FDA seeks to cut nicotine in cigarettes, tobacco stocks dip following NYT report

Shares of Altria Group (NYSE:MO ) and Philip Morris International (NYSE:NYSE:PM ) declined slightly after a report in the New York Times (NYSE:NYT ) indicated that the U.S. Food and Drug Administration (FDA) is pushing for a significant reduction in nicotine content in cigarettes. Altria's stock decreased by 0.3%, while shares of Philip Morris dropped by 0.6%. British American Tobacco (NYSE:BTI ) shares pared their gains but were still up 0.5%.

The FDA has taken a step toward a major public health initiative by submitting a proposal to the Office of Management and Budget on Tuesday, the report noted. The proposal aims to lower the nicotine levels in traditional cigarettes to a minimal amount, a move that public health experts have long advocated for but has met with strong resistance from the tobacco industry.

Mitch Zeller, a former director of the FDA’s tobacco center, commented on the significance of the proposal, stating, "I think it’s a milestone in progress toward the single most game-changing tobacco regulatory policy, in terms of lives that could be saved, that FDA could ever do.”

The proposal's future, however, remains uncertain as it arrives during the final days of the current administration and ahead of President-elect Donald Trump's inauguration in January. The tobacco lobby, which has been a significant contributor to Mr. Trump's campaign, is likely to challenge the proposal. Notably, Reynolds American (NYSE:RAI ) donated $8.5 million to Trump's main super PAC by late October.

While Mr. Trump has personally expressed opposition to cigarette smoking, his stance on specific regulatory issues like nicotine levels in cigarettes has not been recently articulated. His likely nominee to lead the nation's top health agency, Robert F. Kennedy Jr., has criticized federal subsidies for tobacco growers, highlighting the contradiction of promoting public health while supporting an industry linked to chronic diseases.

The World Health Organization reported in 2023 that the U.S. Agriculture Department provided $437 million in subsidies to tobacco farmers between 2015 and 2020. Dr. Robert Califf, the FDA’s commissioner, announced in June 2022 the agency's intention to mandate tobacco companies to significantly reduce nicotine in cigarettes to non-addictive levels.

The FDA confirmed Wednesday that its proposed rule has been received by the White House. An agency spokesperson conveyed that if implemented, the rule "would be among the most impactful population-level actions in the history of U.S. tobacco-product regulation."

The initiative aims to reduce the appeal of cigarettes, assist smokers in quitting, and further decrease smoking rates. Cigarette smoking is associated with approximately 480,000 premature deaths annually.

Earlier this year, the Biden administration dropped a proposal to ban menthol cigarettes after facing opposition from companies like Reynolds American. The draft proposal to reduce nicotine levels has garnered over 7,700 public comments, including those from the industry, and the FDA has since refined the plan.

Major cigarette manufacturers have responded to the proposal by advocating for harm-reduction strategies that encourage smokers to switch to e-cigarettes, which are considered less harmful. They argue that making cigarettes unattractive to adult smokers would effectively amount to a ban, contrary to tobacco control laws.

The proposal, if moved forward, would represent a significant shift in tobacco regulation, according to Erika Sward from the American Lung Association. The impact on nicotine levels in other tobacco products, such as cigars, hookahs, or e-cigarettes, remains unclear.

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Source: Investing.com