WASHINGTON (Court TV) -- Big Tobacco and eight states reached a $206 billion
settlement that falls short of tobacco critics demands but resolves state
suits seeking the recovery of smoking-related health costs.
The Nov. 14 agreement eliminates 46 current and future state suits seeking the
recovery of Medicaid costs for treating patients with smoking-related
illnesses. (Mississippi, Florida, Texas, and Minnesota have already settled
their suits for $40 billion.)
Philip Morris, R.J. Reynolds Tobacco, Lorillard Tobacco, and Brown &
Williamson, four of the nation's largest cigarette manufacturers, decided to
spend $1.7 billion on research and programs aimed at discouraging smoking,
especially among teenagers. The states would receive $12 billion upfront over
the next five years, and the rest of the payments would be made until 2025.
The tobacco companies also agreed to limit its product advertising and
marketing.
"It's time to stop the legal bickering," said Washington state
attorney general Christine Gregoire in a press conference. "There is a
limit to what can be accomplished in the courts. It is now time to take it to
the streets. It is now time for Congress to regulate cigarettes with FDA
approval."
The settlement, the largest U.S. civil settlement ever, will cost the industry
much less than the failed $368 billion plan proposed in 1997. But while that
plan banned payment of punitive damages and future class-action suits, the
$206 billion settlement does not shield the industry from such action.
In addition, the 1997 proposal required Congressional approval while this
agreement does not.
Big Tobacco will be banned from using billboard and transit advertisements and
will not be able to sell clothing and merchandise with cigarette brand logos.
The companies also cannot use cartoon characters such as Joe Camel in their
ads. Despite the limits on advertising, the tobacco companies will still be
able to use human figures such as the Marlboro man. They also will be able to
sponsor at least one sporting event a year.
"Our kids have been walking billboards for the tobacco industry. With
this agreement Joe Camel is gone. The hats, backpacks, T-shirts with tobacco
logos are gone. Our kids will finally see the truth, the devastating effects
of smoking," Gregoire said.
Although the attorneys general called for Congress to approve FDA regulation
of tobacco products, the settlement did not address the issue. On Nov. 12, the
4th U.S. District Court of Appeals in Virginia upheld a prior ruling that
struck down regulations requiring minors to present photo identification when
buying cigarettes and allowed the FDA to regulate nicotine as a drug.
Tobacco industry critics did not participate in drafting the settlement.
Although several state attorneys general have said they are impressed with the
deal, some have admitted that the deal does not satisfy industry critics'
demands.
"There is more to be done legislatively," said Gregoire, one of the
architects of the settlement. "We think this represents more than they
can expect to receive in the courts."
But Mark Gottlieb, an attorney for the Tobacco Liability Project at the
Northeastern University School of Law, disagrees and feels that states cheated
themselves and sick smokers by agreeing to the settlement. Although the
settlement allows the states to recover past and future medical costs for
treating sick smokers, Gottlieb says the agreement is most advantageous to the
tobacco industry.
"I'm afraid that the states, at least many of those signing on to this
deal, are short-selling themselves, their taxpayers, and the future health of
their kids," said Gottlieb. "These cases settle all past claims as
well as future claims for the next quarter century for the cost of treating
indigent sick smokers under Medicaid. While states may receive, over a 25-year
payment plan, more than they were seeking in a lump sum, for past damages,
they are pre-empted from recovering for future damages until 2024. Future
damages over the next 25 years are likely to be substantially more due to
medical inflation and the advent of expensive new treatments for lung disease,
including expensive transplants."
Under the settlement, the tobacco companies also will not be penalized if
number of under-age smokers fails to decrease. According to Gottlieb, the
state attorneys general sold out their promise to protect children by agreeing
to this stipulation.
"The lack of any sort of lookback provisions to punish the industry if it
fails to reduce youth smoking is a shameful omission," Gottlieb said.
"It is hard to understand how the attorneys general, who indicated from
the beginning that they brought these suits not for money, but to protect
kids, could fail to insist on lookbacks."
Copies of the settlement were sent to 46 states. These states must approve or
reject the agreement by Friday, Nov. 20. President Clinton praised the deal as
an "important step forward," but noted that a lot more needed to be
done towards passing national tobacco legislation.
"I am asking the 106th Congress to put partisan issues aside and think of
our children first," Clinton said. "Comprehensive tobacco
legislation must address many things, but one of the things it must clarify is
the position of the FDA. Everyday, thousands of children start smoking. Today,
a significant step was taken towards saving our children's lives and giving
them the future they deserve."
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