Slow burn.

America's tobacco giants ($45 billion in sales last year) hit a major impasse last month. After years of tobacco's denials that smoking harms the public health, a federal appeals court concurred with the Federal Drug Administration that tobacco is an addictive drug subject to FDA regulation. Despite a recent industry victory in a major liability case, U.S. tobacco companies are newly and perhaps permanently on the defensive. Even some of the industry's vaunted political clout (Philip Morris and RJR Nabisco, the two largest cigarette makers, were first and third respectively in corporate contributions to political parties last year) has begun to lose its reach. And with a long series of liability trials coming up (tobacco spent $600 million in lawyers' fees alone last year), investors' confidence has begun to waver. Following an adverse judgment in a liability case against another company last year, in only one day Philip Morris lost nearly $12 billion in market value.

This is not the time for the public or the government to capitulate. Local, state, and federal officials should resist offers for premature group settlements (now being floated by tobacco executives) from an industry that for decades thumbed its nose at any suggestion of regulation while working to attract new generations to its deadly product.

Smoking kills 420,000 Americans a year (one in five deaths) and costs the country $50 billion annually in medical expenses. Tobacco affects not only the heart, lungs, circulation, and skin of smokers, but, according to the Environmental Protection Agency, actually contributes to the death of 15,000 nonsmokers yearly. While the number of smokers has declined slightly, some 61 million Americans will light up this month. That number will include thousands of new teen-age smokers, a group in which smoking is on the rise and a critical component in big tobacco's long-term profits: 90 percent of new smokers come from that group, and 70 percent of them, according to the American Cancer Society, will be hooked long-term.

The battle against big tobacco has been sluggish, underfunded, and full of political land mines. The industry is notorious for withholding and obfuscating facts. Its contempt for regulation has been remarkably resistant to even a minimal sense of social responsibility. As late as last month, Reynolds president Andrew Schindler testified in a court deposition that cigarettes are no more addictive than carrots. Politicians have been in tobacco's back pocket too long. As assembly speaker in California, Willie Brown accepted $200,000 over five years from tobacco companies. When asked why he had never attempted to curb cigarette smoking through legislation, he replied with unintended irony: "It's not my issue. I'm concerned with substance abuse." For his part, Newt Gingrich (R-Ga.) has called Dr. David Kessler - former head of the FDA, an architect of its antismoking policy, and tobacco's arch enemy - "a bully and a thug." While Congress spent a pitiful $1 million on an antismoking campaign in 1995, industry spent $5 billion in marketing.

Yet despite this marketing, public sentiment is increasingly turning against the cigarette industry. Attorneys general in more than fifteen states have filed suits against the industry to recoup state medical expenses. (In April, a Mississippi judge denied an industry motion for dismissal that argued the companies had saved taxpayers money for long-term geriatric care.) In 1996, Bob Dole paid for his campaign remark that tobacco is not addictive. According to a recent Harris Poll, 90 percent of Americans now believe that (a) smoking is addictive, (b) smoking causes cancer, and (c) the tobacco companies know that it does. This new consciousness seems to be filtering through to juries as well as politicians. Possible monetary judgments against tobacco companies are causing the corporations to reassess their prospects in jury trials and to seek a major, preemptive settlement covering all past and future liability cases. But the attorneys general should resist a quick settlement. Before an agreement is concluded, the collusion of the tobacco giants in developing, marketing, and hiding the deadly nature of their addictive product should be given time to ripen in the public's mind.

In the meantime, tobacco products (cigarettes, cigars, pipe and chewing tobacco, and snuff) should be made more difficult to obtain. A fifty-cent tax hike per package of cigarettes could raise $12 billion a year for health costs and for government antismoking projects. (A $107-million campaign by the California Health Services Department in the early 1990s helped cut cigarette consumption in that state by 12 percent, according to Business Week, April 7.) Furthermore, such a price increase could help to reduce the number of young smokers by a projected 16 percent. In light of the Supreme Court's April 28 decision permitting restrictions on outdoor advertising for cigarettes, local ordinances should be enacted across the land. Socially minded investors can drop tobacco stocks from their portfolios. And the FDA should gradually reduce levels of tar, nicotine, and chemical additives, and insist that all cigarette ingredients be fully listed on packages.

A cloud is lifting in the tobacco wars. But it is not yet gone.