18
TOBACCO OUTLET BUSINESS
SEPTEMBER/OCTOBER 2012
NEWS & TRENDS
Manufacturers Win Labeling Victory
Federal appeals court upholds lower court’s ruling.
In August, a federal appeals court
upheld a lower court’s ruling banning
the Food and Drug Administration’s
graphic cigarette warning labels on
First Amendment grounds. The 2-to-1
decision by the U.S. Court of Appeals
in Washington, D.C., tossed out the
graphic warnings requirement and
sent the FDA back to the drawing
board.
The FDA had originally released its
nine graphic warnings in June 2011
and mandated that those warnings
appear on all cigarette packaging
and advertising by Sept. 22, 2012.
Several
tobacco
companies—
Lorillard Inc, R.J. Reynolds Tobacco
Co., Commonwealth Brands Inc. and
Liggett Group LLC—banded together
ina lawsuit challenging themandate as
a violation of First Amendment rights.
The suit landed in U.S. District Court
in Washington, D.C., where Judge
Richard Leon ruled in favor of the
tobacco companies. “The government
has failed to carry both its burden of
demonstrating a compelling interest
and its burden of demonstrating that
the rule is narrowly tailored to achieve
a constitutionally permissible form
of compelled commercial speech,”
Leon wrote in his ruling, which was
immediately appealed by the FDA.
In its recent decision upholding the
lower court’s decision, the appeals
court wrote that the suit raises “novel
questions about the scope of the
government’s authority to force the
manufacturer of a product to go
beyond making purely factual and
accurate commercial disclosures
and undermine its own economic
interest—in this case, by making
‘
every single pack of cigarettes in
the country (a) mini-billboard’ for
the
government’s
anti-smoking
message.”
The court also noted that the
FDA “has not provided a shred of
evidence” showing that the change
in labels would “directly advance”
its goal of reducing the number
of Americans who smoke. “It’s
a significant vindication of First
Amendment principles,” said Floyd
Abrams, an attorney representing
Lorillard Tobacco, of the ruling. “There
has never been any doubt that the
government could require warnings
on products that can have dangerous
results. And what the court is saying is
that there are real limits on the ability
of the government to require the
manufacturer of a lawful product to
denounce the product in the course of
trying to sell it.”
Reynolds Transitions to “Total Tobacco Company”
The release of three nicotine-replacement therapy products marks a
departure for the manufacturer.
Entering the nicotine-replacement
therapy (NRT) market with the test
launch of several new products is
the first step toward Reynolds’s
transformation into “a total tobacco
company,” according to Reynolds
President and CEO Daniel Delen. On
September 3, Reynolds reportedly
launched a test of Zonnic NRT
gum through its Niconovum
pharmaceutical subsidiary at retail
locations in Des Moines, Iowa. The
company is alsoplanning to introduce
nicotine extract products such as
lozenges and smokeless pouches
and pellets. Its Vuse e-cigarette and
Viceroy pouch products are already
being tested at Tarheel Tobacco
outlets.
Each package of Zonnic, which is
reportedly already approved by the
Food and Drug Administration, will
contain 10 pieces and retails for
about $3, about half the cost of a
pack of cigarettes in the test market
region. It comes in 2-milligram and
4-
milligram mint styles and features
“
stop smoking aid” labeling.
Taglines for Zonnic emphasize its
role as a smoking aid, stating “Each
cigarette not smoked is a victory”
and “It’s more than quitting—it’s
succeeding.”
The company has stated that it
plans for Zonnic to sell primarily
at convenience stores rather than
drugstores and big-box stores where
NRT products are most commonly
sold. If the test market sales are
promising, Reynolds reportedly
hopes to begin national distribution
relatively soon.
