Tobacco Master Settlement Agreement
Tobacco Master Settlement Agreement
The Tobacco Master Settlement Agreement was entered in November 1998, originally between the four largest United States tobacco companies and the attorneys general of 46 states. The states settled their Medicaid lawsuits against the tobacco industry for recovery of their tobacco-related health-care costs. In exchange, the companies agreed to curtail or cease certain tobacco marketing practices, as w…
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What is the tobacco Master Settlement Agreement (MSA)?
The Tobacco Master Settlement Agreement (MSA) | NAAG In 1998, 52 state and territory attorneys general signed the Master Settlement Agreement (MSA) with the four largest tobacco companies in the U.S. to settle dozens of state lawsuits brought to recover billions of dollars in health care costs associated with treating smoking-related illnesses.
How much did the Master Settlement Agreement cost?
Under the Master Settlement Agreement, seven tobacco companies agreed to change the way they market tobacco products and to pay the states an estimated $206 billion. The tobacco companies also agreed to finance a $1.5 billion anti-smoking campaign, open previously secret industry documents,...
How are tobacco companies obligated to pay the settling states?
Under the MSA, tobacco manufacturers are obligated to make annual payments to the Settling States in perpetuity, so long as cigarettes are sold in the United States by companies that have settled with the States. The NAAG Center for Tobacco and Public Health makes certain such payments are made.
How many states have signed contracts with tobacco companies?
In November 1998, forty-six US states, along with the District of Columbia and five US territories, and the major tobacco companies entered into a contract of an extraordinary nature. (The other four states, Florida, Minnesota, Mississippi, and Texas, had entered similar agreements on their own beginning the year before.)
How much was the Master Settlement Agreement?
Under the Master Settlement Agreement, seven tobacco companies agreed to change the way they market tobacco products and to pay the states an estimated $206 billion.
What did the master settlement agreement that cigarette companies agreed to in 1998 do?
In 1998, 52 state and territory attorneys general signed the Master Settlement Agreement (MSA) with the four largest tobacco companies in the U.S. to settle dozens of state lawsuits brought to recover billions of dollars in health care costs associated with treating smoking-related illnesses.
What was the result of the 1998 tobacco settlement?
In the largest civil litigation settlement in U.S. history, the states and territories scored a victory that resulted in the tobacco companies paying the states and territories billions of dollars in yearly installments.
Where did the tobacco settlement money go?
This year (fiscal year 2020), the states will collect $27.2 billion from the 1998 tobacco settlement and tobacco taxes. But they will spend less than 3% – just $739.7 million – on programs to prevent kids from using tobacco and help smokers quit - less than a quarter (22.4%) of the total funding recommended by the CDC.
Can I sue tobacco companies for COPD?
Yes, you can still sue tobacco companies in certain cases. You may be able to bring an action as an individual or, in some cases, as a representative of a class in a class action.
What is MSA reporting for tobacco?
MSA Multicat Mandatory Data Multicat reports are weekly reports filed electronically by tobacco, candy, drinks, and grocery distributors to report sales and inventory floor counts to brand manufacturers as part of participating in their trade programs.
How long did tobacco litigation last?
In the forty years through 1994, over 800 private claims were brought against tobacco companies in state courts across the country.
What were the terms of the Master Settlement Agreement?
It requires the tobacco industry to pay the settling states billions of dollars annually forever, forbids participating cigarette manufacturers from targeting youth, imposes restrictions on advertising and promotional activities, and bans or restricts transit advertising, outdoor advertising, product placement in media ...
When did the Big Tobacco lawsuit start?
The first big win for plaintiffs in a tobacco lawsuit occurred in February 2000, when a California jury ordered Philip Morris to pay $51.5 million to a California smoker with inoperable lung cancer. Around this time, more than 40 states sued the tobacco companies under state consumer protection and antitrust laws.
What is tobacco settlement money used for?
In that settlement, state governments received $246 billion to restrict cigarette sales and marketing by forbidding manufacturers from targeting youth and banning specific types of media (e.g., cartoons). The settlement funds were also to be used for prevention and cessation programs.
Does the government get money from cigarettes?
State and local governments collected $19 billion in revenue from tobacco taxes in 2019, which was 0.6 percent of state and local general revenue.
When did the big tobacco lawsuit start?
The first big win for plaintiffs in a tobacco lawsuit occurred in February 2000, when a California jury ordered Philip Morris to pay $51.5 million to a California smoker with inoperable lung cancer. Around this time, more than 40 states sued the tobacco companies under state consumer protection and antitrust laws.
Which statement about the effects of nicotine use is true quizlet?
Which statement about the effects of nicotine use is true? Nicotine has no effect on brain chemistry.
Which state has the highest rate of smokers?
Smoking: State-By-State RankingState/TerritoryRankTotalKentucky128.3West Virginia227.0Oklahoma325.8Missouri424.647 more rows•Mar 12, 2009
Who was the first European to encounter tobacco plants?
Christopher Columbus1492 – Christopher Columbus first encounters dried tobacco leaves. They were given to him as a gift by the American Indians. 1492 – Tobacco plant and smoking introduced to Europeans.
How many tobacco companies have settled under the MSA?
Eventually, more than 45 tobacco companies settled with the Settling States under the MSA. Although Florida, Minnesota, Mississippi, and Texas are not signatories to the MSA, they have their own individual tobacco settlements, which occurred prior to the MSA.
What is the prohibition on tobacco companies?
Prohibiting tobacco companies from taking any action to target youth in the advertising, promotion or marketing of tobacco products.
What is the NAAG Center for Tobacco and Public Health?
The NAAG Center for Tobacco and Public Health works with the Settling States of the MSA to preserve and enforce the MSA’s monetary and public-health mandates, including: Representing, advising, and supporting the Settling States in MSA-related legal matters , including litigation and arbitrations.
How does MSA work?
The MSA’s purpose is to reduce smoking in the U.S., especially in youth, which is achieved through: 1 Raising the cost of cigarettes by imposing payment obligations on the tobacco companies party to the MSA. 2 Restricting tobacco advertising, marketing, and promotions, including:#N#Prohibiting tobacco companies from taking any action to target youth in the advertising, promotion or marketing of tobacco products.#N#Banning the use of cartoons in advertising, promotions, packaging, or labeling of tobacco products.#N#Prohibiting tobacco companies from distributing merchandise bearing the brand name of tobacco products.#N#Banning payments to promote tobacco products in media, such as movies, televisions shows, theater, music, and video games.#N#Prohibiting tobacco brand name sponsorship of events with a significant youth audience or team sports. 3 Eliminating tobacco company practices that obscure tobacco’s health risks. 4 Providing money for the Settling States that states may choose to use to fund smoking prevention programs. 5 Establishing and funding the Truth Initiative, an organization “dedicated to achieving a culture where all youth and young adults reject tobacco.”
What law gave the FDA the power to regulate tobacco products?
In 2009, the Family Smoking Prevention and Tobacco Control Act gave the FDA the power to regulate tobacco products. State attorneys general have been active participants in helping the FDA shape its regulatory authority.
How does the MSA affect smoking?
The MSA continues to have a profound effect on smoking in America, particularly among youth. Between 1998 and 2019 , U.S. cigarette consumption dropped by more than 50%. During that same time period, regular smoking by high schoolers dropped from its near peak of 36.4% in 1997 to a low 6.0% in 2019. As advocates for the public interest, state attorneys general are actively and successfully continuing to enforce the provisions of the MSA to reduce tobacco use and protect consumers.
What is the purpose of the MSA?
The MSA’s purpose is to reduce smoking in the U.S., especially in youth , which is achieved through: Raising the cost of cigarettes by imposing payment obligations on the tobacco companies party to the MSA.
What is the tobacco master settlement agreement?
The Tobacco Master Settlement Agreement ( MSA) was entered in November 1998, originally between the four largest United States tobacco companies ( Philip Morris Inc., R. J. Reynolds, Brown & Williamson and Lorillard – the "original participating manufacturers", referred to as the "Majors") and the attorneys general of 46 states. The states settled their Medicaid lawsuits against the tobacco industry for recovery of their tobacco-related health-care costs. In exchange, the companies agreed to curtail or cease certain tobacco marketing practices, as well as to pay, in perpetuity, various annual payments to the states to compensate them for some of the medical costs of caring for persons with smoking-related illnesses. The money also funds a new anti-smoking advocacy group, called the Truth Initiative, that is responsible for such campaigns as Truth and maintains a public archive of documents resulting from the cases.
When was the Master Settlement Agreement signed?
Adoption of the "Master Settlement Agreement". In November 1998 , the Attorneys General of the remaining 46 states, as well as of the District of Columbia, Puerto Rico, and the Virgin Islands, entered into the Master Settlement Agreement with the four largest manufacturers of cigarettes in the United States.
Why did the OPMs and the settling states not join the MSA?
The OPMs worried that the NPMs, both because they would not be bound by the advertising and other restrictions in the MSA and because they would not be required to make payments to the settling states, would be able to charge lower prices for their cigarettes and thus increase their market share.
How long does it take for a SPM to join the Master Settlement Agreement?
As an incentive to join the Master Settlement Agreement, the agreement provides that, if an SPM joined within ninety days following the Master Settlement Agreement's "Execution Date," that SPM is exempt ("exempt SPM") from making annual payments to the settling states unless the SPM increases its share of the national cigarette market beyond its 1998 market share, or beyond 125% of that SPM's 1997 market share. If the exempt SPM's market share in a given year increases beyond those relevant historic limits, the MSA requires that the exempt SPM make annual payments to the settling states, similar to those made by the OPMs, but based only upon the SPM's sales representing the exempt SPM's market share increase.
What was the 1997 National Settlement Proposal?
This proposed congressional remedy (1997 National Settlement Proposal (NSP), a.k.a. the "June 20, 1997 Proposal") for the cigarette tobacco problem resembled the eventual Multistate Settlement Agreement (MSA), but with important differences. For example, although the congressional proposal would have earmarked one-third of all funds to combat teenage smoking, no such restrictions appear in the MSA. In addition, the congressional proposal would have mandated Food and Drug Administration oversight and imposed federal advertising restrictions. It also would have granted immunity from state prosecutions; eliminated punitive damages in individual tort suits; and prohibited the use of class actions, or other joinder or aggregation devices without the defendant's consent, assuring that only individual actions could be brought. The congressional proposal called for payments to the states of $368.5 billion over 25 years. By contrast, assuming that the Majors would maintain their market share, the MSA provides baseline payments of about $200 billion over 25 years. This baseline payment is subject to
How many plaintiffs have ever prevailed in the tobacco case?
Only two plaintiffs ever prevailed, and both of those decisions were reversed on appeal. As scientific evidence mounted in the 1980s, tobacco companies claimed contributory negligence as they asserted adverse health effects were previously unknown or lacked substantial credibility.
How many lawsuits were filed against tobacco companies?
By the mid-1950s, individuals in the United States began to sue the companies responsible for manufacturing and marketing cigarettes for damages related to the effects of smoking. In the forty years through 1994, over 800 private claims were brought against tobacco companies in state courts across the country. The individuals asserted claims for negligent manufacture, negligent advertising, fraud, and violation of various state consumer protection statutes. The tobacco companies were successful against these lawsuits. Only two plaintiffs ever prevailed, and both of those decisions were reversed on appeal. As scientific evidence mounted in the 1980s, tobacco companies claimed contributory negligence as they asserted adverse health effects were previously unknown or lacked substantial credibility.
What are the restrictions on tobacco products?
The MSA contains three main categories of restrictions: advertising restrictions, brand name restrictions, and give-away restrictions . The first set of restrictions ban outdoor and transit advertising of tobacco products, any advertising targeted at youth (under 18 years of age), and any use of cartoons in advertising, promoting, packaging, or labeling tobacco products. There are two main exceptions to the advertising prohibitions. First, manufacturers may advertise tobacco products on the property of retail establishments, subject to certain size restrictions (generally, no larger than fourteen square feet). Additionally, manufacturers may advertise tobacco products at adult-only facilities or adult-only events.
When do you get your Kentucky tobacco certification?
The certification must be completed and delivered to our office on or before April 30th each year. The directory of compliant manufacturers is available on the Revenue Cabinet website and is updated as necessary. If a manufacturer or brand is not found on the directory, tax stamps may not be placed on packages of those cigarettes. Please contact our office should you have any questions regarding the certification or directory.
What is the tobacco master settlement agreement?
Under the MSA, the settling cigarette manufacturers agree to certain prohibitions and restrictions on the marketing and advertising of their products and also agree to make annual payments to the States.
Who settled the tobacco master settlement?
Tobacco Master Settlement Agreement. In November 1998, four of the major cigarette manufacturers—Philip Morris, RJ Reynolds, Brown & Williamson and Lorillard— settled lawsuits filed by New Mexico, 45 other states, and the District of Columbia that the State had initiated to recover a portion of the health care costs that cigarette smoking had ...
What happens if a cigarette manufacturer fails to comply with the Model Escrow Statute?
A failure on the part of a cigarette manufacturer selling its product in New Mexico to abide by the Model Escrow Statute will expose that tobacco product manufacturer to civil penalties and other sanctions.
How long after master settlement agreement is it required to stop smoking?
Beginning 180 days after the Master Settlement Agreement Execution Date, companies must: Develop and regularly communicate corporate principles that commit to complying with the Master Settlement Agreement and reducing youth smoking.
When did tobacco companies enter into settlement agreements?
If tobacco companies, before October 1, 2000, enter into an agreement with better overall terms, settlement states will get the benefit of that agreement. (This does not apply to any agreement reached after the seating of a jury or commencement of trial.)
What is the purpose of the smoking ban?
Prohibits the industry from making any material misrepresentations regarding the health consequences of smoking.
How long does a tobacco company have to maintain a website?
Requires tobacco companies to maintain for ten years, at their expense, a Website which includes all documents produced in state and other smoking and health related lawsuits.
What happens after state specific finality?
After state specific finality, tobacco companies will be prohibited from opposing proposed state or local laws or administrative rules which are intended to limit youth access to and consumption of tobacco products.
Who appointed the officers of the tobacco association?
Officers of the association will be appointed by the board, be employees of the association and will not be employed by a member tobacco company.
Who can inspect and copy non-privileged records?
Antitrust staff for any settling state may inspect and copy all non-privileged , non-work-product records and interview association directors, officers and employees.
What is the Master Settlement Agreement?
The Master Settlement Agreement (MSA) imposes major restrictions on tobacco company marketing practices and prohibits advertising aimed at youth. The MSA restricts the participating tobacco companies in the following ways: Prohibits direct or indirect targeting of youth in advertising, marketing and promotions.
Who represented California in the tobacco litigation?
The Attorney General represented the State of California in the tobacco litigation. The Attorney General established the first full-time state tobacco enforcement unit in the country and provided consumers with a complaint line, 916-565-6486, for reporting suspected violations of the MSA.
What is the Tobacco Master Settlement Agreement?
The Tobacco Master Settlement Agreement simultaneously represents one of the most egregious examples of a government shakedown of private industry and offers a case study of the problems that stem from big government and big business scratching each other’s backs. It has turned the largest tobacco companies into an indispensable cash cow for politicians and bureaucrats, enabled irresponsible state spending, and, amazingly, has resulted in less money for public health and tobacco control while propping up a declining industry. As is the case with discriminatory tobacco taxes, the incentives of the MSA are perverse: the more people smoke, the more money the government gets to spend on whatever it wants. The biggest losers are those with tobacco-related diseases and smokers trying to quit.
What was the master settlement agreement between the tobacco companies and the states?
In November 1998, forty-six US states, along with the District of Columbia and five US territories, and the major tobacco companies entered into a contract of an extraordinary nature. (The other four states, Florida, Minnesota, Mississippi, and Texas, had entered similar agreements on their own beginning the year before.) The agreement, known as the Master Settlement Agreement (MSA), represented the culmination of a decades-long argument between the tobacco companies and state governments. After the dangers of smoking became known, the tobacco industry had engaged in extensive efforts to somehow stay in business, deflect and defeat lawsuits, and minimize negative attention. Public healthcare systems—and most of the healthcare in this country is taxpayer-funded or subsidized—had seen an influx of patients with smoking-related diseases, and state governments began filing lawsuits against the tobacco companies, claiming they wanted money to help cover smoking-related healthcare costs. The tobacco companies had lots of money but were nervous about the states’ potential to sue them out of business. So, they decided to talk. The result was the MSA.
How do politicians take advantage of the tobacco industry?
Besides politicians’ quintessential habit of spending money on things it was not meant for, there is a more insidious way that they have taken advantage of the never-ending stream of money from the tobacco companies. This is called securitization, and it occurs when a cash-strapped state borrows against promised future MSA payments so that it can get the money immediately. The state issues bonds backed up by the promise of future payments. The term “tobacco bonds” is a reference to this irresponsible practice. The buyers of bonds (the most prominent of which are powerful financial institutions) make a handsome long-term profit. State governments and their taxpayers get a raw deal. As the Campaign for Tobacco-Free Kids warned as early as 2002, states that securitize their tobacco funds get much smaller total payments, “usually for about 40 cents on the dollar or less,” than they would if they let the future revenue come in as planned. Borrowing against future payments in exchange for less money today leads to fewer resources for public health and more money for Wall Street. Yet politicians openly turn to the MSA revenue to cover for their irresponsible spending. For example, in November 2017, as Pennsylvania tried to balance its budget shortfall that had been caused by a refusal to eliminate wasteful spending, securitizing tobacco settlement revenue was the preferred course of all parties. Unfortunately, even some otherwise fiscally responsible politicians like to securitize tobacco revenue, as they consider it a better option than raising taxes.
How does the amount paid by tobacco companies affect the number of cigarettes sold?
The amount paid by the tobacco companies would directly correlate to the number of cigarettes sold—the more cigarettes sold, the more money the states would get. In exchange for their money, the tobacco companies would not be sued by state and local governments seeking recovery of costs associated with tobacco use.
How much money did tobacco companies pay to the states?
Nearly twenty years later, the tobacco companies have paid a staggering $119.5 billion to the states and territories participating in the MSA and another $25.4 billion to the four states with their own agreements. What have the states done with this huge amount of money?
What is tobacco bonds?
The state issues bonds backed up by the promise of future payments. The term “tobacco bonds” is a reference to this irresponsible practice. The buyers of bonds (the most prominent of which are powerful financial institutions) make a handsome long-term profit. State governments and their taxpayers get a raw deal.
What are the incentives of the MSA?
As is the case with discriminatory tobacco taxes, the incentives of the MSA are perverse: the more people smoke, the more money the government gets to spend on whatever it wants. The biggest losers are those with tobacco-related diseases and smokers trying to quit.
Overview
The Tobacco Master Settlement Agreement (MSA) was entered on November 23, 1998, originally between the four largest United States tobacco companies (Philip Morris Inc., R. J. Reynolds, Brown & Williamson and Lorillard – the "original participating manufacturers", referred to as the "Majors") and the attorneys general of 46 states. The states settled their Medicaid lawsuits against the tobacco industry for recovery of their tobacco-related health-care costs. In exchange, the compa…
History of adoption
In September 1950, an article was published in the British Medical Journal linking smoking to lung cancer and heart disease. In 1954 the British Doctors Study confirmed the suggestion, based on which the government issued advice that smoking and lung cancer rates were related. In 1964 the United States Surgeon General's Report on Smoking and Health likewise began suggesting the relatio…
Summary of terms
The Original Participating Manufacturers (OPMs) agreed to several broad categories of conditions:
• to restrict their advertising, sponsorship, lobbying, and litigation activities, particularly as those activities were seen as targeting youth;
• to disband three specific "Tobacco-Related Organizations," and to restrict their creation and participation in trade associations;
Contraband statutes
By the middle of 2000, domestic NPMs and importers had begun to obtain greater market share. The NAAG noted that reductions in settlement payments which result from an overall reduction in cigarette consumption benefit the states because health care costs imposed by each cigarette exceed the settlement payments. On the other hand, when reductions in settlement payments occur because NPM sales displace PM sales, the states receive no benefits if the NPMs do not …
Criticism
Some anti-smoking advocates, such as William Godshall, have criticized the MSA as being too lenient on the major tobacco companies. In a speech at the National Tobacco Control Conference, Godshall stated that "[w]ith unprecedented future legal protection granted by the state A.G.s in exchange for money, it appears that the tobacco industry has emerged from the state lawsuits even more powerful".
Securitization
In the ten years following the settlement, many state and local governments have opted to sell so-called Tobacco Bonds. They are a form of securitization. In many cases the bonds permit state and local governments to transfer the risk of declines in future master settlement agreement payments to bondholders. In some cases, however, the bonds are backed by secondary pledges of state or local revenues, which creates what some see as a perverse incentive to support the to…
Individual state settlements
There is technically a distinct MSA signed separately with each state. While these MSAs are identical, the states have had to enact enabling legislation which differs from state to state. Furthermore, each state's court system is entitled to create its own jurisdictional interpretations of the MSA text. As a result, legal understanding of the MSA differ from state to state.
Documents relating to the initial lawsuits filed by each individual state are available at the UCSF
See also
• Operation Berkshire
• Project SCUM
• Tobacco Settlement Financing Corporation
• "Truth" ad campaign