Three U.S. cigarette makers have reached a settlement with 17 states to resolve a dispute over payments required under a 1998 anti-smoking agreement. The states include Alabama, as well as Washington D.C. and Puerto Rico. Philip Morris USA, R.J. Reynolds Tobacco Co. and Lorillard Inc. will pay to the states their portion of more than $4 billion in disputed payments. In exchange, the manufacturers will receive credits against future payments. The payments stem from the 1998 Master Settlement Agreement (MSA) that ultimately prevented companies from being sued by state governments for the costs of health care for smokers. The settlement, which I thought at the time was much too low, required a combination of yearly payments to states and voluntary restrictions on tobacco advertising and marketing.
Since 2003, Alabama has received nearly $1 billion from the MSA. Alabama Attorney General Luther Strange had this to say in a prepared statement:
This settlement is important for Alabama and essential to the future of our public health funding from the Alabama 21st Century Fund. The Legislature has utilized the state’s MSA funds by funding incentives for economic development and supporting health care programs for children and seniors. Our office is focused on maintaining the integrity of that fund. Under the terms of the settlement, we avoid the significant uncertainty of costly litigation and the potential loss of one or more entire annual MSA payments.
The tobacco companies must be held accountable for their wrongdoing over the years that has killed and injured hundreds of thousands of Americans. Many believed at the time that the settlements under the MSA were actually better for the tobacco industry than they were for the states. I tend to agree with that assessment. Nevertheless, it appears this latest settlement is good for all concerned.
Source: Associated Press
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