Tobacco.org

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STATE OF MINNESOTA

DISTRICT COURT COUNTY OF RAMSEY

SECOND JUDICIAL DISTRICT

File No. C1-94-8565

The State of Minnesota, by Hubert H. Humphrey, III, its attorney general, and Blue Cross and Blue Shield of Minnesota,

Plaintiffs,

vs.

Philip Morris Incorporated, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, B.A.T. Industries P.L.C., Lorillard Tobacco Company, The American Tobacco Company, Liggett Group, Inc., The Council for Tobacco Research-U.S.A., Inc., and The Tobacco Institute, Inc.,

Defendants.

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TRANSCRIPT OF PROCEEDINGS

VOLUME 6, PAGES 1034 - 1168

JANUARY 27, 1998

THE CLERK: All rise. Ramsey County District Court is now in session, the Honorable Kenneth J. Fitzpatrick now presiding.

(Jury enters the courtroom.)

THE COURT: Good morning.

(Collective "Good morning.")

THE COURT: Counsel.

MR. BERNICK: Good morning. My name is David Bernick. I don't think I had the opportunity to ask very many of you questions during the selection process, so I want to take this opportunity to tell you a little bit about who I represent. I represent a company called Brown & Williamson. I don't know if many of you have heard about Brown & Williamson. Brown & Williamson makes Kool cigarettes. That's one of our brands. I also represent American Tobacco Company. American is now part of Brown & Williamson, they're part of the same company. American has made Lucky Strikes; may be a brand that you're familiar with.

Now I also represent a couple other companies that you're -- I'm pretty confident you probably don't know. One of them is called the British-American Tobacco Company. British-American Tobacco is affiliated with/related to Brown & Williamson. You'll hear a lot in this case about British-American Tobacco Company or BATCo because BATCo did a lot of research, and the research was done/sponsored in part by Brown & Williamson and came over to this country.

There's also another company I think you'll probably hear very little about, which is B.A.T U.K. & Export. I'm not going to spend a lot of time on that this morning, but they're also another company that is related to BATCo.

I'm going to take you back and tell you a little bit about where my presentation fits into the discussion you've heard so far. Mr. Bleakley talked to you about the beginning of the smoking-and-health controversy, and in particular back in the 1950s. At that point in time the smoking-and-health controversy was looming large, it was becoming a national event.

We had to change over our system this morning, and the result is that the slides I'm going to show you are slides that used to be on computer and they're now here graphically. But they're basically the same in content.

Mr. Bleakley talked to you about the state and what the state had done, and he particularly focused on the role that the state had played in this process. I'm going to take you back and I'm going to talk to you about what the industry has done, and in particular three basic things that the industry has done over time.

The story that Mr. Ciresi told you for the state was a story of documents, and it was a story of attitudes that people had, what was on their minds, and he showed you those documents and he said this is what this industry is about, this is what this industry has done for over 40 years. Look at the attitudes, look at the objectives, look at the goals, look at the intent of these people and believe as you hear the evidence in this case for 40 years that the evidence in this case reflects those attitudes, those intents and those goals for the industry, and it's in those documents.

Those documents were taken, as Mr. Ciresi said, from a collection of literally millions of pages of documents, and they say what they say, and you'll hear about them. But you will have to reach a judgment in this case not only about what attitudes were in a particular document, but about what was accomplished by this industry over time, what was actually done, and I'm here to tell you this morning about what was done, what was done in connection with these three basic areas of activity. And at the end of the case you'll have to reach an assessment. After all of the evidence is in you will have to reach an assessment: Is the picture that Mr. Ciresi showed you with those documents taken out of the 33 million pages, is that picture a complete picture, or is there another picture that's more complete, a picture that reflects the accomplishments of the industry, what the industry actually did? And are those accomplishments obscured by the fact that some people at some points in time have had ideas and have had attitudes? And those ideas and attitudes weren't necessarily best, didn't necessarily reflect the best kind of a judgment and aren't necessarily ideas or attitudes that we would stand behind today and ask that you endorse. That's the judgment that you'll have to make.

So listen to the attitudes, look at the documents, understand them. We're not going to walk away from them. They are what they are. But think to yourself now about what was actually accomplished, what was actually done.

These three items, the research, the changes to the product, the defense of smoking, this is a road map, this is a road map that you can use. And I'll tell you where the road ends right now, then I'll go back and explain exactly what path that road has taken. But where does it end?

With regard to research, the story that was told, the overview that was given to you by Mr. Ciresi was research as an example of a broken promise, a commitment was made and then it was breached. In fact, his suggestion to you was at the time the commitment was made there was never intent to live up to it, that at the very time it was made there was information that was not shared. And he's also suggested to you that the industry, the companies learned a lot about their product and then didn't reveal it, that there were secrets, that there were important secrets that were never revealed.

Our road ends at a different point than Mr. Ciresi's road. Our road ends at the point where research was done, the promises were kept. And I'll show you how they were kept and then you will see no important scientific secret, no silver bullet for the smoking-and-health controversy that was somehow closeted in within the confines of the tobacco industry and was not known to other scientists, there will be no such important fact that would have made a difference to choices that smokers made and choices that the state made.

What about changes to the product? You heard an argument about changes to the product that said this industry was so hidebound, so dug into its ways that the product wasn't essentially changed. Could have been done, wasn't done. And the changes that were made, they were illusory changes, they weren't real changes. They were changes at the time to provide reassurance, not reality. Reassurance, not reality.

We'll show you a different road, a road that ends with intensive research to change the product, with real changes that were made that had meaning and that were directed and endorsed by public health authorities. We'll talk to you about those changes.

Mr. Webber, who follows me, will deal with those.

What about the defense of smoking? That's another area of activity. The industry sought to preserve itself. Can't be a shocker. The industry was under intense scrutiny, intense -- intense attention as it has been for 40, 50 years. Did it defend itself? It absolutely defended itself. It sought to preserve itself and it sought to preserve the rights of smokers to choose to continue to smoke.

Now Mr. Ciresi's characterization of that road, of that path, was it was a path of deceit, that our very public positions were designed to mislead and in fact did mislead people.

Our road is a different road. Our road is a road paved with public facts, not private facts.

Public discussion of those facts, a debate and discussion that the industry couldn't control. We didn't even move the needle. Who was going to pay attention to what the tobacco industry had to say? There was a debate, there was a debate that we participated in through public facts so that at the end of the day, what could happen? At the end of the day people who were watching that debate and participating in that debate could make up their own minds, make their own choices. That's where these roads end.

Let me begin with research. Research was done.

You'll hear an awful lot about research, tremendous amount of research. And before I talk to you about what that -- what that evidence will show, I want to give you a touchstone or a guideline to use because you're probably sitting here saying well how can I keep track of all this information, all these articles, all of these thoughts? How do I go about doing that?

Here's a test. The test is this: The test is borne of this case. Their case is that smokers were deceived and the state was deceived. With that case, with that claim, here is my test. If you find it useful, use it; if you don't find it useful, cast it aside. My test is this: As you hear about the research, as you hear about what was done, ask yourself: Would it have made a difference? Would it have made a difference to smokers who had to make choices, the state who had to make choices? And who had heard -- I'm not going to go back through what Mr. Bleakley covered -- who had heard two things, just two things? Number one, smoking may be hazardous to your health. Number one. Number two, once you start, it may be hard to quit. That's not a lot of technical stuff, it's not a lot of articles, it's not a lot of research, it's basic, practical wisdom. It's the kind of stuff that people rely on when they make choices. You'd go a little eyeweary just thumbing through the annals of pharmacology.

You make choices on what you believe and what you understand.

As you hear about that research, is there anything that we knew that nobody else knew, some important fact that would have made a difference to people who had heard these things? That's the test.

Now with that test, how do we stack up? What actually occurred?

I'm going to try one more slide. If it doesn't show up clearly, I may just abandon it altogether.

I don't know if -- Your Honor, I don't know -- may I inquire if the jury can read that on their screen? Is that all right?

THE COURT: Can you read it?

(Affirmative resonse from some jurors.)

MR. BERNICK: Research was commenced, and the first part -- there actually weren't one, but several lines of research. The first, CTR research.

We've already heard a little bit about CTR. It's CTR that led to the Frank Statement that Mr. Ciresi talked to you about. And let me create a little bit of the ground work of the Frank Statement.

The time is 1954. There's a big issue that's out there, a scientific issue that's out there, the claim that smoking causes disease. Companies know they got to respond to that. They know that they have to do research. Even the documents that Mr. Ciresi showed you yesterday reflect the understanding that research had to be done.

Now I want to ask you, to put the question to you: If the tobacco companies had gone ahead and said, gee, we want to do this whole research program, we're going to do it ourselves, so we go build all the labs, hire all the scientists, all the sophistication in the world is housed within the tobacco industry and they start coming out with reports and they start coming out with articles and the articles say, gee, you know what? It turns out maybe smoking doesn't cause disease. What do you suppose people would have asked about those studies? Suppose they might have asked, "Well, gosh, that's just the tobacco industry research. How independent really was it? How good was it? Who believes that?"

What if the studies had come out poorly for the tobacco industry, smoking is not only established to cause disease but there were problems with the study, the companies' own scientists felt the studies were flawed, and they would take out and they would write down, "We think this -- we think these studies are flawed studies." What do you think people would have to say about those scientific criticisms? They'd probably say, "Well gee, how do we pay attention to those? They are the tobacco industry criticisms of its own research. How can they disavow their own research?" Big problem.

The solution that was adopted by the industry was announced publicly and openly. The solution announced by the industry was to create an independent mechanism for funding research done by institutions that had no allegiance, no tie, not beholding to the industry.

So we got another problem. Who picks the researchers? Who says I'm going to give you money and not you money? Who goes ahead and does that? Can't have the tobacco industry go do that. So not only did they put the money for people who were on the outside, at outside institutions, the tobacco industry had to create a mechanism for going ahead and selecting who gets the money. And that's what this is all about. It's all about the commitments that were made.

Let me focus first on the recitals. It says, first of all, "Although conducted by doctors of professional standing, these experiments" -- referring to the experiments that had occasioned the publicity -- "are not regarded as conclusive in the field of cancer research. However, we do not believe that any serious medical research, even though its results are inconclusive, should be disregarded or lightly dismissed." So they're reciting the fact that the issue is out there. "We accept an interest in people's health as a basic responsibility, paramount to every other consideration in our business.

"We believe the products we make are not injurious to health."

Let me take both of those statements. The second statement, made in good faith at the time, wouldn't be made today given the way that it's worded, but back then when the issue was -- when the issue was where it was and science was where it was -- Mr. Bleakley has reviewed it for you -- it was a fair and good and an appropriate statement to make.

What about the statement about "paramount to every other consideration in our business?" "Paramount to every other consideration in our business." Sounds kind of noble, sounds, well, we believe we have -- and there is that dimension of it, we did believe we had the responsibility. But just think about it for a minute. This is not a situation where there was a difference between what we had a responsibility to do and what we had to do in our business.

MR. CIRESI: Your Honor, I'm going to object to the argumentative form of the opening statement.

THE COURT: I think maybe you should move on, counsel.

MR. BERNICK: Thank you.

The evidence will show that there was no inconsistency. Why? The evidence will show that the marketplace was awash with this information. Mr. Bleakley has already reviewed it to you. Our customers were hearing these statements made about smoking and health. If we wanted to do business with our customers, if we wanted to be responsible, the evidence will show that those two paths converged. Doing the science was important for a responsibility point of view, doing the science was critical to just staying in business. If we didn't do it, if we weren't responsive, where would our customers go?

So you see the statement "paramount to every other consideration in our business," and you think about what the tobacco industry actually did over time in its business. Think about paramount not only from a responsibility point of view, think about paramount in the sense that this was the driving issue that dominated the marketplace, that dominated our business.

MR. CIRESI: Your Honor, I -- I'm again going to object.

MR. BERNICK: Your Honor, that's a statement of fact.

THE COURT: Counsel.

MR. BERNICK: I'm sorry.

MR. CIRESI: I'm objecting to the form of the argument. It's an opening statement, not a closing argument.

THE COURT: You may proceed.

MR. BERNICK: Thank you.

Let's go on and take a look at the commitments that were made. Commitments reflected the concept that I've talked to you about. "We are pledging aid and assistance to the research effort in all phases of tobacco use and health. This joint financial aid will of course be in addition to what's already being contributed by individual companies." So the idea is a commitment to fund. A commitment to fund.

Number two, "For this purpose we are establishing a joint industry group consisting initially of the undersigned. The group will be known as the Tobacco Industry Research Committee." The TIRC, later CTR. That was done.

Now, number three -- if I may zoom in on this a little bit more -- "In charge of the research activities of the Committee will be a scientist of unimpeachable integrity and national repute. In addition there will be an Advisory Board of scientists disinterested in the cigarette industry. A group of distinguished men from medicine, science, and education will be invited to serve on this Board. These scientists will advise the Committee on its research activities." That was the commitment that was made.

Here is the structure that that describes. The tobacco companies created CTR. CTR had a board of directors, it had a Scientific Advisory Board, and it has a scientific director and a scientific staff. Money was provided to independent scientists. What was the role of the Scientific Advisory Board? It was the Scientific Advisory Board that made the recommendations on what research to follow.

Now in judging CTR and judging this enterprise, let's take a look at the people who became a part of it. Were these people who the tobacco industry had simply selected that were not of stature or not of quality? The evidence will show it's the contrary. The scientific directors. First one, Dr. Clarence Cook Little, president of the University of Michigan, president of the University of Maine, founder of the Jackson Memorial Laboratory, managing director of the American Society for Control of Cancer, now the American Cancer Society. That's who the first scientific director was. President of the American Association for Cancer Research.

You can go on and talk about Dr. Gardner, chairman of the department of anatomy for Yale Medical School, president of the International Union Against Cancer and so on, member of the National Cancer Institute, a government organization focused on cancer.

Sheldon Sommers, faculty member at Columbia, Harvard and other medical schools. President of the New York Pathological Society.

Dr. Glenn, president of Mount Sinai Medical Center.

These were the scientific directors, these were the people who were in charge of the administrative organization.

What about the Scientific Advisory Board itself? Were these people -- were these people that were simply patsies of the tobacco industry, will do what they want, or are these people that didn't have stature? These were people that included folks who

were on the National Cancer Institute itself. I don't know if you can read that; I'll focus a little bit on it. Paul Kotin, SAB member from 1954 to 1965, chief of the carcinogenesis studies of the National Cancer Institute. These kinds of people were the kinds of people who were given the job of making those recommendations to the industry about what research to follow. These kinds of people. And there are more them. You'll see again and again the institutions that are represented here. University of Chicago, University of South Carolina, Harvard University, National Cancer Institute, prestigious research organizations. These people were asked for their views, asked for their recommendations, and the work got funded.

Was it work that was confined geographically? Can't see this very well. We funded institutions all across the country to do this kind of research.

What about here in the state of Minnesota? Mayo Clinic, University of Minnesota, a whole series of researchers over time who got funding. Those were the people whose work got done, those were the people who were chosen to discharge the commitment, the promise to do independent -- fund independent research.

How broad was this research program? Awarded more than 284 million dollars in grant and contracts, over 600 million dollars in today's dollars, funded over 1365 projects for more than 1100 researchers. Grantees published more than 6,000 publications. Among the recipients were three Nobel Prize winners.

Now was this research that ended up being favorable to the industry? Was this research that ended up exonerating, kind of giving us a clean bill of health, or was it independent research? Let's take a look at some of the conclusions.

This is what one study concluded in 19 -- in 1961. "There's a significant relationship between smoking and bronchogenic carcinoma." It's not what we would like to see. It's what they found. It's what they published.

"Significant decrease in birth weights of infants born to mothers who smoke was found." Not something that was good for us, it's not something that exonerated our product.

"Chronic smokers are more likely to develop a greater incidence of coronary disease at an earlier age, and manifest a higher incidence of coronary occlusion."

It's that kind of independence that came out of the independent research organization. Was it on target? Was it relevant? Judge for yourselves by the quotes.

The Surgeon General concluded that. The Surgeon General's reports have included over 500 citations to research that was funded by the tobacco industry through CTR, 500 citations.

Now there are criticisms that have been lodged against CTR in this case, and you'll hear them. You heard them from Mr. Ciresi in his original statement to you. I'm going to deal with them.

First he says this was a PR effort. Remember Hill & Knowlton and the meetings and how do we improve our image? This is all a PR effort. There's truth to that statement. But think about it a bit. Was it good PR or was it bad PR? The fundamental concept was that of course there was a PR dimension. This was a big public issue, it's a big public issue today. The whole question is: How were we going to respond to it? And the choice that was made was that good science was the best PR, fully consistent with, indeed precisely because of the information. Did we recognize the public relations value? Sure we did, absolutely. But it was only as good as the science was good and as people believed that it had integrity.

That was the statement that was made by one of the people who became responsible for the administrative side of CTR in the mid-1970s. This is a quote from Addison Yeaman, who in 1975 made the following report. I don't know if you can read that. I'll read it to you. "The Tobacco Industry Research Committee was formed to meet a public relations need and it was a PR gesture." Absolutely. But go on. "It is my sober judgment that CTR, as it now operates, is the best public relations asset you have in the problem of tobacco and health. But the moment CTR becomes, or the attempt is made to use it, as a public relations instrumentality, your asset will lose its value because it will have lost its scientific integrity. End of sermon."

PR, absolutely. Good PR? It will be our position, absolutely. Good PR driven by our ability to create an organization that has scientific integrity. As soon as it was lost, the PR failed. Who would buy it? Who would pay attention to it? It all depended on scientific integrity.

What about litigation value? Mr. Ciresi read you a quote, "This is the best insurance money can buy." Did it have value? Did CTR have value for litigation? Absolutely. What better way to describe the responsibility of a company to an issue than to do good science? Our position is, our position will be and the evidence will show that good science is of course what you would want to talk about if a person's making a claim against you. Of course you want to say yes, there was an issue, and yes, we responded to it, and here is the response. Otherwise you're in a situation where, according to this, we should be saying, oh, well, we can't talk about CTR. You say we've not been responsible. We're not going to tell you about it. Of course we're going to tell you about CTR. Of course it's going to have value.

Does that make it bad? Or is the fact that it was going to be part of lawsuits mean that you have to drive all the more clearly and unequivocally to make sure that the science is good science? Doesn't that make you improve? Doesn't that make you have a higher standard rather than a lower standard?

Now there are also people who made scientific criticisms of CTR. Company scientists said we don't think it has value. Outside scientists from abroad came in and said we don't think it has value. You have to take a look at what their perspectives are. Were they focused on the kind of research that CTR was doing or were they focused on other interests they had for research that they would have liked to see pursued? You will have to be the judge of that.

But a guide to you in making that judgment comes back to the SAB. The decision about what research to do, the recommendations more precisely about what research to do were the recommendations not of the tobacco industry, not of this scientist, not of foreign scientists, it was the recommendations of SAB.

And then watch what the Surgeon General has to say. Why, if it was so irrelevant or it was so poor, why did the Surgeon General see fit to give it such stature, citation after citation after citation?

And then, finally, well, what about the lawyers? Sometimes you will hear lawyers being critical of the role of CTR, there were lawyers reviewing CTR as an enterprise, but what you'll see at the end of the day is, after all the discussion got done, CTR was preserved. It was preserved. It was preserved in the same form through which we committed to it back in 1954.

Now you say, well, lawyers advised and lawyers' criticisms is one thing. Did the lawyers tell the SAB what they could do and what they couldn't do?

Did they limit the SAB in what it could do and couldn't do? And there will be one instance in which that was true, and we will describe it to you, we will tell you why it occurred. You will understand why it occurred. And you'll also see that, even with our explanation, what was the reaction?

There was a document that Mr. Ciresi showed you yesterday. That's what Sheldon Sommers wrote afterwards. "I think CTR should be renamed Counsel for LegalLy Permitted Tobacco Research, CLIPT for short." He was ticked off at those lawyers and what they had done. You say well, we'll have to explain why this occurred. And well, but here we are in 1978, CTR has been in existence for 24 years, and is CTR comprised -- does it have an SAB that goes down lightly from interference? No, the SAB didn't go down lightly, no matter what the rationale was. These were independent people with an independent job and they weren't going to do it. They don't like doing what the lawyers told them to do.

This document reflects an incident that we will have to account for to you, but also reflects something much, much more important, which was the integrity of the SAB and how it reacted to what they were told to do.

So we have as our first element of the research story CTR, and there's one other part of CTR that I want to call to your attention, which is special projects. I've described to you in the first part of this, which is tobacco companies formed CTR, the SAB reviews grants, makes recommendations, and then the grants get funded. That's what I've been talking about, that's the grant program is what it's called. It's what we committed to in the Frank Statement.

Now I got another line here that says tobacco companies, tobacco company lawyers, and then scientific director, and then special projects. Well what's that all about? Why are lawyers involved in science? How is that appropriate for lawyers to be kind of making suggestions about what to fund? How can that be right? Well you will hear experts take the stand who are scientists in this case -- and you think about that a little bit. It doesn't come as an awful lot surprise to you. Lawyers work with scientists who are experts, it happens all the time. What happened here was that the company lawyers thought that certain research would be worthwhile to do, but they also thought that the end point was not simply testimony, they thought that the research was of such high quality, potentially could be of such high quality that maybe it should be published, and in order to go about funding research that met that standard of quality -- not simply resulting in testimony, but resulting in published scientific research -- well there ought to be a mechanism to get it done. So the CTR special projects were projects that were funded through CTR with the approval of the scientific director as special projects, but they were not projects that had been recommended by the SAB as part of the mainstream grant program and they were not represented to be projects that were recommended by the SAB pursuant to grant program. CTR was simply used as an administrative vehicle in funding the research.

What kinds of research got done? Here are some of the institutions that were involved. Harvard University, Georgetown, Berkeley, MIT, Yale University. Top-quality research organizations were used, were funded through special projects to go ahead and do this work, and the work was published.

Was it work that was uniformly favorable? Was it work that was only supported by us? Here are other organizations that funded the same research. Special projects, same projects. National Cancer Research thought that research was pretty good. They said we'll co-fund that research. Was it research that exonerated the industry? By no imagine -- by no stretch of the imagination was that always -- was that always true.

Look at this first one. Kind of a long quote. At the end it says, "These studies demonstrate the persistence of ETS," that's secondhand smoke, "reactivity during a two-year period." That's not something that was good for the tobacco industry, that's not something that was good for our product.

What about the second? "These data suggested that the odds in favor of lung cancer mortality were influenced by smoking." Gee, that doesn't exonerate the industry. So once we went ahead and funded this research and it was getting done, special projects even that the lawyers had recommended it, we had no assurance it was going to get done and it was going to come out with a result that was favorable to us.

The CTR grant program resulted in research that was favorable, unfavorable. Special projects, research favorable, unfavorable. Published research, quality institutions, quality research and research results.

Still the story isn't over. We had the grant program, we had the special projects, we also had direct institutional grants. What do I mean by that? Here is an example. We set up a program with the AMA, the American Medical Association, 15 million dollars, comprehensive research on smoking and health; 219 separate research projects were done. Did we control the results and the conclusions? Research results, "Committee believes that the bulk of research sponsored by this project supports the contention that cigarette smoking plays a important role in the development of chronic obstructive pulmonary diseases."

When you go out and you fund independent institutions and quality research, you have to be prepared to live with the results. We went out and funded the AMA, we went out and funded Harvard University, we went out and funded Georgetown, Washington University, we also went out and funded UCLA, multi-million-dollar funding programs. Hundreds of articles came out, often unfavorable to the industry. And out of that whole process, after all those institutions were saying you do your thing, you'll hear of maybe one complaint by one scientist, one complaint by one scientist, and it wasn't that he couldn't get his results published, it wasn't that he was constrained in what he could do, he was unhappy that the contract ended with Harvard University. That wasn't -- it was what he was doing, and he kind of blames the industry. Although when you read his documents and his memos, it turns out that the industry was prepared to give money, Harvard didn't want tobacco money after a certain -- certain point, didn't want to support the facilities necessary to do the research, so the program was terminated.

Now how do you reconcile? You'll have to ask yourself as this evidence comes in: Is it possible to reconcile the picture that was painted to you in the plaintiffs' opening statement about our attitude toward research with our willingness, as you will see in the evidence, to take these multi millions of dollars and go to the most prestigious research institutions in the entire country and say study our product, publish your results, and you see the results?

Now there's one more area of research that we funded, one more way of funding research, but before I talk about it, I want to take a step back. You've now heard about all of these hundreds and thousands of articles that were published, all this money being spent on research. You may have reached the conclusion that, gee, we were doing all the research, we were controlling the scientific process. It was just us. And that brings me to want to talk about a whole other area of research.

Smoking-and-health literature, outside published research, research that we had nothing to do with, we didn't fund, we didn't control, we didn't direct. There was that research. Why?

1954, public issue. Does anyone believe that the medical, scientific and public health community was going to let the tobacco industry control the show? You have to ask yourself that. And what you'll see is that, huh-uh, that wasn't going to happen. The volume and extent of the response of the medical and scientific community, you will see, was huge. Everybody started to focus on this issue. Wide publicity over the studies, public-health issue, public-health response.

If you just go to the Surgeon General's collection of articles that had been published over time, just that one collection, what you'd find out is that by the end of 19 -- I think 1964 there were 7,000 articles, publications in the open scientific literature, all about smoking and health. By 1979 there were 39,000 of those. By 1989 there were 57,000 articles in the scientific literature, 57,000 articles, a huge, massive scientific undertaking. We funded, in the hands of people we didn't control, we funded a sliver of that research. Not a small one, but a sliver. And not only that, but did the tobacco industry control the take or the scientific characterization of what all that information meant? Did the tobacco industry kind of interpret it and control what scientists thought about it? Huh-uh. Whole compendia, collections were turned out.

This is 1961, Haag, Silvette & Larson, thousands of pages reviewing the scope of tobacco-related research. That was volume one. Volume two. They came out every few years. Volume three. Volume four, same thing, reviewing, compiling all of this literature.

Now this was funded by the tobacco industry to recite, collect and share what was known, but that wasn't good enough for the public health community. The Surgeon General of the United States decided we're going to do that, we're going to take all of this literature that's coming out and we're going to tell you what it means. And the reports started to come out. There wasn't just one, there was two -- this whole cart is filled with 24 surgeon generals reports citing tens of thousands of articles in the scientific literature, compiling, interpreting them, in order to develop public health policy that was in no way dependent upon or controlled by the tobacco industry.

We were not driving this car. We were not steering the ship. It was out of our hands. It was in the hands of people who were responsible for public health, who wanted to deal with this issue because it was so big and so important.

What kind of research was it? They did epidemiological. You'll hear a lot about that. That's the study of groups to see, gee, do smokers get sick more frequently than non-smokers? They are statistical analyses, sometimes very sophisticated statistical analyses. There was toxicology. Can we replicate human-type cancers in laboratory animals? There was microbiology. Can we find a mechanism for the causation of cancer? There was smoke chemistry. What's in smoke? Is it carcinogenic? We'll talk about that in a minute. What are all the thousands -- you know, there are thousands of chemicals in smoke, many of them in incredibly minute amounts, but you can isolate them, and people isolated them. So you get this literature that's developing, interpreted totally separate and apart from the bottom part of the chart, which is the internal research.

What about the internal research? Internally the companies -- and this is the last area of research that I want to describe for you -- internally the companies did do research. What was the nature of the research it did? Well a lot of it was focused on, at the end, smoke chemistry and toxicology. Why? Because the companies felt that the focus of their research for the most part should be on what they knew best, which was the product itself, understanding its chemistry, understanding how it might behave in a laboratory setting. So a whole series of studies got done over time. Smoke chemistry work was done from a very early point in time, probably before the 1950s, but certainly in the '50s. Later on they started doing mouse skin-painting experiments. Mouse skin-painting was described to you -- this is a technique where condensate of tar is painted on the backs of mice, shaved back, painted on the backs, see if tumors develop. Later on people started to become more sophisticated and they did inhalation experiments where, instead of working with a condensate -- a condensate is not smoke, it's a -- it's a material that's derived from smoke and it's much more intense and much more highly concentrated. Well what happens when you have animals just inhale the smoke like people do? Those were inhalation experiments.

And then there were Ames tests that were done. These were tests of mutagenicity. These are tests to determine whether exposure of the material alters the way the cells grow or replicate. It was a technique that was developed in the more recent times.

Now with all this internal research, how did it develop, how did it unfold, what did it show? Well first of all on smoke chemistry, let me describe first the sequence and then whether there was something new.

Smoke chemistry began in this early period of time. As Mr. Ciresi has said, back in this early period of time the focus of the companies' internal research was not on biology or biological effects, that was being done through CTR, it was on smoke chemistry. As time went on, though, what happened was -- was -- was interesting. What happened was that outside health authorities began to focus on these types of tests here in order to determine whether products might be improved in some way, and there started to be a commercial dimension or product dimension of biological research. Some of the companies -- American Tobacco Company, you saw the memo -- American Tobacco decided not to pursue this research internally. You might have drawn the conclusion from the memo that was shown to you, well, American just decided not to do any research, and that would have been wrong because American was in a position where it was already doing research, it was doing the research at the Medical College of Virginia. The issue in that memo was not whether to do research, it was where to do the research, and the author was concerned with the appearance and with the litigation risks that would be created by moving it in house whereas that had not been done before. But part of the reason why that was just a litigation issue and not a scientific issue, the evidence will show, was that research already was being done, had been done for years through the Medical College of Virginia, and every year the Medical College of Virginia would turn out a report of the presentations that had been made publicly, the papers that had been published, including papers like "The Pharmacology of Nicotine." So American had a unique relationship with the Medical College of Virginia, a relationship long pre-dating that memo. And they continued. And that's what they had decided to do, not to stop doing research or not to do research, but to do it there where it was external, where nobody could quarrel with the integrity of the institution or the quality of the work or try to somehow use it in the litigation process. That was the decision that was taken.

But American's approach wasn't necessarily the approach of other companies. For example, BATCo, one of my clients, BATCo actually went ahead and opened up a biological research laboratory in England in 1957 at Southampton. B&W funded that research together with other tobacco companies that were related and Southampton went ahead. Over time they did mouse skin-painting experiments, they did inhalation experiments and they did Ames experiments internally. And other companies over time did biological research internally as well.

So the internal biological research grew as it started to be product related and commercially driven. CTR still had it done, but internal research was done as well. So the idea that, oh, we decided not to do internal research, you will see the evidence doesn't support that.

Well now was there something that came out of that research that was unique, that we knew only internally and didn't tell anybody? I want to deal with that for just a moment. I'll get the right folder out here and then I will be able to -- here we go.

There was some talk yesterday about the fact that in 1952 or 1953 we came to understand that the smoke chemistry included a chemical called BAP, benz(a)pyrene, and this is the document that -- one of the documents that was referred to, "Carcinogens Identified in Tobacco Substance," and it's a Reynolds document, February 1953. It was suggested to you that we decided not to tell anybody about BAP. Remember that? Didn't tell anyone else about BAP. And B&W -- B&W didn't tell anybody about BAP either. 1953, just as we were making the Frank Statement promise, we weren't sharing that information.

Was that secret information? Was that information that nobody knew?

If you take a look at the document itself, the document itself says in 1941 Rothwell reported isolation of benz(a)pyrene in the pyrolized distillates of tobacco. This was a find made in 1941 and published. It was simply being replicated.

Benz(a)pyrene was well known to be a part of the chemicals in smoke. Indeed, the Surgeon General in 1964 recites that. When did we learn, when did the world learn about benz(a)pyrene? 1933 it was published. So we're talking about a smoke constituent that by 1953 had been known to the scientific literature, published in the scientific literature for 20 years. And when it made its way into the Surgeon General's report, it got special treatment. Everybody knew about benzpyrene.

This is the '64 report of the Surgeon General. The number one item: benzpyrene.

Now you have to understand you're talking here about very small quantities. This is an amount reported in micrograms per 1,000 cigarettes. Fifteen micrograms per 1,000 cigarettes means, per cigarette, you have to take a thousandth of 15 micrograms, which would be 15 one-thousand one-thousandths. We're talking about very small quantities of chemicals.

Are they carcinogenic? Yes, they are. What does "carcinogenic" mean? It means that in sufficient quantities they have been shown to produce cancers in laboratory animals. That doesn't mean they're carcinogenic for people, it doesn't even mean that they're carcinogenic, the evidence will show, for animals in the levels in which they actually occur in cigarettes. So you could have a table of hundreds of carcinogens -- they can be in smoke, they can be in foods, yet any number of different things, it doesn't mean that they cause cancer in people, it means we're going to pay special attention to those things. And what you will not hear is that anybody has linked up any one of the hundreds of carcinogens that Mr. Ciresi has talked about. No one has ever been able to find one of those that is present in sufficient amounts in cigarette smoke to cause human-type cancers in animals. So we could gather all the information in the world that we want of carcinogens in smoke; they're well known, they're well documented, they're public. It doesn't answer the question of what is it in smoke that may be responsible for the increased incidence of disease.

This is a very old, old subject in tobacco smoke chemistry. It's not a revelation, it's not some important, new, silver-bullet fact that only emerged in the context of this litigation.

What about mouse skin-painting? What did we find about mouse skin-painting? We found that mouse skin-painting in fact produces tumors on the backs of mice. Was that a revelation? No. 1950s, Wynder produced that first result in a published paper.

That's one of the things that created the whole controversy to begin with.

What about inhalation studies? All kinds of inhalation studies already had been done and continued from that point forward.

What about Ames testing? All kinds of Ames testing had been published.

What actually was occurring here was that the industry was taking techniques that had been known, established and published by outside scientists and they were applying those techniques to cigarettes that they were making to see is there something we might be able to change that would produce a better result? That's why all this research got done.

Not revealing research. There's no deep, dark secret that would have made any difference to smokers. Mr. Webber will tell you what actually happened as a result of this research, what the results were, what changes were made.

What was it that was learned as a result of all of this research that I've described for you? First there was the statistics, the epidemiology. What was learned as a result of all the research? They published independent, you know, funded by the tobacco, whatever. What was learned was that there was an increased risk of incidence of disease among smokers. People who smoke more frequently get sick. It's been known since the early 1950s. It's been uniform.

What about smoke chemistry? Has anyone managed to isolate the particular chemical in smoke that's linked to this increase? No one has been able to do that. Lot of candidates. No one's been able to actually link one up and say this is it. Lot of theories, lot of possibilities, it just has not actually occurred.

There was a report last year -- in 1996, an article that came out that tried to do that. It said for the very first time somebody has managed to do it. Not so.

Animal test toxicology. Has it been possible to replicate in the laboratory human-type lung cancer on exposure to whole smoke? If you put an animal in a cage, expose him to whole smoke through the lifetime of the animals, do you get lung cancers in significant numbers consistently? Not consistent, significant lung cancers. Bronchogenic carcinoma, we could show you the Surgeon General said this in 1982, recognized it in 1982.

What about the biological mechanism for the causation of cancer from smoking, has that been established, proven up? Not known. We don't know what causes cancer. We don't -- can't trace the mechanism 1, 2, 3, 4, 5, 6, 7. We know an awful lot about it, but all the links are not in place.

Now what does all this add up to? What is what everybody likes to call the bottom line? Does this mean that, oh, well gee, you know, we don't know all this stuff, but smoking, why do we do it? What are we here for? The answer is absolutely not.

This statistical evidence is very important. It says a fact which is that people who smoke more often get sick. There is clinical pathology evidence of changes that take place in smokers. I'm sure you'll hear extensive evidence from the plaintiffs' experts of all the changes that are produced in the smoker from smoking. Those are meaningful, important facts. There are also things that are missing in the equation. Is the bottom line anything different -- common-sense, practical bottom line anything different from this? Smoking may be hazardous to your health. Is it something that would have made a difference to smokers in making a choice if we add all of that up and draw a conclusion? That's what you'll have to decide.

What about nicotine? Mr. Ciresi gave you a whole series of documents talking about what the companies knew about nicotine. I'm going to fill out the bottom of the chart, bottom part of the chart first. What was the internal research that he described to you?

I'm sorry, Your Honor, would it -- am I --

Would it be time for a break, or should I continue on?

THE COURT: Probably.

MR. BERNICK: Okay.

THE COURT: Is this a good time?

MR. BERNICK: This is just fine.

THE COURT: Okay. Let's take a short recess.

THE CLERK: Court stands in recess.

(Recess taken.)

THE CLERK: All rise. Court is again in session.

(Jury enters the courtroom.)

THE CLERK: Please be seated.

THE COURT: Members of the jury, counsel for Philip Morris and Lorillard stated yesterday during opening statements that, quote, "This lawsuit is about money," unquote. This statement is not complete. As I instructed you yesterday before the commencement of opening statements, plaintiffs claim that defendants' conduct violated Minnesota law. I further instructed you that the plaintiffs seek to recover health-care expenses to treat diseases caused by smoking as well as other relief.

At the conclusion of the evidence you will be called upon to evaluate the evidence and apply the law as I instruct you at the end of the case.

Proceed, counsel.

MR. BERNICK: Thank you, Your Honor.

I hope -- I hope you -- if you have problems hearing, I know there's a little bit of an echo, maybe you could inform the court, but I'll -- I'll proceed as if you can hear me okay until somebody says something. We've had some technical problems with the microphone, if that's all right.

I think where we left off was talking about nicotine, and nicotine was a very central focus in what the state had to say to you. There's a lot of, in a sense, emotion that gets created about nicotine, and Mr. Ciresi likened certain forms of nicotine to free based hard drugs or -- I forget what it was, crack cocaine or something to that effect. Nicotine also triggers in people's minds addiction, and because it's a drug that has pharmacological effects, said to be addictive, and again that invokes all of these feelings of hard drugs. And what I'm going to talk to you about is what our internal research showed and you're going to have to ask yourselves as you listen to that and as you listen to the evidence in the case: Are the facts -- what are the facts, and do they warrant that kind of emotional response, those types of emotional labels, or are we doing -- dealing with something that's very, very different? And that's what you'll have to decide.

So I'm going to try to take you a little bit step back to the labels and deal with the facts, the underlying facts about nicotine and about addiction and about quitting.

Remember the test that I proposed to you originally? Second part of it is once you start, it can be hard to quit. I'm going to talk about that part of the test. Once you start, it's going to be hard to quit. Why?

Now I think where we left off in particular is -- I've put another board up here to deal with what had been said about our internal research, like this one here, only now focused on nicotine instead. Going to do the same kind of thing to put into perspective what it is that we said and did.

Mr. Ciresi in his opening statement talked first of all about the fact that nicotine is a drug, it has pharmacological effects, and that our own internal documents recognized what I'll put here as nicotine pharmacology. Then there was another document where -- let me take a step back.

Nicotine pharmacology. Pharmacology, pharmacological effects. Pharmacological effects, you will hear, are any kind of effects on people's nervous system or really any other system in their body that are induced chemically. If a material -- chemical material causes a change in your body, that's a pharmacological effect.

Nicotine has pharmacological effects. It won't be disputed in this case. Many, many, many, many other things have pharmacological effects. Almost anything that you take into your body that causes you to feel or maybe act in any number of different ways has got pharmacological effects. Coffee does. Water, if you're thirsty, has pharmacological effects. Watching TV has pharmacological effects. Nicotine has got pharmacological effects.

Because it has those effects, it is a drug. A drug is a substance that you take that has pharmacological effects. Everyone asks what are those effects and what relationship do they have to people's choices and behavior? That's what we're up against here. Pharmacological effects, no dispute. Nobody has a dispute.

Another thing you heard discussed was titration. Didn't really kind of have that name, but what I'm referring to is the documents that talk about a particular kind of pharmacological effect and behavior, and it's called technically titration. What that means is that people want to have a certain dose, a dose specific is the claim that was made. There were some documents, and I'll show them to you, people smoke for a particular dose of nicotine. That's called titration, seeking a dose.

Titration is actually a process of producing a concentration of a chemical in a solution. Titration for nicotine is looking for that concentration as a person who smokes. That's titration.

Compensation is something else that was referred to. Compensation -- I'll go over this again in a minute -- is where, in order to get that particular dose, the idea is that you will smoke more or less depending upon the kind of cigarette that you have. It refers to smoking behavior that's designed to get that nicotine dose. That's the concept of compensation.

There were references to tar-and-nicotine ratios, research about changing the ratio of tar and nicotine to give you -- give people more nicotine. That is in our documents. And then finally, there was discussion of pH and ammonia, changing the chemical form of nicotine so that it's more readily available. That was -- again we go back about this, but these are all of the things that were pulled out of our documents and seeing what these people knew about nicotine. "What did they know, when did they know it," I think were the words that were used. And the argument that was made was that we knew all of these really important facts about nicotine and we put them into our product and we acted on them and didn't tell anybody. That's the argument that was made. And I'm going to give you an overview and just a couple examples of how wrong that is. I'm going to show you that not only was there no secret that we had about nicotine that would have made a difference to smokers and their choices, but I'm also going to show you that many of the things that we did, indeed every single thing here was related to suggestions that had been made by public health authorities who were concerned about the health effects of nicotine. They were responsive to outside concerns about the health effects of nicotine -- I mean of smoking. The nicotine research was tied to what the public health authorities were saying about smoking. I'm going to show you exactly how.

This research was responsive research, it was not some secret research on concepts that nobody else knew about. It was a response to what public health authorities had to say. May come as a surprise, but we're going to show you. We're going to show you in the documents and in the pronouncements of these public health authorities.

First let me work a little bit with pharmacological effects. Is there any secret, is it known only to people in the tobacco industry that nicotine has got pharmacological effects? Absolutely not. If you read on the screen it says, "That tobacco is endowed with pharmacological activity" -- this is an outside publication by a very well-known authority in the field of nicotine and smoking behavior -- "That tobacco is endowed with a pharmacological activity has been known for centuries." You'll see the literature references and you'll see the studies. Everybody always has known that nicotine has got pharmacological effects. Well- documented in the literature.

"That persons who use tobacco may become compulsive users as may persons who use alcohol and opiates also has been recognized for at least 200 years." In the published literature. So we're talking about nicotine pharmacology in the outside published literature recognizing that nicotine is a drug with pharmacological effects is actually off this chart, at least 200 years old. It's that old, it's that well-known.

Well we ended up doing nicotine pharmacology work and sponsoring that kind of research. Why would we do it way back in the '50s and the early '60s? Why would we do this kind of research if the effects were so well-known? This now gets to the responsive aspects.

Remember in the 1950s there was an attack by the public health authorities on tar? Tar was under fire, no pun intended, and one of the reasons that nicotine pharmacology research got done was the feeling of some of the companies, including BATCo, my client, was that there were benefits of nicotine. It was important to talk about the benefits of nicotine, the benefits of the smoking experience in order to have -- in order, really, and initially, they were thinking of producing an alternative smoking device that would produce mostly just nicotine without the tar. So this whole subject was a response to the attack on tar. Let's do research on nicotine and the benefits of nicotine.

Now this research expanded over time. It became outside-conducted research in England funded by The Tobacco Research Council, the TRC. The nicotine pharmacology research that came out of that program, the TRC research, was published. Nicotine pharmacology work done at the Medical College of Virginia sponsored by American Tobacco, much of it was presented and published.

The pharmacology of nicotine was intensively being studied and the tobacco companies and their funded research actually contributed substantially to what scientists in the outside world knew about the pharmacology of nicotine. Been studied a lot, will be studied some more. There was no secret about the pharmacological effects of nicotine, there was no secret about the fact that we were doing this kind of research. We shared the results. Not all of the results, but the results that were felt to be of publishable quality and would contribute to ongoing scientific knowledge were openly shared. They will be cited in this case by publications that the plaintiffs' own experts will rely upon.

What about nicotine titration? Remember that's that people want to get a certain dose of nicotine. That was this paper here, and it was presented by Mr. Ciresi, "The Nature of Tobacco Business on the Crucial Role of Nicotine Therein." Remember he showed you the page that says, "Our industry" -- let's see if I can get this right -- "Our industry is therefore based upon design and manufacture and sale of attractive dosages of nicotine" -- that's nicotine titration -- "and our company's position in our industry is determined by our ability to produce dosage forms of nicotine which have more overall value, tangible or intangible, to the consumer than those of our competitors."

People titrate, seek a dose of nicotine. Oh? Was that some secret, that nobody else knew about that? Was that just something that we invented or created or thought of?

Here's an article, 1942, The Lancet, one of the most prestigious medical journals in the world. 1942. And it contains an article and an experiment by Johnston. Again this is in literature that the plaintiffs' own experts have reviewed and have cited. Look what he said. "On the assumption that smoking tobacco is essentially a means of administering nicotine, just as smoking opium is a means of administering morphine, nicotine was given hypodermically to 35 volunteers in known doses with a view to comparing its effects, and particularly its psychic effects, with those of tobacco smoking."

Here was the experiment. Volunteers got intravenous nicotine, and then the question was would they smoke fewer cigarettes because they were getting the nicotine intravenously. And the theory that drove that experiment was the titration theory, that people smoked to titrate for nicotine. So you have Johnston pursuing exactly the same theory back in 1942 and reporting his results.

This experiment was reconducted in 1967 -- this is an article by Luchese, "The Role of Nicotine as a Determinant of Cigarette Smoking Frequency in Man with Observations of Certain Cardiovascular Effects with -- Associated with the Alkaloid." This was going to pursue this same theory. Interestingly, who sponsored this study? Study was supported by a research grant from the American Medical -- American Medical Association Research and Education Foundation, Committee for Research on Tobacco and Health. Remember the AMA ERS that I said the industry funded with an independent 15-million-dollar grant? That money went to this study all about the role of nicotine. Out there in the open literature.

What did Dr. Luchese do? He basically replicated Johnston's experiment. "The results obtained suggest that nicotine plays a small but significant role in the smoking habit and that part of the craving for a cigarette can be satisfied by the intravenous administration of the alkaloid. This was manifested by a reduction in the number of cigarettes consumed and by a reduction in the amount of each cigarette smoked by subjects receiving intravenous nicotine." And he cites back to the Johnston study and similar studies.

We've got 1967, the titration theory is under active consideration and the tobacco industry actually is funding published research that openly pursues exactly the same subject that was in Mr. Teague's memo.

Here's another one, Nature Magazine, January 1968. It's a publication out of London. And who is it by? "Pharmacological Basis for the Tobacco Smoking Habit." And you take a look at the authors, Armitage, Hall and Morrison, Department of Pharmacology, Tobacco Research Council Laboratories in Harrogate. Remember I talked about the TRC? This was work that came out of the TRC by Armitage and others. Very well known and highly regarded pharmacologist. What did he do? He pursued the same basic theories, and this is what he ended up saying right here. "If the average man weighs 70 kilograms, every time he inhales a puff of tobacco smoke he can be expected to receive a dose of nicotine roughly equivalent to between one and two micrograms per kilogram administered intravenously. It is worth noting that someone smoking a cigarette has literally fingertip control of how much nicotine he takes into the mouth; by reducing the puff volume or inhaling less frequently, he absorbs less nicotine.

"It seems likely that some people smoke in order to dose themselves with nicotine, and our particular concern has been to find out what effect these small amounts of nicotine have on a smoker."

It's the titration theory. It is openly pursued, funded by the tobacco industry, it's in the public literature.

Why is Teague talking about titration internally? Because all these articles are coming out specifically discussing exactly this theory. What tobacco company in the face of published research saying here's why people use your product and here's how they use the product, what tobacco company scientist wouldn't write a memo talking about exactly the same thing? Of course he would. It's being pursued, it's a theory of why people smoke.

What about compensation? Compensation is a little bit different but somewhat similar. Here's a chart. I'm not going to talk to you about the details of the chart because Mr. Webber will, but the reason it's here is to deal with compensation, which is a subject I'm going to cover that relates to nicotine. This shows what was happening to tar deliveries over time.

Back in 1955 the sales weighted average of tar deliveries was about 36 milligrams. This is an FTC measurement of how much tar comes out of the cigarette under controlled experimental conditions. You can see that over time the amount of tar has dropped, indeed dramatically, and Mr. Webber will describe to you why that has been so. The deliveries have fallen. And here's the question: If nicotine is following tar down like this -- watch my finger, it's coming down and down and down -- but people smoke for a dose of nicotine, doesn't that mean that if the person's using a low delivery cigarette, you'll have to smoke more and harder to get the same dose? That's what you'd think. That would be called compensation. People take those low delivery cigarettes and they puff them more and puff them harder. Compensation.

That was a theory that was discussed internally. There was a theory about how people would respond to low delivery products. Was it some secret? Again take a look at the studies. This is puffing frequency in nicotine intake in cigarette smokers, it's by Heather Ashton and Watson, and you'll see who they are in a minute. What did they do? They basically determined that with people who are smoking more heavily filtered cigarettes, look what happens, "The results are compatible with the possibility that smokers automatically adjust the nicotine dose obtained from a cigarette to some optimum level which may vary with different activities." They smoke more -- more -- more puffs. So this theory is that people are compensating for low delivery, titrating up to their basic dose of nicotine. Published in the open literature 1970.

Who were these people? This work was supported by a grant from The Tobacco Research Council. This was more TRC research. Compensation was an openly- pursued subject by Ashton and many others in the late '60s and early 1970s. Again, what company wouldn't look into exactly the same fact?

Now this didn't just stand where it was, it went on. Because remember, going back to our little chart here, if people are smoking the same -- a low delivery cigarette more to get more, how is it low delivery any more? Isn't it really a higher delivery cigarette for them? Okay?

The public health authorities said, well gee, if there's really compensation, we want people to use lower delivery cigarettes, how can we encourage them to do that? How can we keep the low delivery cigarettes low delivery if people are trying to get more -- smoking it harder or smoking it more frequently to get that nicotine? Somebody had the bright idea, said well, I'll tell you what, instead of having the nicotine drop along with the tar, what if you produce cigarettes that maintain the same level of nicotine, kind of a medium nicotine, but low tar? That way, if compensation is true, titration is true, they get their nicotine dose but with a lower delivery cigarette. Public health authorities want low delivery cigarettes. Mr. Webber will talk to you about that. This is a suggestion of how to go about doing that even though there's compensation: produce the low delivery cigarette for tar, maintain a medium delivery of nicotine. Seems like a smart idea.

Was it just our idea? No way. This was the idea -- here's the Banbury report of a very important conference that took place involving scientists both outside and inside the industry, and here's one of the most well known researchers in the area of smoking behavior and what he said in 1980. It's called "The case for medium-nicotine, low-tar, low-carbon monoxide cigarettes." This was an idea that came from the public health authorities and outside scientists to skew -- to decouple nicotine and tar and deliberately maintain nicotine levels, deliberately maintain them while lowering tar. This is what they proposed. They proposed.

Russell proposed it here: "Finally, a case will be made for a medium-nicotine, low-tar, low-carbon monoxide cigarette, or at least for some more systematic research in this direction. This is based on the premise, admittedly a little oversimplified, that people smoke mainly for nicotine but die to a large extent from tar and carbon monoxide." This is their idea, the public health idea. Not a bad idea. Was it theirs alone?

Surgeon General, 1981. Surgeon General's report says the same thing. "It should be determined whether smoke from cigarettes" -- well, "The tar-to-nicotine ratio may limit the delivery of smoke constituents to the smoker. A low ratio might be desirable strategy for low cigarettes." If we have less tar, more nicotine, the lower ratio, that may be more desirable from the point of view of lower-risk cigarettes. Surgeon General himself was proposing this line of research in 1981.

So you have the Surgeon General, 1981, dealing with tar-to-nicotine ratios, much as Russell had done in 1980. All in the open literature.

Did we respond with memos? Did we respond with research? Absolutely we did, responsive to their concerns and their issue. It was a smart idea.

What about pH and ammonia? That's a chart that you're going to have a hard time dealing with for a moment, but let's get into it for just a moment. This is a theory that says that if you change the chemical environment of nicotine, it may be more readily available free base nicotine, and therefore you could work with the same amount of nicotine, but because you're changing its chemistry a little bit, people get it more quickly, it's absorbed more quickly. So the idea is can we maintain the same amount of nicotine but deliver it in a more readily absorbed form by changing pH?

What's pH? PH is chemical environment. Over to the left-hand side is acids, acidic; to the right- hand side is basic or alkaline. Neutral is seven. So when you think about it, grapefruits, citric acid, that's over here; milk of magnesia is more basic, that's over on the other side. Those are the kinds of different kind of chemical environments.

Now if you have different chemical environments, the form of nicotine changes. Over to the left-hand side are nicotine salts. Over to the right-hand side is free nicotine, basic nicotine, free base nicotine. It's not meant to be just like, oh, this is hard drugs nicotine, it's a form -- it's a statement of chemistry. This is basic nicotine and it's got a somewhat different chemistry to it.

As you increase the pH of smoke, as it becomes more basic, at a certain point the amount of free nicotine increases significantly, so in order to figure out how much free nicotine is in any smoke, you have to figure out what's the pH of the smoke.

If the pH of the smoke is less than seven, there is very, very little free nicotine. If it goes above seven, free nicotine rises very significantly.

So now what was the idea that somebody had? Again, let's make the pH higher, maybe by adding ammonia, and thereby increase the amount of free nicotine, making nicotine more available to smokers. Who suggested this? Whose idea was this? National Cancer Institute, looking for low risk cigarettes. 1976 article by Gio Gori talks about the possibility of making that low delivery cigarette more attractive, not by maintaining the amount of nicotine, but changing its chemistry to increase pH.

And you'll see that down here he said this, "Thus it appears that the hazards of cigarettes can be reduced by a simultaneous reduction of tar and of its specific carcinogenic activity -- read on -- "and by an adjustment of nicotine levels," that would be tar-and-nicotine ratio, "and protonation conducive to consumer satiation." Protonation is another way of talking about the effects of pH. So 1976 down here, National Cancer Institute was saying the same thing.

If you take a look at the minutes, the meeting minutes back during this same period of time, the National Cancer Institute smoking and health program -- they had a whole program about it Mr. Webber is going to describe. Now who was there? Gio Gori, National Cancer Institute; also representatives of the tobacco industry. And what kinds of proposals are made? Purpose of the meeting, "It is necessary to consider this additional approach to less hazardous cigarettes, i.e., a low tar to nicotine ratio." That's one of the things we talked about. "Low tar cigarettes" is another. There's then a whole discussion about nicotine nature and delivery and you'll see that, "It was suggested that the form of the nicotine could be critical in efficiency of transfer and physiological impact which depends on the base/salt nicotine ratio in the smoke aerosol." Base/salt ratio, pH.

And as follow-up items, you can see the follow up is again focused on the same thing, "Determine nicotine, tar, pH and nicotine species distribution." And then it goes on to say, "It may also be desirable to attempt to increase or decrease the pH of the mainstream smoke...." Again the National Cancer Institute is the one that focused on this. Change pH, enhance nicotine delivery, make low delivery tar cigarettes more attractive.

There was just one problem: Taste. As you get to the right side and you increase free nicotine, you change the taste of cigarettes. It was well established in the literature at the time. This goes back to 1929. This is published in the literature. "The determination of free nicotine, as this volatile part of nicotine has been designated, is of some importance in the chemical examination of tobacco, since the harsh flavor of certain tobaccos has been attributed to a high proportion of this component." So it's been published in the open literature, free nicotine, and the fact that it produces a harsh taste.

Studies that were done in 1953 say if you use ammonia, guess what happens to taste? "The artificial increase in the content of ammonia has the sharpest effect in the above-described sense, manifesting itself very strongly in raising the sharpness of the taste sensations." So if you start to push pH high, make it more basic, make it more free base, you produce a harsh smoke. Will people buy it or do they want those low delivery cigarettes?

Well now it's suggested to you that this was all done, that ammonia was added. Ammonia was added to Marlboro, and this was a document that was shown to you yesterday, that described how -- I guess it was this page here -- Marlboro was increasing its pH over Winston, and the key was the addition of ammonia.

Why was Marlboro adding ammonia and increasing the pH? Mr. Ciresi suggested it was to increase the delivery of free nicotine and that's the secret to Marlboro's success. Remember that? Big sales, big market share, adding that ammonia. There's just a problem. If you take a look at the same document, the same effect is attributed to Kool. Kool's pH is increasing; it's above Salem, and Kool is gaining market share against Salem.

There's just one problem. Back at the time this memo was written there wasn't any ammonia that was being added to Kools. Brown & Williamson makes Kools. We didn't know -- we couldn't figure out what the success of Marlboro was. We couldn't figure out why it was that Marlboro was taking off in sales. And we were not adding ammoniated reconstituted tobacco to our products, including Kool, and yet Kool was grabbing market share. Wasn't grabbing market share by adding ammonia.

How do we explain that? How do we explain what happened to Winston? Winston is this one right here. And he says, well gee, Winston was losing market share to Marlboro. But you don't see the last chapter, which is that they started to add ammoniated tobaccos; that is, ammoniated process tobaccos to Winston beginning in 1980 to compete with Marlboro.

What happened to Winston's market share? (Whistling and gesturing a downward slope.) Just like what happened to Kool's market share (gesturing a downward slope). Adding ammonia is not the key just by itself to market share. Marlboro was doing something else. What was it doing?

My client, Brown & Williamson, has been trying to figure that out for over 30 years because Marlboro's been a huge success. And we got research report after research report. We tried to reverse engineer their tobacco to figure out why Marlboro tastes so good. I got -- I got a very happy client if we could figure out exactly what the recipe is and why it works.

We think we have some ideas. We got to go back to basics here. In the 1920s Camel cigarettes came out and they were a new blend. They used what was called bright tobacco and burley tobacco. They found out that if you add these two things together you get great taste. Lamina plus -- bright plus burley spells great taste. Well guess what. Burley lamina has got a lot of ammonia in it naturally. Bright has got a lot of sugars in it naturally. So we had the bright idea maybe what's going on is that they're adding ammonia but they're adding ammonia as part of a bigger recipe with sugars, and enhancing those natural ingredients produces great taste. So we started to produce reconstituted tobacco in the mid-1980s that was not just adding more ammonia, it was adding a particular recipe that involved sugars, and we thought tasted better.

What impact does that have on pH? Well if you just add enough ammonia you'll increase pH. But sugars tend to reduce pH. So if you look at the recipe -- not just part of the recipe, the full recipe -- you're not necessarily increasing pH. In fact, adding our recon to our tobaccos with both the ammonia and the sugar actually has the result of reducing pH over what it would have been.

So not so simple, not just the pH, not just the ammonia, tobacco blending, tobacco composition. You got to look at the full recipe and you got to watch out for taste.

What has happened with the pH over time? You'll see outside reports where the pH's haven't jumped over seven as people have been trying to produce free base nicotine. The pH's have remained in the five and -- and lower six range by and large. Everybody is still basically around there. Very little free nicotine at that point.

The competition is not based on the free nicotine, it's not based upon boosting pH, it's based on taste. Everybody wants to get something that can compete with their competitors on the basis of taste. And that's what we've learned a lot as a result of the nicotine research process, is that smoking behavior is not just a question of nicotine titration. The nicotine titration as the theory we will show you has actually not been borne out by the science. The more recent science, the evidence will show, says that there are a whole variety of factors that contribute to smoking behavior: smell, taste, impact on sensory effects, ritual, social interaction.

Where do the companies compete? They compete for that great-tasting cigarette that people will like. And they do taste panel test after taste panel after taste panel test. What if we did this, will people like us better or worse? Let's give it to some smokers in a taste panel test and find out.

The industry is based on taste.

What has happened to nicotine over time? Would that there was some magical solution to cigarette design. Tar deliveries have fallen, nicotine deliveries, again according to the FTC method, have continued to fall. Nicotine is a matter of science, it's not a matter of emotion. Smoking behavior is a matter of science, it's not a matter of emotion. Competition is a matter of science, it's a matter of marketing, it's not a matter of emotion. And these companies compete tooth and nail for that market share based on taste.

Your Honor, I have about ten minutes and I know that I'm running into the lunch hour here. Whatever suits your pleasure.

THE COURT: You're starting to run out of time, counsel.

MR. BERNICK: Yeah, I understand.

THE COURT: Can you --

MR. BERNICK: Okay, I'll move -- I'll move it along quickly.

What about habit and addiction? This will move along quickly. You will see internal documents back in the '50s and early '60s talking about cigarette smoking as an addiction. You will see other ones that talk about habit. You'll see ones after the 1960s that talk about dependence, others that talk about addiction.

What about all these labels? What do they all mean? Can't pursue this today in detail. Let me give you a flavor. The labels are all about different kinds of definitions and different criteria for smoking behavior, and the labels have changed. Back before the 1964 Surgeon General's report, some people said it was an addiction, other people said it was a habit. We actually sponsored research during this period of time, 1963, article by Knapp, "Nicotine is the active agent, but not necessarily the only noxious agent -- it appears to have certain addictive qualities."

Summary and conclusions: "Heavy smokers appear to be true addicts, showing not only social habituation but mild physiological withdrawal effects."

Who sponsored this research? Research was supported in part by grants from the American Cancer Society and the Tobacco Industry Research Committee. We sponsored this research.

Addiction was a term that was used by scientists in the literature. There wasn't an issue about whether it could be published, in fact it was published.

In 1964, though, the Surgeon General came out with a report, and the report specifically addressed the issue of habit and addiction, and it concluded drug addiction and drug habituation were two different terms, and the tobacco habit was characterized as an habituation rather than an addiction. So you get the first Surgeon General's report, 1964, says habit. Why? There were specific criteria that the Surgeon General used to distinguish hard drugs from tobacco. They're set out right here.

After 1964 the science in the outside world changed. People started to use the term "dependence." A different term, different criteria. We picked up that term in some of our statements internally. Others continued to say addiction. And by the time the Surgeon General's report came out in 1988, the Surgeon General was saying cigarette smoking is addictive based largely on the same criteria that are criteria for dependence.

The plaintiffs' own expert in this case will say addiction, dependence, use them interchangeably. So we get evolving definitions based upon evolving criteria. What counts? What is it that will change the views or choices of a smoker? Well what about quitting? Not the labels, not the definition, not the criteria, what about the common-sense notion once you start it's hard to quit?

What happened during exactly this same period of time? Well during exactly the same period of time people quit, and the number of people who are former smokers versus current smokers rose from approximately 29 percent in 1965 up to 44 percent by 1987. Quitting became the thing to do.

And the Surgeon General's report, the very same one that says cigarette smoking is an addiction, announced that 41 million people had quit. But here's the key: 90 percent of them without medical assistance. Making choices, making real-world decisions, what counts? Is it what label you use, what criteria that you have, or is it the real-world experience of can you quit and how to do it? Which matters?

And what did we learn? We have learned that, yes, it may be hard to quit. People do it, and largely without the experience of the assistance of doctors.

This whole area of research and area of nicotine, we will show you, we commit to show you that independent research was done, and that when you finally apply the common-sense test, would anything have made a difference, something that we knew, we will show you that the same basic practical wisdom that has driven decisions for decades and longer, the same practical wisdom is good today.

What about the defense of smoking? Did we defend smoking? I only have a couple minutes. I'll just give you a very brief overview. We defended smoking. Smoking came under attack, the companies came under attack. We had a trade association called The Tobacco Institute. We had lawyers that defended lawsuits over time, lots of lawyers, lots of lawsuits. The companies and the industry wanted to preserve their viability as an industry and wanted to preserve the right of their customers to choose to smoke or to choose to quit.

Did we take public positions on causation and addiction? Yes, we did. The position on causation was not that cigarettes don't cause disease, not that cigarettes aren't risky, but that not -- there are certain areas, I've shown them to you, where gaps remain in our knowledge that you can't use that word "causation" in absolute technical and scientific sense. Does that mean that people should minimize this? No. Does that mean that they should make different positions about what to do with their lives? No. It's a statement about the state of science, it's not a statement of public health policy.

Did we say that cigarettes are not addictive but habituating? The answer to that is yes. What were we after? We still believe, like the Surgeon General in 1964, that there's a difference between tobacco smoking and hard drugs, that we feel that that difference is captured by the difference of habit and addiction.

Does that mean that it's always easy to quit? No. Does it mean that nicotine is not an important part of the smoking process? No.

Listen to our positions carefully. They were carefully crafted. They mean a specific thing.

What impact did they have? The claim in this case was that they have deceived, they have misled people. Listen to the evidence, listen to the facts and bring yourself into the world of dialogue and discussion about cigarettes, and as you look at that world and look at the positions that we took and others took, ask yourself this question: Did we use private facts for this discussion and our positions, or were we relying on the same public facts that everybody else has had made available to them through the offices of the scientific community and the Surgeon General? Our position is that our views and our conduct was driven by public facts that our customers, that the states and others can appreciate, just along with us. And then what was that discussion all about? Was that a discussion that we controlled, that we dominated such that we could mislead people, or was that a discussion that overwhelmed the tobacco industry, that overwhelmed the debate because it was driven --

MR. CIRESI: Your Honor, I'm going to object to the closing argument.

THE COURT: Counsel, you are really starting to get a little too long.

MR. BERNICK: All right, I'll keep it to the facts.

THE COURT: And keep it brief.

MR. BERNICK: And -- and keep it brief.

You will see the tobacco industry itself well appreciated that no matter what it could have hoped for, its public positions, dialogue and discussion about tobacco was a public discussion. It could not be and it was not dominated or controlled by the industry because of all the different scientific organizations, medical organizations, public health organizations and advocates who participated in that process and got the same, indeed even more of the attention of the media, the regulators and the legislatures.

How do we reconcile what we said in our positions with our responsibilities to our customers to share information with them? We relied upon the fact, and it will be a fact, that we're dealing with a public discussion and public facts. We expected our customers to do what everybody else in the public did, which is to see what the public facts were, the public decisions were and the debate, and to make their own decision about what opinions to hold.

This issue is far too public to be dominated by the tobacco industry. This issue is an issue where, like the use of our product, it comes down to making a choice based upon publicly available information.

Thank you.

THE COURT: We'll recess, reconvene at 2:00 o'clock.

THE CLERK: Court stands in recess.

(Recess taken.)

AFTERNOON SESSION.

THE CLERK: All rise. Court is again in session.

(Jury enters the courtroom.)

THE CLERK: Please be seated.

MR. WEBBER: Thank you, Your Honor.

Good afternoon, ladies and gentlemen. Even before I get started, I -- I just want to take a moment and thank you for the courtesy and attention you've given to all counsel. My part is the last of the opening statements for the four major cigarette manufacturers, Philip Morris, Reynolds, Brown & Williamson and Lorillard, so we are on the home stretch, and I thank you for all the courtesy you've shown us.

I'm pleased to be able to stand before you now as counsel for the R. J. Reynolds Tobacco Company of Winston-Salem, North Carolina. Winston and Salem were two small towns years ago and they grew into each other and it's now become a hyphenated city, and it's no surprise, given it heritage, that two of the company's leading brands are named after where they came from, Winston and Salem.

I'm going to discuss two important areas of evidence with you this afternoon. The reason we save these to last, quite frankly, is that they're best understood in the context of all the information you've heard up till now. The first area I'm going to talk about relates to this chart right here, and I've used a briefcase as a prop so I can get this up a little higher so everybody can see it.

This is a chart that shows over time the dropping levels of tar and nicotine on a sales weighted average for American cigarettes, and the first area I'm going to talk about relates to that chart and what it is that R. J. Reynolds and these other companies did to bring about these reductions, reductions that the Surgeon General of the United States has called drastic reductions. I'm going to talk about how the cigarettes that are made by these companies are the most responsive and advanced of any cigarette companies in the world. I'm going to talk about the evidence that will show you the hard work, the investment and the innovation that went in to achieving these results.

The other area I'm going to talk about is a separate area. Mr. Bleakley spoke with you yesterday about some of the flaws in the state's statistical model. I'm going to talk about another area with respect to the state's statistical model for just a few minutes at the end, and I'm going to go into the calculations that underlie the statistical projections that the state uses, and as I do that, I think that evidence -- as I describe that evidence, it will reveal why Mr. Ciresi yesterday said not one word about how that 1.7 billion was calculated, because I think the evidence will show you that the calculations on which it is based are indefensible, that they produce absurd projection results, and that in the end you will find this sophisticated model -- I think was the language that was used -- to be untrustworthy and unreliable.

An opening statement is an opportunity for a lawyer to talk to you about what the evidence will be. It's a commitment from the lawyer to the jury about what the state of the evidence will be at the end of the day when you retire to the jury room. I'm looking forward to this opportunity. We will bear this commitment out over the weeks and months ahead, and I ask your patience and continued courtesy as you listen to all the witnesses for all the parties.

I want to begin with the story of what it is and how it is that R. J. Reynolds and these other companies brought about these remarkable and drastic reductions in tar and nicotine. Mr. Bernick, you'll remember, talked about tar-and-nicotine ratios and some of the suggestions that science made about them. I'm not going to address that issue, I'm going to talk about what these companies did to reduce tar and nicotine, and I want to start out with a reference, first, to one of the claims made by the plaintiffs' lawyer yesterday. He said, "In other words, the defendants would do nothing to change their products unless and until they were required to do so by government, or as a result of being held accountable in litigation." His words, not mine.

The evidence will show those statements to be wholly unsupported by the evidence. The evidence will show no support for that whatsoever. Indeed, the evidence will tell a far different story -- some of it may surprise you -- that the theories and effects of cigarette design were discussed publicly for years, that there was one whole Surgeon General's report called "The Changing Cigarette" that discussed cigarette design and the improvements these companies had made, and that there were hundreds of pages in other surgeon general's reports that discussed these issues and hundreds of articles in the press.

RJR and these other companies were working on changing cigarettes from the 1950s on, reducing deliveries with developments such as the filter, porous paper, expanded tobacco, reconstituted tobacco, and I'm going to explain some of that for all of us as we go along. These developments were no secret. There was public discussion and debate year in and year out.

You'll also learn that these companies made numerous and substantial contributions to the science of understanding tobacco and smoke, contributions published in the literature, attendance at the Tobacco Chemists Research Conference year in, year out, conferences where government officials, public health officials came and joined in with tobacco researchers and exchanged ideas about designs and chemistry. You're also going to learn a good deal about a cooperative 12-year venture, and I emphasize "cooperative," 12-year venture between these companies and the National Cancer Institute along with independent researchers and members of other companies. This was called The National Cancer Institute's Less Hazardous Cigarette Project, and for 12 years these companies worked with the National Cancer Institute on that project. You'll learn that in 1968, toward the beginning of this exercise, representatives of these companies went to Washington and met with the Secretary of Health and Education -- I think it's Health and Human Services now. Back then it was secretary Wilbur Cohen, one of the country's great labor leaders. He was a member of the cabinet, and they met with him about working on the less hazardous cigarette project. And among other things as they talked about that project with the secretary, they told him that if they ever got to the point where someone invented a cigarette that the government accepted as truly safer, truly ground- breaking, solving all the problems, that no one company would try to exploit that but they would work out arrangements to make sure that no economic advantage came from it and that the companies could share that technology, and they shared that concept with the government in 1968.

You're going to learn that this cooperative effort at the National Cancer Institute went on for 12 years, theorizing about how to design cigarettes, testing cigarettes, bringing people from different areas of the science that had been following this together. You're going to learn these companies cooperated for 12 long years, and the evidence will show you that in 1978 that project ended because the federal government shut it down. There was a new secretary in the department and he changed the federal policy, said the federal policy should not be the work of the companies' less hazardous cigarette projects any more, and after 12 years of cooperation, that ended by federal policy.

But the companies continued working, studying, searching, researching, looking for new technology, taking actions that would count, actions approved by their highest executives, actions backed by hundreds of millions of dollars of investment to bring about the types of results you see before you. And when the evidence begins in this case tomorrow, I think one question is fair to keep in your mind, because if there was a conspiracy, if these companies wouldn't do anything unless the government forced them to, if that's true, if there were a conspiracy, why is it that the types of innovations that brought about these drops all came from these companies, no one else in the world? Hundreds of tobacco companies worldwide, governments worldwide, our government, yet these developments came from these companies working in a competitive marketplace.

It's also fair to ask why Mr. Ciresi would say these companies did nothing unless they were forced to. And keep this in mind as we go through this evidence and see whether these were because the government forced these companies to do it or whether it was because of their reaction to changing marketplace and competitive activity.

When all the evidence is in front of you on this, it will demonstrate, ladies and gentlemen, that there is no one, no company anywhere in the world that can demonstrate it has made cigarettes more responsive to the public health community or they can be proven to be safer and still smoked by consumers than what these companies have done in the American marketplace.

Now I'm sure you're wondering how it is this got accomplished. How did Reynolds decide which ideas to follow, which theories made sense on design, what should they invest in, what should get top priority? How did these drastic drops come about? Well you're going to hear evidence from a number of people. I'm going to refer a little bit to Dr. David Townsend, who's a Ph.D. cigarette designer at R. J. Reynolds who's been there for years. Dr. Townsend will come here and testify and explain to you what R. J. Reynolds did, how it listened to the suggestions from the Surgeon General and the public health community in changing cigarettes, and what Dr. Townsend is going to start out with is he will explain the way this works by going through the product design process. This is a process that doesn't apply only to cigarettes, it basically applies to design in anything, a house, an office building, a car. These are the types of factors designers have to take into account in making their decisions. And in this case, cigarettes, that first one, defining the design goal, was a major challenge. And the reason it was a major challenge is manifold and I want to mention a number of those reasons right now.

First of all, Mr. Bernick mentioned, and Mr. Ciresi mentioned as well, a number of different tests that have been used on cigarettes. We've heard about mouse skin-painting, heard about other biological tests, Ames tests, DNA testing. There are literally dozens of tests that have been used to compare cigarettes against each other. One of the problems was the government never said, the state of Minnesota never said, no state ever said that any one test was the one to design the goal toward. And that's an important piece of evidence because you will hear that different of these tests give different results. Some tests with the condensate from smoke on one kind of cigarettes will show that there's biological activity, that an animal or a cell reacts to it, and yet another one of these tests, same substance, no reaction. So it's not -- not a black and white issue. There are many different tests, many decisions to be made.

Let me just give you one example that I know that the witnesses will talk about. Many products we have, we do know what the standards are. Governments do announce them. Take cars, for example. Standards on just how the brakes should perform or just what the crashworthiness should be or how stiff the sides should be without losing integrity to the front and the back. But it wasn't that way in this case for cigarettes. It never was. And this created very real practical difficulties. But the evidence will show you that over time one test came to be focused on, and this is a test that came out of the Federal Trade Commission. You've heard a number of references to it over the past few days, the Federal Trade Commission test for measuring tar and nicotine.

Now no one says that the tars produced in that test precisely mimic the way humans smoke under all conditions at all times. They don't. FTC knows that, public health community knows that, the companies know that. These are -- these test results come from having a machine smoke cigarettes. But what it does is it does give a real basis for comparing one cigarette to another, and I'm sure even if you're not a smoker and never have been, you know about those FTC numbers. You've heard about them, the tar and nicotine ratings. You see them on every ad since 1972. And you will learn from the evidence here that these differences are real differences. They are bases to compare cigarettes and these differences have meaning.

For this reason, that federally required test has become a focus of cigarette design efforts, and here's a quote from the 1979 Surgeon General's report. "As long as warnings of health hazards from smoking are disregarded and as long as cigarettes are consumed, efforts towards a reduction of tar and smoke components which may contribute to these health hazards should be continued." And that was the work these companies were about, reducing, reducing tar and nicotine deliveries.

Evidence will show you the companies put aside whatever doubts they had for this purpose, about whether those mouse skin-painting experiments with tar really were what some people said they were. There were always questions about the significance of those results and about whether tar could be used to measure smoke because tar isn't smoke. But they put those aside and they worked to reduce tar and nicotine deliveries. And they also, you will hear evidence -- very important -- not only did they work to reduce tar and nicotine deliveries cigarette to cigarette, but they worked to reduce the biological activity of tar on an equal weight basis, if you understand me. That is, one cigarette may produce more tar than another, but if you got the equal amount from each and then you test those in a biological system, they worked to try to reduce biological activity on an equal weight basis.

Now how will the evidence demonstrate that these comparisons have meaning, by that I mean that lower tar cigarettes were in fact the way to go, that they listened and they listened for the right reasons? Here's a quote from Dr. Wynder himself. He was the one who did those mouse skin experiments. Because of the problems with our system today, I know it's hard to read, but what he says in the top paragraph -- this is shortly after his mouse skin experiments, he says, "A filter tip capable of filtering out 40 percent of the tar would be a step in the right direction." Then he goes on to talk about that and he says at the end, "A reduction to that level, as shown both by animal experiments and human statistical studies, would be a significant reduction in cancer risk." And these companies, as this chart shows you, have not only made that 40 percent reduction, but another 40 percent and more.

So I want to turn now to the second phase of that design process and go through that and the others with you as quickly as I can. You have to assess also, if you're designing, the effect of every choice you make on the rest of the design, and by that I mean if you're in San Francisco and you want to design a very tall building, you don't build it with the strongest, most inflexible steel, because if the earth starts to shake, then your design isn't very good. And the point here is that any part of the way you design a product can affect other parts, and it's true in cigarettes, too. Changing one part of the cigarette might change the temperature at which it burns, which might change the burn rate, which may change the different chemicals that are formed. It is a complex process and Dr. Townsend and others will come here and describe it to you.

Take for example, you know, if your goal in designing a car was to make a car in which nobody inside would get hurt in a wreck, you could do it, they could do it today, and would make a car ending up looking like a Sherman tank. Couldn't go very fast, wouldn't dent, wouldn't roll over, et cetera. But it wouldn't work in the marketplace because the choice that is necessary to reach your design goal in fact gave you a product that no would want and nobody could afford.

And that gets us to the third part I'm talking about, very important in cigarettes as well, consumer acceptance, commercial feasibility. You may make the best product in the world, you may have fit your design goals exactly, you may have assessed the effect of everything, but if people don't buy it, your design is a failure. It's true and we all know that in our own marketplace experience, and it's also true in cigarettes in a particularly important way.

I want to refer again to some advice Dr. Wynder gave years ago on this very subject. I know this is a long quote, but it's an important one, and I'd ask you to follow with me on one of the screens, if you can. "As a practical matter, it's important to appreciate that a virtually harmless cigarette smoked by only one percent of the population will have a lesser impact on the reduction of tobacco-related diseases than a somewhat more harmful cigarette smoked by 80 percent of the population. Research on the less harmful cigarette should therefore be directed toward developing a cigarette containing the lowest possible amount of harmful elements for all tobacco-related diseases, but one that has sufficient acceptability for the largest segment of smokers."

The point Dr. Wynder, who did those initial experiments, made there is it doesn't matter how good your design is, if people won't use it, it's not a success in the marketplace.

We'll also hear about the differences between a good idea, a good design, something consumers might even like, and the difficulty in getting that made into the marketplace. That's that issue of technical and manufacturing feasibility. There will be evidence here on that. You will learn that some of these cigarette design developments were made available only because of technological developments in other areas over the past 20 years. You will learn that to make some of these cigarettes, hundreds of millions of dollars had to be invested in equipment that had never been made before. Technical feasibility, another one of the issues a designer has to concern himself with.

Last but not least, regulatory feasibility. Even if the design is great, even if people want it, even if you can make it, doesn't do you any good if the government doesn't let you sell it or let you talk to people about it. And cigarettes are regulated. States and the federal government make decisions on what can be sold, and they also make decisions on what can be said about these products. And you'll hear about that as well.

So how then did these companies go about bringing about the reductions that the Surgeon General says are drastic? How did they do it? I want to discuss that evidence now. There were two major sources considered, general reduction, selective reduction. General reduction is a process by which everything that comes out of a cigarette is reduced, and the best example I can give you on that is a filter, that generally most everything coming through the filter would be reduced. Selective reduction is a much more complicated, expensive and time-consuming task.

Selective reduction was a theory that said see if you can do something to cigarettes to snatch out almost, snatch out of the smoke just certain chemicals, certain ones that science was then concerned with, certain chemicals that may have existed only at the level of nanograms, one billionth of a gram. And just -- a gram is about the size of a little Equal sugar packet or artificial sweetener packet. You know what I mean? A billionth of a gram. If you took a billion pieces of paper, it would be a stack 63 miles high. If you could hold the stack in order and turn it over, it would get you from this courthouse a little bit past Menomonie, Wisconsin. So a billionth is a real small amount of a gram. And to work with those infinitesimally small quantities took advances in analytical chemistry, took some very sophisticated equipment and some very sophisticated understanding.

There were efforts made to reduce benzpyrene. There's been some discussions of that chemical. Polycyclic aromatic hydrocarbons, benzpyrene. Enormous money invested into trying to just pick those nanogram quality -- or nanogram quantity chemicals out of the smoke. There were different theories. Try to change the way smoke burns so that benzpyrene isn't formed. Try to get a filter that would pick out benzpyrene. Try to -- try to add materials to a tobacco so that the whole burning combustion is different and whatever benzpyrene is made is destroyed before the smoker gets it. All sorts of ideas like this. And as they were working this through, Dr. Wynder himself said in 1957 that his experiments have confirmed that the amount of benzpyrene in smoke was so small that it couldn't account for the reaction in his mouse skin experiments.

There was also concern about chemicals called phenol that people wanted out of smoke, and there were great efforts to selectively get them out, and then some other research came out and said, well, it may be that phenol actually stops the effect of benzpyrene. Should you take phenol out then?

Dr. Wynder suggested at one time that one way to reduce benzpyrene was to use tobaccos high in nitrate., that that would reduce benzpyrene. Few years later they said never use tobaccos high in nitrate. So this selective process was one where priorities were changing over time, different priorities being put on different chemicals.

There are the quotes. One says go to high nitrate in '67, another to low nitrate or don't do that in '84. So these priorities were changing over time in terms of what the emphasis was.

But the companies didn't stop trying to reduce these chemicals. They worked. They just moved primarily to a little different method. Here, for example, shows you the results from 1956 to 1992 regarding average amount of benzpyrene in a Winston cigarette. Fifty-two nanograms down to ten nanograms over that period. So while selective reduction ended up not being the way most of the work was done because of its complications, you can see that these deliveries have been reduced through other techniques.

I'd like to turn now to speak about that other technique, general reduction. And there were advantages to it. Dr. Townsend will come and explain those to you. They're much more technically practical than selective reduction. It addressed all potential target compounds, or at least could in theory, not just one. It avoided unintended consequences. That's an important fact because one of the methods that -- that one company came up with to reduce benzpyrene, and this was the Liggett company, they came up with this, was that they added palladium and a cobalt-based heavy metal to a cigarette, and that did prevent the benzpyrene from forming, but it had possibly unintended consequences: They had heavy metals they were putting in there.

Now they never marketed the cigarette, it was a -- it was an experiment done, but it just shows you how -- how careful -- how one part of this affects another. You have to avoid unintended consequences, and general reduction does that. It also hits the point that Mr. Bernick mentioned before, maintains the character of the taste. It still tastes like a cigarette to the people smoking it.

Now I want to discuss some of those general reduction methods with you now and I want to emphasize that each of these -- I think they're a little more clearly observable on the side screens, and I'm sorry for the problem with our equipment -- I want to emphasize that each of these is a development brought about by these companies here in the United States working in this competitive marketplace.

Bear with me a minute, I want to get something out.

Let me start out with reference to some of the easy ones, filtration. You will hear that there were thousands of filters tried, just thousands of different ones, and that the cellulose acetate filter is one of the major advancements that has reduced tar and nicotine. Porous paper is an interesting one in which microscopically small holes are put with lasers in the cigarette paper. And what does that do? It let's some gases escape. It also lets some air come in. And it's an interesting phenomenon that air, because it has a higher pH than -- than cigarettes do, than smoke does, with porous paper the pH will go up because you're drawing in some room atmospheric air. But it does allow gases to escape.

Reduced circumference. Reducing the size a little bit can reduce the amount of tobacco. Reduce the amount of tobacco a little bit, you lower tar and nicotine.

Expanded tobacco is a process invented by R. J. Reynolds, and I want to -- rather than describe it, I think the best thing to do is show it to you. These two jars hold the same amount of tobacco. This is regular tobacco, not expanded, this is expanded tobacco. And it's a process best described by saying it's almost like popping popcorn. Same amount. You subject it to a process. There are different ways to do it -- freezing, heating, carbon dioxide -- but it comes out like this, and the net result is you can put some of this in a cigarette and blend it with regular tobacco. Net result, less tobacco in the cigarette, less tar, less nicotine. And there are also some other results that I'm going to mention based on the National Cancer Institute testing as well.

Faster-burning paper, another development. Filter ventilation, another development of the type I've talked about.

I want to move on now to reconstituted tobacco, another development that I'm pleased to say was invented by the R. J. Reynolds Tobacco Company. It was a key development in reducing tar and nicotine.

If you come to this chart, see 1957, reconstituted tobacco. Now no cigarettes are made commercially that are solely reconstituted tobacco, they all have some -- not all, but many have some reconstituted tobacco in the blend. And what reconstituted tobacco is is this. When a cigarette is made, the leaf, the lamina, is stripped from the stems in the leaf, and the stems used to be discarded. Well Reynolds developed a process whereby certain of the stems were re-collected, chopped up, mixed in a water slurry, and they were mixed also with what are called tobacco fines, f-i-n-e-s, tobacco dust that is made in the rest of the process. Here is some stems. Here are some fines. And the reconstituted sheet process took these together, chopped them up, put water in with them, then dissolved everything that water would dissolve, took that mix out, and it had a solid, made those solids into sheets and later in the process would put the tobacco solubles that had been removed, they'd put them back in. And what you'd end up with is what's called reconstituted sheet. If I can get this out here, I'll show you. It's almost like a paper-making process. All tobacco, but made from those pieces I showed you.

Then what they do is they chop this up, small pieces, and blend it into a cigarette. Reconstituted tobacco sheet, you will -- you will learn, is another reason tar and nicotine is lower. There is less tar and nicotine in the stems, and by using these you've reduced tar and nicotine by mixing reconstituted sheet into your blend.

Reconstituted sheet does taste harsh, doesn't have full tobacco flavor, and oftentimes but not always there will be some ammonia treatment to edge -- take the edge off the harshness as that is mixed in, and you'll hear the evidence about that as well.

Let me go back and just refer generally now to these -- these processes that have brought about this drastic reduction. These weren't secret from the Surgeon General or the public health community, they were discussed in public meetings and conferences, public patents, discussed at great length in surgeon general's reports, as I've mentioned before.

It's also important to note that cigarettes with these modifications were tested by the National Cancer Institute in a 12-year cooperative program before the federal government shut it down due to a policy change. What they did in this program was they took cigarettes made by these companies with these modifications and they tested them against certain standard or reference cigarettes that didn't have the modifications, and the tests the government chose, the National Cancer Institute, was the mouse skin-painting test we've heard a lot about where you collected this tar, which really isn't smoke, it's -- it's -- it's an artificial substance, but you collect it, paint it on the back of the mice and see what kind of biological reaction you get. And the -- and they did this in a way so that you could compare one cigarette to another. They did it on a gram-per-gram basis, and I want to be clear about that because it's so important here. They took two grams or whatever of tar from the experimental cigarettes and tested it in mice against two grams of tar from the standard cigarette without the changes. And the National Cancer Institute results are clear. Cigarettes made with reconstituted tobacco sheet had less biological activity than the reference cigarette. Cigarettes made with tobacco stems had reduced biological activity from the reference cigarette. Cigarettes made with the air dilution filter had reduced biological activity. Cigarettes made with porous paper, reduced biologic activity. Cigarettes made with expanded tobacco, reduced biologic activity. All in the mouse skin tests as performed by the National Cancer Institute.

But there's even more that R. J. Reynolds and these other companies did. They didn't stop at just general and selective reduction, they tried some ideas that I think are going to even surprise you more. One thing they tried was tobacco substitutes. The theory here was to find something that burned a little different than tobacco, something that would burn and maybe not produce as many chemicals, and if you could find that, then see if you could chop it up and blend it in a cigarette. Theory: a less complicated smoke, a more simple smoke, less chemicals.

I hope you can see some of the things they tried. Reynolds tested over a hundred substitutes, including 33 ideas that outsiders brought to Reynolds thinking they made the invention of the century. They investigated plant leaves, puffed grains, vegetables, vegetable hulls, shucks, skins, practically everything but bamboo was tested here. They tested all these different things, and eventually the substitute theory didn't work out, and the reason the substitute theory didn't work out was there was so much progress being made on general reduction that that method was focused on. Some of the substitutes would have produced different chemicals when they were burned, and that was a problem, and by that I mean different chemicals than what was already in smoke. And thirdly, some substitute cigarettes had been tried in Europe and had never been commercially successful.

But again, the story isn't over. I want to talk about two alternative technology cigarettes, cigarettes based on recommendations from the public health community. And the first one I want to talk about is Philip Morris's NEXT cigarette, put out in the early '90s, a denicotined cigarette using technology that -- that is analogous to how you decaffeinate coffee. They essentially denicotined their cigarette and they advertised it and they spent a lot of money on it. And based on what you heard in this case up till now you probably would think that the federal government and the state of Minnesota were there applauding this development. But they weren't. The federal government harshly criticized this and said it was a hazardous cigarette, and NEXT became a footnote in cigarette design history, a failed product.

An even greater failure -- and I have to admit it was my client's cigarette -- Premier. I don't know if you heard about it. It even had a movie that -- that made jokes about it. Premier came at design from another angle than NEXT. Premier was remarkable in that it produced no traditional tar, and that was because it heated tobacco but didn't burn it. In a Premier there's a little tip of carbon at the end, it's lit, and then as the air is drawn in, it's heated by the carbon, goes over the tobacco and the extracts and volatilizes or releases flavors, nicotine and other tobacco flavors. Essentially a no-tar cigarette. Years, hundreds of millions of dollars. Again I think you might assume that the government would say no-tar cigarette, low nicotine, this is what we've been recommending, but you'd be surprised because the government didn't react that way. And I'll tell you about that in just a moment.

When Premier was marketed -- well let me strike that. Before it was marketed, because its technology was so different, Reynolds subjected Premier to a battery of tests and published the results in a 700-some page monograph and submitted these results to a blue ribbon peer review committee with key reviewers from Duke, Kansas, Texas, Michigan State, MIT, University of Rochester, Johns Hopkins, on and on, and gave it to them, and they agreed that the science was good.

Reaction in other parts of the world wasn't the same. Some experts from the Federal Ministry of Health in Berlin considered this research monograph possibly Nobel prize worthy for the work that had been done. You heard earlier someone mention the journal Lancet. Lancet is a British journal. It is either the number one or number two medical journal in the world. And what did The Lancet have to say about this?

Could we make that just a little bit bigger? There you go.

It talks hear about Premier. "The smoke was virtually tar free, water and glycerol. Nicotine was low." That last two sentences -- or the last sentence, "In terms of the aims for product modification laid down by the U.K.," United Kingdom, the British, "independent Scientific Committee on Smoking and Health, this would seem a near-perfect low tar cigarette and there is no doubt that it would be less harmful than most other brands on the market." The Lancet. Near-perfect low tar cigarette. And you will notice they're talking there about standards for product modification laid down by the independent committee in Britain formed by the government. We don't have any such committee here.

Is that the same reaction here? Did the state of Minnesota say no tar cigarette, virtually perfect? Well you might be surprised.

Dr. Koop, then Surgeon General, said the product shouldn't be marketed. The second quote is from the Commissioner of Health for this state who petitioned the FDA to keep this product off the shelves. The last one is from the president of the Minnesota Public Health Association, also to keep this product off the shelves. All this despite the fact that for smokers it was virtually tar free.

Now the evidence on Premier and NEXT I think will be of particular significance because it speaks to this regulatory feasibil