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Kai Ryssdal: Marlboro meet Benson and Hedges. Philip Morris International announced today that it’s buying Rothman’s, the Canadian cigarette maker, for about $2 billion. That’ll give the company about a third of the Canadian tobacco market.
The U.S. market, meanwhile, could be in for some changes. The House of Representative passed a bill that would let the Food and Drug Administration regulate tobacco for the first time.
It’s not a done deal yet — still has to pass the Senate — but some in the industry say say it actually stacks the deck in favor of Philip Morris USA. That’s this country’s biggest tobacco company.
From Washington, Marketplace’s Steve Henn explains.
Steve Henn: If you have a fondness for flavored cigarettes, yesterday’s vote on the tobacco bill was bad news.
Matthew Myers: It bans clove cigarettes because clove cigarettes appeal to young people. It bans other flavorings because they appeal to young people.
Matthew Myers heads the campaign for Tobacco Free Kids. He says flavors are one way tobacco companies lure new smokers. Every day, more than 1,000 kids pick up the habit and each year roughly 400,000 Americans die.
The bill gives the FDA authority to see secret recipes and demand changes like cutting nicotine and banning menthol. Myers says the goal is to make it harder to get hooked, easier to quit and maybe even lead to a less dangerous cigarette, though no one knows if that’s possible.
R.J. Reynolds lobbied against this bill — some of its most popular brands are menthols and lights. Steve Kottak, a Reynolds executive, says informed adults should be allowed to make their own decisions.
Steve Kottak: We believe there is a need for public health policies that are broader than the abstinence-only, one-size-fits-all approach embodied in this bill.
But Myers says he had one surprising ally: Philip Morris, which is betting…
Myers: That in that highly regulated market, it will gain a competitive advantage. What we care about is that we believe the legislation will save lives.
Competitors feel the bill’s advertising ban means Philip Morris will simply lock in its market dominance.
In Washington, I’m Steve Henn for Marketplace.
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