Philip Morris Intl Commences New Plans to Spread Death and Disease

Philip Morris International today starts business as an independent company, no longer affiliated with Philip Morris USA or the parent company, Altria. Philip Morris USA will sell Marlboro and other cigarettes in the United States. Philip Morris International will trample over the rest of the world.

Public health advocates have worried and speculated over the past year about what this move may mean, but Philip Morris International has now removed all doubts.

The world is about to meet a Philip Morris International that will be even more predatory in pushing its toxic products worldwide.

The new Philip Morris International will be unconstrained by public opinion in the United States — the home country and largest market of the old, unified Philip Morris — and will no longer fear lawsuits in the United States.

As a result, Thomas Russo of the investment fund Gardner Russo & Gardner tells Bloomberg, the company “won’t have to worry about getting pre-approval from the U.S. for things that are perfectly acceptable in foreign markets.” Russo’s firm owns 5.7 million shares of Altria and now Philip Morris International.

A commentator for The Motley Fool investment advice service writes, “the Marlboro Man is finally free to roam the globe unfettered by the legal and marketing shackles of the U.S. domestic market.”

In February, the World Health Organization issued a new report on the global tobacco epidemic. WHO estimates the Big Tobacco-fueled epidemic now kills more than 5 million people every year.

Five million people.

By 2030, WHO estimates 8 million will die a year from tobacco-related disease, 80 percent in the developing world.

The WHO report emphasizes that known and proven public health policies can dramatically reduce smoking rates. These policies include indoor smoke-free policies; bans on tobacco advertising, promotion and sponsorship; heightened taxes; effective warnings; and cessation programs. These “strategies are within the reach of every country, rich or poor and, when combined as a package, offer us the best chance of reversing this growing epidemic,” says WHO Director-General Margaret Chan.

Most countries have failed to adopt these policies, thanks in no small part to decades-long efforts by Philip Morris and the rest of Big Tobacco to deploy political power to block public health initiatives. Thanks to the momentum surrounding a global tobacco treaty, known as the Framework Convention on Tobacco Control, adopted in 2005, this is starting to change. There’s a long way to go, but countries are increasingly adopting sound public health measures to combat Big Tobacco.

Now Philip Morris International has signaled its initial plans to subvert these policies.

The company has announced plans to inflict on the world an array of new products, packages and marketing efforts. These are designed to undermine smoke-free workplace rules, defeat tobacco taxes, segment markets with specially flavored products, offer flavored cigarettes sure to appeal to youth, and overcome marketing restrictions.

The Chief Operating Officer of Philip Morris International, Andre Calantzopoulos, detailed in a March investor presentation two new products, Marlboro Wides, “a shorter cigarette with a wider diameter,” and Marlboro Intense, “a rich, flavorful, shorter cigarette.”

Sounds innocent enough, as far as these things go.

That’s only to the innocent mind.

The Wall Street Journal reported on Philip Morris International’s underlying objective: “The idea behind Intense is to appeal to customers who, due to indoor smoking bans, want to dash outside for a quick nicotine hit but don’t always finish a full-size cigarette.”

Workplace and indoor smoke-free rules protect people from second-hand smoke, but also make it harder for smokers to smoke. The inconvenience (and stigma of needing to leave the office or restaurant to smoke) helps smokers smoke less and, often, quit. Subverting smoke-free bans will damage an important tool to reduce smoking.

Philip Morris International says it can adapt to high taxes. If applied per pack (or per cigarette), rather than as a percentage of price, high taxes more severely impact low-priced brands (and can help shift smokers to premium brands like Marlboro). But taxes based on price hurt Philip Morris International.

Philip Morris International’s response? “Other Tobacco Products,” which Calantzopoulos describes as “tax-driven substitutes for low-price cigarettes.” These include, says Calantzopoulos, “the ‘tobacco block,’ which I would describe as the perfect make-your-own cigarette device.” In Germany, roll-your-own cigarettes are taxed far less than manufactured cigarettes, and Philip Morris International’s “tobacco block” is rapidly gaining market share.

One of the great industry deceptions over the last several decades is selling cigarettes called “lights” (as in Marlboro Lights), “low” or “mild” — all designed to deceive smokers into thinking they are safer.

The Framework Convention on Tobacco Control says these inherently misleading terms should be barred. Like other companies in this regard, Philip Morris has been moving to replace the names with color coding — aiming to convey the same ideas, without the now-controversial terms.

Calantzopoulos says Philip Morris International will work to more clearly differentiate Marlboro Gold (lights) from Marlboro Red (traditional) to “increase their appeal to consumer groups and segments that Marlboro has not traditionally addressed.”

Another, related initiative is Marlboro Filter Plus, which claims to reduce tar levels. First launched in Korea, in 2006, Calantzopoulos says it has recorded “an impressive 22 percent share” among what the company designates as “Young Adult Smokers.”

Philip Morris International also is unrolling a range of new Marlboro products with obvious attraction for youth. These include Marlboro Ice Mint, Marlboro Crisp Mint and Marlboro Fresh Mint, introduced into Japan and Hong Kong last year. It is exporting clove products from Indonesia.

Responding to increasing advertising restrictions and large, pictorial warnings required on packs, Marlboro is focusing increased attention on packaging. Fancy slide packs make the package more of a marketing device than ever before, and may be able to obscure warning labels.

Most worrisome of all may be the company’s forays into China, the biggest cigarette market in the world, which has largely been closed to foreign multinationals. Philip Morris International has hooked up with the China National Tobacco Company, which controls sales in China. Philip Morris International will sell Chinese brands in Europe. Much more importantly, licensed versions of Marlboro are expected to be available in China starting this summer. The Chinese aren’t letting Philip Morris International in quickly — Calantzopoulos says “we do not foresee a material impact on our volume and profitability in the near future.” But, he adds, “we believe this long-term strategic cooperation will prove to be mutually beneficial and form the foundation for strong long-term growth.”

What does long-term growth mean? In part, it means gaining market share among China’s 350 million smokers. But it also means expanding the market, by selling to girls and women. About 60 percent of men in China smoke; only 2 or 3 percent of women do so.

The global vilification of Big Tobacco over the last decade and a half is one of the world’s great public health stories. Directly connected to that vilification has been a reduction in smoking, and adoption of life-saving policies that will avert millions of deaths.

Yet here comes Philip Morris International, now the world’s largest nongovernmental tobacco company. It is permitted to break off from Altria with no regulatory restraint. It proceeds to announce plans to subvert the public health policies that offer the best hope for reducing the toll of tobacco-related death and disease. The markets applaud, governments are mute.

What an extraordinary commentary on the political and ideological potency of the multinational corporation — and the idea that corporations should presumptively be free to do what they want, with only the most minimal of restraints.

Note: Essential Action, a group I direct, works to curb the global tobacco epidemic, and helped organize a public health call for government action in advance of the Philip Morris breakup.

How Things Work: FTC Chair to Join Procter & Gamble

The chair of the Federal Trade Commission (FTC), Deborah Platt Majoras, is leaving her job. She’s going to become vice president and general counsel for Procter & Gamble (P&G).

Should it raise eyebrows for the head of the leading U.S. consumer protection agency to leave and take a job with the largest consumer products company?

Not in Washington, D.C.

Asked about the propriety of the move, FTC spokesperson Nancy Judy explains that Majoras will need to abide by a year-long “cooling off” period. She’ll never be able to represent P&G before the Commission on matters on which she worked while at the FTC. And once she announced that she would be taking a job with P&G, she removed herself from any matters that might affect the company.

Shira Mintz, who is the assistant general counsel for ethics at the FTC, says that Majoras is “extremely conscientious” about ethical matters, and that everything she has done is above board.

OK, but is there any concern about appearances here? Or is this just how things work?

“It is how things work,” says Mintz. “The nature of the business is the revolving door.”


“You get extremely qualified people to come into government, and then they go back into the real world,” says Mintz. “Real world” means well-paying corporate work.

Majoras came to the FTC from the Bush Justice Department. Prior to that, she worked for the corporate law firm Jones Day. Jones Day claims more than half of the Fortune 500, including P&G, as clients.

Procter & Gamble is the largest consumer goods company in the United States (not counting Altria/Philip Morris, which is breaking itself apart later this week). It makes Old Spice deodorant, Charmin toilet paper, Pampers diapers, Duracell batteries, Ivory soap, CoverGirl cosmetics, Dawn dish washing soap, Clairol hair dye, Pepto-Bismol, Tide laundry detergent, Crest toothpaste, Bounty paper towels, Gillette shaving products, Folgers coffee and Pringles potato chips, among many other products.

The FTC is an independent federal agency with authority over both consumer protection and competition policy. Given the breadth of the FTC’s jurisdiction and the breadth of P&G’s product line, what the FTC does — and does not do — is of potentially enormous importance to P&G.

Under the Bush administration, including the period since 2004, when Majoras became chair, the FTC hasn’t done much.

Consider just a few of the issues that touch on Procter & Gamble’s interests:

+ P&G is the leading company involved in “buzz marketing” — employing regular people to talk up company products, often in exchange for free merchandise. P&G says it has 250,000 teens working for its Tremor division. P&G sends them stuff, and they are supposed to talk to friends about the products.

The head of the Tremor division told USA Today in 2005, “If we’ve done our work correctly, they talk to their friends about” the gifts. Tremor doesn’t tell members to say they are part of Tremor, he explained, “because you never tell a [panelist] what to say.”

An organization with which I work, Commercial Alert, petitioned the FTC in 2005 to investigate whether buzz marketing operations violate federal rules on deceptive advertising. The basic FTC rule is that paid marketers must disclose that they are paid.

The Commercial Alert petition asked the FTC to review evidence that “companies are perpetrating large-scale deception upon consumers by deploying buzz marketers who fail to disclose that they have been enlisted to promote products. This failure to disclose is fundamentally fraudulent and misleading.”

The petition specifically focused on P&G, arguing that “the Commission should carefully examine the targeting of minors by buzz marketing, because children and teenagers tend to be more impressionable and easy to deceive. The Commission should do this, at a minimum, by issuing subpoenas to executives at Proctor & Gamble’s Tremor and other buzz marketers that target children and teenagers, to determine whether their endorsers are disclosing that they are paid marketers.”

A year later, the FTC responded. The Commission agreed with the thrust of Commercial Alert’s argument: “In some word of mouth marketing contexts, it would appear that consumers may reasonably give more weight to statements that sponsored consumers make about their opinions or experience with a product based on their assumed independence from the marketer.” But then the Commission declined to undertake an investigation or rule-making, saying it would consider matters only a case-by-case basis. The P&G case — involving a quarter of a million teens who are not instructed to disclose their relationship to the company — apparently was not noteworthy enough.

Said Gary Ruskin, Commercial Alert’s executive director at the time, “Instead of acting like a watchdog, the Commission is more like a docile lapdog nestled in the lap of its corporate masters.”

+ A major emerging technology for consumer products is RFID (Radio Frequency Identification) systems. These systems, involving the attachment of tiny, trackable electronic chips to products (or people, pets and cars), offer the possibility of precise inventory control and management. They also portend some major privacy concerns.

The Electronic Privacy Information Center (EPIC) warns of the possibility of “an Orwellian world where law enforcement officials and nosy retailers could read the contents of a handbag — perhaps without a person’s knowledge — simply by installing RFID readers nearby.” There are concerns about retailers and manufacturers being able to track consumers once they leave the store.

These issues are being taken seriously in Europe. There, says EPIC executive director Marc Rotenberg, “the European Commission has undertaken an extensive public consultation and has recently held several high-level events.” The European Commission is now soliciting comments on proposed privacy standards for RFID technologies.

In the United States, in 2004, the Federal Trade Commission held a workshop on RFID issues. P&G presented at the workshop, detailing the company’s privacy policies and how it would ensure that RFID technologies were not abused. EPIC also presented.

“EPIC submitted very detailed comments with clear recommendations,” says Rotenberg. “No action since.”

+ Childhood obesity rates in the United States have more than tripled over the past four decades. The childhood rate of type 2 diabetes, once known as “adult-onset” diabetes, has more than doubled in the past decade. No serious person believes skyrocketing childhood obesity rates are unrelated to the onslaught of junk food marketing targeting kids. The staid Institute of Medicine finds, “food and beverage marketing practices geared to children and youth are out of balance with healthful diets and contribute to an environment that puts their health at risk.”

It has been impossible for the FTC to completely ignore this issue. But the FTC has doubly worked to protect the junk food marketers. It emphasized that many factors besides marketing are driving the obesity epidemic — which is true, but a way to divert attention from the agency’s regulatory role. And, as Majoras said in 2007, “the focus of the FTC/HHS [Department of Health and Human Services] joint initiative on childhood obesity has been on marketing and industry self-regulation.”

In recent years, facing the threat of litigation, federal legislation, state and local regulation, and citizen pressure campaigns — just about everything but serious FTC action — the junk food companies have adopted some modestly helpful marketing guidelines to curb some of their most aggressive practices. But the guidelines remain voluntary and are non-enforceable. Although it has held some interesting meetings, the FTC has been absent on the regulatory front.

These are just three among many examples. Other FTC policy issues implicating Procter & Gamble include online marketing to kids, product placement on TV, and mergers (the FTC in 2005 approved a controversial, $57 billion P&G takeover of Gillette, a decision from which Majoras recused herself.) There are many others.

There’s no reason to suspect Majoras is violating any laws in going to work for Procter & Gamble, or that she will in the future. There is no reason to believe she did favors for P&G in anticipation of a job with the company. From her new, high post, she personally may never take up a matter before the FTC.

But the deep corruption inside the beltway is not the illegal, Jack-Abramoff stuff. The real corrupting influences are the things that are legal. The things that Washington insiders view as just “how things work.”

Note: I serve as managing director for Commercial Alert.

Alternative Power

As part of a national day of action, hundreds of people marched in downtown Washington, D.C. this morning to protest five years of the Iraq war and occupation. They blocked traffic and sought to highlight the Washington institutions that have enabled the long-running, criminal and disastrous war.

A group of protesters gathered outside of the American Petroleum Institute (API), for what was called a celebration of an expected announcement that API will change its name to the Alternative Power Institute.

Said a mocking release from the protesters: “Its first act as the new API is anticipated to be the notification of every member of the United States House and Senate whom it has legally bribed in recent years that, in light of API’s just announced transition to promotion of renewable energy technologies, there is no further requirement to fund the occupation of Iraq.”

This is parody with a purpose.

What if in fact the United States was no longer addicted to oil? Can anyone seriously believe the United States would have invaded Iraq? Alan Greenspan among others has acknowledged that guaranteeing the Middle Eastern supply of oil was the underlying rationale for the war.

What if in fact the oil industry — and that of other fossil fuel industries — ceded its political power (or if that power was taken away)?

Suddenly, the transition to a sustainable energy future would be much more achievable.

The United States, and the world, needs a massive infusion of resources into energy efficiency, renewable energy technology deployment, and research into new efficiency and renewable technologies.

We face financial and technological challenges of an enormous scale.

But the threshold problem is political. Governments are not doing what they can — and that which scientists say must be done immediately — because of the balance of power. Too much power for Big Oil, the auto companies, the utilities and coal companies. Too little power mobilized by the people in order to save the planet.

Since publication of Ron Suskind’s 2004 New York Times magazine article, it has been commonplace to ridicule the Bush administration for not living in the “reality-based” world. I confess to having engaged in this guilty pleasure myself.

But in fact the famous Bush aide quote mocking “the reality-based community” deserves at least as much emulation as ridicule. It wasn’t a comment about faith versus reality, it was a statement of a political philosophy and commitment: not to be constrained by apparent political or other restraints, but to act decisively to make history. There is a lesson to be learned here.

The aide said that guys like me were ”in what we call the reality-based community,” which he defined as people who ”believe that solutions emerge from your judicious study of discernible reality.” I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ”That’s not the way the world really works anymore,” he continued. ”We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to just study what we do.”

OK, there is a degree to which this quote suggests that maybe even the laws of nature can be overcome with enough willpower, but essentially the Bush adviser was saying that the administration’s mission is not to accept reality, but to make it. There is something to learned here.

One lesson that can be drawn from the fifth anniversary of the shameful Iraq war, as well as from the recent Federal Reserve actions to uphold the financial system, is that the United States can find the money to do things it believes important. There are real fiscal limits, but the spectacular wealth of the United States gives it the power to find astounding resources for top priorities.

The federal government has spent $700 billion to kill hundreds of thousands of people in Iraq, on a mission leading to the deaths of 4,000 U.S. soldiers and the maiming of thousands more. The Federal Reserve has conjured $200 billion to keep Wall Street functioning.

Can there be any doubt that the United States could, tomorrow, begin spending $100 billion a year — or much more — to address global warming?

We can only hope that today’s demonstration at API is an early, small step, taking us to alternative power — a new political balance of power and a new and urgently felt commitment to alternative energy investment and deployment.