Tobacco Documents Online

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