Big Tobacco, State Officials Reach $206 Billion Deal By Saundra Torry and John Schwartz The nation's leading tobacco companies and eight attorneys general reached agreement yesterday on the major provisions of a $206 billion deal designed to end a massive legal assault by more than three dozen states. The deal -- which would become the largest legal settlement in U.S. history -- depends on the approval of a large number of the states with lawsuits pending against the industry, but many observers believe a majority of state The proposed settlement is far narrower than either the unsuccessful deal proposed last year or the failed Senate tobacco legislation. Those measures would have forced huge price increases on cigarettes, greatly The new proposal would, however, solve the tobacco industry's most threatening legal problem, pour billions of dollars into state treasuries, and impose at least some restrictions on tobacco advertising and marketing. It Washington state Attorney General Christine Gregoire (D), one of the chief negotiators, said the deal, if approved, would achieve "historic public health gains" and offer "the single largest economic recovery in history." By 2003, the deal's cost could prompt cigarette makers to increase the manufacturers' price for a pack of cigarettes by about 40 cents, which could translate into an even larger per-pack increase for consumers, Gregoire said, though nothing in the deal would force companies to raise prices. "We can keep doing this state by state, winning and losing . . . and continuing to addict 3,000 kids a day," she said, "or take a giant step now and get on with it." Yesterday, negotiators in New York were still finalizing the complex deal. They are scheduled to make a formal announcement Monday in Washington. But public health groups and state officials already were weighing in with widely divergent reactions. Like last year, the public health advocates were bitterly divided over this new proposal and its effect on their long-running war against smoking. Pennsylvania anti-smoking activist Bill Godshall pronounced the deal "terrible for taxpayers and not good for public health." He and others are lobbying state officials to reject it, arguing that states would do better by taking their cases to trial, or even settling them, individually. Others cautioned against reacting negatively to a deal they feel helpless to stop. Former Food and Drug Administration commissioner David A. Kessler, who was at the forefront of efforts to strengthen the 1997 settlement, said he has no strong feelings this time. "It's all about money," he said, "and there's very little in it for public health." Mary Aronson, a Washington-based litigation analyst, said the critical issue in the coming days "is how many states agree. If not enough do or key ones don't, then the whole thing unravels." States have until Friday to decide whether they will join the settlement. If a "critical mass" fails to sign on, the industry will abandon the deal, according to sources familiar with the negotiations. "A critical mass is going be one of those things that you can't define -- but you'll know it when you see it," said North Carolina Attorney General Mike Easley (D). While a handful of attorneys general have privately voiced reservations about the deal, none has come out publicly against it. Maryland Attorney General J. Joseph Curran Jr. (D), who took a hard line during last year's negotiations, said that "from a national standpoint, the deal is good" because it means all the states, even those that never filed suit, would share the money and the public health gains, such as the ban on tobacco billboards. But Curran believes that Maryland has a strong suit, one scheduled for trial early next year, and he said he is still weighing his options. Virginia Gov. James S. Gilmore III (R) said he is "receptive" to the deal. According to officials and sources familiar with the proposal, Maryland stands to get about $4 billion over the next 25 years; Virginia, at least $3.5 billion; and the District, about $1.25 billion. But negotiators cautioned that the payout formulas are complex and the amounts will also depend on how many states sign on. The deal, a product of more than five months of secret and often contentious talks, grew out of negotiations between Gregoire, whose lawsuit is underway in Seattle, and the nation's four major tobacco companies -- Philip Morris Cos., R.J. Reynolds Tobacco Co., Lorillard Inc. and Brown & Williamson Tobacco Corp. Starting in 1994, a handful of states filed novel lawsuits against the industry seeking to recover the Medicaid costs of treating sick smokers. As more states filed suit, the onslaught led to the proposed national tobacco deal, and in turn helped spur the congressional legislation. That ambitious measure was killed by Senate Republicans -- the victim of partisan politics and, some say, overreaching by the public health community. It would have cost the tobacco industry more than $516 billion, while the proposed 1997 deal had a price tag of $368 billion. Four states -- Mississippi, Florida, Texas and Minnesota -- settled individually with the companies for more than $40 billion. After the national legislation collapsed, the industry started negotiating with attorneys general Along with the 25-year payout to the states, the deal would create a $1.45 billion national foundation to run counter-advertising campaigns aimed at underage smokers. It does not contain the industry's most coveted goal and the most controversial tenet of last year's national deal: broad protection for cigarette makers from mass lawsuits. Still, health advocates pointed to some key elements lacking in the deal and to language they fear could be exploited by the companies. For instance, while the deal would limit brand-name sponsorships of sports events, it Former Maine attorney general James E. Tierney, who now advises other attorneys general, acknowledged that the deal is weaker than the June 1997 agreement and the congressional tobacco bill, but that state officials "These are public prosecutors," Tierney said, not public health officials. "They have a case. They have an offer on the table. They have to balance whether . . . the people of their state [will] be better off if they accept this settlement." The politicians, he said, "respect the American Lung Association, and they wish them luck as they fight the fight in Congress. But that's not what an attorney general does." Matthew Myers of the National Center for Tobacco-Free Kids called the proposal "a small piece in a large puzzle" of tobacco control. "Hopefully, the narrowness of this agreement will give impetus to Congress to pick the The Clinton administration plans to revive tobacco legislation next year, but is still debating whether to seek a tax increase and, if so, how much. Last summer's failed measure called for a $1.10 increase per pack. Staff writers R.H. Melton, Bill Miller and Craig Timberg contributed to this report. IN THE DEAL The new tobacco settlement would: Require the nation's largest tobacco companies to pay more than $206 billion over the next 25 Create a national foundation, to be funded with $1.45 billion over the next five years, to run counter-advertising programs, many of them designed to curb youth smoking. Ban outdoor billboards, transit ads, merchandise with brand-name logos and the use of cartoon characters, such as Joe Camel. Restrict brand-name sponsorship of sporting events to one per year for each company, allowing, for instance, Winston's sponsorship of NASCAR races, or Philip Morris's sponsorship of Virginia Slims Tennis. Not guarantee broad FDA authority over tobacco products. Not grant broad legal immunity to the industry. Not establish a penalty system that punishes companies if youth smoking rates do not drop. © 2000 The Washington Post Company |
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