Dr. Len's Cancer Blog

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Dr. Len's Cancer Blog

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Does Surgery Worsen Outomes For Breast Cancer?

by Dr. Len February 22, 2007

A recent article in the International Journal of Surgery has rekindled interest in the myth that surgery itself may have an adverse effect on cancer survival by removing the cancer.  In this report, the “target” population is pre-menopausal African American women with breast cancer.

 

The authors write that they have a theory that might provide a scientific basis for the myth.

 

It’s not bad to have a theory.  But when the theory regarding a myth becomes interpreted as a fact, the risk of harm to people at risk is substantially increased.

 

That could happen in this particular circumstance.

 

Let’s take a look at the history of this myth, and see how it has played into the current discussion.

 

This myth was present back when I started my oncology practice over 30 years ago.  It had probably been around for a long time, and if I had to take a guess, it existed and was supported because of the observations and experiences of many patients.

 

Back then, we didn’t find cancer early.  We didn’t have mammograms.  We didn’t have CT scans, and we didn’t have MRI machines.  We didn’t have techniques to biopsy suspicious cancers with minimally invasive techniques.  We didn’t have colonoscopies to look at the colon and screen for colorectal cancer.  And we didn’t have effective treatments.

 

If a patient presented with an abdominal mass, we frequently had to do an operation called an exploratory laparotomy to make the diagnosis. Not infrequently, these cancers were advanced at the time of surgery.  Again, the outlook was poor.

 

The myth was more prevalent in the African American community.

 

The sad reality was, and to a significant degree remains the situation today, that African Americans were often impoverished. It has been well documented in study after study that treatment for many diseases, including cancer, has been unequal for many African Americans.

 

The result was that African Americans did—and too frequently today, still do—present later in their disease course.  That means they are not going to do as well as someone who has access to screening, has access to medical care, and gets early treatment.

 

More recent research articles have confirmed that the “air makes cancer worse” myth persists, and in fact is more common that some might realize.

 

In 2005, in the International Journal of Surgery, three researchers published a paper where they noted that pre-menopausal women, based on historical information, have a slight increase in mortality within several years after they are treated for breast cancer.

 

To support their thesis that this increased mortality was due to the fact that surgical removal of the cancer itself, they turned to a database of women in Italy who had been diagnosed and treated for breast cancer from 1964 to 1980.

 

None of these women had mammograms. None of these women received adjuvant chemotherapy.  All of these women had either a radical or modified radical mastectomy as the only treatment for their breast cancer.  None of them were screened or treated according to current medical standards.

 

The authors reported that women with larger cancers had a tendency to recur earlier.  No surprise there.

 

They also found that in pre-menopausal women who had lymph nodes involved with cancer, 20% developed a recurrence within 10 months following surgery.  This rate of relapse was five times greater for these women with their lymph nodes involved with cancer than those without lymph node involvement.  Most of this was confined to pre-menopausal women

 

The authors then concluded that one of the explanations for this observation was that there were already tumor cells that had spread from the primary cancer to other parts of the body.  These cells were lying dormant because they had no blood supply.  The surgery and the removal of the cancer resulted in a stimulation of the cancer’s blood supply leading to detectable cancer recurrence at 10 months.  The authors said this is occurred only in pre-menopausal women.

 

There is nothing wrong with making a suggestion or proposing a theory. To me, however, at the time it I read this article it seemed like a very large step from theory to conclusion, without much supporting evidence.

 

That certainly didn’t stop the media from spreading the news around the world that surgery could make cancer survival worse. 

 

Now we come to the current paper, published in a recent issue of the same journal.

 

The title of the article suggested that this theory is a possible explanation for some of the increased mortality of breast cancer in pre-menopausal African American women.

 

We know that the rate of breast cancer in African American women is lower than Caucasian women in the United States.  We also know that their survival is worse than Caucasian women for reasons that we do not completely understand.

 

African American women disproportionately continue to suffer the burden of unequal access to medical care and insurance.  Their rates for mammography are lower than they should be.

 

Almost all experts agree that these are the most significant factors which explain the poorer outcomes for African American women with breast cancer in this country.

 

We also know that there are disputes among the experts whether the socioeconomic considerations are the only factor, or whether genetics play  a role as well.  Some say there are no genetic factors responsible, others say there are.

 

Now, the authors of this paper are saying the theory they proposed in 2005 may be the explanation.

 

They write the following: “Since AA breast cancer is mostly pre-menopausal and EA (European American) breast cancer is mostly postmenopausal, it might be anticipated that starting in the 1970s because of surgery-induced early mortality, outcome would be superior for EA compared to AA.”

 

In other words, if you are African American and pre-menopausal, then—according to their theory—the removal of the primary cancer may stimulate the growth of otherwise dormant cancer cells elsewhere in the body, leading to a pattern of early recurrence.

 

The authors go on to say that the reason for the prevalence of the “when the air hits it” myth in the African American community may in fact be based on historical experience of the African American community.  In their opinion, this experience of bad outcomes is in part the result of the theory described above. 

 

The researchers conclude that, since mammography was primarily investigated in Caucasian women in the United States, Europe and Scandinavia, therefore these “early detection protocols may be suboptimal in African American women.” 

 

They reiterate that their original theory may explain why the outcome of breast cancer treatment of women in Africa is poor, especially since, as they write, most breast cancer in Africa occurs in pre-menopausal women.

 

What they ignore is that the reason for the increasing survival gap between African American women and Caucasian women in this country may be due to the fact that African American women are not receiving the same screening and treatment opportunities as others.

 

They also ignore, in this comparison, that the lifespan of women in many African countries is short, and many women don’t live long enough to develop post-menopausal breast cancer.  Cancer registries in Africa and elsewhere in the world are not particularly well developed, so it is difficult to get such information on large populations.

 

The authors then devote space to explaining three research programs which could test their theory.

 

“In conclusion, we suggest that the observed race-related changes in breast cancer mortality may, in part, stem from screening and subsequent resection of poor-prognosis breast cancers among AA pre-menopausal women, which negatively impacts the host cancer balance in a subset of these women. The mammography screening introduction

should be considered as a probe revealing biologic features of the host-disease balance in AA and EA, as reflected by the change in mortality dynamics.”

 

In other words, if you are African-American and pre-menopausal and you get screened for breast cancer, you may do worse than if you left the cancer alone and found it on your own at some later point in time.  (It is important to note that in press interviews, one of the authors has made it very clear they are NOT recommending that African American women not be screened for breast cancer or in any other way not follow the current recommendations for breast cancer treatment.)

 

There is no research done specifically for this paper and reported in this paper that supports this conclusion.  It is a theory, plain and simple.  Not a research paper supporting a theory—just a theory.

 

In my opinion what they should be saying is that we need to do everything in our power to reduce the real disparities in health care.   We need to be certain that every woman in this country has access to state of the art cancer screening and cancer treatment in this country.  That is the most “curable” way to close the survival gap for breast cancer between African American and white women in this country.

 

We have learned from experience that it is OK to have theories, and it is OK to do research in the laboratory and perhaps in the clinic to support your theory if your basic science research confirms your hypothesis.  The world of science is built on that sequence.

 

My fear and concern is that the theory proposed in this paper will be picked up by the press and held forth as fact when there are other very creditable explanations for some of the observations.

 

My fear is that there are women who will read the news and say, “I don’t need to be screened.  It will increase my chances of dying from my breast cancer.”

 

My fear is that we could take another giant step backwards.

 

Researchers (and others) need to be very aware that that their well-intentioned thoughts and observations may end up being misinterpreted and promoted elsewhere devoid of their original good intent and stripped of their explanatory and clarifying notes and comments.

 

In this case, some of the headlines may lead African American women to conclude that mammography in their pre-menopausal years is harmful for their health.

 

If that happens, the unintended consequences could be very, very unfortunate. 

 

 

 

Filed Under:

Breast Cancer | Screening | Treatment

New Breast Cancer Genetic Test: What Does It Mean?

by Dr. Len February 06, 2007

An announcement earlier today from the US Food and Drug Administration has garnered an amazing amount of media attention in a very short period of time.

 

The announcement discussed FDA approval for what the FDA said was “the first cleared molecular test that profiles genetic activity” in breast cancer. 

 

The test, called MammaPrint and developed by a company called Agendia which is based in the Netherlands, analyzes 70 genes in a sample of breast cancer tissue and provides a prognostic index estimating the likelihood of breast cancer recurrence after primary treatment.

 

According to a statement by the Commissioner of the FDA, Dr. Andrew von Eschenbach, “MammaPrint results will provide patients and physicians with more information about the prospects for the outcome of the disease.  This information will support treatment decisions.”

 

If you read this blog regularly, you may recall that we discussed this and similar tests in some detail in early August, following a research report and an editorial in the New England Journal of Medicine.

 

Unfortunately, the results of that study and the comments in the editorial weren’t exactly overwhelmingly enthusiastic regarding the practical implications of these particular genetic predictive tests.

 

This begs the question of whether or not things have changed in some way in the meantime.

 

Why is a test that can offer prognostic information to women with breast cancer so important?

 

We have made great strides in the treatment of breast cancer since I first started my oncology career 35 years ago.

 

Advances in surgery, radiation therapy and chemotherapy have gone a long way in reducing deaths from breast cancer (along with the very important contribution from mammography).

 

Despite (until recently) a rising incidence of the disease, death rates have declined.  Now, when a woman is diagnosed with breast cancer limited to the breast, the five year survival is 98%.

 

That is striking progress compared to the situation several decades ago.

 

But there is still a major problem with our ability to predict which women, even those with limited disease, are more or less likely to recur.  If we were able to do that, then there is a reasonable chance we could spare some women—if not many women—the inconvenience, cost and risks of adjuvant chemotherapy after their primary treatment with surgery and radiation therapy.

 

We have a number of ways we can look at breast cancers and get an idea of how aggressive they may be.  But those ways are simply not scientific enough or accurate enough to allow us to have enough confidence to say to a particular woman with breast cancer that she does not need to undergo any more adjuvant—or preventive—chemotherapy to decrease the odds that her cancer will come back at a later date.

 

This is important because once breast cancer recurs it usually progresses further over time.  The key to success in breast cancer treatment is to prevent the cancer from coming back (bear in mind here that we are talking about the original breast cancer returning, not the occurrence of a new cancer in the same or the opposite breast).

 

Our hope has been that with the new advances in understanding the genetic changes in breast cancer (and other cancers as well) we would be able to profile these cancers with very sophisticated laboratory-based tests and provide a more accurate prediction of what the future held for a particular patient.

 

The number of research articles along these lines has been increasing steadily in the past several years.  Several of those articles have dealt specifically with breast cancer, including one that was published along with an editorial in the New England Journal in August 2006 (and covered in my blog at that time).

 

What has become clear that, although these tests are valid and helpful, they are still not sufficiently accurate to influence treatment decisions by women with breast cancer and their doctors when it comes to taking adjuvant therapy.

 

Without getting into too much detail, a test of this type has to be sufficiently accurate to be certain that if it says a woman is at low risk of recurrence, she is in fact at a low risk of recurrence.

 

Imagine if the test said a woman was at low risk of her breast cancer returning and her doctor told her not to take adjuvant therapy after she finished her surgery and radiation therapy.

 

Further imagine that if the test was wrong one out of six times, and the cancer came back, how that woman, her family and her doctor would feel about her decision not to take chemotherapy.

 

That is essentially the situation that is facing us with the tests we have available today.

 

My conclusion is that, for the most part, relying on these tests to make a decision about whether or not a particular woman with breast cancer should or should not take chemotherapy will be more often the exception rather than the rule.

 

It is not that these tests are not a step forward.  They are.

 

But we still have a long way to go before we can completely rely on them in making our decisions about adjuvant therapy in breast cancer.

 

There are some other things you should know about in today’s announcement.

 

The FDA was very specific in what circumstances the test could be considered.

 

They defined women eligible for this test as under age 61 with a breast cancer less than 5 centimeters in diameter (about 2 inches) and no evidence of cancer in the lymph nodes.

 

Also, according to Agendia's website, the test must be done with fresh tissue sent to their laboratory.  If there is no fresh tissue available, then this particular test cannot be done (although another test, called Oncotype DX, uses paraffin embedded samples, which is the way the pathologist prepares slides for the microscope, and is generally kept on file).

 

Finally, it is not clear which insurance companies are going to pay for this test, which is likely going to be fairly expensive.

 

That means that many women with breast cancer will not be able to get this particular test.

 

So who will want this test?

 

There will definitely be a population of women who will demand the test be done. 

 

There will definitely be a population of women who will use this test to make their treatment decisions, the information and example above notwithstanding.  

 

And there may be some women who are adamantly opposed to continuing their adjuvant therapy because of side effects or the length of time they have to take their drugs where the doctor may use this test to persuade them to stay the course to complete their treatment (that assumes the test will be positive).

 

But, for most women with breast cancer, this test will not be a major factor in their care.

 

To get to the day when tests of this type will in fact be relied on by patients, families and doctors, we will need more research and more clinical trials.  Those trials—some of which are underway according to recent publications—will help us understand and refine where we stand with respect to the use of these test in the clinical management of our patients with breast cancer.

 

But, the FDA announcement notwithstanding, we are not there yet.

 

 

DCA: Cancer Breakthrough Or Urban Legend?

by Dr. Len February 03, 2007

There is the medical equivalent of a tsunami wave building out there, only we don’t know where this one is going to land.

 

It is called DCA, and we are suddenly receiving requests for information about something few if any of us had heard about as a cancer treatment until this past week.

 

I suspect some of this rapid explosion is fueled in part by the internet and the rapid exchange of information, and some by advocates who believe in the long-held conspiracy theory that someone is holding back the single simple answer to curing all cancer.

 

We even received an urgent plea from one media outlet on Thursday asking us to help them out with understanding DCA, since their website was being inundated with internet traffic that was overwhelming their servers.

 

Before we replace rational discourse with irrational exuberance, it is my personal opinion that a bit of caution is in order.  The basic reason for my conservative view is “been there, done that.”

 

I don’t know the details of how this phenomenon got started, but I can take a stab at an answer.

 

Do a general internet search on dichloroacetate (the actual name of this material) and cancer doesn’t rise to the top of the list before very recently.

 

That said, an article appeared in the January 2007 issue of Cancer Cell, written by a researcher at the University of Alberta in Canada.

 

I do not know the researcher, but the institution is one that is a recognized, established University.

 

The basic gist of the research report is that cancer cells rely on certain energy pathways that are different from normal cells, similar to the situation that occurs in what we medically call lactic acidosis.

 

Lactic acidosis in very simple terms occurs in our bodies when we are very ill or may be suddenly severely traumatized.  Our cells basically become starved for energy, and switch into other energy pathways that rely less on oxygen, resulting in the production of lactic acid.

 

As a result, when there are large quantities of lactic acid circulating in our system, it can contribute to a significantly increased risk of death.

 

What the Alberta researcher hypothesized was that cancer cells also work through similar metabolic pathways.  If you could revert them to normal, then the cells would switch back to the typical energy pathway, and either die or convert to normal cells.

 

Where DCA or dichloroacetic acid fits into this theory is that it can apparently convert the bad metabolic pathways into good ones. 

 

As noted in the conclusions of the study, it can do so while selectively affecting cancer cells and not harming normal cells.

 

According to the authors of the report, DCA is non-toxic and is currently used in children who have a rare genetic condition where they produce too much lactic acid.

 

They go on to point out that DCA is used in these children to reverse the condition with minimal or no side effects.

 

Let me assure you that this is a gross oversimplification of a very complicated discussion.  I personally never was a standout in biochemistry, and that was over 35 years ago.  Trying to explain this study in plain words is not an easy task.

 

But the concepts are basic, and the theories of differential cancer cell metabolism have been around for a long time.  The paper itself cites something called the Warburg theory espoused in the 1930s as an example of support for this principle.

 

In fact, for years we have been studying the possibility that improving the microenvironment surrounding cancer cells by increasing oxygen levels of tumors through various means will lead to improved responses to treatments.  Hyperbaric oxygen therapy is one example of such previous efforts.

 

(In contrast, the targeted therapy Avastin is based on the principle that by preventing blood vessel growth in cancers, you will starve the tumors blood supply, oxygen levels will go down and the cancer will slow or stop its growth.)

 

To demonstrate the concept, the authors in the current report did a number of experiments that came to the conclusion that DCA was in fact effective in meeting the goals of their expectations. 

 

In these experiments in the laboratory, they found that DCA could in fact reverse the abnormal metabolism in several laboratory-based cancer cell lines.  DCA also reversed the “immortality” of these test tube cancer cells and induced a process of cell death called apoptosis.

 

Finally, they injected some of these laboratory-based cancer cell lines into rats who were genetically engineered to have no basic immune system, and found that if they put DCA into their drinking water, the tumor growth was significantly slower than in a comparison group of rats that did not receive DCA.

 

In one group of rats where DCA was given after the injected tumors had been allowed to grow, the tumors immediately (in the authors’ word) decreased in size.

 

So far, so good.

 

But here is where things begin to get a bit dicey.

 

These are quotes taken directly from the article.  The first is from a summary printed at the bottom of the first page of the report:

 

“The ease of delivery, selectivity, and effectiveness make DCA an attractive candidate for proapoptotic cancer therapy which can be rapidly translated into phase II–III clinical trials.”

 

In the discussion section of the paper, the authors conclude with the following statement:

 

Our work identifies the mitochondria-NFAT-Kv channel axis and PDK as critical components of the metabolicelectrical remodeling that characterizes many human

cancers and offers a tantalizing suggestion that DCA may have selective anticancer efficacy in patients. The very recent report of the first randomized long-term clinical trial of oral DCA in children with congenital lactic acidosis (at doses similar to those used in our in vivo experiments) showing that DCA was well tolerated and safe (Stacpoole et al., 2006) suggests a potentially easy translation of our work to clinical oncology.” (Emphasis mine)

 

In other words, the authors are saying that in their opinion these experiments in the lab and rats suggests that DCA may be a simple, effective treatment for cancer and we should move forward with clinical trials based solely on their theory and their results.

 

I am not being critical of the authors’ comments, except for describing this as a “potentially easy” process.  Nothing in translation from the bench to the bedside is easy.

 

This is not the first time such suggestive statements have been made.  In fact, these types of comments are not unusual in papers of this type.

 

What I am critical of is the lack of discrimination in judgment of other folks—not the researchers--who have picked up on these lines and rapidly circulated the thought that we have a cure for cancer at hand, and that we must stop doing everything else and get this simple, safe and effective treatment to cancer patients immediately.

 

Even my own blog was “hit” with such a suggestion this past week.

 

Well, as they say, if I had a nickel for every time I have heard such a proposition based on this type of evidence, I would be a rich man.

 

Please try to understand that I am NOT saying this is a theory that won’t work.  It may, and if it does prove valuable, that would be terrific.

 

It is just that I have been around a while and have seen this type of hope and hype just a few times too many.

 

I have seen cancer patients hopes lifted and dashed so often that I can’t help but be cautious and conservative in my thinking.

 

Let’s take a look at what we can say.

 

First, I did a literature search on PubMed looking for articles with the terms dichloroacetic acid and cancer.

 

Although I didn’t have access to all of the articles, one underlying theme stood out:  DCA is an organic chemical that causes liver cancer in laboratory mice when put in their drinking water.

 

It is NOT non-toxic.  It is a byproduct of another chemical called trichloroethylene (TCE), which has been a source of concern as a cancer causing agent for some time. (A simple Google search will give you over 8 million hits on this topic.)

 

Here is what the Agency for Toxic Substances and Disease Registry has to say about TCE:

 

“HIGHLIGHTS: Trichloroethylene is a colorless liquid which is used as a solvent for cleaning metal parts. Drinking or breathing high levels of trichloroethylene may cause nervous system effects, liver and lung damage, abnormal heartbeat, coma, and possibly death. Trichloroethylene has been found in at least 852 of the 1,430 National Priorities List sites identified by the Environmental Protection Agency (EPA).”

 

So before you start going out and adding DCA to your drinking water to prevent cancer, a degree of caution would be very prudent at this point.

 

Another article that came up in the Google search was a 1983 article from the New England Journal of Medicine.

 

Here is a quote from that article:

 

“Despite improvement in their lactic acidemia, all patients but one died of their underlying disease. No serious drug-related toxicity occurred. We conclude that dichloroacetate is a safe and effective adjunct in the treatment of patients with lactic acidosis, although the ultimate prognosis may depend on the underlying disease.”

 

In other words, the treatment was a success, but the patient died.

 

But experience is the best teacher in my opinion.

 

For example, even in the short time this blog has been in “production” I have written articles on other relatively non-toxic substances and their potential role in either preventing or reducing the burden of cancer.

 

New discoveries about vitamin C and vitamin D come to mind.

 

We haven’t seen the hue and cry about getting these vitamins into cancer clinical trials, yet based on evidence similar to the DCA paper, there is equal reason to believe that either or both of these vitamins may have a role in cancer prevention and/or cancer treatment.

 

Still vivid in my mind was something that happened in the early 1970s when I was training to be an oncologist at the National Cancer Institute.

 

To the best of my recollection, a research report suggested that a particular material was very effective in treating acute leukemia.  Once again, mice that had a transplanted leukemia were given this drug, and the leukemia miraculously disappeared.

 

To demonstrate that this new drug was so non-toxic that the researcher went on to one of the major national morning television shows and injected himself with the drug right there on camera as he touted his new discovery.

 

The problem was that there were only very, very small amounts of the drug available.

 

Research centers around the world rapidly picked up the beat, and vied to get their hands on some of this new miracle powder.

 

Cancer research centers were receiving phone calls with incredible offers of financial support from wealthy patients with leukemia, if they could just get these folks this wonder drug.

 

The only thing we found out was that it didn’t work at all.

 

Of course, there are stories on the other side of the aisle so to speak, where simple discoveries in fact have proven to have great benefit in the treatment of some cancers, such as the treatment of promyelocytic leukemia.

 

But the overwhelming number of promising laboratory experiments have not ended up as effective cancer treatments when they move from the bench to the bedside, if they are even able to get to the bedside in the first place.

 

It is indeed a long, difficult road that must be traveled to demonstrate that an exciting new idea actually works in the treatment of cancer.

 

So, pardon me if I am a skeptic.  As Jessica Rabbit said, “I am just drawn that way.”

 

But I am also an optimist, as I have said many times in these pages.  I do believe that there are exciting new developments in cancer treatment emerging from laboratories around the world.   Maybe DCA is one of them.

 

Right now, we simply do not know what is going to occur as DCA moves through the research pipeline, first with laboratory confirmation and critical analysis of these findings and then on to the clinic if others review this report and agree that DCA is a promising approach that deserves a clinical trial in the treatment of cancer.

 

It’s just that I believe in patience, prudence and caution because my experience has taught me that those are the best guidelines to follow in assessing reports such as the one in Cancer Cell.

 

It is way too soon to know whether this is a cancer treatment breakthrough or an urban legend or something in between.

 

I am acutely aware that there are cancer patients out there who are fighting every day for their survival, and are hoping that there is one last chance to get a treatment that may prolong or save their lives.

 

For some of you out there to inappropriately make them feel that DCA is the answer to their prayers based on this single early stage report in a medical research journal is, in my opinion, not acceptable at best and despicable at worst. 

 

 

 

 

Filed Under:

Cancer Care | Medications | Treatment

Cigarettes Mean Big Bucks

by Dr. Len February 02, 2007

The financial markets are going gaga over Altria.

 

Who is Altria and why all the excitement?

 

Just one of the most profitable companies which happens to make cigarettes and markets them around the world.  You may know it better from one of its leading brands: Marlboro.

 

But the reason for the excitement isn’t just about the cigarette business.  It’s about the business that Altria is getting out of.

 

You see, Kraft Foods is also part of Altria.  You know Kraft Foods because you likely use many of their products, especially macaroni and cheese.

 

That’s quite a contrast: cigarettes vs. mac and cheese.

 

And because Altria will no longer make macaroni and cheese, investors are excited.

 

They call this an “unwinding” that will "unlock the value" of the company and remove an albatross from around their corporate neck.  The cheese company will no longer drag down the profits of the cigarette makers.

 

Instead of making your kids happy at dinner, they will now be able to devote all of their resources to killing many of them by age 80.

 

And that means big bucks and big profits.

 

The sickness of all of this struck me last night while I was reading a recent issue of Barron’s while on a plane to San Diego.

 

The report in this well respected financial newspaper wasn’t evil in itself.  I respect the reporter, who like many of us just doing what he is supposed to do, namely report the news of interest to his readers about the soon-to-be unleashed value in the stock.

 

Heck, I guess that many of us who own mutual funds as investments or as part of our 401Ks or other retirement plans aren’t even aware that one of the most profitable components of those funds is cigarette stocks. 

 

We are owners of this company and similar ones, and for many of us there is no way to avoid being a part owner of these tobacco companies.

 

Being successful and making money is one thing.  Having to kill people with cigarettes and then cheer the profits is quite another.

 

Let me provide some quotes from the Barron’s article:

 

“Altria's fans are bullish on the looming breakup and argue that shares of Altria Group (ticker: MO), which traded at 88 Friday, could top 100 in the next year. "I'm very optimistic about the stock, particularly on a risk-reward basis," says David Adelman, tobacco analyst at Morgan Stanley.

“While widely anticipated, the Kraft (KFT) spin-off should usher in a period of good performance for Altria stock, Adelman argues. Investors should give some credit to Altria when the Kraft split occurs in a few months because it will indicate no successful legal challenge to the move was mounted, he says.

“Philip Morris USA has a 50% U.S. market share, led by Marlboro, which accounts for 40% of domestic cigarette sales. Philip Morris International has a 15% share of the overseas market, including a leading position in most of Western Europe and a promising beachhead in China.

“Demographics favor Altria because of Marlboro's popularity with young smokers. It's estimated that about 65% of new smokers in the U.S. choose Marlboro. Philip Morris International does have challenges, notably in Western Europe, where it gets about half its revenue. Big tax hikes and restrictions on indoor smoking have hurt.”

There was also an article in the Wall Street Journal yesterday that had similar wonderful news for the stockholders.

 

Here are some quotes from that report:

 

“A board decision on the separation of the tobacco businesses is expected later this year, and in the eyes of many analysts, an official acknowledgment of the move by Altria could push Altria shares higher.

“By contrast, Altria's international tobacco operations are still growing. Overall, Philip Morris International sold 831.4 billion cigarettes in 2006, up 3.4%, while operating income rose 8.1% to $8.5 billion. PMI has a licensing deal with China National Tobacco Corp. for Marlboro. Nearly two trillion cigarettes a year are consumed in China. "Our ambition is to become [CNTC's] No. 1 strategic partner, but that will take time," Mr. Camilleri said, acknowledging that Marlboro's market share is tiny. "Marlboro has significant brand equity in China," he added, "and we'll see how it develops over time ... Ultimately the market will open up."

Here is what the New York Times had to say in a front page article on January 31st:

 

“For all the industry’s apparent troubles, however, the future of cigarettes appears to be brighter than ever.

 

“That at least is the message investors are sending as the Altria Group — the company once known as Philip Morris and the maker of the world’s most popular cigarette, Marlboro — prepares to split itself by spinning off its Kraft Foods division to shareholders and become, once again, primarily a tobacco company. Today, Louis C. Camilleri, the chief executive of Altria, is expected to set a timetable for completing the spin-off.

 

Here is one of the best quotes from that article:

 

“Something that is forgotten in all of this is people like to smoke,” said David Adelman, an analyst at Morgan Stanley, who noted that United States tobacco stocks have beaten the Standard & Poor’s 500-stock index in each of the last six years. “It’s enjoyable and there’s not an alternative product.”

“He added: “If frozen dinners get too expensive, people will try something else. That’s not true with cigarettes — you are not up at night worried about that product that is going to make cigarettes obsolete.”

 

And, here is another:

 

“Why is Wall Street so infatuated with cigarettes? Cigarettes have certain advantages over other consumer products, not the least of which is that they are addictive. They are inexpensive to make, require almost no innovation, there is a global market for them, and cigarette makers can raise prices without seeing much of a drop in business.”

 

And, finally:

 

“The future prospects are particularly attractive in developing countries, where smoking has not yet declined as it has in more developed parts of the world like the United States and Europe.

“In China, for instance, the Philip Morris International unit of Altria signed a deal in 2005 that allows it to manufacture and sell Marlboro cigarettes to the country’s 350 million smokers. There are an estimated 1.3 billion smokers worldwide.

“But even in the United States, with 45 million smokers, the Philip Morris USA unit of Altria continues to generate sizable profits by raising prices. It also hopes eventually to lure consumers with new tobacco products, including a small tea-bag-like pouch that is smoke-free, spit-free and tucks into the cheek”

 

So, my friends, here we are.  This is certainly one of capitalism’s finest moments.

 

For your information, I believe in free enterprise.  I do believe it is the best economic system that has been devised. 

But this is a sick distortion of what the financial world should be about.

 

After all, cigarettes are a product that when used as intended has a fifty percent chance of killing you.  And even if it doesn’t kill you, it can certainly mess up your life.

 

What if someone came along with a product today that had similar characteristics?  It wouldn’t even get to first base (except, perhaps, if it was a defense oriented enterprise).

 

The lawyers would be all over it.  Think Vioxx and you understand what I am trying to say here.

 

But here we are applauding companies for doing just that. 

 

Kill folks, get rich. 

 

Get rid of the mac and cheese, and get richer. 

 

Export to those other countries around the world and get richer still.

 

There probably is a way to get our arms around this, however.  Sort of like turning the process back against itself.  Using capitalism to defeat the sick motivations of these companies.

 

I wrote about a bold new idea to buy the tobacco companies back in July.  There was a presentation at the World Conference on Tobacco OR Health that made just such a suggestion, and unlike some of my respected colleagues, I didn’t dismiss it immediately as a wacko idea.

 

As ludicrous as it sounds, I still think it is an interesting concept.

 

You may remember the book “Barbarians at the Gate”, where some pretty smart people entered into a bidding frenzy to buy RJR Nabisco, which was a cigarette maker, to take it private as part of a leveraged buyout.  (There is that food thing again.  Nabisco is a cookie maker.  In that case, instead of mac and cheese, it was all about the Oreos and Fig Newtons.)

 

They succeeded.  And, I assure you, the amount of money involved was huge. 

 

It shows that when people are motivated, they can make things happen.

 

And, if you follow this stuff, you know that huge financial funds are being accumulated as we speak to purchase very large and very expensive public companies

 

Ultimately, as suggested in that July presentation, if someone with the right intent could purchase a sufficient amount of Altria’s stock, the purpose of the company could be shifted by management towards social responsibility. 

 

Profits could be used to pay down the debt, decrease marketing to kids and decrease exports of cigarettes (although in the Altria case, they are contemplating spin-offs of their tobacco business into a domestic United States company and an international company.  That way, if things went sour here, they would still be able to develop their international marketing plans from a safer haven).

 

There are some business folks out there who do have the money to make this happen.

 

There are some very, very large foundations who have indicated they want to do some good in this world. 

 

They have also said that they don’t want their money to linger around forever, which means it has to be spent within a reasonable time frame.

 

And, they have indicated they are interested in health problems confronting the world.

 

Maybe they should consider making an investment in Altria.

 

The returns on their investment would be excellent, at least in the short term. They could in fact do more good than they would have otherwise anticipated.  At least that’s what the financial pundits are saying.

 

In the meantime, as they purchase the stock quietly in the open market, they could eventually get a large enough share of the company such that they could get a seat on the board of directors, and then influence management’s decisions.

 

They could then cut back on marketing expenses—especially to young folks who are the prime target for future customers—and mount an effective anti-smoking youth-oriented advertising campaign, along the lines of the Legacy Foundation ads that were so effective a couple of years ago.

 

Cigarette sales would drop, health would improve, and the country would be better off because people would not have to pay ridiculous prices for cigarettes and health care.  (I saw a soldier pay $7.60 for a pack of cigarettes at Hartsfield Airport in Atlanta on Wednesday.  He had to dig deep in his pocket for the money, and he certainly was taken aback.  If it had been anything other than cigarettes, I would have probably offered to help him out.)

 

Over time, the company would shift into other more appropriate businesses.  Maybe they would even buy back Kraft Foods

 

The money would be well spent to achieve a remarkable goal.

 

Sounds like a good investment to me.

 

Now that would be story for the ages.

 

 

Filed Under:

Lung Cancer | Tobacco

About Dr. Len

Dr. Len

J. Leonard Lichtenfeld, MD, MACP - Dr. Lichtenfeld is Deputy Chief Medical Officer for the national office of the American Cancer Society.

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