March 18, 2011

Could Banning Menthol Cigarettes Improve Health?

U.S. advisers said on Friday that banning sales of menthol-flavored cigarettes would improve public health.

"Removal of menthol cigarettes from the marketplace would benefit public health in the United States," Dr. Mark Clanton of the American Cancer Society said in a statement sent to Reuters Health.

The committee will send the final report to the Food and Drug Administration (FDA) by next Wednesday.  The FDA will consider the advisers' view as it decides whether to ban or otherwise limit menthol.

The FDA does not have to follow advice and is not required to take any action on the report.

Lorillard Inc. said that banning menthol cigarettes would make about 30 percent of all cigarettes illegal and would likely lead to the illegal sale of more dangerous cigarettes through an underground market.

UBS analyst Nik Modi told Reuters that he believes the FDA will ultimately not ban menthol cigarettes and they have added that the company's shares to the UBS Alpha Preferences most preferred list.

The FDA's tobacco center head, Dr. Lawrence Deyton, said the agency would review the findings and provide a progress report in about 90 days.

Deyton said the receipt of the report "will not have a direct and immediate effect on availability of menthol products."

Clanton said that the committee acknowledged the possibility for illegal sales of menthol cigarettes if they were banned and suggested that the FDA consider that possibility and consult with experts.

"It's very unlikely the FDA will end up banning menthol cigarettes based on the recommendation we got this morning," Mark McMinimy, an analyst who follows the sector for MF Global Holdings Ltd's Washington Research Group, told Reuters.

"If you're calling for more research, how can you call for something like removing menthol cigarettes from the market, which seems very final," McMinimy said.

A 2009 law restricts tobacco marketing and bars cigarette makers from adding flavors like clove or strawberry. 

Menthol products account for about 30 percent of the $85 billion U.S. cigarette market.  Lorillard's Newport is the top-selling menthol brand with $5 billion a year in revenue.

Lorillard and Reynolds American, another cigarette manufacturer, sued the FDA to block the agency from "receiving or relying on" the advisory panel's recommendations.  According to the complaint filed on February 25 in federal court in Washington, three of the eight panel members have conflicts of interest.


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