Senate Passes Bill Allowing FDA Regulation of Tobacco Industry (MO, RAI, LO)

June 12, 2009 9:37 AM EDT

Early this morning, the Senate overwhelmingly passed legislation (79-17) that will make the FDA one of the top regulators for the tobacco industry. The announcement follows more than 10 years of lobbying by tobacco company's, which spent almost $308 million to block the bill.

Industry officials are now weighing the effects of the legislation, suggesting that changes detailed in the bill could put unconstitutional restrictions on the advertising and packaging of tobacco products. Specifically, most industry-insider concerns are related to the bills impact on smokeless tobacco products, which companies have recently been spending millions in promotions on. The bill will also allow FDA regulators to adjust regulations on candy- and fruit- flavored cigarettes, with the eventual possibility of a ban on these products.

At first glance, the bill seems ultra-restrictive to the tobacco industry; however, tobacco-giant Altria (NYSE: MO) has initially praised the legislation, saying that it will require every tobacco maker to operate "at the same high standards". Other tobacco companies which will be affected by the bill: Reynolds American (NYSE: RAI), Lorillard (NYSE: LO) and Vector Group (NYSE: VGR).

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