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US: Tobacco Deal Haunts Contender for WHO Chief

Seen as Industry Blueprint, Pact With Cigarette Makers May Be Dr. Frenk's Undoing

by John Lyons and Betsy McKayWall Street Journal
October 24th, 2006

Julio Frenk was a finalist for the top job at the World Health Organization three years ago. The post is available again, but the Mexican health minister's latest campaign for the job may go up in smoke.

This year, several public-health experts criticized a deal Dr. Frenk cut with cigarette makers, saying it undermined Mexico's efforts to reduce smoking. That has helped foster attacks on Dr. Frenk by antismoking groups in the run-up to the Geneva-based organization's selection of a new director-general on Nov. 8.

In the June 1, 2004, deal, Philip Morris of Mexico -- a joint venture of Altria Group Inc. and Latin America's richest man, Carlos Slim -- and the Mexican unit of British American Tobacco PLC agreed to donate about $400 million over 2 years to fund new health programs of the Health Ministry's choice. The catch was that the donations would be rescinded if new taxes were levied on cigarettes.

The arrangement essentially forced the ministry to protect cigarette companies from tax increases for the deal's duration, and set a precedent for cigarette companies negotiating regulatory terms with governments, its detractors say.

Dr. Frenk defends the deal. "Taken out of context, the agreement may look very suspicious," Dr. Frenk said. "But it was a middle point, and part of a larger strategy that has been successful. This was not a friendly deal for the cigarette companies."

The arrangement reaffirmed regulations on cigarette advertising and warning labels that are weaker than the voluntary standards in a WHO treaty called the Framework Convention on Tobacco Control. That rankled antismoking advocates who say the 140 nations that have signed the treaty made a commitment to adopt a uniform strategy for regulating tobacco companies and reducing smoking. The agreement with the tobacco companies was announced four days after the Mexican congress ratified the treaty.

"Implementing the treaty is going to be a priority for the WHO, and the next director-general needs to have a clear commitment to the issue," said Damon Moglen, vice president for international programs at the Campaign for Tobacco-Free Kids, which issued a news release critical of Dr. Frenk.

Several cigarette-industry observers said they knew of no other countries that have entered into similar agreements with the tobacco industry thus far. Francisco Espinosa, a spokesman for Philip Morris of Mexico, said the cigarette agreement "represents a very courageous act by Dr. Frenk to pursue an aggressive antitobacco agenda."

The attention on the cigarette deal highlights the expanding reach of an antismoking movement into Mexico and other developing nations. It also raises the fundamental question of what is the best way to try to combat smoking in such nations, where courts and regulatory bodies are often less independent and corporate power more concentrated than in the U.S. and Europe, leading regulators to adopt unorthodox strategies to achieve their aims.

The WHO post opened up when the former director-general, Lee Jong Wook, died unexpectedly in May, setting off a politically charged campaign for WHO chief. Dr. Frenk, a 52-year-old former senior WHO official, isn't the only one facing questions. For example, China's candidate, Margaret Chan, is under fire over her nation's lack of transparency in combating SARS. In all, 13 candidates from countries such as Japan, Finland, France and Mozambique are vying to head the United Nations health agency.
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In an interview, Dr. Frenk described the cigarette deal as a "tactical move" that reflected the weakness of the Mexican legal system and the restraints of the budgetary process. Negotiating an agreement allowed Mexico to immediately impose advertising and other restrictions on tobacco companies, whose lawyers might have easily thwarted such restrictions using broad injunction powers often used by Mexico's powerful monopolies to deflect regulations.

In a country where it is difficult to earmark tax revenue for certain projects, the deal also guaranteed funding for his broader plan to expand catastrophic health insurance for the poor.

What is more, Mr. Frenk described the arrangement as an intermediary step that set important precedents for regulating cigarette companies, paving the way for stronger, enforceable laws. Indeed, the Health Ministry is preparing to send Congress a bill that would convert the cigarette-company contribution into an actual tax, as well as bring advertising and other restrictions up to WHO standards.

As Mexico's health minister since 2000, Dr. Frenk has employed various tactics to improve public health and reduce smoking. He forced through tax increases on cigarettes, as well as introduced a ban on smoking in schools and government buildings. He is also the first Mexican health minister to actively push restrictions on cigarette sales -- efforts that have helped cut total cigarette sales in Mexico during his term.

Indeed, Dr. Frenk retains support for his WHO bid, even among some critics of the tobacco arrangement. "If you take the totality of what he has achieved in Mexico, he has brought about one of the most extraordinary improvements in health care in low-income countries," says Derek Yach, a former WHO official who has criticized the deal with cigarette makers. The Lancet health journal has endorsed Dr. Frenk.

Dr. Frenk, a physician who holds doctorates in health and sociology from the University of Michigan, used the money to expand health-care coverage for the poor to include neonatal intensive care and the catastrophic costs of diseases. The money has also funded a new cancer-treatment facility, and the Health Ministry has opened hundreds of smoking-treatment clinics.

However, critics point out that the deal presented some ethical binds. In October 2005, Dr. Frenk opposed legislation that would have increased taxes on cigarettes as a way to deter smoking, especially among teens. The new taxes would have scuttled his deal. Dr. Frenk argued against the bill in a meeting with lawmakers and complained in Mexico's daily El Universal newspaper that the proposed increase would sink his arrangement with the cigarette companies. Congress eventually defeated the tax increase.

That raised concerns that the Mexican arrangement could be used as a cigarette-industry blueprint for negotiating regulations and heading off new taxes.

In February 2006, Jonathan Samet, chairman of epidemiology at the Johns Hopkins Bloomberg School of Public Health, teamed with other health experts, including Dr. Yach, to critique the deal in the British Medical Journal. The article, titled "Mexico and the tobacco industry: Doing the wrong thing for the right reasons?" was published in time for a summit of health officials in Geneva to discuss smoking prevention.

Write to John Lyons at john.lyons@wsj.com and Betsy McKay at betsy.mckay@wsj.com





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