British American Tobacco Plc and Imperial Brands Plc led cigarette stocks lower on concern that the US Food and Drug Administration plans to propose strict limits on the amount of nicotine in traditional cigarettes, writes Thomas Mulier for Bloomberg.
Research shows that reducing the amount of nicotine in cigarettes by as much as 96% would improve public health, Lynn Hull, a pharmacologist at the FDA’s Center for Tobacco Products, said in a webcast summary of recent studies on the matter.
BAT fell as much as 5.4% and Imperial declined as much as 7% before paring some losses.
The 11 October lecture, preceded by a disclaimer that it doesn’t formally represent the FDA’s position, sparked speculation that tough measures may be on the way.
The agency said in March it plans a proposal on nicotine reduction, though analysts say it will take years to implement.
“Making all cigarettes minimally addictive could significantly reduce the morbidity and mortality caused by smoking,” Hull said.
With an estimated 480,000 deaths due to smoking related causes each year in the US, FDA Commissioner Scott Gottlieb is developing a plan to change regulation over traditional cigarettes and new alternatives to smoking.
The presentation “demonstrates that the FDA is committed to building a body of evidence to support its nicotine reduction agenda,” Pamela Kaufman, a Morgan Stanley analyst, said in note to clients. The next step is for the agency to publish its proposal, she said. Hull declined to comment in her presentation on when that might be.
Hull also summarised findings from a paper the Center for Tobacco Products published in the New England Journal of Medicinein March. Assuming nicotine limits are implemented in 2020, the study forecast the measures would prevent 33 million people from starting to smoke and eight million deaths by 2100.
The new rules may increase the use of non-combustible nicotine alternatives after they’re implemented, but overall consumption should decline over time, Hull said. Studies also show that a sudden reduction in nicotine levels won’t lead smokers to compensate by smoking more, she added.
Both BAT, the maker of Lucky Strike cigarettes, and Imperial, which manufactures Winston, erased some of their early declines, with the former down 1.5% at noon in London and the latter dropping 4.4%. Altria Group Inc. shares closed 2.9% lower Thursday. The FDA webcast took place at noon New York time that day.
Some analysts said the presentation only repeated previous statements and summarized past studies.
“There is really nothing to see here,” wrote Owen Bennett, an analyst at Jefferies, who said that while some concern is understandable, the research doesn’t include any studies with independent data-gathering. The estimates of public health gains by 2100 were published in June, he added.
Cutting nicotine to the levels cited by Hull would require difficult, expensive genetic modification of tobacco plants, Bennett wrote. Still, some companies claim a big reduction is possible, including 22nd Century Group Inc., which is developing strains of tobacco with less nicotine.
Separately, Gottlieb and US. Secretary of Health and Human Services Alex Azar wrote in a Washington Post editorial that e-cigarettes shouldn’t be allowed to become a gateway to teenage addiction. Imperial Brands makes e-cigarettes in the US under the Blu brand.
— With assistance by Lisa PhamTobacco Stocks Drop on Concern FDA Plans Strict New Rules
Presentation by Dr Lynn Hull, Lead Pharmacologist with the Division of Individual Health Science in the FDA’s Center for Tobacco Products
Research shows that reducing the amount of nicotine in cigarettes by as much as 96% would improve public health, Lynn Hull, a pharmacologist at the FDA’s Center for Tobacco Products, said on 11 October in a webcast summary of recent studies on the matter.
The presentation gave an overview of the systematic literature review that FDA’s Center for Tobacco Products has done on the likely effects of reducing nicotine in combusted tobacco, as well as on consumer knowledge, attitudes, perceptions, beliefs, and planned behavior on reduced nicotine tobacco products.
Use of combusted tobacco products like cigarettes, kreteks, bidis, cigarette tobacco, roll-your-own tobacco, cigars, pipe tobacco, and water pipe tobacco causes a heavy burden of death and disease every year.
These negative health effects are ultimately the result of users’ addiction to the nicotine in tobacco products, which in turn results in their repeated use. This continuously exposes users and non-users (via second- or third-hand smoke) to toxicants in the smoke.
FDA has issued an Advanced Notice of Proposed Rulemaking for a product standard to set a maximum nicotine level in cigarettes. FDA continues to assess the best available science to determine a level at which these products would be minimally addictive and, therefore, appropriate for protecting the public health.
FDA’s Center for Tobacco Products has suggested that extended exposure to combusted cigarettes containing tobacco filler in the 0.2 – 0.7 mg nicotine per cigarette range (that is, very low nicotine content) could be associated with reduced addiction potential, dependence levels, the number of cigarettes smoked per day, and increased quit rates among current smokers, without evidence of increased toxicant exposure, craving, withdrawal, or compensatory smoking.The Science to Inform a Tobacco Product Standard for the Level of Nicotine in Combusted Cigarettes