U.S. health officials said Friday they want tobacco companies to make all cigarettes with such low levels of nicotine that they are no longer addictive, part of a sweeping regulatory overhaul that threatens Big Tobacco's main moneymaker.
The Food and Drug Administration also said it would encourage smokers to switch to products such as e-cigarettes and smokeless tobacco that are less dangerous than cigarettes. The so-called harm-reduction strategy is a break by the U.S. government from an abstinence-only approach to fighting tobacco-related diseases and deaths.
Shares of major tobacco companies, which have been reaping growing profits in the U.S. market even as the number of smokers dwindles, tumbled Friday on the surprise move. Marlboro maker Altria Group Inc. fell 10%, while British American Tobacco PLC, maker of Camel cigarettes, dropped 8.5%, erasing tens of billions of market value.
"The problem isn't just nicotine, the problem is the delivery mechanism, " FDA Commissioner Scott Gottlieb said at a press conference Friday.
"Cigarettes will likely remain incredibly toxic.... We may be able to reach a day when the most harmful products will no longer be capable of addicting our children," he said.
Dr. Gottlieb said the FDA's new approach would consider "a continuum of risk for nicotine delivery," from combustible products such as cigarettes to replacement therapies like nicotine gums. Nicotine hooks people on cigarettes, but nicotine itself doesn't cause cancer, heart disease or lung disease, he noted. It is other harmful compounds in cigarette smoke that kill 480,000 people in the U.S. each year, according to the Centers for Disease Control and Prevention.
In addition to pursuing regulation to "render cigarettes minimally addictive," Dr. Gottlieb said the FDA would consider a ban on menthol cigarettes.
The announcement is the biggest step by the U.S. government to curb smoking since a landmark legal settlement in 1998. In addition to paying more than $100 billion to help states pay for health care, tobacco companies agreed to restrictions on the use of cartoons in marketing, as well as transit advertising, billboards and free product samples.
"This is a huge switch from the 'tobacco-free world'. approach to tobacco and nicotine by U.S. government agencies," said David Sweanor, a Canadian law professor and tobacco expert who supports the harm-reduction approach.
The FDA began regulating the industry in 2009 but that move in some ways proved beneficial to Big Tobacco by grandfathering in cigarettes already on the market and eliminating regulatory uncertainty. The FDA's new stance "represents a paradigm shift in regulatory risk for U.S. tobacco companies," Stifel analyst Christopher Growe told clients in a note Friday.
Altria, which supported the 2009 legislation that gave the FDA authority to reduce nicotine levels, said "any proposed rule such as a nicotine product standard must be based on science and evidence, must not lead to unintended consequences and must be technically achievable."
BAT's U.S. subsidiary Reynolds American, which also sells nicotine gum, e-cigarettes and smokeless tobacco, said: "We are well prepared and look forward to participating in a thorough process to develop a comprehensive plan for tobacco and nicotine regulation."
Imperial Brands PLC, which sells the Winston and Kool brands, said "it's too early to understand the practical implications" of the FDA's new position. Philip Morris International Inc., which doesn't sell products in the U.S. but has applications pending before the FDA, didn't respond to a request for comment.
Some tobacco analysts were skeptical, saying such regulation would take years to develop and would likely be litigated. Others questioned the public-health benefit, suggesting smokers would just smoke more cigarettes to compensate for the lower levels of nicotine.
Citigroup analyst Adam Spielman said he doesn't believe the FDA will be able to lower nicotine to nonaddictive levels because defining that level would be difficult and there would be political opposition. "We don't believe the proposal to reduce nicotine in cigarettes dramatically is practical," Mr. Spielman said.
Nicotine levels in cigarettes can be reduced in different ways. Manufacturers can adjust the blend of tobacco leaves or use different types of paper or filters. Nicotine can also be stripped from the leaf in the manufacturing process.
But products with very low levels of nicotine have never garnered a significant share of the U.S. market. In 1989, Philip Morris Cos., the company now known as Altria, introduced an ultralow-nicotine cigarette called Next De-Nic, created through a process that stripped the majority of the nicotine from the tobacco leaf similar to the way caffeine is removed from coffee beans.
The FDA also said Friday it will allow more time for makers of e-cigarettes and vaping products to submit products for agency review. Those that were on the market in August 2016 won't be subject to review until 2021 or 2022.
The FDA's shift comes as the agency considers whether to approve new health-related marketing claims for several cigarette alternatives. In April, Reynolds American submitted applications to market six styles of Camel Snus tobacco pouches as being less harmful than cigarettes. Philip Morris International also has a health-claim application pending for a new device that heats tobacco instead of burning it. Analysts said the FDA's new position could bode well for such products.
Saabira Chaudhuri contributed to this article
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(END) Dow Jones Newswires
July 28, 2017 17:26 ET (21:26 GMT)