FDA Lacks Statutory Authority to Regulate Tobacco Advertising, District Court Rules By Richard T. Kaplar The Food and Drug Administration cannot restrict tobacco advertising even though it has statutory authority to regulate tobacco products as medical devices, a U.S. district court in North Carolina ruled April 25. The decision means the FDA will not be able to impose sweeping restrictions on tobacco advertising adopted in a regulation last August. Those restrictions included a ban on billboards near schools and playgrounds, advertising limited to black-and- white text in publications read by young people, and a ban on brand-name sponsorship of events and merchandise (see box below). Judge William L. Osteen, Sr. ruled the FDA did not have the statutory authority it claimed under the Food, Drug and Cosmetic Act to regulate tobacco advertising. The FDA contended that a provision giving the agency authority to regulate "other conditions" related to the sale of "restricted medical devices " included advertising. That interpretation, Judge Osteen held, was overly broad. Thus, the court did not reach the merits of the First Amendment arguments raised by tobacco companies and advertising groups challenging the FDA rule. The FDA already asserts broad authority to regulate pharmaceutical advertising and has statutory authority to regulate all drug product "labeling," including package inserts for consumers and promotional literature for physicians. The tobacco advertising restrictions would have expanded the agency's authority greatly, giving it unprecedented power to regulate commercial speech about a non-pharmaceutical consumer product. That authority could have led to still-tighter restrictions or an outright ban on tobacco advertising or attempts to regulate other consumer product advertising. Tobacco ads, like advertising generally, currently fall under the scrutiny of the Federal Trade Commission. The FTC is now investigating whether the cartoon image of "Joe Camel" is aimed at children. The landmark ruling in the U.S. District Court for the Middle District of North Carolina still gives the FDA considerable leeway in regulating tobacco products themselves. The court upheld provisions of the FDA rule that would impose a federal ban on tobacco sales to persons under 18, ban vending machines in places accessible to children, and require a photo ID from young adult purchasers. President Clinton and Vice President Gore, both strong supporters of the FDA's efforts to regulate tobacco marketing and advertising, said the Administration will appeal the district court's decision on FDA advertising authority. That appeal will be heard by the Fourth Circuit, which recently upheld on remand a pair of Baltimore ordinances banning neighborhood billboards for alcohol and tobacco products. Former FDA commissioner David A. Kessler called the overall decision "stunning." "It's a victory for the nation, for the public health," he said. Kessler downplayed the court's ruling on the FDA's advertising authority. Hal Shoup, executive vice president of the American Association of Advertising Agencies, termed the decision "a clear-cut victory for the advertising and media industries." But Shoup cautioned "the battle is far from over." In a joint statement, tobacco manufacturers pledged to challenge facts about tobacco products asserted by the FDA in its regulations and called on Congress to resolve the public policy debate. "By seeking a legislative solution, the issues presented in this case will receive a fair and thorough review in a forum that is the most appropriate for their consideration," the statement said. In May 1996, Philip Morris Companies Inc. floated a legislative proposal that included restrictions on marketing practices and advertising aimed at adolescents, but would not have given the FDA authority to regulate tobacco products. The measure was never introduced. Coyne Beahm, Inc. v. United States, #2: 95CV00591, 1997 U.S. Dist. LEXIS 5453 (M.D.N.C. April 25, 1997).

Tobacco Ads on Table in Industry/Government Talks The North Carolina decision may add another wrinkle to what has become a hot topic in the media -- negotiations reportedly in progress between major cigarette manufacturers and 32 state attorneys general. According to reports first published in the Wall Street Journal, the two sides have discussed the possibility of a settlement that would give tobacco makers immunity from future government and private lawsuits. In return, the companies would create a fund -- valued at perhaps $300 billion over 25 years -- from which claimants would be reimbursed. A host of other issues reportedly have been on the table, such as the scope of the FDA's regulatory efforts and limits on tobacco advertising. Some observers think the district court decision affirming the FDA's authority to regulate tobacco may put extra pressure on tobacco makers to reach a settlement. Others aren't so sure -- nothing will be final in the courts until the case goes to a federal appeals court and probably the Supreme Court. The fact that the district court denied the FDA's authority to regulate tobacco advertising keeps that imortant card in the companies' hand -- at least for now. Meanwhile, the sporadic talks have yielded no deals and the process could collapse at any time. The Wall Street Journal reported May 29 that negotiators planned to wrap up a deal within two weeks, but noted June 2 that the attorneys general had postponed the talks until they could agree themselves on whether an individual's right to sue the tobacco companies should be limited. At least five are reported to oppose such a limitation. Any deal would need a law passed by Congress, a formidable obstacle in itself.

Judge Rules Advertising, Promotion Not Covered Under 'Restricted Devices' From the opinion by U.S. District Judge William L. Osteen, Sr., in Coyne Beahm: "Section 360j(e), entitled 'Restricted devices,' provides: (1) The Secretary may by regulation require that a device be restricted to sale, distribution, or use...upon such other conditions as the Secretary may prescribe in such regulation... "FDA determined that tobacco products are restricted devices within the meaning of Section 360j(e).... FDA further asserts that it may restrict the advertising and promotion of tobacco products, explaining that advertising and promotion constitutes an 'offer of sale' and moreover, that an 'offer of sale' is part of the 'sale' of a product. ... "FDA may not restrict advertising and promotion pursuant to Section 360j(e). First...the word 'sale' does not encompass the advertising or promotion of a product. Second...although Congress expressly used the words 'offer for sale' and 'advertising'....elsewhere in the FDCA, it chose not to use such language in Section 360j(e). "[T]he section's grant of authority to FDA to impose 'other conditions' on the sale, distribution, or use of restricted devices does not authorize FDA to restrict advertising and promotion. ... "[T]he fact that Congress has specifically granted to FDA the authority to regulate advertising of restricted devices in a separate section supports the court's finding that Congress did not intend to grant FDA such authority under Section 360j(e). "In light of the court's finding that FDA lacks authority under the FDCA to restrict the promotion and advertising of tobacco products, the court declines to determine whether the promotion and advertising restrictions violate the First Amendment." 1997 U.S. Dist. LEXIS 5453, 61, 63-67, 70, 74 (footnotes omitted).