Ra (LSE:RAI)
Historical Stock Chart

From Jun 2019 to Jun 2024

A bill allowing the U.S. Food and Drug Administration to regulate tobacco is on the way to the White House for President Barack Obama's signature.

A day after the U.S. Senate overwhelmingly approved the measure, the House passed it Friday on a 307-97 vote.

Obama supports the bill. Health and Human Services Secretary Kathleen Sebelius said Thursday that her agency looked forward to implementing it.

The FDA now will take on an unprecedented role overseeing the production and marketing of cigarettes.

Health advocates are giddy about the prospect, saying at long last regulators can determine exactly the types of toxins involved in making and smoking cigarettes.

Some FDA watchers and people in the tobacco industry say the new responsibilities will be too heavy a lift for the agency and will harm small tobacco farms.

"Allowing the FDA to regulate tobacco in any capacity would inevitably lead to the FDA regulating the family farm," said Rep. Howard Coble, R-N.C., during the House debate. "This could create uncertainty for family farmers as they are already struggling."

Many North Carolina elected officials have protested the legislation, arguing that it would hurt jobs in their state. Reynolds American Inc. (RAI) and Lorillard Inc. (LO), the second- and third-largest tobacco companies in the U.S., are based in North Carolina.

But the No. 1 U.S. tobacco producer, Altria Group, Inc. (MO), the parent company of Philip Morris USA, has given its stamp of approval to the measure.

Critics, including Lorillard, say Altria supports FDA regulation because new rules could solidify the company's dominance in the market. Altria spokesman William Phelps said previous regulations on cigarettes haven't stifled the tobacco market.

Health advocates aren't concerned about the solvency of tobacco companies. "As long as players in the industry are fighting over market share, all that we care about is that they're fighting over a shrinking market," said Gregg Haifley, senior associate for federal relations at the American Cancer Society Cancer Action Network.

After the bill becomes law, tobacco-product manufacturers must register with the FDA and provide a detailed product list. They also must pay user fees to cover the cost of the new regulation.

The FDA can evaluate health claims made by cigarette makers and require companies to change their tobacco products.

Packets of cigarettes will have larger and more strongly worded warning labels. There will be strict controls on advertising, stopping use of the terms "mild" and "low tar."

-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com