Tobacco Firms Begin Paying for FDA Regulation

Press enter to search
Close search
Open Menu

Tobacco Firms Begin Paying for FDA Regulation

WASHINGTON, D.C. -- The Food and Drug Administration began collecting millions of dollars in fees from the nation's tobacco companies to help fund the agency's newly granted authority to regulate the tobacco industry, according to a report on

The user fees will be collected quarterly and are based on each company's share of the U.S. tobacco market. The FDA will collect about $23 million for fiscal 2009. That will rise to $235 million in 2010 and $712 million by 2019. The FDA would not disclose the assessments for specific companies.

FDA spokeswoman Kathleen Quinn said the fees will be used to fund the Center for Tobacco Products, the agency's group tasked with regulating tobacco. The fees will pay for staffing, offices, systems that will be used to register products and outside contractors.

In June, President Barack Obama signed the law that allows the FDA to regulate the industry.

No. 1 tobacco supplier, Richmond, Va.-based Altria, supported the legislation, but its chief rivals -- Reynolds American Inc. and Lorillard Inc., both based in North Carolina -- opposed it. The latter two have joined in a lawsuit with other smaller tobacco companies challenging specific marketing regulations of the law.

The nation's tobacco companies already pay $1.01 per pack sold for federal excise taxes, and the top cigarette makers also make yearly payments as part of the landmark 1998 tobacco settlement to reimburse states for smoking-related health care costs.

In that settlement, tobacco companies agreed to make about $206 billion in annual payments over more than two decades. Companies also make payments as part of legislation that ended the federal tobacco program, a quota program that limited and stabilized the amount of tobacco produced by farmers, according to Forbes.