INDEPENDENT PANEL MAY JUDGE TOBACCO ADS

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Tobacco marketers' ability to escape Food & Drug Administration regulation without a political fight may hinge on their willingness to let an independent panel determine whether their ads appeal to underage smokers.

Congressional and advertising sources say the Clinton administration, concerned more about underage smoking than nicotine addiction, and perhaps unwilling to face the political fallout of a fight over new regulations, may be willing to settle for a voluntary industry solution with some teeth.

The kicker: Tobacco companies would have to present their new campaigns to the group for review and agree not to go ahead with ads that the panel feels appeal to children.

The exact makeup of the panel or how it would work hasn't been determined. But the panel is a key to separate talks Reps. Charlie Rose (D., N.C.) and Ron Wyden (D., Ore.) conducted last week with White House and tobacco industry officials.

The panel could be as simple as a focus group or more complicated, with perhaps a selection of advertising or marketing industry people reviewing results of focus group data. Also unclear are the exact criteria to be used in making a determination.

Such a review would be the most controversial portion of a package of voluntary proposals. Those changes also would likely include requiring rival tobacco marketers to emulate Philip Morris USA and not distribute free packs by mail, and increasing state regulation of underage smoking. The White House said only it had received a list of options, which is being reviewed.

Already ruled out in any deal, however, is court review and tobacco company financing of any related anti-smoking advertising. The tobacco companies would be only in trouble if they failed to follow the review process or to accept the results.

"If the government is appointing the board, we would be troubled," said John Camp, senior VP for the American Association of Advertising Agencies. "If the industry were selecting an outside group, that's a different decision."

Rep. Rose, a congressman from a tobacco industry state, and Rep. Wyden, a tobacco critic, are hoping to use the voluntary agreement to get quick action on youth smoking, while avoiding lawsuits.

"We are looking for them to come forward with some type of nonbiased system to determine whether they advertise to kids," said John Merritt, Rep. Rose's chief of staff.

With House Speaker Newt Gingrich already on record as saying the FDA has "lost its mind" in trying to regulate tobacco, tobacco makers might normally be even more reluctant than normal to accept advertising review.

The alternative, however, might be far worse. There were reports last week that some Democrats were urging the president to take on the unpopular tobacco industry as a major plank of his platform in next year's campaign.

A settlement would appear to avoid that prospect and may be very attractive to an industry besieged.

Last week there were reports two grand juries were looking into the tobacco industry.

Philip Morris acknowledged that a New York City federal grand jury had subpoenaed documents. The jury is reportedly looking into whether the company complied with Securities & Exchange Commission regulations in the light of a June 8 New York Times story claiming Philip Morris had engaged in secret research. Philip Morris has denied the charge and disputed the story.

Meanwhile a Washington, D.C., grand jury was supposedly looking into several congressmen's charges that tobacco executives lied in a Congressional hearing. The Justice Department and U.S. attorneys declined to confirm either probe.

Several tobacco companies last week declined comment on the possibility of an advertising panel, saying there was no specific proposal on which to comment.

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