Stifel Cuts Target For Altria Group Inc (MO) Amid FDA Woes

Ray Weaver
August 7, 2017

Tobacco stocks fell on Friday after the U.S. Food and Drug Administration announced plans to target nicotine levels.

The FDA says that its goal is to ensure that the agency has the scientific and regulatory foundation to implement the Family Smoking Prevention and Tobacco Control Act, and make certain that it is striking an appropriate balance between regulation and encouraging innovative tobacco products that may be less risky than cigarettes. But questions remain as to how much nicotine needs to be cut out in order to render cigarettes "non-addictive" and whether such a measure would actually help smokers quit. Envisioning a world where cigarettes would no longer create or sustain addiction " needs to be the cornerstone of our efforts", he said.

The law gives the FDA the authority to regulate levels of tar, nicotine, and any other harmful chemicals of tobacco products.

According to the US FDA, cigarette smoking is responsible for more than 480,000 deaths per year in the United States, as well as an estimated USD 300 billion dollars in direct health care and lost productivity costs.

The results showed that e-cigarette users were more likely than non-users to make a quit attempt (65 percent versus 40 percent) and more likely to succeed in quitting smoking tobacco for at least three months.

He said Gottlieb's stance suggested "balancing regulation of existing products with encouraging innovation for future less harmful options" and that investors should "never underestimate the lobbying power of the mighty tobacco industry". Under expected revised timelines, applications for newly-regulated combustible products, such as cigars, pipe tobacco and hookah tobacco, would be submitted by August 8, 2021, and applications for non-combustible products such as ENDS or e-cigarettes would be submitted by August 8, 2022.

In the USA, the major cause of preventable deaths as well as diseases is tobacco.

Richmond, Va. -based Altria Group Inc. called the FDA's move "an important evolution in the agency's approach to regulating tobacco products and a meaningful step forward in developing a comprehensive regulatory policy that acknowledges the continuum of risk". One of the biggest: the addictive component of cigarettes will have to go away.

Gottlieb also held out the possibility that premium cigars would be exempted from FDA oversight, but the overall outlook for traditional tobacco products appeared grim. Specifically, the FDA postponed the requirement that such products be approved by the agency. Letting gummy bear-flavored e-cigarettes and similar products stay on market shelves will allow them to flourish with little public health oversight, he warned.

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