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We're back to the "what did they know and when did they know it" question. From the lawsuit I worked on, and in the preliminary stages only, here's what I recall:
First, cigarettes are not regulated as a consumer item by the Food and Drug Administration. A little odd, to be sure, but the tobacco companies lobbied very hard for many years, arguing that consumers didn't actually "consume" cigarettes, and at the time they won the ruling, they persuaded Congress that there was no "drug" involved with smoking. Of course, this was a lie, and the tobacco companies knew it. I don't recall whether it was 1959 or 1962, but an internal Philip Morris memorandum acknowledged that their research into nicotine and its effect on human beings showed that nicotine did indeed have pharmacological effects. Between their own departments, Philip Morris freely acknowledged that nicotine was addictive and that if this was public knowledge, their fiction that smokers were free agents who chose to smoke and keep smoking couldn't be sustained. So for nearly half a century, the tobacco companies obfuscated the issue, muddied the waters, and promoted the fiction that smokers were victims of their own choice.
Throughout the 1960s, the tobacco companies conducted extensive research on nicotine and its addictive qualities. First through the Center for Tobacco Research and then through the Tobacco Institute, Philip Morris, R.J. Reynolds, Liggitt and the other tobacco companies paid for research that showed them just how much nicotine was necessary to keep smokers smoking. One disturbing discovery they made was that they could manufacture a de-nicotinized cigarette. But without nicotine, smokers made the unfortunate "choice" to quit smoking. That is, the addicts they had created were no longer getting their drug, so smokers were able to quit. Denicotinized cigarettes never got to market due to unspecified difficulties - like making it too easy for smokers to quit smoking. The threshold, they found, was about 1 mg of nicotine per cigarette would keep enough smokers smoking to remain profitable. It also maintained enough smokers to replace those who euphemistically "aged out" of the smoking demographic (tobacco company speak for smokers who either became too sick to keep smoking, or who died).
While not regulated by the FDA, the tobacco companies couldn't avoid some oversight by the Federal Trade Commission, which was given authority to standardize the levels of tar and nicotine in cigarettes. But the tobacco companies were never ones to let any defeat stop them for long. Early on, the FTC and the tobacco companies had their own versions of measuring tar and nicotine, further confusing the issue of just how much of a hit any particular cigarette or brand was going to give a smoker. It wasn't until the late 1960s that the FTC exercised full control over the testing methods and mechanical measuring of tar and nicotine. The tobacco companies publicly protested, but privately planned how to subvert the FTC's "full" control over cigarette labeling.
First came the advertising campaigns, which set out to deliberately gull the public into thinking that lower nicotine cigarettes were safer than "full flavor" cigarettes. In myriad ways, official (through advertising) and unofficial (rumors and innuendo), tobacco companies sold the smoking public on the fiction that lower tar meant less harm to a smoker's health.
But there were other gimmicks. The tobacco companies knew that the FTC smoking machines took a regulation puff of a cigarette, and measured the tar and nicotine in each puff to arrive at their number for tar and nicotine. One of the gimmicks the tobacco companies came up with was to manipulate the filters and the wrapping of its cigarettes. Smoking machines didn't hold cigarettes, but smokers did. By putting a circle of holes in the cigarette wrapping where the tobacco met the filter, the tobacco companies able to achieve a low nicotine reading from the smoking machines. Smokers, however, by holding the cigarette in their fingers, covered these holes, bringing more nicotine into their systems. As you note, smokers also took heavier puffs of light cigarettes, delivering more nicotine than the standard puff the smoking machines did.
Smoking machines, being machines, also did not mimic the human body. Tobacco companies found that by putting additives in tobacco such as benzene, formaldehyde and ammonia, they could improve the delivery of nicotine. A cigarette certified light by the FTC method could actually deliver substantially more nicotine to a human smoker due to the reactive nature of the combination of chemicals in the cigarette, a reaction not available to the FTC machines.
For decades, the cigarette companies not only knew this, but manipulated their product, public opinion, and the agencies that were supposed to oversee them. When caught, they fell back on the fiction that "everybody" knew that all this was going on, and that if some of the millions of people they lied to believed them, then it was the fault of those smokers, and not the companies that lied to them. They've been so good at lying, that they've even convinced a fair number of smokers that they smoke due to their own free choice. While the decision to start smoking may be up to the individual, the matter of "choice" quickly disappears (almost like a puff of smoke) once the addiction to nicotine has been formed. And the tobacco companies are masters at convincing young people to take up the "habit," which is no habit at all, but an addiction. Through advertising, product placement, peer pressure, and depictions of the "glamor" associated with smoking (to name just four methods, and very powerful methods they are), cigarette companies are able to replace the smokers who age out of the population.
It's been about six years since I worked on the preliminary research for a light cigarette lawsuit, and in the meantime there has probably been more evidence that has been unearthed or pried out of the blood-stained claws of the tobacco companies, but that's what I recall. There was more than this, of course, but I don't remember all of it; it seems, however, to be sufficient to me and now apparently to the Supreme Court, that there is enough evidence for a lawsuit to proceed.
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