U.S. Food and Drug Administration
Performance Plan
2002

2.7 TOBACCO

2.7.1 Program Description, Context, and Summary of Performance

Total Program Resources:

On March 21, 2000, the United States Supreme Court, in a 5-4 decision, affirmed the decision of the U.S. Court of Appeals for the Fourth Circuit that FDA lacks jurisdiction under the Federal Food, Drug, and Cosmetic Act (FDCA or Act) to regulate tobacco products. The Court held that, although premature deaths from tobacco use present "one of the most troubling health problems facing our nation today," FDA lacks the authority to issue and enforce its tobacco regulations. Therefore, as of March 21, 2000, FDA commenced an orderly shutdown of the Office of Tobacco Programs. As a result, there are no performance goals for FY 2001 or FY 2002. Performance reporting for FY 2000 is through March 21, 2000.

FDA asserted jurisdiction over tobacco products because 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 14‡ 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. 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 sought to promote and protect the health of our nation's youth by reducing the number of young people who began to use and become addicted to tobacco products each year. FDA's long-term goal was a 50% decline in young people's use of tobacco within seven years of full program implementation. To help reach this goal, FDA worked 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).

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 granting of the petition continued a stay of the issuance of the Fourth Circuit's mandate while the Supreme Court considered the case. The age and identification provisions of FDA's tobacco rule in effect since February 1997 therefore remained in effect until the United States Supreme Court issued its decision on March 21, 2000.

From February 28, 1997 until March 21, 2000, when the Supreme Court rendered its decision, FDA enforced the age and photo identification restrictions. FDA's role was threefold: enforcement and evaluation, compliance outreach, and product regulation. FDA's overall goals were 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. In just 3 years' time, the Agency designed and implemented an aggressive enforcement program resulting in:

• Nearly 200,000 compliance checks completed nationwide
• Contracts to enforce the age and photo identification restrictions in every State, 2 Territories, and the District of Columbia
• 5,600 complaints for civil money penalties filed against tobacco retailers who had violated the rule at least twice
• More than $1 million in civil money penalties collected from retailers who violated the rule at least twice, some of whom settled their cases for reduced penalties

FY 2000 Performance Highlights

Through March 21, 2000, completed 53,700 compliance checks and conducted follow-up compliance checks of 100% of retailers found to be in violation of the rule.

Through March 21, 2000, conducted a multimedia campaign in 27 media markets; distributed 52,000 retailer kits; and distributed 500 retailer recognition rewards.

2.7.2 Strategic Goal

Strategic Goal:

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

A. Strategic Goal Explanation

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 only 3 years, FDA realized significant achievements both in enforcing the age and identification requirements and informing stakeholders about the Tobacco Program.

A key influence on a retailer's decision to comply with the rule was the extent to which the retailer perceived that he or she was likely to be found in violation and the certainty of punishment for that violation. The Agency's enforcement strategy was designed to ensure that every retailer would be inspected and re-inspected if found to be in violation of the rule. Most of the program's enforcement funds were expended for contracts with States and Territories to conduct compliance checks during which minors, accompanied by FDA commissioned officers, attempted to purchase cigarettes or smokeless tobacco at retail establishments.

Under the enforcement plan, retailers who refused to sell tobacco to the minor participating in an FDA inspection received a letter informing them that they were in compliance with the rule. Those who sold to the minor received a letter informing them that they had violated the rule, and that another compliance check could occur in the near future. If on the second purchase attempt the retailer sold to the minor, the Agency sought a $250 civil money penalty and a $1500 civil money penalty for third violations. Penalties were scheduled to escalate further for subsequent violations of the access restrictions, but at the time the Supreme Court ruled, the Agency had not filed complaints for fourth or fifth violations. By the time the Tobacco Program ended, the Agency had filed 5,600 complaints against retailers who had violated the rule two or more times and had collected more than $1 million in civil money penalties.

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

When the Agency shut down the Office of Tobacco Programs, it still was a relatively new program. Nonetheless, there already was an indication that FDA's enforcement program had 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), Ö 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."

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 outreach program was 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 00, the Agency was developing new creative elements for the campaign, including a TV advertisement. FDA had planned to 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 was launched.

FDA used a multitude of media and approaches to ensure the greatest reach and utility of its messages. FDA maintained a toll-free hotline and an Internet site, which provided retailers and the general public with easy access to brochures, materials and answers to frequently asked questions. In FY 2000, through March 21, the hotline received 6,000 calls from retailers and consumers requesting materials, asking questions about the program, or reporting concerns. FDA also received requests for more than 75,000 free in-store materials. In addition, television, radio, newspaper, and billboard ads were running throughout Michigan, Colorado, Tennessee, New Hampshire, and Nevada. Further, 500 rewards were distributed to retailers complying with the regulation.

B. Summary of FY 99 Performance

C. Goal-By-Goal Presentation of Performance

1. Conduct 200,000 compliance checks and conduct follow-up compliance checks of 100% of retailers found to be in violation of the rule. (17001)

• Context of Goal: In FY 00, the Agency intended to expand its enforcement program by arranging to have compliance checks conducted in every State and eligible Territory and by conducting 200,000 compliance checks. In addition, FDA planned to re-inspect each violative retailer within 3 months after notifying the retailer of the violation or after adjudication of civil money penalty.
• Data source: FDA Tobacco database
• Performance: As of March 21, 2000, the Agency had arranged to have compliance checks conducted in every State, 2 Territories, and the District of Columbia. By the same date, the Agency had completed 53,700 compliance checks. Finally, the Agency had re-inspected 100% of violative retailers within 3 months after notifying the retailer of the violation, or after adjudication of a civil money penalty.

2. Conduct a multimedia campaign in 40 top media markets; distribute 150,000 retailer kits; and pilot test a retailer recognition program for 3,000 retailers. Maintain retailer awareness at 90%. (17003)

• Context of Goal: FDA conducted a national advertising campaign aimed at raising retailers' awareness of the tobacco regulations and motivating them to comply. The campaign's primary target audience was 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.

  The revised FY 2000 campaign used a mix of media tools and messages to maximize knowledge of and compliance with the regulations. FDA provided retailers with kits that contained explanations of the requirements, and posters and materials, which helped explain the rules to customers and assist in defusing customer anger or anxiety.

  As part of FY 2000 efforts, FDA intended to 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 planned to pilot-test a retailer recognition program for 3,000 retailers.

• Data Sources: FDA sponsored surveys of known retailers of cigarettes and smokeless tobacco.
• Performance: Testing not completed during this time.

2.7.3 Verification and Validation

FDA enforced the Age and Photo ID restrictions by training and commissioning state regulatory officials, who conduct unannounced purchase attempts using young people under the age of 18 to determine if retailers sold to minors. The results of these attempts were faxed or mailed to FDA by state officials. FDA 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 contained an inventory of retailers of cigarettes and smokeless tobacco products as they were identified. It allowed 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 permitted FDA to measure the progress of its enforcement program. However, the data was not statistically projectable because it is not based on a random sampling of retailers.

The Agency installed the first increment of an information system that would have greatly enhanced the Agency's 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 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 and territories. Battelle also would have implemented an information technology system to automate all the program's various functions, including contracting, outreach, enforcement, compliance checks, litigation, collection of civil money penalties, etc. The new system was intended to increase the efficiency of the program and improve communications internally as well as with state contractors and with other stakeholders. The various system design components were to be implemented incrementally as they were developed beginning in early 1999. The entire system was scheduled to be operational by 2001. When the Supreme Court rendered its decision, Battelle was ready to pilot-test 2 methods by which commissioned officers would record and submit compliance check results electronically. FDA intends to make available to States its research in this area.

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