WASHINGTON/GENEVA The U.S. Food and Drug Administration said on Tuesday it may place restrictions on menthol cigarettes following a scientific review that showed the products are likely to be more addictive than regular cigarettes.
The FDA published preliminary results from a study it conducted that suggests "menthol cigarettes pose a public health risk above that seen with non-menthol cigarettes."
The report found that while menthol cigarettes, which account for about a quarter of all cigarettes sold in the United States, are no more or less toxic than regular cigarettes, menthol's cooling and anesthetic properties can reduce the harshness of cigarette smoke, increasing their appeal to new smokers.
"Menthol smokers show greater signs of nicotine dependence and are less likely to successfully quit smoking," the FDA said.
The FDA is seeking public comment on whether a limit could be set on the amount of menthol in cigarettes. It is also seeking information on how menthol cigarettes are marketed to young people and minorities.
Anti-tobacco groups said the FDA has enough evidence in hand to ban menthol cigarettes and should not need additional input from companies or the public.
"This additional delay will simply prolong the disease and death caused by menthol cigarettes, with particularly adverse consequences for youth and African-Americans who smoke menthol cigarettes at disproportionately higher rates," said David Dobbins, chief operating officer at Legacy, a tobacco research and public health advocacy organization.
Shares of Lorillard Inc, which makes the Newport brand of menthol cigarettes, fell as much as 5 percent while shares of Altria Group, which makes a menthol version of its Marlboro brand, fell as much as 3 percent.
Lorillard Chief Executive Murray Kessler said in a statement that the company is "encouraged" by the FDA's "science-based approach."
"It is Lorillard's long-held belief that the best available science demonstrates that menthol cigarettes have the same health effects as non-menthol cigarettes and should be treated no differently," he said.
A spokesman for Altria, David Sylvia, said the company had just received the FDA's report and was reviewing the information.
The tobacco industry has previously acknowledged the inherent risks of all tobacco products, the FDA said, but the industry has raised the possibility of a black market in menthol cigarettes emerging should a ban be imposed.
At least some tobacco company analysts interpreted the tone of the report as positive for the industry in so far as the FDA did not immediately recommend an outright ban. An advisory committee to the agency had recommended in 2011 that they be removed from the market. The agency is under no obligation to follow the panel's recommendations.
"We believe it's unlikely that menthol will be banned," said Bonnie Herzog, an analyst at Wells Fargo Securities, in a research report. "We see this as a buying opportunity as we expect the stock to recover as investors digest this report," she said, referring to Lorillard shares.
The FDA's move comes during a trade dispute in which Indonesia has charged that the United States illegally allowed menthol cigarettes to remain on the market while banning the import of clove-flavored cigarettes from Indonesia.
In 2012, the World Trade Organization ruled that the United States should either end its ban on Indonesia's imports or impose a ban on U.S. menthol cigarettes. So far the United States has stopped short of a ban.
"The United States has been clear that it would comply with the WTO findings in a way that is appropriate for the public health," said a statement from Andrea Mead, a spokeswoman for the Office of the United States Trade Representative, which negotiates with foreign governments to create trade agreements and resolve disputes.
The U.S. has until Wednesday to comply with the WTO ruling.
Lorillard's shares were down 4.3 percent in afternoon trading to $44.36 on the New York Stock Exchange. Earlier they fell as low as $43.77. Altria's shares were 2.4 percent lower at $35.98, after dropping as low as $35.73.
(Reporting by Toni Clarke in Washington and Tom Miles in Geneva; Editing by Tim Dobbyn and Carol Bishopric)