Reports that Matter

United States v. Philip Morris USA Inc.: Amended Final Opinion

Despite Their Internal Knowledge, Defendants Publicly Denied that

Section 68 of 129

Despite Their Internal Knowledge, Defendants Publicly Denied that

Compensation Is Nearly Complete and that the FTC Method is Flawed 2346. Despite evidence spanning multiple decades showing Defendants' extensive

knowledge of compensation, Defendants concealed that knowledge and disseminated false and misleading statements to downplay its existence and prevalence. As part of their attempt to portray low tar cigarettes as less harmful, Defendants publicly endorsed retaining the FTC Method well into the 1990s because of its usefulness to consumers. Henningfield WD, 48:14-49:7; 54:7-15; 55:6-12; 2041186475-6517 at 6475, 6486-95, 6498-04 (US 22181*) (1994 -- B&W, American Tobacco, Lorillard and Liggett defending the validity and usefulness of the FTC Method to consumers);

895

2048381972-2310 at 1975 (US 22190); 521321297-1301 at 1297 (US 22137); 520011445-1480 at 1445, 1457-58 (US 22101) (1994 -- various public statements by RJR employees defending the validity of the FTC Method); 2505597781-7998B at 7968-87 (US 23028*) (1996 -- Defendants' statements defending the utility to consumers of the FTC Method).

  1. As Defendants knew, the smoking regimen used in the FTC Method was designed to approximate smoking behavior in the 1930s, when cigarettes were relatively simple devices: few had filters, and perforated filter ventilation cigarettes were not in production. Henningfield WD, 47:11-21.

  2. When the FTC Method was adopted, it was understood that, while it was intended to provide a useful measure of the amount of tar and nicotine that particular brands generate when smoked in a uniform fashion, so that smokers could compare brands, the standardized FTC Method -- or any standardized testing procedure for that matter -- would not totally accurately represent the amount of tar and nicotine that any particular smoker would ingest. 03531981-1986 (US 22243); (no bates) (JD 040254); (no bates) (JD 048746).

  3. As noted in Section V(E)(1)(c), supra, while the FTC contemplated at the time it adopted its Method that numerous potential variations among individuals in everyday smoking behavior could have some effect on tar and nicotine yields, it did not have a full understanding of smoker compensation -- that smokers' addiction to nicotine would cause them to smoke low tar cigarettes more intensely to satisfy their nicotine addiction, and thereby inhale amounts of tar and nicotine comparable to those inhaled by smokers of full flavor cigarettes. Defendants withheld their long-held knowledge that the primary reason the FTC Method could yield misleading data was that nicotine addiction would drive smokers to obtain relatively stable nicotine intakes through smoker compensation. Henningfield WD, 48:3-49:7.

896

  1. When the FTC Method was adopted, the Tobacco Institute offered several criticisms in an August 1, 1967 press release, but none of those criticisms related to smoker compensation. Instead, the Tobacco Institute criticized the number of cigarettes tested, the length of the cigarette smoked, and the lack of dissemination of tar yields per cigarette puff. The Tobacco Institute stated that "there is no valid scientific evidence to show that . . . 'tar' and nicotine [] are responsible for any human illness" and then proposed several changes to the FTC Method, most of which were based on claims that FTC tar and nicotine yields were inaccurately high. The Tobacco Institute argued that twice as many sample cigarettes should be tested to arrive at FTC yields, that the FTC Method should use a longer butt-length (which would have lowered FTC tar and nicotine yields by smoking less of the cigarette), and that tar and nicotine yields should be disclosed on a per-puff, as well as a per-cigarette, basis. For these reasons, the Tobacco Institute claimed that the FTC Method "may be deceptive because a smoker may assume his cigarette is delivering the amount of 'tar' and nicotine reported by the FTC when in fact it will be delivering much less, the way he smokes." TIMN0120846-0849 at 0847-0848 (US 87967).

  2. Even at the time it was developed, scientists understood that the FTC method, like any standardized method, would provide an imperfect measure of the exact amount of tar and nicotine that a particular smoker would ingest from a particular cigarette. Instead, the method was intended to give representative approximations of the amounts of tar and nicotine generated by different brand cigarettes when smoked under identical conditions. Those approximations could then provide a useful comparison of the tar and nicotine a human smoker would receive from smoking different brands. For example, the FTC stated in 1983: "If consumers avoid blocking ventilation holes, cigarettes smoked in the same fashion will yield 'tar', nicotine, and carbon monoxide in general accordance with their relative FTC rankings." 03573029-3030 at 3029 (US 22244); 48 Fed. Reg. 15,953 at 15,954 (Commission Determination Re Barclay Cigarettes; Amendment of Report of "Tar," Nicotine, and Carbon Monoxide Content of 208 Varieties of Cigarettes; Request for Comment on Possible Testing Modifications). While the FTC Method does provide a means by which to compare brands, the comparison does not meaningfully relate to the reality of smoking.

897

  1. In a November 29, 1994 written statement submitted for the December 5-6, 1994 NCI Conference on the FTC Cigarette Test Method, B&W, American Tobacco, Lorillard, and Liggett defended the FTC Method, stating that "The FTC's Test Method Provides Useful and Reliable Information About the Relative 'Tar' and Nicotine Yields of Cigarettes," and contending that FTC yields are a "useful predictor" of the amount of tar and nicotine smokers will inhale. 2041186475- 6517 at 6475, 6486-95, 6498-6504 (US 22181*).

  2. RJR employees, David Townsend and Donald de Bethizy, maintained at the same Conference, in both their written and oral statements, that the FTC Method was a valid and accurate test method that approximates human smoking. 2048381972-2310 at 1975 (US 22190).

  3. In his written statement, Townsend asserted that the FTC Method "provides accurate and reliable information" that "is a key factor for consumers to make objective choices in the marketplace" and stated that "implementation of the FTC testing for 'tar' and nicotine . . . was an important step in providing data for the consumer to use to make an informed decision in the marketplace." 521321297-1301 at 1297 (US 22137). Townsend further stated that

898

it is clear from the information, I believe, that the FTC test method does provide accurate and reliable information for the consumer to use in the marketplace; that is, to compare yields of various brands and make objective choices. The consumer makes choices based on the FTC information, or the rankings derived from that information. . . . The FTC method was established to provide accurate and reliable comparative smoke yield information, and has been very successful in doing that.

2048381972-2310 at 2252, 2256 (US 22190).

  1. De Bethizy stated: "The FTC method provides an accurate and meaningful ranking of cigarettes. . . . On average, smokers absorb approximately the yield of nicotine predicted by the FTC method, and smokers of lower yielding products absorb less nicotine . . . ." 520011445-1480 at 1445, 1457-58 (US 22101). He also stated: "The FTC method provides an accurate and meaningful ranking of cigarettes. . . . [T]he compensation phenomenon does not undermine the FTC method." 2048381972-2310 at 2264, 2267 (US 22190).

  2. In their 1996 comments on the FDA's proposed tobacco Rule, Defendants continued to maintain that there is a meaningful relationship between the FTC ratings and smoker tar and nicotine exposure. 2505597781-7998B at 7968-87 (US 23028*).

  3. While defending the FTC Method and resisting proposed changes to it, Defendants have made repeated public assertions that they have substantially reduced the tar and nicotine deliveries of cigarettes, citing the FTC ratings as their primary support for this assertion. 2505597781-7998B at 7987-88 (US 23028*) (1996 Comments of B&W, Liggett, Lorillard, Philip Morris, Inc., RJR & Tobacco Institute before the U.S. FDA, Vol. III) (claiming that "over the years, the average yield of cigarettes generally has declined markedly. . . . The fact is that from 1950 to the present, U.S. cigarette manufacturers have reduced 'tar' and nicotine yields by more than 60 percent"); 2046932308-2363 at 2314-2315 (US 85067) (Philip Morris 1994 submission to NCI regarding the FTC Method, asserting "an overall decrease in the 'tar' and nicotine intake of smokers" as a result of reduced FTC yields); 521321297-1301 at 1299 (US 22137) (1994 RJR employee's statement that "all cigarettes are substantially lower in 'tar' yields than they were in past years" and his claim that "[c]igarette design changes have resulted in an overall major reduction in smoke yields.").

899
  1. A February 7, 1996 Covington & Burling memorandum, from Tobacco Institute attorney David H. Remes to attorneys and senior employees from Philip Morris and B&W and attorneys from the law firms of Arnold & Porter and Collier Shannon, summarized a meeting held earlier that day between Remes and C. Lee Peeler, Director of Advertising Practices in the Bureau of Consumer Protection at the FTC. At this meeting, Remes relayed to Peeler the industry's claim that low tar cigarettes actually do deliver less tar and nicotine to smokers, and that consumers need not be informed about changes in smoking behavior related to smoker compensation. Remes communicated his "observation that in many cases low-yield brands contain so much less tobacco than higher-yield brands that any compensation could not begin to erase the difference." Remes also said that he had made a "suggestion that smokers do not need to have it explained to them that smoking a lot of low-yield cigarettes will result in greater T&N deliveries, just as people do not need to be told that eating a lot of low-fat cookies can make them fat." Remes noted that Mr. Peeler "responded that the analogy does not hold because we know how much fat is 'delivered' in each cookie but not how much T&N is delivered by each cigarette." 92613896-3899 (US 87919); Wells
900

  1. Over the years, there has been discussion in the scientific community about revising the FTC Method to make it a more accurate measure of the tar and nicotine that human smokers actually ingest. Defendants have opposed changing the FTC Method, arguing that it provides a way for consumers to choose cigarettes and meaningfully compare them in terms of the tar and nicotine exposure from smoking. Henningfield WD, 55:6-12.

  2. For instance, in September 1997, the FTC solicited public comment on a proposal to replace the existing FTC test method with a methodology that would "provide information on the tar, nicotine, and carbon monoxide yields obtained under two different smoking conditions" to provide "a range of yields for individual cigarettes smoked under less intensive and more intensive smoking conditions," and to convey to smokers that "a cigarette's yield depends on how it is smoked." FTC Cigarette Testing; Request for Public Comment, 62 Fed. Reg. 48,158, 48,159 (Sept. 12, 1997) (US 88618). In response, Philip Morris, RJR, B&W, and Lorillard submitted joint comments to the agency defending the current FTC Method and opposing the proposed change, stating: "The manufacturers believe that the current test method should continue to be used. They are not convinced that it should be supplemented with a second test method." Comments of Philip Morris Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., and Lorillard Tobacco Co. on the Proposal Titled FTC Cigarette Testing Methodology Request for Public Comment (62 Fed. Reg. 48,158) at 2-3, (no bates) (US 88618) ("Joint Comments") .

  3. The comments further stated that: "Smokers are familiar with the ratings produced by the current test method, and continued use of the current test method assures historical continuity of the data. For these reasons, testing under the current FTC test method should continue." Id. at 4. The comments referred to compensation as a "hypothesized" and "weakly documented phenomenon" and stated: "The testing protocol should not be modified to reflect 'compensatory' smoking, in part because "current knowledge about these behaviors is too sparse to be usable for modeling purposes." Id. at 43.

901

  1. Defendants' comments urged that "[t]he protocol should not be modified to incorporate a vent-blocking condition." In response to the FTC's question: "What kinds of consumer education messages should be created to inform smokers of the presence of filter vents and the importance of not blocking them with their fingers or lips?" Defendants' 1998 comments stated: "The manufacturers are not convinced that vent-blocking is a sufficiently common or documented phenomenon that smokers should be alerted to the presence of filter vents and instructed not to block the vents." Id. at 60, 82.

  2. In response to the FTC's question: "If the effect of compensatory smoking behavior is not incorporated in the tar and nicotine ratings, should a disclosure warning smokers about compensatory smoking behavior be required in all advertisements?" Defendants' 1998 comments stated: "The manufacturers are not convinced that compensatory smoking behavior is a sufficiently common or documented phenomenon that consumers should be alerted to its existence. . . ." Id. at 89.

a. Tobacco Institute 2364. In anticipation of the 1981 Surgeon General's Report, the Scientific Affairs Division

of the Tobacco Institute drafted a December 15, 1980 memorandum to Horace Kornegay, President of the Tobacco Institute, warning that, among other issues, the Report was expected to include a discussion of smoker compensation. Rather than recommending disclosure of full and complete information on the subject to the public, the "Response" section of the memorandum stated:

902

[I]t is suggested that the TI take the following position on the report and that on receipt of any queries from the press, staff be instructed to respond as follows: "The results of research in the past are so mixed that it is impossible to reach and support a firm conclusion at the present time. All one has to do is be aware of and appreciate the call for more research to realize that the Surgeon General's Office cannot objectively have a strong position supported by research. The office is looking for more money in order to support the current campaign against the tobacco industry."

TIMN0073798-3799 at 3799 (US 85127).

b. Philip Morris

  1. In a June 29, 1988 "Statement of Philip Morris, U.S.A." to Congress, Philip Morris made statements equating machine measured tar and nicotine deliveries with actual smoker intake:

From the 1940s to today, Philip Morris has similarly spent millions on its own research program to modify its cigarettes. As a result, the "tar" and nicotine yields of today's cigarettes -- the principal concern of the scientists who believe cigarettes pose health risks -- have been reduced as much as 95% from the 1957 averages. . . . [I]t was Philip Morris scientists who perfected the instrument that was used for many years by the Federal Trade Commission and other groups around the world for the measurement of "tar" and nicotine yielded by cigarettes . . . [filter] ventilation techniques also contributed to an overall reduction in 'tar' and nicotine levels. . . . As a result of these advances in filtration and ventilation, Philip Morris and the other cigarette companies were able to reduce "tar" and nicotine levels substantially in the late 1950s. . . . As a result of these dramatic reductions in the "tar" and nicotine levels of the leading brands, as well as the introduction of entirely new low-delivery cigarettes, the overall intake of "tar" and nicotine by American smokers decreased dramatically even before the Surgeon General's Report against smoking in 1964. . . . As a result of all this research, Philip Morris succeeded in reducing "tar" and nicotine levels even more in the years following the 1964 Surgeon General's Report.

TI01770431-0458 at 0433, 0439, 0441-0443, 0451 (US 85065).

903
  1. In his April 14, 1994 written Statement before the House of Representatives Subcommittee on Health and the Environment of the House of Representatives Energy and Commerce Committee, William Campbell, President and CEO of Philip Morris USA, stated, contrary to extensive information developed by and known to Philip Morris USA, that "consumers are not misled by the published nicotine deliveries as measured by the FTC method." Campbell also claimed that "tar and nicotine levels have decreased dramatically over the past 40 years. Today, the market is populated with a number of 'ultra low' brands which deliver less than 5% of the tar and nicotine of popular brands 20 years ago." In a statement carefully worded to refer only to the number of cigarettes smoked, ignoring all other methods of smoker compensation, Campbell both misrepresented the evidence about whether downswitchers smoke more cigarettes per day and denied that smoker compensation rendered the FTC tar and nicotine yields misleading:

Commissioner [David] Kessler suggested that the FTC figures were misleading because smokers might "compensate" for lower tar and lower nicotine brands by smoking those cigarettes differently. In fact, the data indicates that, despite the dramatic reductions in tar and nicotine levels over the past decades, the number of cigarettes smoked by an individual has remained constant, and even declined slightly. More importantly, the data shows no difference in the number of cigarettes smoked by those who favor higher and lower yield brands.

ATC2746877-6887 at 6877, 6878, 6887 (US 59009); compare with 1000861953-1953 (US 35484) (Wakeham 3/24/61) ("As we know, all too often the smoker who switches to a hi-fi cigarette winds up smoking more units in order to provide himself with the delivery which he had before.").

  1. An October 1994 document that Philip Morris submitted to the United States National Cancer Institute, titled "Submission of Philip Morris Incorporated to the National Cancer Institute Consensus Conference on the FTC Cigarette Testing Methodology and Rating System," stated:
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A number of the FTC's questions . . . relate to "compensation," a term used to suggest that some smokers of lower yield cigarettes may sometimes alter their smoking behavior in ways that may tend to reduce the differences in yields among brands and styles implied by their relative FTC method ratings. While there is a fair amount of recent literature on compensation, few studies have been performed that provide reliable data to establish the occurrence of this suggested phenomenon. We appreciate the interest people have in possible compensation. But there can be no real dispute that, to date, the scientific literature on compensation is limited and inconclusive. . . . [W]hatever conclusions may be reached about compensation, the FTC method remains an appropriate standard for measuring cigarette properties. The reporting of FTC method yields . . . remains a useful source of information to consumers choosing among cigarette brands and styles.

2046932308-2363 at 2312, 2362-2363 (US 85067).

  1. A document, titled "Philip Morris Management Corp., Worldwide Regulatory Affairs

Department, 1996 Core Issues Plan," discussed under the topic of "Core Issue #2 Federal Trade

Commission," Philip Morris's response to an NCI Conference recommendation to change the FTC

Method and to provide more information to consumers: "Preserv[ing] our ability to . . . advertise low tar/light and ultra low tar/ultra light cigarettes as such; avoid changes in the FTC method for as long as possible; [and] minimize changes in the FTC method to the extent possible. . . ."

2046266224-6268 at 6234 (US 23936).

c. R.J. Reynolds

  1. In a July 2, 1984 letter to the FTC from Samuel B. Witt III, RJR Vice President,

General Counsel, and Secretary, Witt stated:

[T]he Commission has also asked for comment on broad questions concerning "smoker compensation. . . ." In their submissions [in response,] health organizations take the position (which is not correct) that the average smoker will get the same amount of "tar" and nicotine from higher and lower "tar" cigarettes, therefore making

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the Commission's numbers irrelevant to the consumer. RJRT, on the other hand, maintains that the average smoker will get less "tar" from smoking a low "tar" cigarette than he or she will receive from smoking a higher "tar" product, and that the average smoker of low "tar" cigarettes does not smoke more cigarettes than the average smoker of higher "tar" cigarettes.

2025045756-5761 at 5760 (US 22247).

  1. In an April 14, 1994 statement to the House of Representatives Subcommittee on

Health and the Environment of the House Energy and Commerce Committee regarding the potential regulation of cigarettes by the FDA, RJR stated:

Since the 1950s, Reynolds tobacco has pursued . . . development of new technologies to reduce yields of "tar" and nicotine generally . . . [this] line of research has been remarkably successful. . . . The important point is that in spite of broad variations in how individual smokers may smoke any given cigarette, the fact remains that the lower the yield by FTC numbers, the lower the yield will be to any given smoker. The yield for any given smoker will probably be different from the FTC yield; for some smokers it will be higher, for some it will be lower, but overall, the FTC yields are generally predictive of the yield to smokers as a group. The statement, however, that "in reality" low yield cigarettes do not yield low "tar" and nicotine, is not true.

516962199-2227 at 2203-2204 (US 85128).

d. Brown & Williamson

  1. In the mid-1990s, Tommy Sandefur, B&W CEO, submitted a written statement to

Congress defending the FTC Method: "We also vigorously dispute the suggestion of [David] Kessler and [John] Slade that the 'tar' and nicotine ratings produced using the FTC test method are meaningless or misleading." More than ten years earlier, on March 19, 1984, Ernest Pepples, B&W

Senior Vice President and General Counsel, wrote a letter to Howard Liebengood of the Tobacco

Institute acknowledging that FTC tar and nicotine ratings "may be misleading to consumers" and bear no relation to actual consumer intake. Compare 682637627-7629 at 7629 (US 22946) with

906
  1. Susan Ivey, President and CEO of B&W, admitted at trial that B&W "has been aware for many years" that some smokers compensate when smoking low tar cigarettes. B&W takes a different position on its website, which states that "[t]he question of why compensation occurs is still the subject of scientific research, and the relative importance of tar versus nicotine in determining compensation is unclear." The website also states that "how much smokers alter their behavior when they switch to lower tar products, and for how long, is still unclear." The website also states that "our studies show that, as actually smoked by consumers, lower tar cigarettes will generally deliver less tar and nicotine than higher tar cigarettes, and cigarette deliveries generally align with the ranges associated with the descriptors: ultra lights, lights, and full flavor." Ivey WD, 67:19-21; TLT1040050-0055 at 0052-0054 (US 88620); Ivey WD, 64:1-67:11.

e. BATCo 2373. In an October 1999 Memorandum by British American Tobacco to the U.K. House

of Commons Health Committee, titled "The Tobacco Industry and the Health Risks of Smoking," BATCo discussed compensation:

It is clear that compensation does occur, but that . . . despite compensation, smokers receive less tar on average when switching to a lower tar cigarette. . . . The evidence suggests that increasing the number of cigarettes consumed, blocking of ventilation holes and increasing inhalation depth, are not common compensation mechanisms. . . . The limited evidence of which we are aware, suggests that switched smokers either revert gradually to their former, non-compensatory behaviour (which results in lower overall intake of smoke), or change again to a brand which they prefer and which does not require the extra "effort" of taking larger puffs (which may or may not result in lower intake).

907

322017057-7142 at 7108-09 (US 22068); Ivey WD, 69:4-13.

f. American Tobacco 2374. Eric Gesell stated, on behalf of American Tobacco, that the company did not believe

that smokers smoke for a certain level of nicotine and adjust their level of smoking when switching between different types of cigarettes to ensure that they get the same amount of nicotine. Gesell PD, Minnesota, 9/18/97, 5:8-25; 6:10-17; 98:21-100:6.

  1. Gesell also said on behalf of American that the FTC Method tar and nicotine yield data "is meaningful, and it was meaningful, and probably still is today." Gesell PD, Minnesota, 9/18/97, 5:8-25; 6:10-17; 107:7-108:6.

g. Lorillard 2376. In 1999, Alexander Spears, CEO of Lorillard, stated publicly that the FTC tar and

nicotine numbers did not need to be explained to smokers because it was "very obvious" that they were meaningless due to smoker compensation. Spears PD, Minnesota, 9/23/97, 70:2-72:2.