FDA Strengthens Regulations to Curb Smoking by Kids (PM, MO, RAI) - UPDATED

Shares of Philip Morris International Inc. (NYSE:PM) are up today 1.6% but Altria Group (NYSE:MO) and Reynolds American (NYSE:RAI) are trading slightly lower as the FDA strengthens regulations to curb smoking by kids.  

Big Tobacco is going to do just fine outside the U.S. (i.e. Philip Morris), however the pinch could hit U.S. tobacco companies as the FDA plans to significantly curb adolescents' access to cigarettes and smokeless tobacco products. It would also keep manufacturers from marketing tobacco products for the younger smoker.

Here's the story from CNN:

Every day, nearly 4,000 children in the U.S. under the age of 18 try their first cigarette, according to the Food and Drug Administration.

And of those, a thousand become daily smokers.

Now, in an effort to fight the war on smoking -- especially when it comes to children -- the FDA is issuing a new rule titled Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents.

The rule, which becomes effective June 22, will prohibit the sale of cigarettes or smokeless tobacco to people younger than 18, prohibit the sale of cigarette packages with less than 20 cigarettes, prohibit distribution of free samples of cigarettes, restrict distribution of free samples of smokeless tobacco, and prohibit tobacco brand name sponsorship of any athletic, musical or other social or cultural events. It would also keep tobacco manufacturers from passing out free hats, T-shirts and other memorabilia with their product names on them to children.

Though regulations already on the books cover some of those areas, the new regulation imposes heavier fines, officials said. But the FDA did not elaborate on fine increases in the announcement Thursday.

"It's important all Americans lead healthy lives," Health and Human Services Secretary Kathleen Sebelius said. "That means protecting our children from unhealthy habits as well."

"Many of these kids will become addicted before they are old enough to understand the risks and will ultimately die too young. This is an avoidable personal tragedy for those kids and their families as well as a preventable public health disaster for our country," FDA Commissioner Margaret A. Hamburg said. "Putting these restrictions in place is necessary to protect the health of those we care most about: our children."

Under the ruling, the FDA will work closely with states to make sure retailers comply with the rule. The agency will also work with retail communities over the coming months to educate retailers about the new requirements.

The FDA also will help retailers better understand how to comply and how to protect children and adolescents from "addictive products."

Manufacturers and retailers who do not comply may be subject to legal action.

David Howard, spokesman for RJ Reynolds Tobacco Co., the second-largest tobacco company in the U.S., said the new ruling comes as no surprise.

"Virtually everything in this announcement is already in place," Howard said. "What's important to note is that since 1996, tobacco use among youth has declined significantly, and that is a very good thing and should continue. We look forward to working with the FDA on this and other matters of interest moving forward, because we believe cooperation and open dialogue is the best approach to developing an effective science-based regulatory framework for the tobacco industry.

The rule was included as a key provision of the 2009 Family Smoking Prevention and Tobacco Control Act, signed by President Obama in June.

It comes on the heels of an FDA announcement in September that banned flavored cigarettes and flavored tobacco because of their appeal to kids. Studies have shown that 17-year-old smokers are three times as likely to use flavored cigarettes as smokers over the age of 25.

Finish Article at CNN>>