Where there’s no smoke, Altria hopes there’s fire

For years, Altria, home to Philip Morris and its popular Marlboro cigarette brand,
was a corporate pariah blamed for the deaths of millions of people and sued 
for hundreds of billions of dollars by attorneys general in every state.
After eventually acknowledging, like others in its industry, that cigarette smoking was, indeed, addictive and caused disease, Altria went a step further. It broke from the Big Tobacco pack and began supporting legislation that would ultimately put the company under the regulatory thumb of the Food and Drug Administration.
Altria's motives for submitting to strict oversight have long been a mystery. Did the company and its executives, who were internally pursuing a strategy of "societal alignment," suddenly embrace a true partnership on public health? Or was this a case, as its longtime foes and competitors have argued, of Altria seeking to generate good P.R. or lock in its market dominance by cozying up to a regulator that could restrict rivals from marketing new products?
Another possible answer was highlighted this month, as the federal government began fine-tuning aspects of a law that President Barack Obama signed last summer that gives the government sweeping new powers to regulate the production and marketing of tobacco products. A series of letters that Altria submitted to the FDA as part of that process argues that the government should, effectively, sign off on the notion that smokeless tobacco products are less harmful than cigarettes -- and that Altria and other companies should be allowed to market them as such to consumers. 

It is a pivotal and divisive claim. While public health doctors agree that the smokeless products are far less hazardous to individuals than cigarettes, they still have concerns because all tobacco products contain nicotine and carcinogens. They also contend that promoting smokeless products -- some in tiny packages in the shape of cigarette packs -- would attract new, perhaps younger customers and maintain the addiction for smokers who might otherwise quit. They note that Altria is adding flavorings to its smokeless products that have long been used in candy.
Furthermore, critics say, Altria's suggestion to the FDA that it be allowed to market its products as less risky is part of an effort to dodge indoor-smoking laws (which are credited with encouraging more smokers to quit) and to encourage smokers to use oral tobacco products as supplements. "If you look at how they're marketing smokeless now, they're marketing for dual use, and to protect the cigarette market, which is their big money maker," says Stanton A. Glantz, a professor of cardiology and a specialist in tobacco research at the University of California, San Francisco. 
Under its gregarious chief executive, an occasional smoker named Michael E. Szymanczyk, Altria is treading carefully when it comes to talking about its business strategies or its relationship with the FDA. After its letters to the regulator made headlines this month, the company canceled interviews for this article with top executives at its headquarters in Richmond, Va. 
An Altria spokesman says the executives declined to comment because "we don't want to be perceived as leading the discussion" on the regulatory front. 
Brendan J. McCormick, another Altria spokesman, says the company supported the legislation enacted last summer because it believed that the FDA offered the best way to settle the debates about tobacco use and marketing, which have raged for decades. He says the company believes that FDA standards will create more predictability in the industry and a level playing field for competitors. 
Volumes may be declining, but cigarettes remain Altria's biggest business by far, accounting for $14.4 billion in revenue in 2009. (Smokeless brought in $1.2 billion.) Cigarette profits are growing thanks to price increases and a customer base of people who haven't kicked the habit. About 70 percent of the nation's 46 million smokers say they want to quit, government surveys show, and about 40 percent try every year. But only 2.5 percent succeed, the surveys say. The government estimates that 400,000 Americans die of smoking-related diseases each year.
Critics and public health officials contend that in focusing the FDA's attention on smokeless products, a much smaller but growing industry, Altria and other tobacco companies are diverting regulators' attention from the source of the real public health problem: cigarettes.