2.7 TOBACCO

2.7.1 Program Description, Context, and Summary of Performance

Smoking is the leading preventable cause of death in the United States. Every year, another one million young people become regular smokers and one-third of them will eventually die prematurely as a result of their smoking. The average teenage smoker starts smoking at 141/2 years of age and becomes a daily smoker by the age of 18.

Tobacco products are responsible for more than 430,000 deaths each year, or one in every five deaths. The Centers for Disease Control and Prevention (CDC) report an estimated 47 million adults smoke cigarettes in the United States, even though this behavior will result in death or disability for half of all regular users. Paralleling this enormous health burden is the economic burden of tobacco use: more than $50 billion in medical expenditures and another $50 billion in indirect costs.

The FDA Tobacco Program seeks to promote and protect the health of our nation's youth by reducing the number of young people who begin to use and become addicted to tobacco products each year. FDA's long-term goal is a 50% decline in young people's use of tobacco within seven years of full program implementation. To help reach this goal, FDA is working with other organizations within the Department of Health and Human Services (DHHS) such as the Substance Abuse & Mental Health Services Administration (SAMHSA), CDC, and the National Cancer Institute (NCI).

The challenge of the Tobacco Program is represented by the following strategic goal:

Reduce the easy access to tobacco products and inform and enlist the support of our stakeholders (for example, retailers) and the public to assist in reducing young people's use of and demand for tobacco products.

FDA's role is threefold: enforcement and evaluation, compliance outreach, and product regulation. FDA's overall goals are to reduce the access and appeal of tobacco products to young people; to enlist retailers' and other stakeholders' assistance in these efforts; and to develop regulatory procedures for cigarettes and smokeless tobacco products. FDA's efforts are supported by and coordinated with activities in other agencies within DHHS. For example, SAMHSA uses its authority to withhold substance abuse grants to states that do not achieve required access compliance rates by retailers and also conducts surveys to gather information about tobacco use. CDC's Office of Smoking and Health is primarily involved with public education, research, and surveys. Finally, NCI is also involved in research and education programs. FDA will use data gathered by these agencies to both carry out and evaluate its tobacco program. FDA will also work closely with state governments, especially in its enforcement role. The ultimate goal of these combined and coordinated efforts will be a significant reduction of tobacco use by young people.

On August 23, 1996, FDA issued its final regulation restricting the sale and marketing of nicotine-containing cigarettes and smokeless tobacco products. The rule contained a comprehensive set of provisions that limit young people's access to tobacco products, as well as restrictions on the marketing of these products to minors. The rule was the culmination of an intense multi-year investigation that sought to determine if FDA has jurisdiction over these products, and if so, what form regulation should take.

The cigarette, smokeless tobacco, advertising and retail industries, and others brought suit in the United States District Court for the Middle District of North Carolina (Greensboro Division) to invalidate FDA's assertion of jurisdiction and enjoin its regulations. Argument was heard on February 10, 1997, and the Court issued its decision on April 25, 1997, upholding FDA's jurisdiction and its access and labeling regulations. The Court held that the statutory provision relied on by FDA does not provide FDA with authority to regulate advertising and promotion of tobacco products. Furthermore, the court delayed implementation of all remaining provisions, pending appeal, except those for age and photo identification that had gone into effect on February 28, 1997.

Both the government and plaintiffs appealed to the United States Court of Appeals for the Fourth Circuit. On August 13, 1998, the Fourth Circuit issued its decision finding the FDA's assertion of jurisdiction and issuance of regulations invalid. On April 26, 1999, the U.S. Supreme Court granted the Petition for a Writ of Certiorari filed by the Solicitor General. The Supreme Court heard oral arguments on December 1, 1999, and a decision is expected by Summer 2000. The granting of the petition continues a stay of the issuance of the Fourth Circuit's mandate while the Supreme Court considers the case. The age and identification provisions of FDA's tobacco rule in effect since February 1997 therefore remain in effect pending the Supreme Court's final decision.

FY 99 Program Accomplishments

In FY 99, the most important responsibility related to implementing the age and identification restrictions was to ensure that the estimated 500,000 to 1.5 million tobacco retailers were aware of and in compliance with the new rules prohibiting sales of cigarettes and smokeless tobacco to minors. FDA engaged in two major activities in support of its rule - enforcement and outreach. Most of the program's resources were dedicated to contracts which leveraged State and local tobacco control experience in conducting investigations to ensure that tobacco products were not sold to minors and for contracts to ensure that those industries directly affected by the rule knew what their new responsibilities were. In FY 99, the Agency achieved significant increases both in enforcing the age and identification requirements and informing stakeholders about the Tobacco Program.

While the Program is still in the early stages of implementation, there is already an indication that FDA's enforcement program has contributed to a decline in the number of youth who reported having easy access to tobacco products. The 1999 "Monitoring the Future" study, conducted at the University of Michigan's Institute for Social Research and supported by research grants from the National Institute of Drug Abuse, one of the National Institutes of Health, reported that, "[w]hile the great majority of young teens feel that they could get cigarettes 'fairly easily' or 'very easily' if they wanted them (72 percent of eighth-graders and 88 percent of 10th-graders), ... accessibility has been falling since 1996, particularly among the eighth-graders. According to the study's principal investigator, "[t]his suggests that the efforts by federal and state governments are starting to have an effect."

2.7.2 Strategic Goal

Approach

A key influence on a retailer's decision to comply with the rule is the extent to which the retailer perceives that he or she is likely to be found in violation and the certainty of punishment for that violation. The Agency's enforcement strategy is designed to ensure that every retailer will be inspected and re-inspected if found to be in violation of the rule. Most of the program's funds will continue to be expended for contracts and in support of investigations to ensure that tobacco products were not sold to minors and to ensure that those industries directly affected by the rule knew what their new responsibilities were.

Under the current enforcement plan, retailers who refuse to sell tobacco to the minor participating in an FDA inspection receive a letter informing them that they are in compliance with the rule. Those who do sell to the minor receive a letter informing them that they have violated the rule, and that another compliance check may occur in the near future. If on the second purchase attempt the retailer sells to the minor, the Agency seeks a $250 civil money penalty. Penalties escalate for subsequent violations of the access restrictions in effect: third violation-$1500; fourth violation- $5000; fifth violation- $10,000. In FY 99, FDA began seeking civil money penalties from retailers who were found to have violated the age and identification restrictions for a third time. Improvements in efficiency and productivity, coupled with an increased number of compliance checks conducted, has resulted in an almost 1,000% increase in the civil money penalty caseload, from 220 cases filed in FY 98 to 2,280 cases filed in FY 99. As a result, the penalties collected from retailers who have violated the rule two or more times have increased from $42,625 in FY 98 to $ 553,400 in FY 99. As of January 12, 2000, FDA has collected $820,000 in penalties from retailers who have violated the rule two or more times.

In FY 01, relying on increased experience, leveraging and efficiency, FDA expects to conduct more inspections and file more cases for civil money penalties than in the previous fiscal year. In addition, by FY01, the Agency expects to seek penalties for fourth and fifth violations. A penalty schedule for violations of other portions of the regulation will be developed when these provisions go into effect.

Assuming other parts of the tobacco regulation are in effect, the Agency will increase the investigators' responsibilities during each check to include checking on the removal of vending machines and self-service displays and illegal advertising. Fewer inspections for compliance with the age and identification provisions would result if the additional provisions of the rule go into effect because longer and more complicated inspections would be required.

A review of the literature and discussions with tobacco control experts indicate that the combination of compliance checks and an active outreach program maximizes retailer compliance with access restrictions. A strong compliance outreach program ensures that those directly affected by the age and photo identification provisions understand what their responsibilities are, why such measures are needed, and the consequences of failing to comply.

In FY 99, the Agency received the marketing industry's highest honor for effective advertising, the EFFIE Award, for its 1998 compliance-based advertising and education campaign. The Agency's multi-faceted program is intended to ensure retailer compliance and boost retailer awareness of the regulation. This program consisted of free retailer materials, advertising, direct mail, exhibits and speeches, and a toll-free hotline. In FY 01, the Agency will develop new creative elements for the campaign, including a TV advertisement. FDA will hold a series of focus group discussions with retailers, sales clerks, young people between 18 and 27, children ages 12 to 18, and the general public to test the advertising campaign before it is launched.

Research and Standard Setting Contributions

By FY 01, the Supreme Court will have determined FDA's jurisdiction over nicotine-containing cigarettes and smokeless tobacco. FDA is regulating cigarettes and smokeless tobacco products under the restricted medical device provisions of the FD&C Act. The FD&C Act requires that all medical devices be classified according to the level of controls necessary to provide reasonable assurance that the product will be safe and effective (see Section 513 of the FD&C Act). Depending upon the classification adopted for tobacco products, it may be appropriate for the Agency to develop performance standards, which could include provisions regarding the construction, components and ingredients, and properties of the device and provisions for the testing of the device. All devices are also subject to the requirement that they conform to quality system regulations pursuant to 21 CFR, Part 820. The application of the Act's requirements to tobacco is essential to ensure that the health consequences of products or their ingredients, additives or constituents are made less harmful in order to reduce the death and disease caused by tobacco use.

In FY 01, FDA will continue to address the immediate issues posed by new products and nicotine replacement therapies. In addition, the Agency will begin exploring the questions associated with product regulation including questions raised by classification and quality system regulations. In FY 01, the Agency will continue the establishment of a regulatory framework necessary to properly analyze the issues related to current and new products.

Leveraging and Communication

FDA enforces the restrictions currently in effect primarily through the commissioning of state and local regulatory officials, who conduct unannounced purchase attempts using young people under the age of 18. FDA currently uses a multitude of media and approaches to ensure the greatest reach and utility of its messages. FDA maintains a toll free hot line and an Internet site, which provide retailers and the general public with easy access to brochures; materials and answers to frequently asked questions. As of January, 2000, the hotline has received more than 9,500 calls from retailers and consumers requesting materials, asking questions about the program, or reporting concerns. FDA also has provided retailers with in-store materials. In FY 98 and 99, the Agency mailed retailer kits to stores selling tobacco products. In addition, advertising is placed on radio, in newspapers, and on billboards reminding retailers of their responsibility.

The Agency has begun analyzing methods to monitor industry compliance with the restrictions on advertising even though these provisions are not yet in effect. For example, the tobacco rule prohibits all outdoor advertising within 1,000 feet of schools and playgrounds, as measured from the perimeter of the property. FDA has looked at satellite or computer mapping technology as an aid in determining the appropriate 1,000-foot area around schools and public playgrounds. This technology can then be made available to state and local government agencies as well as to private groups who can report violations to FDA. Similarly, the tobacco rule requires that all advertising appear in black and white text-only format except in publications read primarily by adults, as measured by a percentage and gross number of adult readers. FDA has met with industry officials in an attempt to identify an appropriate methodology for measuring adult and youth readership of publications.

Reinvention

Because the Agency is unable to inspect all known retailers in 2001, it will use some of its FY 01 budget to create targeted demonstration-enforcement areas. Although the vast majority of inspections will be distributed randomly within each state, the targeted demonstration areas will be subject to more intense outreach and enforcement efforts in an attempt to measure the effectiveness of different mixes of interventions and levels of effort on sales of tobacco products to minors. These projects will allow the Agency to plan for more effective use of its enforcement dollars in the future by using the information gathered from these areas to redesign compliance check procedures. In addition, data gathered from these areas will help the Tobacco Program determine how effective it is in reducing illegal sales to youth and in reducing youth smoking rates.

C. Goal-By-Goal Presentation of Performance

1. Increase by 12.5% the number of compliance checks conducted in FY 01 to 225,000 and conduct follow-up compliance checks of 100% of retailers found to be in violation of the rule. (17001)

• Context of Goal: In FY 01, the Agency intends to expand its enforcement program by inspecting 225,000 retailers each year, as compared to the 200,000 planned with FY 00 money. This will provide for inspection coverage in approximately one fourth of identified retail outlets at least once every year and reinspection of each violative retailer within 3 months after notifying the retailer of the violation or after adjudication of civil money penalty. The Agency also intends to continue its own enforcement program in those states that are unable or unwilling to contract with the Agency. Because the Agency is unable to inspect all known retailers in 2001, it will use some of its FY 01 budget to create targeted demonstration-enforcement areas. These projects will allow the Agency to plan for more effective use of its enforcement dollars in the future by using the information gathered from these areas to redesign compliance check procedures.
• Data source: FDA Tobacco database
• Performance: The FY 99 goal has not been met. The Agency believes it is important to retain this goal. With increased Federal and state experience, and efficiencies gained through automation, the goal will be attainable. A key influence on a retailer's decision to comply with the rule is the extent to which the retailer perceives that he or she is likely to be found in violation and the certainty of punishment for that violation. The Agency's enforcement strategy is designed to ensure that every retailer will be inspected and re-inspected if found to be in violation of the rule. Taking into account such factors as the newness of FDA's tobacco rule, the political climate in some states and the inexperience of these and other states in conducting tobacco control enforcement, FDA established goals that would gradually increase the number of checks to be conducted each year. Even though the Agency did not reach its goal of completing 198,000 compliance checks in FY 99, this goal remains valid FY 00, given the same level of funding as in FY 00 as in FY 99.

2. Increase distribution of multimedia advertising campaign to 50 top media markets; create, print, test and distribute new retailer kit to 200,000 retailers; and increase retailer recognition program to 10,000 retailers. Maintain the percentage of known retailers of cigarettes and smokeless tobacco products who are aware of the FDA tobacco rule at no less than 90% and double the percentage of retailers who understand the age and ID provisions and the consequences of not complying with the rule in all markets subject to the intensified media campaign. (17003)

• Context of Goal: FDA is conducting a national advertising campaign aimed at raising retailers' awareness of the new regulations and motivating them to comply. The campaign's primary target audience is managers and clerks in stores that sell tobacco and consisted of free retailer materials, advertising, direct mail, exhibits and speeches, and a toll-free hotline. The campaign was first introduced in FY 98 in one media market in one state for a four-week period. A survey was conducted in two markets each in ten states (one treatment and one control) to assess the effect of the media campaign in raising retailer awareness of and compliance with the regulations. A total of 2,000 managers and clerks were surveyed immediately prior to the campaign and another 2,000 were surveyed after the campaign. Data have been collected and analyzed.

  The revised FY 00 campaign is scheduled for testing among retailers, clerks and consumers in late FY 99, with results expected by mid-FY 00. The FDA will continue to measure the effectiveness of its outreach efforts in this manner and to compare results over time. The Agency will use these results to redesign the mix of media tools and messages to maximize knowledge of and compliance with the regulations. FDA will also provide retailers with kits that contain explanations of the requirements, and posters and materials, which help explain the rules to customers and assist in defusing customer anger or anxiety.

  As part of FY 2000 efforts, FDA will conduct a multimedia campaign in 40 top media markets for a four-week flight to include: create and produce two radio, one TV, three billboard, and three print advertisements; run radio, billboard, and print ads in up to 40 major media markets; distribute 150,000 retailer kits; and distribute 400,000 direct mail pieces to retailers. FDA will visit up to 15,000 retailers to educate them about program; exhibit at 30 retailer or other trade shows and participate in up to 60 one-on-one meetings with retailers. FDA will also pilot test a retailer recognition program for 3,000 retailers.

• Data Sources:FDA sponsored surveys of known retailers of cigarettes and smokeless tobacco. A survey was tested in two markets each in ten states in FY 98. The results are analyzed and will be used to develop baseline data. Based on this limited survey of retailers:
• 97% were aware of the FDA tobacco rule.
• 84% were aware that the legal age for purchase is 18.
• 31-34% were aware that they had to check the ID of every customer under the age of 27.
• 16% knew the specific level of penalties for violations

A national survey testing the effectiveness of the FY 99 campaign will be conducted.

• Performance:FDA achieved this goal through a variety of vehicles to communicate to stakeholders their obligations under the tobacco rule and the consequences for non-compliance. For the first time, FDA exhibited and took orders for free retailer materials at national or regional retailer conferences and at approximately 15 national consumer conferences. FDA also launched a multi-faceted media campaign in 66 media markets for a single four-week period and, for the first time, ran media throughout five states. The Agency also designed and pilot-tested a retailer rewards program in five media markets and received approximately 2,000 hotline calls from consumers and retailers and, for the first time, arranged for calls to be fielded by live operators. Through direct promotion, nearly 400,000 retailers received free retailer materials by the end of September 1999.

FDA pilot-tested a new program to encourage retailers to follow the regulation and to use the free retailer kit; approximately 2/3 of the retailers agreed to post the materials in their stores. In FY 99, the Agency received the marketing industry's highest honor for effective advertising, the EFFIE Award, for its 1998 compliance-based advertising and education campaign. The Agency's multi-faceted program is intended to ensure retailer compliance and boost retailer awareness of the regulation. This program consisted of free retailer materials, advertising, direct mail, exhibits and speeches, and a toll-free hotline. In FY 99, the Agency developed new creative elements for the campaign, including a TV advertisement. FDA held a series of focus group discussions with retailers, sales clerks, young people between 18 and 27, children ages 12 to 18, and the general public to test the advertising campaign before it was launched.

FDA funded advertising campaigns in 11 individual media markets and 5 States with which FDA had a contract to conduct compliance checks. In order for advertising to have a lasting effect, experts recommend that the message be disseminated repeatedly over a 12-month period. For this reason, in FY 99, FDA instituted a compliance-based outreach strategy in 5 states that includes continuous, statewide media coverage. Retailers and sales clerks are the primary target audience for this campaign. In addition to reminding retailers and sales clerks not to sell to minors and to check young peoples' photo identification, the campaign also urges customers to cooperate with retailers attempting to meet their responsibilities to help keep young people tobacco-free. FDA conducted two waves of a tracking study in 15 media markets to evaluate the effectiveness of the campaign. The second wave is being conducted during the first quarter of FY 00.

3. Design and to the fullest extent permitted under any court orders addressing such activities, begin to implement a regulatory program for cigarettes and smokeless tobacco products, including: Begin to examine the appropriate scientific and regulatory framework to evaluate products that state or imply that they are less hazardous; Assist other agencies within DHHS in providing the FTC with an analysis of the public health issues associated with the testing and reporting of the tar and nicotine content of the smoke of cigarettes; and Establish an evaluation and review procedure for new products. (17005)

• Context of Goal: This is the FY 99 goal. It is included here only for FY 99 reporting. There is no similar goal in FY 00 or FY 01. The program was unable to begin most of its product regulation activities. The U.S. Court of Appeals for the Fourth Circuit found FDA's assertion of jurisdiction to be invalid and that decision was appealed to the U.S. Supreme Court. The age and identification provisions of the tobacco rule remain in effect pending a decision by the Supreme Court.
• Data Sources: Internal Agency documents will substantiate progress made. These programs have yet to be established and therefore the baseline is zero.
• Performance: The goal has been met. FDA has achieved its goals for beginning to design and implement a regulatory framework for cigarettes and smokeless tobacco products, within the constraints imposed by court order. The Agency has leveraged the tobacco prevention and cessation expertise of other Federal Agencies, including the National Cancer Institute and the Centers for Disease Control, as the Federal Trade Commission's expertise in consumer risk perception, to begin to study collaboratively the risks associated with smoking cigarettes with low machine-measured yields of tar and nicotine.

FDA has commissioned the Institute of Medicine (IOM), a member of the National Academy of Sciences, to convene a national panel of experts to evaluate the scientific and regulatory issues raised by drug and tobacco products that may claim to reduce exposure to harmful substances in tobacco and to reduce health risks. These products include nicotine replacement therapies and tobacco products modified to reduce specific harmful compounds.

2.7.3 Verification and Validation

FDA is enforcing the restrictions on youth access that are currently in effect by training and commissioning state regulatory officials, who conduct unannounced purchase attempts using young people under the age of 18 to determine if retailers will sell to minors. The results of each attempt are faxed or mailed to FDA by state officials. FDA has established a computerized tobacco database to gather these results, prepare follow-up compliance check forms, send notification of the results to the retailer and ultimately, if necessary, to prepare documents to seek civil money penalties. The database contains an inventory of retailers of cigarettes and smokeless tobacco products as they are identified. The database allows FDA to track the number of compliance checks, the number of violations (total and broken down by type of store, state, etc.), the number of civil money penalty actions, etc. The data will permit FDA to measure the progress of its enforcement program. However, the data is not statistically projectable, because it is not based on a random sampling of retailers.

In addition, a survey was conducted in two markets each in ten states (one treatment and one control) to assess the effect of the media campaign on raising retailer awareness of and compliance with the regulations. A total of 2,000 managers and clerks were surveyed immediately prior to the campaign and another 2,000 were surveyed after the campaign. The data have been collected and are analyzed. FDA intends to continue measuring the effectiveness of its outreach efforts in this manner and to compare results over time. Key findings include:

• Retailers aware of the ad knew better than those not aware the FDA tobacco rule and the cut-off age for checking identification;
• Stores with FDA materials better knew the age required for checking ID, the $250 fine, and were more prone to use the correct cut-off ages for sales and checking ID.
• A small, but significant decline occurred in the number of minors who tried to purchase tobacco products after the ad campaign (from 3.4 times to 2.8 times).
• Adult customers who were asked to present ID often were less irritated when carded (down from 34% to 28%).
• 9 in 10 managers and clerks whose stores displayed FDA materials felt they helped educate clerks and customers about the tobacco rule requirements.
• Twice as many clerks after the campaign (30%) as before (16%) volunteered the correct cut-off age for checking ID.
• A three-fold increase in recall of the $250 fine occurred after the campaign.

The FTC collects and publishes industry-wide data on advertising expenditures by category (e.g., newspapers, outdoor advertising, and specialty items). FDA intends to establish baselines for advertising from FTC data indicating levels of expenditures for each category for the base year, and measuring decreases in spending for each subsequent year. Although this data source cannot measure all of the changes required by the rule (conversion of advertising in publications to black and white text only), it should be able to document whether expenditures for banned advertising (e.g. hats and tee shirts with logos) has ceased and whether declines in expenditures are observed for heavily restricted advertising (e.g., outdoor advertising is banned within 1,000 feet of schools and playgrounds and is otherwise restricted to black and white text only format).Additionally, the Agency will discuss with FTC the possibility of including additional questions in their survey of company advertising expenditures to help FDA more accurately measure compliance with the tobacco rule.

In FY 01, the Agency plans to have an information system in place that will greatly enhance its ability to collect data and measure its performance. In the second half of FY 98, the Agency contracted with Battelle Memorial Institute to study the tobacco program's business processes, outline the program's workflow and conduct a requirements analysis. From this analysis, Battelle proposed a system design to automate the program's processes. In addition, Battelle presented a proposed plan to obtain and maintain a list of retailers selling tobacco in each state that would be more complete, accurate and user friendly than the lists constructed by the Agency during its first full year of operation.

Based on the design, Battelle has launched a multi-year effort to provide reliable retailer lists and an infrastructure designed to maintain the list and make it user friendly for FDA and for all contracting states. Battelle will also implement an information technology system which will automate all the program's various functions, including contracting, outreach, enforcement, compliance checks, litigation, collection of civil money penalties, etc. The new system will increase the efficiency of the program and will improve communications internally as well as with state contractors and with other stakeholders. The various system design components will be implemented incrementally as they are developed beginning in early 1999. The entire system should be operational by 2001.

Even though FDA's tobacco program is not fully in effect, the Agency has the tools in place to measure progress toward intermediate goals. FDA is working closely with CDC's Office on Smoking and Health, SAMHSA and the Data Council of DHHS to devise and conduct surveys to measure success in reducing initiation and use of tobacco by young people. The Agency also is monitoring compliance with the rule, assessing buy rates, determining reach and effect of outreach efforts, and assessing the risks of various components of tobacco products to determine whether it is possible to reduce the overall health risks associated with tobacco products. One of the first responsibilities of the Tobacco Program following lifting of the court stay or enactment of comprehensive legislation, will be to devise and implement a surveillance mechanism to establish bench mark levels for these goals including but not limited to youth tobacco initiation and use rates and risk levels of current products and ingredients. This surveillance effort will enable the Agency to validly measure progress.

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