Thursday, 4 October 2012

Day 66: Avoiding 'swingeing' regulations

On Wednesday October 3rd, Mr. Peter J. Hoult, a former marketing head and president of RJR-Maconald and marketing vice-president of RJ-Reynolds, testified for a third day at the trial of the Quebec class action suits against tobacco companies.

On his first day at the trial last week, Mr. Hoult gave expansive answers to general questions put to him by plaintiff lawyer, Philippe Trudel. On his second appearance this Monday, he was shown documents connected to his time at the company (1979 to 1983 and 1987-88) and asked to elaborate. Today, the questions were more tightly focused on specific events and decisions taken during his time at the company. Thursday is his last day of scheduled testimony.

For three days Mr. Hoult has maintained an unabashed air of comfort about the business of selling cigarettes. This is a man who expresses no regrets, and often speaks enthusiastically about managing the marketing efforts within a global tobacco company.

Last Friday, for example, in response to questions about research on smoker compensation (by which smokers think they are inhaling a lower amount of tar than they actually are), he replied that such research would naturally be of interest because "if there is something found on the positive side you can benefit from, as a marketer you will certainly take advantage."

Out Barclaying Barclay

Today, Philippe Trudel returned to how a marketer might take advantage of smoker compensation. He chose as a starting point the 1980 launch of the Barclay brand in the United States. The filter used on this cigarette predictably resulted in smokers receiving significantly more nicotine and tar than the values shown on the package.

Mr. Hoult sounded the alarm about the Barclay brand shortly after it appeared in test markets. In January of 1980, he wrote his boss a worried-sounding memo describing the brand's market appeal, and the impact it might have on the market and on regulators.
The Barclay cigarette's
compensatible filter

One of the major consumer benefits is the brand's flavour level which is significantly higher than could normally be expected from its official tar and nicotine rating. This benefit however is achieved quite simply because the filer structure cheats the machine." (Emphasis in original. Exhibit 701)

If RJR-Macdonald could not get an industry agreement to not market such brands in Canada, then his company should prepare to market its own version. (Exhibit 703).

During his testimony today, Peter Hoult did not offer much of an explanation of how it was that the Barclay cigarette was able to cheat the machine, and it seemed from the back of the room that Justice Riordan did not entirely understand that one way of "taking advantage" of smoker compensation was to manufacture cigarettes with compensatible filters, let alone that the companies may have learned from the Barclay experience to accomplish this in more surreptitious ways.

Philippe Trudel tried to provide information on the Barclay filter by introducing into the trial record an article from the New Scientist, but was blocked by an objection from the lawyer for BAT's Canadian subsidiary, Deborah Glendinning, who convinced the judge that since the Barclay brand of cigarettes was never sold in Canada it was irrelevant. (The story been well explained elsewhere.)

Despite his vague answers about compensation earlier this week, Mr. Trudel introduced documents that showed that Peter Hoult had an early enthusiasm for researching compensation (Exhibit 695), and that he visualized an approach to manufacturing more compensatible cigarettes (Exhibit 701, 703). After launching a new low-tar brand in Canada, his senior management praised him for having "out Barclayed Barclay!"  (Exhibit 702)

Why not give smokers more information?

In 1987, shortly after returning to Canada as president of RJR-Macdonald, Mr. Hoult wrote to the president of the Canadian Cancer Society and informed her that, even at that late date, "the tobacco manufacturers do not believe that the alleged dangers to health have been scientifically proven." They did however feel that smokers should be "made aware of such allegations." (Exhibit 691). The company's limited support for making  making smokers aware of health risks the subject of several exchanges between lawyer and witness.

Mr. Trudel pointed to the company's intention to "strenuously resist with all means at their disposal" additional health warnings, and the record of their resistance while the first federal regulations were being developed. (Exhibit 693694). Why, he asked, would they resist more warnings?

Mr. Hoult rattled off four reasons: "We felt the warnings were redundant in the sense that a huge majority of the Canadian population truly believed that smoking caused various diseases, including cancer. With that total belief any further warnings would be redundant. The pack represented the brand - the health warnings obviously disturbed what was our brand in the market place. It was obviously a matter of some expense to put warnings on the pack. These were warnings that the government took responsibility for and which we carried on our pack."

His company was also concerned about smokers' receiving health information from other sources. When the Canadian Pharmaceutical Association launched a public information campaign on the risks of smoking while taking the birth control pill, RJR-Macdonald received assistance from its head office on how to discredit those concerns. (Exhibit 692692A692B).

Curiously, despite his view that the risks of smoking are well known, Mr. Hoult could not say what risks were elevated by smoking while on the pill. Nor was he able to say how many deaths were attributable to smoking.

"Did you ever have this information?" Mr. Trudel asked.
"When I was working in Canada, I am sure that there was commentary in the press and estimates by various government bodies, but I don’t have a recollection of the number."

"Was it more than 10,000?"
"I have no recollection."

"More than 100?"
"I have no idea – I really can't answer the question"

Unreliable labelling

To date, public health concerns about putting labels on cigarette packages that give levels of  tar, nicotine and other smoke constituents were based on the fact that these levels were not a reliable indicator of what a smoker will actually inhale under real-life conditions. (Numeric indicators are now removed from Canadian cigarettes). Thanks to the evidence presented by Mr. Trudel and Mr. Hoult, we now know that tobacco companies deliberately manufactured their products so that the labels were not a reliable indicator of what a smoking machine would receiver.

Mr. Hoult testified today that there was an agreement amongst tobacco companies to allow a "tolerance" on smoking machine level readings. In 1979, companies that designed and manufactured cigarettes to give 10 mg of tar to a smoking machine could label them as giving 9 mg of tar. It is not clear from the exhibits filed whether the government was also included in this agreement, although Mr. Hoult suggested they were.

Philippe Trudel asked if the company deliberately manufactured at the upper end of the tolerance. Yes, explained Mr. Hoult, especially "with regard to lower tar, where smokers were clearly wanting a lower number."  His memo to staff in 1980 instructed that the company would "remain within the legal limits albeit at the boundary of the limits for certain brands." (Exhibit 700)

It would appear that the policing of these levels was done by the companies themselves. (Exhibit 696697698698A 699 . RJR was a little shy to blow the whistle on its competitors, because "if one company queries another, then it just opens the door for that other company to come back at us with their queries” (Exhibit 697). In 1982, the CTMC discussed reducing the tolerance by one-half. (Exhibit 714B)

CO demands - lost in translation

In June 1980, the federal Health Minister, Monique Bégin wrote the presidents of the CTMC, Paul Paré, and requested that the companies work to reduce the levels of carbon monoxide in their cigarettes.The original letter was written in French (both Mme Bégin and Mr. Paré were Francophone Quebecers), but it was translated into English before being circulated by Peter Hoult to his senior marketing and sales staff. "Under no circumstances," he warned them "must any of our brands be at the top of a published table." (Exhibit 713713A)

Mr. Trudel asked Mr. Hoult how he reacted to the letter when he received it. "Clearly this was another warning shot. It was only a question of time before numbers would be required for carbon monoxide as they were for tar and nicotine. We had to get ourselves in a ready state, and prepare for another component to clutter our pack."

Clutter in the sense of too much information? asked Mr. Trudel
Clutter in the sense that it would be another element damaging or affecting the integrity of the pack. ... This was information the consumer did not need because he or she had made up their minds already."

When the request from the Minister was discussed at length at the CTMC, (714714A714B, 714C, 715715A), the industry hoped that their own translation might be more demanding than the English version that had originally been written by departmental staff. (The twice-translated request for voluntary printing of CO levels on packages was not agreed to.)

Today Mr. Hoult said that the health risks from carbon monoxide were "extremely serious", but at the time he was vice-president of marketing, RJR wanted the industry to "challenge the validity" of the government's health concerns. If necessary, it wanted to prepare an industry position to "show that the carbon monoxide question is still open to debate." (Exhibit 716716A).

The neighbourhood tobacco presence.

Although Monique Bégin was not successful in getting the industry to voluntarily place carbon monixide values on their cigarette packaging, she continued to make requests of the companies. In 1982 she asked them to tighten their voluntary code provisions related to advertising around schools, health warnings on advertising and constituent labelling on advertising. (Exhibit 707)

Her request and information material provided to RJR sales staff (Exhibit 710711) were the basis of questions to Mr. Hoult about its retail and street level marketing activities. Was one of the reasons that the company was more agreeable to the request to put health warnings on billboards that "the consumer cannot notice them," Mr. Trudel asked. In a long answer, Mr. Hoult said words to the effect of yes - "there would be no negatives because the overall impression [is the only takeaway], rather than the reading of copy."

As to why the company had a "negative attitude" towards expanding the ad-free zone around schools, Mr. Hoult said it was a "rather more swingeing" measure.   

"Swingeing?" Justice Riordan asked for a definition.  (I think on behalf of everyone else in the room). In his still-very-English accent, Peter Hoult looked surprised that this term to describe excessive measures was unfamiliar. "It usually refers to tax increases," he explained. 

The company's practices with respect to giving away free cigarettes (Exhibit 710) and putting counter-top cigarette displays in the face of convenience store customers (Exhibit 711) were not a threat to youth, Mr. Hoult explained.  "I can't say it is impossible. I think it is highly unlikely" that sales staff hired to give away free cigarettes in stores would provide them to underage youth, he said. There was no need to take tobacco promotions out of stores that were located near schools both because the Minister of Health did not require them to be removed and because it didn't make any difference 'if people were already going into the store to buy cigarettes."

Tomorrow is expected to be Mr. Hoult's last day of testimony. Next week, the trial will be on recess except for Wednesday morning, when the first witness from Rothmans, Benson & Hedges (Mr. Ron Bulmer) will testify.