FDA Aims to Reduce Nicotine Levels in Cigarettes, Tobacco Stocks Decline According to NYT

Altria Group (NYSE:MO) and Philip Morris International (NYSE:PM) shares showed a slight decline following a report that the U.S. Food and Drug Administration (FDA) is pressuring for a significant reduction in nicotine levels in cigarettes. Altria shares fell by 0.3%, while Philip Morris shares decreased by 0.6%. British American Tobacco shares reduced their gains but were still up by 0.5%.

According to the report, the FDA took a step toward a significant public health initiative by presenting a proposal to the Office of Management and Budget on Tuesday. The proposal aims to reduce nicotine levels in traditional cigarettes to minimal amounts. This is a move long advocated by public health experts but has faced strong resistance from the tobacco industry.

Mitch Zeller, the former director of the FDA's tobacco center, emphasized the importance of the proposal, stating, "I think this is a turning point in moving toward what could be the most game-changing tobacco regulatory policy in terms of lives saved that the FDA can pursue."

However, the future of the proposal remains uncertain as it comes just before the inauguration of elected President Donald Trump in January, during the final days of the current administration. The tobacco lobby, which significantly contributed to Trump's campaign, is expected to push back against the proposal. Notably, Reynolds American had donated $8.5 million to Trump's main super PAC by the end of October.

Although Trump has personally expressed opposition to smoking, his stance on specific regulatory issues, such as nicotine levels in cigarettes, has not been clearly stated recently. Robert F. Kennedy Jr., a potential appointee to manage the nation’s top health agency, has criticized federal subsidies to tobacco producers, pointing out the contradiction of supporting an industry associated with chronic diseases while promoting public health.

The World Health Organization reported that the U.S. Department of Agriculture provided $437 million in subsidies to tobacco farmers between 2015-2020. FDA Commissioner Dr. Robert Califf had announced in June 2022 that the agency intends to demand significant reductions in nicotine levels in cigarettes to non-addictive levels from tobacco companies.

The FDA confirmed on Wednesday that the proposed rule had been received by the White House. A spokesperson for the agency stated that if implemented, this rule would be "one of the most effective population-level actions in the history of U.S. tobacco product regulation."

The initiative aims to reduce the appeal of cigarettes, help smokers quit, and further decrease smoking rates. Smoking is associated with approximately 480,000 early deaths each year.

Earlier this year, the Biden administration withdrew a proposal to ban menthol cigarettes following opposition from companies like Reynolds American. The draft proposal to reduce nicotine levels received over 7,700 public comments, including those from the industry, and the FDA has since refined the plan.

Major cigarette manufacturers have responded to the proposal by advocating harm reduction strategies that encourage smokers to transition to less harmful alternatives, such as e-cigarettes. They argue that effectively removing cigarettes’ appeal to adult smokers would be tantamount to a ban, which would be contrary to tobacco control laws.

According to Erika Sward from the American Lung Association, if the proposal advances, it would represent a significant shift in tobacco regulation. The impact on nicotine levels in other tobacco products, such as cigars, hookahs, or e-cigarettes, remains unclear.