kid and say that this product over here really isn't about the transformation from childhood to adolescence to adulthood. It really isn't about the rugged individual or staying slim. And that's why, in order to free up parents to have that discussion, we need to begin to eliminate those billions of dollars that are changing their attitude in ways that our outside our influence. BURNS: That's all I have. I just -- I think there's a role for the individual here. Although, I am going to support this settlement very strenuously because I think we are confronted with a situation here where children should not smoke or use tobacco products even though I occasion the evil habit myself. Thank you very much. MCCAIN: Senator Bryan. BRYAN: Thank you very much, Mr. Chairman. Mr. Myers, Ms. Igo, thank you very much for some very compelling testimony. Mr. Myers your premise has been is that the negotiated settlement, although flawed, is the vehicle that we should proceed with and we should strengthen the provisions of that settlement agreement. Is that the essence of what your recommendation is to us? I have given you the shorthand version. MYERS: It is the essence. The real bottom line of my testimony, Xm/~(mAhC-Ca7suhN0ete~ 36

suddenly cheaper to them, and we saw one of the more dramatic rises in usage among kids. Now that's not something that the FDA can take into account. Part three of the rebate provision was designed to give the FDA a tool to take into account those sorts of things that were beyond their jurisdiction but within the control of the tobacco industry that could affect youth smoking. So, what I'm suggesting with that is that we need to look at that very, very closely. We should make sure we build on the concept, take what's good in that rebate provision, and try to mold it into a mechanism for preventing the tobacco industry from doing what Senator Wyden would say, which is finding every possible way to circumvent the rules. SNOWE: Would you agree on strengthening the $2 billion in the penalty? MYERS: I would. SNOWE: Because that's based on, as I understand it, current profits. MYERS: That's right. It was indexed to inflation, but based on all the economic analysis I've seen, I think we need to roll up our sleeves again and figure out a way to ensure that the cost to the industry is high enough to serve the role, and that is to'be a disincentive to market to kids. SNOWE: One other question. I'm interested in this whole idea of allowing advertising in black and white. Have there been any studies to document whether or not that would have an impact? I mean, black and white can be used effectively in other ways. MYERS: So. SNOWE: So I'm curious as to whether or not there had been studies to document as to whether or not that would have an impact on teens. MYERS: The concept of black-and-white, text-only advertising was taken from the Food and Drug Administration's rule itself. And in their rule they discussed the best available data about the impact of black-and-white, text-only advertising. It focuses most heavily not on black-and-white text, but on the role of imagery, color on kids, and the lack of data that it's possible to do the same thing with kids P9 HmM~am APd - Ga~rurd:a'Occrlery

suggesting with respect to the latter that that should be accomplished within the framework of this agreement that we're going to be asked to... MYERS: On international issues? I'm not necessarily suggesting that. All I'm saying to you as we move forward within the framework of any legislation, we ought to be sure that we do no harm. Cardinal principle, do no harm, make sure nothing we do makes the situation worse elsewhere. And two, we ought to begin the discussion about how we'd do some good. BRYAN: Sound like the Hippocratic oath. (LAUGHTER) MYERS: In some ways, it feels that way. BRYAN: Ms. Igo, let me ask you a question. I totally agree with the thrust of what you and Mr. Myers have said, and our effort to focus upon children, the devastating consequences. I know this may be political incorrect, but I need to find out what the rationale for this is with respect to the attempted purchase or possession of alcohol. Since the beginning of recorded civilization, there have been some restrictions imposed upon the young person who violates the provisions of the law that says you can't drink until you're 21. Possession of alcohol by a minor in most, if not all states, is a violation of law. It's treated as a juvenile offense if the individual is under the age of legal majority and attempt to purchase alcohol by an underage person, is also subject to penalty provisions. I have scanned the provisions as provided here and the comparative analysis of the FDA's pending regulations, the proposed settlement, and what Dr. Koop and Dr. Kessler on their own very thoughtful analysis it provided. I find nothing that would suggest that the young person who is involved ought not to himself or herself be a part of some kind of penalty structure. I'm not talking about certifying and making those adult offenses. Maybe you can enlighten me as to whether I've missed that, or what is the rationale for not as part of this multifaceted approach that you've all suggested and very, very persuasive fashion. Why shouldn't we include those provisions as well? IGO: I will speak to you as a representative of the National P.T.A., and indicate to you that our association has no position that WatiymAtl-Ga¢erre»Onter{ 35

different programs and campaigns. FRIST: Let me ask you both, very briefly, what does not work? I think it's very clear there is not a silver bullet. And Mr. Myers, you made that point very clear. It's everything coming together. And I guess, as you look at the settlement, and you look at the fact that you're trying to address the fundamental problem right now -- eliminate, reduce youth smoking. What, specifically, does not work in campaigns to reduce smoking. Obviously, everything doesn't work; and obviously we can address it from all different angles. But specifically what has been found to not work in campaigns to reduce youth smoking? MYERS: The negative is always hard. Let me say it, and one has to put boundaries on what you say because the limits of it. There have certainly been educational campaigns where the campaign is seen as adults telling kids not to do something because it's harmful to them. Kids don't respond to that. And public education campaigns that do that have not had a great deal of effect. We have seen internationally, on one or two public education campaigns, that when they so narrowed their focus that kids thought that adults were talking down to them, you saw -- I can't say that you saw a negative effect, but you didn't see much of a positive effect. We've seen some studies in school-based educational programs where the school-based educational program wasn't surrounded either by a community activity or changes in behavior and cues outside the school, where it was very difficult to measure an impact on kids' behavior. Not necessarily the knowledge, but on their behavior, as well. So that those programs, in isolation, have not been shown to have a significant or substantial effect. I guess the other thing that I would say to you is, if you would take out any one component and isolate it, and you did research on it, you would have a hard time showing that it, by itself, could produce a dramatic change in behavior. Youth access is a very good example. There are studies out there LOG STOP at 8:39:16 pm on September 25, 1997 t 3 lYarlWm,&- Cc+verrez¢d0uaNi

thoroughly. I think that as much as we did with the television industry ratings it has to be a meeting of the minds. I think there are some agreements that could be developed and I think it's an issue that has to be carefully considered and a response carefully crafted. FORD: Can you tell me what the difference between an ad aimed at children and an ad aimed at adults might be? Try to be as specific if you can. IGO: The industry would and has argued that the Joe Camel ads were not -- FORD: I asked you what you would -- IGO: I'm going to say in my opinion those ads were aimed at children because of the cartoon nature of the person, of the image. I- think it's those kinds of things that need to be carefully delineated. FORD: What would be, then the ad toward the adult? IGO: I guess if we're talking under 18 and over 18 -- FORD: We're talking about over 18. IGO: I would say that there's a -- I would say that those ads that do not use the images that appeal to children which are those images that are based on their own self image -- what they want to be what they think is cool -- those are the kinds of images in advertising that research and the information that I've read indicate young people are attracted to. There's a lot of research out there that tells us what encourages children to respond to advertising and much of that's been done on the tobacco industry. I think that that research is available to us and I think we can craft those decisions based on that research. FORD: Do you agree with me that regulating the content of the ads would have to be in agreement by those who advertise rather than a constitutional question? MYERS: Let me help out on that both as a lawyer, a former civil rights and civil liberties lawyer, and someone who's looked at this question very closely. FORD: And still has black hair -- I don't understand it. MYERS: Going quickly. I think the agreement that was entered into with the tobacco industry could probably withstand constitutional 33 Wstiwia~Pd - Ca~ertmaOurler`

So we didn't see the money through the federal government, being the sole answer to that. This really was designed to be a federal- state partnership with as many enforcement tools, educational tools being done at the lowest possible local denominator. FRIST: Thank you. Ms. Igo, when people think of the dangers of smoking, people think to the surgeon general warning, and today many people think back to Dr. Koop and his stance against smoking as well. Today, we don't have a single, strong voice. We have seven committees right now in the United States Senate looking at the settlement, we have a number of people who are getting more familiar to the nation's people -- to the people of the nation broadly, but we still don't have that single, strong voice that people associate with the issue. For young people, again based on your experience and talking.to other members of your organization, is that important? IGO: To have a single, strong voice? My association believes strongly in local options, in local development of programs. I think we have seen it work effectively for my organization to be able to craft their own campaigns, their own programs using the information available from the numerous sources that we have available to us. In this country, especially among parents and teachers and young people, that seems to be the feeling with which we are most comfortable working. FRIST: Mr. Myers, who is the single voice in the nation that is recognized that -- on the issues that we're talking about? It used to be the surgeon general. MYERS: I think I agree with you. One of the things that's concerned a number of us is that there haven't been -- I don't know that the quote needs to be "a single voice," but there needs to be strong, visible voices that young people and adults alike look to with respect. And that's something that we need to work at. Dr. Koop played that role in an unparalleled manner during his tenure and still remains a very visible voice. But we need to have other voices as well for our young people to look to. They need to come from multiple communities. Not just from government and the medical profession, but from the sports world and other places where young people look for role models. IGO: Senator, I would just say, I think the message that we've heard, especially in the recent years has been a central, unified message. My concern, and I thought your question was more around the /7 H'orti~tmAdvl - Ca~etrd aOurlery

(OFF-MIKE) MYERS: Well, that's... ROCKEFELLER: Now, that's very... MYERS: ... got to be. ROCKEFELLER: ... interesting, because that means that students as well as teachers can go through the period of a day without smoking. Because they have to. Well, let me then move on to my second question, where I hope my facts will be more straight. And that is, the question of smoking between the ages of 18 and 25. Or 19 and 25. That, number one, as you work on children up to the age of 18, through various anti-advertising -- we -- these agreements, however they come out. Is there any carryover -- how long is there a carryover in the effect of campaigns against smoking to those who are 18 to 25? And secondly, what are the statistics between those -- between 18 and 25 in terms of increased usage or decreased usage of tobacco? And what should we be doing about that as we so constantly discuss young people? MYERS: Let me try to give you a couple of quick responses. One is the best available data in this country, and it's a continuous stream of data on this, shows that if we can get kids to the ages of 19 and 20 without smoking, a very small percentage of them will start thereafter. MYERS: Ninety percent of the people who start smoking do so as teenagers or younger. Among the 10 percent, currently, who start older, the data also shows they tend to quit sooner. That's part cultural. It's part that we've finally gotten them through adolescence and they're beginning to understand they may actually die some day. And begin to worry about risk-taking behavior. So that just getting them to that point goes a long way toward solving the problem. Two. We would be making a mistake if the public education efforts that result from either this agreement or anything else we do, focus so narrowly on kids. The reality is, what we need to do is use 3 #'mWmA@d - Garrerrax~0ar/er`

those public education funds to do broad-based messages about tobacco use. The reality is, tobacco use isn't any better for an adult, it's just that's it's kids who start. With adults we need to use different mechanisms. We need to educate -- help them quit. And that's different in some respects than how we look at it with kids. But we need to be doing both. The reality is that we ought to be doing everything we can to discourage anyone, no matter what age they are, from using tobacco because of its ultimate harmful effects. ROCKEFELLER: (OFF-MIKE) MYERS: Thank you, Mr. Chairman. MCCAIN: Thank you very much. Senator Ford, do you have any further questions or comments before we move to the next panel? FORD: Well, just one thing. I'd like for Ms. Igo to think through this a little bit. You said that -- just take the cartoon characters out and that would not attract teenagers or underage in the advertisement. What are you going to do about the Pink Panther when he goes around with fiberglass? Now that's directly to adults. You're not going to sell much fiberglass to young people. The insulation. So, when you -- I think you have to be careful. This is what we're all talking about: that fine line we get into. I don't want an answer. I just want you to think -- you've seen the ad... IGO: Yes, sir. FORD: ... Oh -- oh, he's all over the place. And he's pink and he's a panther. And I think, my grandchildren, if you ask them about that, they'd know as much about the Pink Panther as they would anything else. Thank you, Mr. Chairman. MCCAIN: Thank you. Mr. Myers. Ms. Igo. MYERS: I want to thank you all for the opportunity to testify. And, you know, we were asked what doesn't work. But it's clear that things do work, you know. Our organization recently issued a set of data on each state, you know, showing the number of kids in each state who smoke. And what it does show you, that if you look at the tobacco I Wor1wm I& - Cnveudza'Ovrlai`

that looks like, dollar-for-dollar, it's probably the best approach. What's your sense on that? MYERS: I absolutely agree. A major public education or counteradvertising campaign is a critical component of any overall plan. That's why the agreement itself has a provision that would have the tobacco industry put up $500 million a year indexed to inflation for that purpose. Part of the reason for that was that it was hard for any of us to see how the Congress of the United States would find that kind of loose change hanging around to do that. At the same time, my organization is committed to working with states to help states develop their own mechanisms for doing counteradvertising and raising excise taxes in those states. We need to do both. WYDEN: Last question for you is what is your assessment of these Camel clubs. I mean, my sense is to see this industry so bold in trying to circumvent what you and the attorneys general have done, when this is an issue before the Congress, shows just how far they're going to push -- in the words of your associate -- the envelope in terms of getting around these advertising restrictions. MYERS: No one should look at this agreement and assume the tobacco industry is going to give up. That's why the agreement needs to be tough, enforceable and have a mechanism like the Food and Drug Administration to not only enforce it but enhance it in ways that are needed. The tobacco industry's move to market to people in their 20s requires a significant debate in Congress and among the American public about how it feels to marketing that focuses on young adults. It's not a simple question and a very serious problem. WYDEN: My time is up, Mr. Chairman. But the point is, look at the language they're using. They're talking about "Camel kids." They're talking about trying to reach kids that are 18, barely starting to the club kind of scene. This is not adult-style marketing. This is kid-style marketing, and I will tell you my sense is that there are effective advertising approaches that we can use to keep kids from starting to smoke. But the longer I'm in this -- and we have worked together on many of these issues -- the more convinced I am that it's going to be the market that really does it. Ps Nm77vyYm Ahd( - Ga~rerrdsa'arnlsr`

Fourth, we need to be sure that enough money is going into public-health related purposes and research-related purposes to ensure that we can carry out our job over the long run and therefore we need to examine the numbers in the document to ensure that that works and works well. BRYAN: You are talking about out of the $368 billion? MYERS: That's right. BRYAN: OK. MYERS: Or any other number that some other human being should... BRYAN: You are talking about reprogramming, perhaps, what the... MYERS: What I am saying is we need to examine it carefully. We need to get the opportunity for the input of the executive branch and other branch agencies that are affected to ensure that the numbers chosen were adequate. For a variety of reasons, their input -- it was impossible to obtain their input in the process. So, best guesses were made and as I said, no one should be so cocky as to think that they know all of those answers on those issues. We need to ensure that as we look at the agreement that we do nothing that makes the tobacco epidemic internationally worse and we need to challenge our government to do better. The World Health Organization is currently considering an international convention to impose worldwide rules so that our children only are protected but children in poor African nations are not protected. MYERS: It would be terribly myopic to look narrowly within the border. On the other hand, we ought to.appreciate the complexity of that issue as we're dealing with legislation, and that's an area that needs careful discussion not rhetoric. And I frankly think it's an area where our administration needs to be challenged to do substantially more. I'm doing this as a stream consciousness, so I may have missed something. But I think I've hit the highlights for you. BRYAN: And I appreciate that. That's very helpful. Now you're ~B ~p'/Y}~6q~1(-~'A)?'Clt%1Y1'Qlq'~ll`

scrutiny because of its focus and intentional focus on advertising that has the greatest impact on young people. I think honesty also requires that a number of the provisions have never previously been tested. And it's for that reason that the state attorneys general and the tobacco industry entered into an agreement to say that those provisions would also be included in consent decrees so that we would be sure that we get what we bargain for. There is a great deal of evidence about the type of advertising that has the greatest impact on children. It is the type of images that I've shown you today. FORD: But, we go back to the Greensboro decision -- the judge there, who knew the nation would be focused on him -- threw out the advertising requirements of FDA without even referring to the Constitution, said they didn't even have the authority. So you didn't even make the constitutional step. Now, Mr. Myers, I think that you and I both agree that there will be a very difficult decision by the Supreme Court and it will go there if you start regulating content. MYERS: Senator, for two quick responses. You are correct. The judge in Greensboro ruled that FDA lacked statutory jurisdiction. Neither he nor anyone else has yet ruled on the constitutionality of the FDA rule. I don't have a crystal ball to know how either the Fourth Circuit or the Supreme Court would rule. One of the purposes of the agreement, for certain, was to nail down the authority of the FDA in this area in an attempt to come up with a set of rules that have the best possible opportunity to work. MCCAIN: Senator Burns. BURNS: I haven't really made up my mind on this, but there's a couple of questions I want to ask. Would it surprise you -- and I was very interested in the question of Senator Ford -- that selling any product, any product, from shoe laces to trucks, the ad on television and usually the display ads -- where do you think they're directed? MYERS: I think advertising serves multiple purposes. It would be a lengthy discussion. Part of the purpose is to expand the market, to attract new users, part of the purpose is to switch people from one brand to another and part of the purpose is to cause a spontaneous action of purchasing when you might not otherwise be thinking of doing it. BURNS: And when they're putting those ads together -- display or whatever -- it is usually aimed at about afourth or fifth grade education. 31 lYarNp'mA@rl - Ccrynefflm'Ov.rleh

doing. I'm getting paid to do what I'm doing. So, we're doing.fine. I'm going to give my job up -- you've got an issue that will last the rest of your life. I think that's part of the thing you've got here. MYERS: Well, there's no one who's been a stronger advocate for the Congress of the United States taking this agreement and trying to come up with something comprehensive and meaningful that we can pass. FORD: And you're on the verge of losing that, too. MYERS: I think the critical question -- and you and I would agree with this because,we've worked off and on for years -- is that there's a very difficult balance. If we're serious about doing something we really have to make hard choices and try to move it forward, but it's too important for us not to do right, Senator, even if you and I may disagree about what the right number is. FORD: I understand that. Are you going to take my figures, are you going to accept those? Or are you going to say that I'm way off. MYERS: I'm not going to say either, because I haven't gone beyond the numbers ... FORD: I'll be more than pleased to give my background here and that's $526 plus billion. It's not 368 that's all on the industry -- and the industry has to make up for that and that pushes it to a dollar and a half a pack. Now... MYERS: Senator, my concern is a very straight forward one. FORD: Mine is, too. I want to get this sucker over with before I sine die. MYERS: I think both of us feel that way -- and I'm aging rapidly. My goal is to make sure that what we pass will actually have a sustained and significant impact on tobacco use rights in this country, so that we can look back on what we have done with pride and a recognition that we have saved the lives of millions of Americans. FORD: I see my time. Let me ask Ms. Igo -- you seem to be sitting there, we jump on Matt a lot and you're a nice lady and I want to give you an opportunity. In your testimony you point out the difficulty in separating advertising aimed at adults and advertising aimed at children. How would you make the distinction? IGO: Well, I would not make the distinction unilaterally at this point. I think that's an issue that needs to be discussed very 3? lYatiyla AEA Ca~ ertd a Ouafrrp

FDCH Transcript Service September 16, 1997 LOG STOP at 8:44:15 pm on September 25, 1997 COMMAND HISTORY: LOG START at 8:39:49 pm on September 25, 1997 LOG STOP at 8:44:15 pm on September 25, 1997 22 IY~hfamAE f - CaererrradOafep

would allow us to support penalties imposed upon young people in this instance. BRYAN: With great respect, and I understand that's your position and you're here to testify and represent that position -- what is the rationale for that? Help me to understand. I am certainly not suggesting that that should be in lieu of all of the other things that Mr. Myers, you and others have worked on, but I must say that I'm absolutely baffled as to why all of a sudden that is verboten. That is so politically sensitive, we don't dare suggest that young people themselves ought to at least bear some responsibility for the actions that they take. IGO: Our association believes that the primary focus of this settlement is and should be on the provider of the tobacco product. MCCAIN: Senator... BRYAN: Mr. Myers could you, and I appreciate the chair for allowing me to go a minute over. I apologize... MYERS: Could I give you a quick response to it as well? BRYAN: Yes. I'd appreciate that. MYERS: And that is the reason that you don't find it in either the Food and Drug Administration rule or this agreement is that all too often in the past, those who market and sell tobacco products have tried to shift the blame from themselves to children. It has been used as an excuse for inaction. And I think that is the reason that you find so many health advocates leery of it here before we come up with a comprehensive solution for solving the problem from the other end. Critically, neither the agreement nor the FDA rule inhibits the ability of a state to take any sort of action that it deems appropriate, including this sort of action that you're suggesting. BRYAN: Shouldn't that be part of the package, Mr. Myers? MYERS: If you have a full scale package, I think it should be part of the debate. As I said, it is clearly a controversial issue, and the reason is that it's been used as a scapegoat issue up until now. MCCAIN: Senator Frist -- Dr. Frist. 1 ~ N'artia+cn Ahd - Ca~etsd»Oualerp

FRIST: Thank you, Mr. Chairman. Ms. Igo, the settlement right now provides, I believe, about $200 million annually for education, $500 million for media. Without focusing too much on the numbers, I do want to ask your perspective on school based programs. Based on your experience and your conversations with others, which of the school based programs work and which do not seem to work? And how good is the data? IGO: And I would not give you an overall answer as to which programs work and which do not. It depends on the numbers of factors that influence that. All of them can be effective, if in fact there is community, parent, teacher commitment to those programs, if they are administered in ways that involve young people in the decision making. I would not give you a definitive answer there. FRIST: Mr. Myers, in your review of the school based programs without sort of expanding into other programs, is there great potential for the school based programs for reducing underage use? MYERS: The best data that I've seen, and there's a good discussion of it in the 1994 report of the surgeon general as well as a number of other comprehensive analyses, is that a school based program is most effective if it's part of a comprehensive community effort that reaches beyond the school as well. Too often our kids learn one thing in the school, and walk out the school door and see a whole bunch of different behaviors and cues. The data shows us part of a broader based program, a school based educational program can contribute significantly to children's awareness, understanding and affect their behavior. FRIST: Is the ratio of $200 million for education annually, versus $500 million for media -- is that a good ratio? Should we invest more heavily in our school based programs? MYERS: Let me first try to explain to you some of the rationale behind what was there. And I'm not sure about your $200 million figure, but let me accept that for a moment. The goal there was to put more money into school based and other direct hands-on education programs than has ever been done before. It was also designed not to be stand-alone, but it was my understanding that the state attorneys general with money that was going back to the states, intended in many circumstances, it would depend on the state ultimately themselves, through their own states to increase the level of state level activity on those issues. They believe and it best be done through local decision making to the extent possible. 11 IYalayfmAh? - Ca3aenaraOzrfer`

control policies in those states, there is a correlation between the number of kids who start using these tobacco products. And so, when you look at this agreement and the set of public health policy initiatives, there is something we can do. We really do have the opportunity to make a difference in how we do that. And if -- I think both of us have a final message; is, it's time we get on with the task of coming up with the best possible set of rules and regulations we can to make that happen; sooner rather than later. Thank you very much. MCCAIN: Ms. Igo? IGO: I would just repeat that -- that I believe the focus has to be on children. It has to be on their health. And it has to be on those things that concern them. I think that where we are today is an opportunity to begin to craft some provisions that will address this problem. Our association of parents and concerned community people has had this as an issue since 1926. We will continue to have it as an issue whether or not this settlement goes through. However, I would tell you that, as a parent, as an advocate for children, this is your opportunity to make a difference for children. Thank you. MCCAIN: Well, I want to thank you both. And I want to assure you of our intense desire to get this issue resolved as quickly as possible. It is very easy, in all due respect, to make an agreement that has to be turned into legislation which is under the oversight and responsibilities of a variety of committees of Congress; which immediately is severely criticized by two of the most respected people in America, Dr. Kessler and Dr. Koop, and many other organizations we'll hear from in the next panel. And I believe, in all due respect to your answers to my first round of questions, we are in agreement. We have to move as rapidly as possible. But at the same time, we cannot move too rapidly. And that's the dilemma that -- that we face here in addressing this issue. And I know you appreciate it, because you live it day-to-day. S Worl~,dcnAEd - Ccryroerr~rtd0arler`

Dr. Kessler was right when he said, if you really want to get at teen smoking, you've got to cut out youth access, you've got to eliminate the main tools that make it appealing, and you've got to do public education. He has also more recently, correctly, said as you have that any comprehensive plan has got to take a look at price sensitivity. We do need to be sure that we raise the price of tobacco products significantly as part of our effort. But let's not be fooled. It is not a magic bullet either. -"-- -' -- -- Lots of countries have higher tax rates than we do and also have higher smoking rates among children. Kids respond to the price change, not the absolute value. And the response time is a relatively short one. We get the greatest immediate impact, and then unless it's followed up with additional activity, you see backsliding. So price increases has to be one of the tools we use. But we would be making a significant mistake if it was the only tool that we use. We won't change attitudes. You know, my children will remember the Marlboro cowboy for as long as they live. My hope is that their children won't know who that is. WYDEN: My concern is that Joe Camel and the Marlboro Man seem to be producing progeny at an extraordinary rate. And I want to see some sensible counteradvertising approaches as well. But it seems to me that this idea of the $1.50 that's being talked about on the price side could send a very powerful message to kids. What's your sense of what that would do to reduce youth smoking? MYERS: As you know, my organization and all the organizations with whom I've worked have long supported a very major increase in the excise tax as one of the best ways, if not the best way, to dramatically and immediately reduce tobacco use among children. But we need not be confused. It is also not a long-term solution. It will drop tobacco use rates dramatically. But if we're going to bring about a fundamental long-term change in attitudes among our kids, we have to do the other things as well. WYDEN: What's your sense about the value of counterads? Based on everything I've seen -- the California experience and elsewhere -- ko 25 Wm'ti»'tnAtrl - Ca¢rzutYdOmfr~

Second, these although criticized to others astonishing in light of the first amendment restrictions on advertising that go way beyond where the FDA was when they proposed their rule a couple of years ago, and really do the companies believe, restrict significantly their ability to communicate with their adult consumers. But, nonetheless were willing to go along with this, part of this overall resolution of so many of the issues that face these businesses. And three is the funding for this public education campaign which Mr. Meyers and you a1.1 discussed this morning. And four is one of the more --has received a little bit more attention than others is the so- called lookback area in which for the first time, the industry was willing to accept as part of this overall resolution, a concept that would involve greater payments made by the industry if specific targets of reduction of youth incidents were not met. That's something that was not, it was contemplated in the original FDA proposal and then later dropped out. It was the final FDA rule. The FDA did not even attempt to address or put forward a true lookback that created financial incentives on the part of the companies to meet these reduction targets. So that's what we came up with as the four principal parts of the agreement relating to youth. I would say... I couldn't agree with the chairman more about the difficulties of getting ones arms around all of this and all the moving parts of it, and I couldn't agree with you more that there is a public interest urgency to addressing it expeditiously. But obviously no one has asked and we don't mean to be perceived as being asked by the Congress to do anything that is rushed or not in an otherwise thorough manner. Evaluating all the aspects of this and understanding how it all works together to one, achieve the support of all the people who are in this process and to achieve what the experts believe are significant public health advances if this comprehensive resolution could get implemented by this Congress. And I think we all agree that if it were, it would be a major and truly historic piece of legislation. So with that, I'm happy to answer your questions how we got to where we were. MCCAIN: Well thank you Mr. Wise, and I appreciate especially as one who is involved in the negotiation, that I appreciate your understanding of the difficulties that we face. Thank you. Doctor DiFranza. DIFRANZA: Senator McCain, thank you for the opportunity to speak to your committee today on behalf of the non-profit organization STAT, which stands for Stop Teenage Addiction to Tobacco. Eleven years ago, 13 IYm~rmAkl - Csyrerrd aOrrteib

But I hope you also understand that there is no lack of willingness, in my view, on the majority of the United States Senate -- I think I speak for my colleague from Kentucky, as well, who has, as you know, deep and abiding concerns because of a -- a variety of reasons including the farmers that he represents. But we also don't want to fashion a piece of legislation that, after it's passed by both Houses of Congress and signed by the president of the United States, did not achieve the goal that we pursue. And, that which has been so well articulated by you here and on other occasions. So, I appreciate what you've given us today. We intend to move forward... FORD: May I -- May I -- I apologize for interrupting, but the chairman makes some awful good statements here. That we're putting -- let me just go back and put -- I want to show you where we're placed in your -- and that Dr. Kessler said, after the FDA rules were signed by the president and put.into place -- I stand by the rules we've put into place and maintain that the provisions of the FDA rule were enough to accomplish -- are enough to accomplish the goal of reducing teen smoking by 50 percent in the next seven years. Now that was the rules that were put into place. Now Dr. Kessler says that the only way to reduce you smoking is to dramatically increase the cost of cigarettes and to fund anti-smoking campaigns. Now, we're put in a position of the leadership that was appointed by a Democrat and a Republican out here that we all talk about as leaders in the field, and we get conflicting statements. It makes it difficult for us to say who's honest, who's dishonest. We don't think anybody's dishonest. But we're put in that position. The chairman's absolutely right. I want this sucker taken care of. And I think, the sooner, the better. Because if you want to stop youth smoking, you'd better get after it instead of continuing the issue. Thank... MCCAIN: I thank my friend from Kentucky. Mr. Myers, as Igo out, will be glad to let you respond as soon as I finish, just one second. So I want -- I want you to be assured that this is the highest 6 WatiamAk? - Cmperrcna'Ourn~

parents' willingness to take on the responsibility on a sustained basis. And the child's responsibility, especially when that child is a, you know, a teenager and moving upwards. So I think it's an interesting point he raised. That children have responsibility in this. To leave them out simply because the tobacco companies were trying to use -- you know, put -- shift the blame to the children is probably not very good reasoning. And that children should accept some legal responsibility, as they do in drinking, for acts which may in fact -- I have no -- I have no idea of the effects of the deadliness or the damage caused by drinking as opposed to smoking. I don't know what those -- how those compare, but they certainly have to be within eyesight of each other. So I just make that as a statement. My question -- I have two questions. One is -- well, basically one. We had a terrific argument in the veterans community about whether or not we should allow veterans to have smoking rooms in veterans hospitals. And we finally decided that yes, we should; because the U.S. government had given out, particularly to -- a lot of those who are now beginning to pass on -- had given out in World War II, et cetera -- had given out cigarettes. I mean that was one of the things you always saw in John Wayne's mouth. And so there are places to smoke in veterans hospitals. And that was a long argument, but I think it was settled in the right manner. These are people who have been encouraged by the government. Who are in their 70s and BOs, et cetera. And just sort of yank them off. What I cannot understand, Ms. Igo, is the fact that schools, so many schools also are allowed to have places where students can go and smoke. And, unless I'm completely wrong. MYERS: They cannot do that anymore, in this country. ROCKEFELLER: Is that universal or national? (OFF-MIKE) MYERS: Yes, sir. ROCKEFELLER: There's no place for them to go? P Wmti~a'm.4ld - Cmaerad»'Oua9er`

LOG START at 8:39:49 pm on September 25, 1997 that show that when you actually increase the enforcement of the laws so that it's virtually impossible for the kids to fail nine out of ten times, you do reduce consumption among kids. But there are other studies that show that if you just fall a little bit below that area, and do nothing else, that you don't have an overall effect on consumption because, you know, it's like the balloon. You know, if you squeeze it here, the kids'll go there; unless you've also dealt with the surrounding community or unless you've also dealt with what makes tobacco products appealing to kids. That's why I am a broken record on the notion of, we can't separate out these things and do this little thing, and expect it to have a long-term major effect. FRIST: Thank you. Ms. Igo, do you have any comment on -- ? IGO: I would -- I would just indicate to you that where the young people themselves have not been involved in the campaigns, that would -- that has seemed to me to be the -- or and to our people, to have been the indicator -- a leading indicator of an unsuccessful attempt. FRIST: Thank you, Mr. Chairman. MCCAIN: Senator Rockefeller: ROCKEFELLER: Thank you, Mr. Chairman. I was struck by what I thought was a good point that Senator Bryan made about the responsibility of children. You know, a lot of what we call children in fact act very much as adults. They're treated that way increasingly by the juvenile justice system. I can remember, I was a governor for eight years, and every year. I'd try to raise the drinking age from 18, in West Virginia, to 21. And in eight years I was able to do it only to 19. And then I came to the Senate, and there was a highway bill. And the Congress decided that, you know, if the state wanted its highway bill, they had to put their drinking age to 21. And it was done. In 10 minutes. And I think there is a parallel between parental responsibility, which I think is probably mixed in this country, at best. That is the 1 IYaAr~lmAEq - C~areuaw Oater~

make this work for the children. MCCAIN: Thank you. And again I want to state, the committee is aware of the absolute criticality of working very closely with you as we address this issue. Thank the witnesses. Our next panel and I am very appreciative of their patience, is Dr. Alfred Munzer who's the past president of the American Lung Association. Dr. Joseph DiFranza who is of the University of Massachusetts' Medical Center. And Dr. D. Scott Wise who is a partner of Davis, Polk & Wardwell, at 450 Lexington Avenue, New York City, New York. I want to thank the witnesses for their patience and, again, point out that ... OK ... that's Dr. DiFranza ... Dr. Munzer? ... Dr. Munzer, I understand that you have to leave early so perhaps we can adjust the committee a little bit and accept your -- go forward with your testimony and any questions that we might have for you, and then if I'd ask the indulgence of the other two witnesses if we could proceed in that fashion due to the fact that I understand you have to treat patients which, as important as this hearing is, is transcendent. Please proceed and welcome Dr. Munzer. MUNZER: Thank you. Mr. Chairman; Members of the Committee. I am Dr. Alfred Munzer, past president of the American Lung Association. I am also Director of Critical Care in Pulmonary Medicine at Washington Adventist Hospital in Takoma Park, Maryland where I specialize in treating diseases of the lung. I have 15 patients in the hospital right now, and 14 of them have diseases directly attributable ~to smoking. I am here today to speak on behalf of the American Lung Association. I wish I could tell you that the proposed tobacco deal is basically sound, that the compromises are fair, and that the tobacco industry has changed and can now be trusted to do what is right. Unfortunately, none of this is true. We urge Congress to throw out the proposed deal. Our experience tells us that this is a sweet deal for the tobacco industry and a bad deal for the American people. The deal is especially bad for our children. For them, it's simply achieves too little. For people elsewhere in the world, it means even more death and disease. 8 Nfzl~mAC2- Gaaaerrmd0uaay

to entertainment and sports figures to smoke in public or in the course of their professions, such as live music performances. Another important health-related provision of this deal relates to document disclosure. The American Lung Association believes that the document disclosure provisions of the proposed settlement represent nothing less than an attempt by the industry to avoid making public the materials that relate to public health, medical research, marketing and advertising, consumer fraud, potential criminal activities, and antitrust violations on the part of the tobacco industry. We are told that if the industry is forced to disclose those documents, they will abandon the settlement. They must be hiding some awful secrets if they are willing to abandon a deal that serves them so well. The American Lung Association also is concerned about immunity, or civil justice issues. Under the agreement, the tobacco companies will be immune from punitive damages. State laws will be preempted. The Tobacco M (ph) companies will also be immune from disclosure of potentially revealing documentary evidence of their past actions. Finally, the tobacco companies will be immune from consolidated litigation. If these three provisions become reality, successful litigation against the tobacco companies will be highly unlikely. Not because the evidence will be suppressed, but because the economics of successful litigation will be eliminated. The precedent is awesome. To think that this industry which may have committed the most egregious and deliberate acts against the health of their consumers may be insulated from punishment raises the question: What kind of conduct should be held to a higher standard of economic damages? Mr. Chairman, some would have Congress believe that this deal is the only, or best chance we have, to curb the scourge of tobacco. When someone tells me I have to buy today because a deal this good won't last, I get very suspicious. The proposed deal is inadequate in so many ways that there is little to redeem it. Before Congress rushes to enact a deal negotiated in back rooms, it should fully examine the consequences. MUNZER: Only the tobacco industry fears going to court. When Minnesota goes to trial in January and all the documents are finally 1D Nati~tnAt? Caaerrrd0aei{

The American Lung Association has looked closely into the advertising and marketing aspects of the tobacco deal. A few months ago, we consulted with some experts in advertising and marketing to provide the American Lung Association with advice and counsel regarding the settlement provisions. We ask for a review of the loopholes of the agreement. What would advertising look like if the settlement agreement were in-place? We also ask for advice on the development of actions that would successfully diminish the power of tobacco advertising among teens and children. While the tobacco industry may, in fact, give up some of its most important visual icons, like Joe Camel, we believe the industry did not give away its ability to attract kids to cigarettes through advertising. I call your attention to this particular advertisement. It does not contain any human or cartoon images. However, our expert tells us that the imagery of the motorcycle and the expression, "live out loud", are very appealing to children. We understand that this type of ad will be permitted in so-called adult magazines. Those magazines that have less than 15 percent youth readership, or less than two- million youth readers under the proposed deal, including: Time, Newsweek, Family Circle, and Popular Mechanics. Mr. Chairman, the American Lung Association endorses the Koop- Kessler Commission advertising and marketing recommendations. To achieve the Coup Kessler goal of -- no advertising directed to people under the age of 18 -- we recommend the following. All tobacco advertising visuals accepted in publications for Over-18 audiences, should be limited to black-and-white ads showing only the product package. No props or scenery of any kind should be allowed. Except for the warning label, no copy should be allowed. All publications that accept tobacco advertising should be required to conduct annual readership studies showing the percentage of readers under age 18. Those with an Under-Age-18 readership of more than 15 percent, or one-million, should be prohibited from running tobacco advertisings or announcements of tobacco marketing or promotional campaigns. The Koop-Kessler Advisory Committee makes excellent recommendations for banning direct and indirect payments for tobacco product placement in movies, TV programs and video games. The American Lung Association additionally recommends an end to payments 9 Wiz/a~a'mAN~ - fa~rerrma'Ourler6

MCCAIN: Dr. Munzer, have you got a handle on how much of a tax increase on a pack of cigarettes would be in order to truly be.a disincentive to teenage smoking? MUNZER: The American Lung Association supports an increase in the excise tax of tobacco to $2 per pack, and we feel that would be effective. MCCAIN: And that's based on some studies and your experience with the issue for all these years? MUNZER: There are some very good studies. There is good experience in other countries, notably our neighbor in Canada, to support, and are very good economic studies to show that an increase in the price of cigarettes to, by a substantial amount, serves as a very strong disincentive to smoking by children. MCCAIN: Roughly a $2 increase from its present price? Is that correct? MUNZER: That's correct. MCCAIN: Thank you, Dr. Munzer, and you've been very helpful, and we appreciate it. And we certainly understand why you have to go about your very important duties, and we thank you. MUNZER: I very much appreciate your courtesy. Thank you. MCCAIN: Thank you. Mr. Wise, welcome. WISE: Thank you, Mr. Chairman. I'm pleased to be here today to add a, maybe somewhat of a different perspective to all this. I come to these issues really only as, through an interesting and somewhat challenging (AUDIO GAP) that there needed to be this multi-faceted approach. WISE: What we ended up with was exactly that, a completely new set of regulations directed toward youth access to the products, a funded mandate to the states that would require serious retail licensing laws in each of the states, with funding to enforce them. This is obviously a new development. There has never been this availability of funding before for the states and local authorities to really put some teeth into retail regulation of the minimum age requirements. And the people in the industry at least, think that's a significant, a truly significant step forward in enforcement of the laws. 12 Wisywcn Ab! - C~rerrd» 9asfed

priority of this committee to exercise our specific oversight. We don't intend, as I said at the first hearing, for us to be involved in other areas. Those are for other committees. The Judiciary Committee. The Agriculture Committee. The Environment and Public Works Committee. And even the Indian Affairs Committee. But I want to assure you that it is our highest priority. I know of no more compelling issue before the Congress. And yet, I've got to say, when the president of the United States does not give us a specific legislative proposal, that's not helpful either.. And I -- Look. I understand why the president of the United States is going to come down as he did today. This'd be -- But it is an indicator -- and I'm not particularly being critical. I'm just saying it is an indicator of how difficult this issue is. And, in respect to Dr. Kessler and Dr. Koop, we'll have another hearing. And we'll have them up before us again, I say to my friend from Kentucky, because I think there's been some evolution in all our thinking on this issue since this agreement was made. And we've -- and that evolution is partly taking place because of the information that we received from you and the active participation in this national debate that we've been involved in. Mr. Myers and Ms. Igo, you're welcome. And again, I don't like to take a lot of time in this committee, but I think this is of the importance that it warrants it. Mr. Myers. MYERS: I want to say two things. One, I want to praise the committee for the thoroughness with which you're doing this. I don't say that lightly, here, just as a matter of courtesy. I think the discussions, both during the hearing and leading up to the hearing, have been extraordinarily fruitful. Second. No one has said this is going to be easy. We will only succeed here if all of the major participants agree to work together to craft a solution that works for everybody; and that puts in place a policy that really will make a difference. MYERS: We offer to assist in any way possible that we can, in making that happen. MCCAIN: Ms. Igo? IGO: I would concur with Matt's statements and add that we, as we did in our testimony, offer to work with any appropriate parties to 1 lYarWmAhd - CWeudaa'Ourn`

program. I would point out, once again that the description in the article described an ad campaign directed to adult only facilities where kids are not present. So it clearly is not a campaign directed toward communicating to people under age. WYDEN: Well, I can just tell you with the latest studies indicating that high school smoking is way up, high school seniors for example, those are some of the people who are gonna be in the coffee houses, where this program is making this new and very aggressive appearance. So we'll look forward to seeing the company's rationale. Let me ask you a question.about-.the international scene, an area* :that I think you know, and the ctiai'r"man'knows,°'-I!m:very interested;inr Seems to me' triat wHat" tri'e' SettleYneitt' does=is''it''codifies a double""'° standard wxth„,xespect,"to<r•hoW',Yda'rke'Y`ing`is`Jgo'i7stjm~towgo+onminkahe::UniGed ,.k,. States.relative..to,:ahe,,,rest,.of,::the~world -'%<°xMyv're'adirig'of the settlement is your company and others for example, couldn't slap a Camel sticker on a hot rod, or something like that at a sports event. But your company can go out and market in any way, in any shape or form to target kids overseas. Now there are parts of the world for example, where there are actually smoking contests to see how many cigarettes a youngster can smoke simultaneously. So, what we have is a settlement that says, OK, in the United States, you can't sponsor these sports events and the like where young people might go, but if you want to go overseas, you can participate in smoking contests in a disgraceful fashion as I've described. What if anything is the company prepared to do to make sure that we don't export the kinds of health problems we have in this country, to the kids of Bangkok and Bangladesh and around the Third World? WISE: This was a topic that was discussed during our negotiations with the attorneys general and the public health people in the United States. And despite our ambition to address a lot of issues comprehensively, I think at the end of the day, we decided that it was really out of place for us to.... as a matter of proposing to the United States Congress, some law to be enacted by the federal government to try to address in that form how these products are marketed and sold in other countries in the world. Most, if not all of the other countries in the world, have their own regulatory regimes for these products, they have their own warning systems. And they vary from country to country. And the companies are in the busy, if they're operating in those countries of abiding by those rules, which they do. WISE: It's just maybe a relevant fact to point out cause we do tend to look at these things from our domestic point of view, I think 181 Yg /w p'm 14e - C a y+c r r tr~' Oi a Ye r6

I-have it right, the domestic companies in tobacco, maybe it's in the cigarette business produce only about 16 percent of the world's volume of cigarettes. Only 16 percent. And 60 percent, if I have this right, 60 percent of the world's volume is produced by foreign companies that are government-owned monopolies. So the competitive landscape out there is complicated, and in many places it's complicated by the fact that the government is a competitor in the marketplace. For all those reasons, and perhaps even simpler ones about exporting our own ideas about how these difficult balances should be reached, we decided that was really not within the scope of what we were trying to do. WYDEN: Well this is very curious because Christine Gregoire, the attorney general of the state of Washington who participated extensively in those discussions said that it was her belief, that all of the companies would have to be willing to support some international restrictions on marketing of tobacco to kids other than British tobacco. Now are you telling us that RJR was also reluctant to support any restrictions on marketing (OFF MIKE)? WISE: I'm not sure that's what she said, I'm familiar with the exchange we had with her in the early hearings in the summer. And I think what she was discussing was some initiative with the World Health Organization of some kind, or funding for the World Health Organization of some kind. I don't think it was something as concrete as trying to impose restrictions on how these products are marketed in foreign markets. But, the to answer your question is, no, I'm not familiar with what she's talking about. WYDEN: Well let me ask it another way. This summer in the context of what went on in Florida with respect to the trial there, Steven Goldstone was quoted as saying we'll warn foreign smokers. It says, "RJR executive", you can't see the headline, but it says,."RJR executive will warn foreign smokers." So I, when asked if that sounds encouraging to me, why don't we use this opportunity for you to tell us, how that statement is going to be carried out? WISE: Well, I think what he was referring to there -- the question was, in respect of foreign jurisdictions that have no effective warning schemes in place, would the company look at the prospect of putting some warnings voluntarily on its packaging in those countries; and I think he said, the company would do that, I think the company is doing that. I think the number of countries where that's the case is quite small. Is my understanding. WYDEN: On this point of the double standard that I touched on 19 fimYr~YaAE~-Gaprudvro'surtery

I was the first person to send a child into a store to see if the store would sell them tobacco. I sent my daughter into 100 stores, and out of the 100 stores, 75 of the merchants illegally sold her tobacco although she was only 11-years-old. Our children living in 99 percent of the cities and towns in the United States can still walk into stores and buy tobacco without a problem. Now before you see the cigarettes that my children working for me bought this summer, even after the passage of the FDA regulations. Each year underage smokers consume well over $1.25 billion worth of cigarettes. On the bright side, in the few communities where children cannot buy tobacco, we have seen dramatic reductions in teen smoking. In Westminster, Mass., we saw a 40 percent reduction in teen smoking, in Woodridge, Illinois a 69 percent reduction in teen smoking, 69 percent. So if you want to know why children use tobacco, you can put up to 69 percent of the blame on the merchants who are happy to sell it to them. Since 1990, the tobacco industry has been promoting its own educational campaign for merchants called, It's the Law, designed to encourage merchants to obey the law. Unfortunately, in a study that I've included in the packet for you, we tested the It's the Law program, and found that it was worthless. That the merchants who had these stickers up in their windows were just as likely to break the law as the merchants who weren't participating in the program. A well funded enforcement program as envisioned in the settlement could have a huge impact on teen tobacco use. By far, it is the most important measure in the settlement, and the tobacco industry's worst nightmare. Imagine a 69 percent drop in future tobacco sales. While it says it supports the law, the tobacco industry has waged a relentless state-by-state effort to sabotage the enforcement of these laws. For example, tobacco supporters in North Carolina and Georgia had written laws to make it illegal to knowingly or intentionally sell tobacco to minors. When authorities in these two states tried to enforce the law, the court threw out the cases commenting that it was impossible to prove what the merchants were thinking while they were selling the children tobacco. Inserting the words knowingly or intentionally makes a law unenforceable. When efforts to prosecute these merchants prove futile, the tobacco industry set off on a national state-by-state campaign to have similar language inserted into the laws of other states and so far, they have succeeded in at least a dozen states. In states where concerned communities were doing a great job of 14 WmMja+m Atr! - CafrefrddOvrler`

think it's really difficult. In the past there's been a clear financial tie between the tobacco industry and these actors, and Sylvester Stallone is known -- was paid huge sums of money to model smoking in his movies. And that certainly could be outlawed. But if a movie director spontaneously wanted to show one of the bad guys smoking, then I don't see how we can deal with that. But, I think it has a tremendous influence on the children. MCCAIN: You do agree with me though, it does have significant influence? DIFRANZA: Absolutely. Many of my older patients -- I'm a family doctor -- tell me that they started smoke because of Lauren Bacall or Humphrey Bogart. Those were the teen idols of their generation. And I'm sure that a lot of kids are starting to smoke because of Sylvester Stallone now. MCCAIN: Mr. Wise, you have a comment on it? WISE: I don't really.... I think probably the first amendment announces it right. There's only so much one can do in terms of curtailing artistic freedom. I would point out that the terms of our agreement address this issue, so far as could be addressed I think by prohibiting payments by anybody in the industry which would have that impact, and to try to eliminate any possibility. And I think it's also fair to point out that the industry doesn't do that now, and has agreed not to do it in the future. MCCAIN: I view myself very subjectively as a zealous guardian of the first amendment too. But here we are enacting all kinds of restraints on advertising penalties, the most severe kind, doing everything we can to provide disincentive. It seems to me at least we ought to try moral suasion on the movie industry to try -- it's almost as some violence in movies and sex in movies, it seems to me gratuitous, rather than any furtherance of the (AUDIO GAP) maybe that's more of a complaint than a question. Senator, Wyden. WYDEN: Thank you Mr. Chairman. Mr. Wise in the past when public health advocates and others have criticized the industry for targeting young people in the industry's marketing, the industry has in effect so no, we're not trying to target young people. What we're just trying to do is to get adult smokers to switch other brands. What we're concerned about is the adult market, we're concerned about the chance in the competitive market place to get adults to switch. Well along comes this Camel Club program that the company is running, which strikes me as manifestly zeroing in on young people. Everything about this looks like it targets young people -- the promotional material. f 6 Hb-ilrv'mrkff - Ca(arrrina'Oivir~

Doctor, I didn't ask you any questions. I felt that your associates in the public health community addressed many of the issues very well today, and I'd just like to give you a chance in closing to add anything further, if you wish. MUNZER: You brought up this point several times that, if you put certain restrictions on advertising, they're going to get around them cause they've done that in other countries. And I think what we're going to see this year in Europe... we've been one vote shy of a complete ban on tobacco advertisings throughout the European Economic Community and that one vote was always felt to be England now that we've had a change of government there. And they've announced that they're going to be banning tobacco advertising in England, we would expect that the next time the EEC gets together, they're going to ban advertising throughout Europe. And the Canadian government is re- writing their ban on advertising. And we see New Zealand, Australia. I don't see any reason why we shouldn't go with a complete ban in the United States as well. There are many democratic countries with freedom of speech who ban all tobacco advertising. Another possibility would be to limit the amount of money they can spend to the amount of money we can spend. One problem with all of our efforts in the past to encourage kids not to smoke, we were out spent by $1,000 to one. So, they're going to give us $500 million a year to spend on counter advertising, perhaps the industry should be limited to $500 million to spend promoting their products. So that'd be another possibility. WYDEN: It just seems to me, and we will as I say, wait, Mr. Wise's clients responds that there are a number of practical steps that can be taken that are consistent with our principles of a free market. And I hope that we'll be able to include those in the settlement. And that the special focus will be on these growth markets. You mentioned Europe, it's very clear Western industrialized nations are moving to many of the policies that our country is. I read an analysis recently that indicated that for every smoker who stops in the United States, two smokers start in China. WYDEN: So this ball game's about Asia, it's about the Third World. And I think that's why there have been such efforts by many of the companies to restrict any limitations on the global market. I just think we have a moral obligation as we protect kids in our country, to also take steps to keep young people from getting sick around the world. Gentlemen, we thank you and by order of Chairman McCain, the committee's adjourned. 71 Wo AinmAld - Caynertd»'Owler)

enforcing'the law, the tobacco industry pushed through preemptive state legislation, which stripped local officials of the ability to enforce the law. In other states, the industry has sabotaged enforcement by sponsoring bills that stripped all health officials and police officers throughout the state of their authority to enforce the law leaving in some cases only a single individual in the entire state with the authority to enforce the law. In Utah, the industry sponsored a bill which would cripple enforcement by placing 20 restrictions on how police could do these underage buyer tests. The details of this campaign of sabotage are also included in one of the published articles in your packet. Settlement legislation will give the tobacco industry the opportunity to simultaneously sabotage youth access laws in every state, since federal law is preemptive over state law. An industry which can quietly slip itself a $50 billion tax deduction might find it relatively easy at the last minute, to slip the words knowingly, and intentionally into a bill that may run into the hundreds of pages. this would cripple the enforcement of youth access laws in every state. In Vermont, the legislature guaranteed that their youth access law would be enforced effectively by mandating that the responsible agency enforce the law with sufficient vigor to ensure that at least 90 percent of merchants are obeying the law. Although the settlement might set up and provide funding for federal enforcement of these laws, it does not guarantee that this or future administrations will actually enforce the law effectively. In summary, the settlement guarantees that the tobacco industry will remain healthy and profitable for the next 25 years, but does not guarantee that we will ever see the promise of a vigorous federal enforcement program become a reality. Additionally this legislation affords the tobacco industry with a golden opportunity to ensure that merchants will continue to illegal supply children with tobacco with impunity. Thank you. MCCAIN: Thank you very much. Dr. DiFranza, one of the things that troubles a lot of us is that every time we watch a movie, the most.attractive characters, or even most of the characters somehow seize the opportunity several times during the movie or television program, especially the movie, to light up a cigarette. MCCAIN: Does that bother you? DIFRANZA: It bothers me immensely, but with the first amendment, I'm not sure we can address that particular problem. All other aspects of advertising are amenable to legislation, but I think when you get into the content of movies and whether the characters smoke; I 1 S ldmtiY(m~frl - Caereud aOwter`

released, the American people will more fully understand the nature of tobacco industry's wrongdoing. We urge you to be cautious and patient as you explore the best ways to protect the people, especially the children of this nation and the world, from the health hazards of tobacco use. Thank you for the opportunity to testify on this very important aspect of the proposed tobacco deal. MCCAIN: Thank you very much, Dr. Munzer. Dr. Munzer, do you support the entire Koop-Kessler recommendations? MUNZER: We support the Koop-Kessler recommendations... MCCAIN: In its entirety? MUNZER: ... and we do offer the added provision in advertising. As time goes on, it is very obvious that the tobacco industry is already beginning to circumvent some of the provisions, and we're seeing more and more problems. And that's why we feel that it is extremely important that nothing be done that preempts the authority of the Food and Drug Administration to act now, within five years and beyond five years. MCCAIN: Do you think that the FTC should play a significant role since they basically issued control advertising? MUNZER: We have supported action by the FTC in the past, and we can certainly continue to do so. MCCAIN: Thank you. Senator Wyden. WYDEN: Only one, Mr. Chairman. On this question of advertising relative to the nature of price increases with respect that the children, I think you've heard me say that I'm increasingly skeptical of some of the steps with respect to advertising restrictions, just because all of you in the public health community have done your job too well. I mean, you have laid out systematically how the industry just builds a road map around these advertising curtailments. What's your view with respect to the price increases versus advertising changes debate in terms of helping to deter kids? MUNZER: Those, of course, are important, but there is no question that the only proven way to reduce consumption of cigarettes by kids is a stiff increase in the price of tobacco. WYDEN: Thank you, Mr. Chairman. 11 WmA01% kd - CMerrirla'9vatn`

where there are restrictions here, and it's clearly possible to do what is restricted or barred here overseas, are you troubled by that double standard? WISE: You know, I think in measuring how each of these different countries address these problems, you really have to look at specific questions. No, the fact that the different countries approach these public health issues and regulatory issues in different ways doesn't trouble me particularly. WYDEN: And you're saying that right now the international marketplace is not such a big factor in the issues that Congress has to deal with with respect to the settlement? WISE: No, I don't think that's fair. I think it is fair just to, in light of the chairman's remarks earlier, and others to focus on what can be achieved domestically in light of this consensual arrangement that has arisen as a result of this work, and to put aside for the moment an attempt to regulate how foreign markets work. WYDEN: Well, right now under the law, the U.S. trade representatives who treat tobacco products like any other. They can be treated like a.Ritz cracker or NYQUIL or anything else. Which of course frees up as a matter of law, the opportunity for the United States, as a formal policy, to promote the sales of these products around the world, including to minors. Would companies support the change in that law? WISE: You're out of my depth now in terms of foreign trade law, but I think my guess would be on a case by case basis in each one of these markets with the competitive factors are at play in each of these foreign markets would have to be considered, so it's hard to make a generalized statement. WYDEN: Well Mr. Wise, I can tell you it was only a couple of years ago, when the CEO of the company that you're representing today told me under oath that nicotine wasn't addictive. And that makes me pretty skeptical of some of what the industry has put on the table. I look forward to having you all tell us what the rationale is for the new Camel Clubs program that looks like it patently targets young people. I hope that we'll hear more about this newspaper clipping, ---..- where RJR says, we'll warn fo'reign smokers. I have not'said that I'm ._..._ _._ . opposed to a settlement. It seems to me that there are clear benefits in a settlement. But the Senate and Congress wants some answers to these questions, so we will look forward to having those answers from your client. P~ lYO'M'~(Gn/Q'/( - Ca~'CX~N'~Gn(H~'

I've read several times in the hearing, the approach that they're using under the radar, trying to be cool, going to concert clubs, going to coffee houses, and the like. What is the company's rationale for starting a new program like this, that so clearly to this member of the United States Senate, looks to be targeting young people? WISE: Senator, I did see the article in the newspaper over the weekend and I know the issue that you're addressing. I haven't had the opportunity to talk with the company about what the theory is of the campaign, or indeed whether the article is correct in all its details. But I would just point out, from a first amendment standpoint, and from'a policy standpoint the venue for that activity that was described in that article, is an adult only facility. And, in all of the debate on advertising with respect to these products in the FDA and now, no one has ever so far as I know, suggested that the industry should be prohibited from speaking to consumers who choose to use the product in adult only facilities. In fact, the existence, the availability of this venue in some ways, was utilized by the FDA in its analysis of the rationale for why it was justifiable to constrict and constrain communication in other venues because of the availability of adult only venues where messages between the manufacturers and the consumers of the product could be conveyed. So, that's my take on that issue at the moment. As I pointed out, I'm not an expert on the details of that particular ad campaign. WYDEN: Why is it called Camel Kids? WISE: Like I said, I haven't talked to anybody at.... WYDEN: If you had said, you didn't know anything about it, I probably would have dropped it. But you said, you didn't know anything about and then said, based on everything you know, this is just another one of the company's programs to try and get a foothold in the adult market. You are right, nobody wants to restrict adult choice. But this program has target kids all over it. I mean everything about it, from the promotional material that's put out by a young marketing firm to the places they go, indicates that this targets young people. And Mr. Chairman, I would like to ask that the company respond in writing with respect to what they're rationale is for running a program like this. Because I think that this program is totally inconsistent with the company you represent says it wants to do as part of the settlement. And this looks to me like another way to try to circumvent in a very clever kind of way, the policies that are being advocated in public. WISE: I'm sure the company will have no hesitancy in responding to you in writing about whatever question that you have about the 17 lYarWmd!°9 Gsreraa oareip