The FDA may have failed in its efforts to force Altria (NYSE: MO ) , Lorillard (NYSE: LO.DL ) , and Reynolds American (NYSE: RAI ) to display graphic images on their packaging as a warning against smoking, but that doesn't mean the government won't continue trying to reinforce the message.
The Centers for Disease Control and Prevention, the folks who brought you preparedness tips for the coming zombie apocalypse, will once again launch a series of TV, radio, online, print, and billboard ads to get people to quit smoking. Paid for by a public health fund set up through Obamacare, the agency will spend $48 million on the ads, which feature disabled and disfigured ex-smokers testifying to the damage caused to their bodies by smoking.
The CDC says these public service announcements have helped tens of thousands of individuals quit the habit and caused calls to its quit-line to double in the weeks after a similar campaign last year.
Snuff it out
Despite dramatic declines in smoking since 2000, federal agencies continue to beat the drum on the dangers of smoking, pointing to the marketing budgets of tobacco companies. The Surgeon General says cigarette makers spend $10 billion annually to entice individuals, namely children, to smoke.
After Congress passed a law in 2009 giving the FDA the power to regulate cigarettes, the agency tried to require the companies to print graphic images and messages on cigarette packs themselves, but Lorillard and Reynolds sued and an appeals court struck it down. Altria didn't take part. The Justice Department subsequently said it wouldn't pursue it any further.
Cigarette smoking is waning, though, with Altria reporting a 0.2% decline in shipment volume in 2012. Reynolds American saw a 2.3% drop while Lorillard experienced a 1.4% falloff in shipment volumes. Overall, the industry saw a 2.3% decline.
So while the government may have lost the battle of getting these graphic images before the face of smokers as they open up a pack of cigarettes, its end run around the roadblock thrown up by the tobacco companies may help it win the war by letting even more people see them.
Cigar butt investing
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