1. Towards an Industry Advisory Group An Open Round-Table Conversation 19 May 2009 Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.cominfo@foresight-grp.com www.foresight-grp.com

2. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com 2 Towards an Industry Advisory Group – An Open Round-Table Conversation Faced with the product design, manufacturing, marketing and sales restrictions and requirement as well as new reporting and documentation requirements to be mandated under a new regulatory regime, what should companies be doing now to prepare their organizations and their consumers?

3. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com Purpose & Objectives of Today’s Discussion Facilitate preliminary discussion of guiding principles for the tobacco industry as it enters a new era of regulation Encourage active participation and presentation of differing viewpoints Lay groundwork for future discussions and industry actions 3 Ultimately, agreement on a set of actionable guiding principles will allow the tobacco industry to better adapt and respond to the challenges of a new and ever-evolving regulatory environment.

4. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com Panel Members NameAffiliation Farrell Delman (moderator)Tobacco Merchants Association Terry GallagherSmoker Friendly Bill GreiweCheyenne Tobacco Bill GodshallSmokefree Pennsylvania Brian HaynesTroutman Sanders John LauterbachLauterbach & Associates John MantheiLatham Watkins David O’ReillyBAT Adrian PayneTobacco Horizons Roger PennMane France Jamie PortnoffForesight Group Jim StarkeyTobacco Merchants Association Jim SwaugerRAI Lyle SmithDLC Services Uwe TrinksForesight Group

5. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com What Companies Should be Doing Now Required actions can be organized in three major categories: 5 Regulatory Response Regulatory Affairs Strategy Regulatory Readiness The following slides will examine these topics in more detail

6. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com “Regulatory Response” FDA and other health authorities will publish proposed regulations and guidelines and solicit stakeholder feedback Stakeholders, including tobacco manufacturers, will have the opportunity to provide written responses to the health authorities Tobacco can chose to either respond using the pharma industry approach or take an alternative approach 6 Traditional Pharma approach - Each individual manufacturer develops their own interpretation/application of the proposed rules, and submits their own written response to health authorities Alternative approach – Single task force composed of representatives from all manufacturers collectively discuss proposed rules and potential implications for industry, and coordinate a single written response to health authorities

7. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com “Regulatory Affairs Strategy” (1) Waxman Bill includes requirement for initial and periodic registration of new and existing individual tobacco products and their ingredients, including a description of tobacco, substances, compounds, and additives, including nicotine content and smoke constituents, by brand and sub-brand Documents that relate to health, toxicological, behavioral, or physiologic effects of current or future tobacco products, their constituents (including smoke constituents), ingredients, components, and additives would also require submission to health authorities In order to bring a “modified risk product” to market, a detailed product application will need to be submitted; following approval, the applicant will need to conduct post-marketing surveillance 7 Each tobacco manufacturer will need to evaluate how proposed regulations will impact their overall product strategies in both the near- and long-term

8. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com “Regulatory Affairs Strategy” (2) Specific regulatory strategies will need to be developed, and these should take into account: Current regulatory landscape Anticipated future regulatory landscape Emerging public policies Available regulatory pathways for approval Achievable commercial claims/target labeling Potential regulatory and/or product risks Possibility of accelerated development or exclusivity Industry will need to anticipate how the new regulatory environment will impact timelines to: Bring a new or modified product to market Efficiently and accurately register existing products with FDA Is all required information available to fulfill this requirement? Can planned product launches continue to market on schedule? 8

9. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com “Regulatory Affairs Strategy” (3) Stakeholders in establishment of regulatory affairs strategy: Regulatory affairs Clinical development Pharmacovigilance/drug safety Pre-clinical Sales/Marketing Manufacturing 9

10. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com “Regulatory Readiness” (1) Industry needs to assess their organizational, functional and technical needs following interpretation of proposed regulations New technical solutions will be required for: Safety reporting - for adverse events reported by consumers Product complaint tracking/investigation – for product complaints reported by consumers Product registration information- to manage information communicated to health authorities Corrective action/Preventative action tracking Existing technical solutions will need to undergo a functional technical assessment 10 Traditional Pharma approach - Each individual manufacturer performs their own assessment and buys/builds their own technical solutions Alternative approach - Industry performs collective assessment and establishes “global” technical industry standards and “industry technical solutions” that do not constitute a competitive advantage

11. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com “Regulatory Readiness” (2) Functional areas will need to be established and/or enhanced: Manufacturing Clinical development Pharmacovigilance Regulatory Affairs Tobacco manufacturers should be prepared to comply with: Good Clinical Practices Good Manufacturing Practices Good Pharmacovigilance Practices 11

12. Confidential Do not copy or reproduce without express written permission of Foresight Group, LLC (Foresight). For more information, contact Foresight at info@foresight-grp.com. Or visit our website: www.foresight-grp.com cinfo@foresight-grp.com www.foresight-grp.com “Regulatory Readiness” – Pharma Experience Pharma has had mixed success with the collective approach, due to several factors: Pharma can be “slow–moving” with regard to adopting new approaches Efforts to work collaboratively were initiated after each manufacturer already began to work independently Successful efforts to date have had a tremendously positive impact on business efficiencies 12