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FDA looks to cut cigarette nicotine in blow to tobacco industry

July 28, 2017

The U.S. Food and Drug Administration will work to cut the amount of nicotine in cigarettes to nonaddictive levels, with the goal of preventing thousands of tobacco-related deaths a year. The surprise move sent shares of cigarette stocks plummeting Friday morning.

While the FDA’s effort is likely to be heavily opposed by cigarette makers such as Altria Group Inc. and British American Tobacco Plc, the move by the agency is aimed at one of the U.S.’s biggest causes of preventable illness that the FDA says is responsible for 480,000 deaths a year as well as hundreds of billions of dollars in medical costs and lost productivity.

About 20 percent of adults in Indiana are cigarette smokers.

“The overwhelming amount of death and disease attributable to tobacco is caused by addiction to cigarettesthe only legal consumer product that, when used as intended, will kill half of all long-term users,” FDA Commissioner Scott Gottlieb said in a statement announcing the move. “Unless we change course, 5.6 million young people alive today will die prematurely later in life from tobacco use.”

The move threatens to deal a crushing blow to tobacco companies, which are already coping with shrinking cigarette volumes in the U.S. It also puts pressure on the industry to speed so-called reduced-risk products to market.

Shares of tobacco companies plummeted after the announcement. Altria dropped as much as 19 percent, the biggest intraday decline since 1999. British American Tobacco’s stock fell as much as 11 percent.

The FDA gained oversight of tobacco products in 2009 through the Family Smoking Prevention and Tobacco Control Act. It plans to take input on the proposal, with the goal of cutting down on the number of future smokers, according to the agency.

“The FDA plans to begin a public dialogue about lowering nicotine levels in combustible cigarettes to nonaddictive levels through achievable product standards,” the agency said in the announcement.

Representatives of Philip Morris International Inc., Altria and British American Tobacco’s Reynolds American division were not immediately available for comment.

Sales of cigarettes have already been in decline, even as taxes on their products rise. The industry’s cigarette sales volume dropped an estimated 4.5 percent last quarter, Altria reported earlier this week. The average state excise tax was $1.74 per pack last quarter, compared with 19 cents for the same time last year, according to Altria.

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