Lorillard Inc. (LO) and Reynolds American, Inc. (RAI) won a case against the Food and Drug Administration (FDA) in which they challenged a report on menthol cigarettes published by the latter in 2011.
According to the companies, three of nine panel members advising on the report had a conflict of interest, because they were involved in consulting activities to companies that develop drugs to help people quit smoking, or they acted as paid experts on litigation cases against tobacco companies.
In light of the ties with anti-smoking companies, the judge ruled the panel committee as having a conflict of interest, which made the FDA report untrustworthy. The panel did not meet the requirements set by the federal government, namely: the panel should be fair, unbiased, and not under any influence. The court prohibited the FDA from using the older report, and also ordered the agency to reconstitute the advisory tobacco panel for any further reports or advisements.
The case was filed by the two cigarette makers who sued the agency in 2011, highlighting the conflict of interest of the panel member advising the FDA on tobacco-based products. The report on menthol cigarettes had concluded that the presence of menthol flavor is likely to increase the number of smokers, as more and more people will like the flavor and start smoking rather than quitting. Based on the report, the Scientific Advisory Committee had recommended a ban on menthol cigarettes.
Lorillard is one of the largest makers of menthol cigarettes in the US. As announced earlier this month, the company will be acquired by Reynolds for over $27 billion. This means that only two players – Reynolds and Altria Group Inc (MO) – will be left in the US tobacco market.