Thursday, April 17, 2008
Kentucky Attorney General Announces Tobacco Settlement Money
Attorney General Jack Conway announced today that Kentucky, as required under the 1998 Master Settlement Agreement (MSA) between the major tobacco manufacturers and 52 states and territories, will receive its annual payment of more than $115 million in tobacco settlement money this week.
“My office continues to enforce the agreement and to make sure that Kentucky receives the money it’s owed from the agreement that provides funding for many invaluable programs – from agriculture to education,” Conway said.
Under the MSA, the tobacco companies agreed to make annual payments in perpetuity to the settling states, to fund a national foundation dedicated to significantly reducing the use of tobacco products by youth and to abide by certain restrictions on promotional and lobbying activity. Kentucky’s share of the settlement is approximately $3.45 billion over the first 25 years. Payments are determined according to a formula that is calculated, in part, by the number of cigarettes sold by companies that have agreed to join the settlement.
The total received by Kentucky since the initial MSA payment in 1999 is more than $1.05 billion for “Phase I.” An additional $600 million was received by Kentucky tobacco growers under “Phase II,” the Tobacco Growers Trust Agreement, which was created as a result of an MSA provision to address affected tobacco-growing communities in 14 states.
Most of the MSA payment was to be paid by the three largest cigarette manufacturers - Philip Morris, RJ Reynolds, and Lorillard. Philip Morris made its payment in full, but RJ Reynolds and Lorillard put into a disputed account about $500 million from their payments based upon their claim to reduced payments under a provision in the MSA called the Non-Participating Manufacturer (“NPM”) Adjustment. The Office of Attorney General is continuing to pursue an action to obtain its full share of the disputed payment amounts.
This year marks the ten-year anniversary of the signing of the landmark MSA. Cigarette sales nationally are down about 25% since the agreement went into effect and the public health provisions of the MSA that restrict cigarette advertising and promotion in numerous ways have changed the way cigarettes are marketed in the United States. The number of cigarettes sold in the United States in 2007 was the lowest since 1951 although the U.S. population has doubled and per capita cigarette consumption in the United States is at its lowest level since the 1930s. This decline will have significant long-term effects on the health of Kentucky citizens and in health care costs related to smoking in the future.
Although a portion of the payment was withheld, Participating Manufacturers still paid the States that are signatories to the Agreement nearly $7 billion this week, bringing the total payments made under the MSA thus far to all settling States to more than $60 billion.
“My office continues to enforce the agreement and to make sure that Kentucky receives the money it’s owed from the agreement that provides funding for many invaluable programs – from agriculture to education,” Conway said.
Under the MSA, the tobacco companies agreed to make annual payments in perpetuity to the settling states, to fund a national foundation dedicated to significantly reducing the use of tobacco products by youth and to abide by certain restrictions on promotional and lobbying activity. Kentucky’s share of the settlement is approximately $3.45 billion over the first 25 years. Payments are determined according to a formula that is calculated, in part, by the number of cigarettes sold by companies that have agreed to join the settlement.
The total received by Kentucky since the initial MSA payment in 1999 is more than $1.05 billion for “Phase I.” An additional $600 million was received by Kentucky tobacco growers under “Phase II,” the Tobacco Growers Trust Agreement, which was created as a result of an MSA provision to address affected tobacco-growing communities in 14 states.
Most of the MSA payment was to be paid by the three largest cigarette manufacturers - Philip Morris, RJ Reynolds, and Lorillard. Philip Morris made its payment in full, but RJ Reynolds and Lorillard put into a disputed account about $500 million from their payments based upon their claim to reduced payments under a provision in the MSA called the Non-Participating Manufacturer (“NPM”) Adjustment. The Office of Attorney General is continuing to pursue an action to obtain its full share of the disputed payment amounts.
This year marks the ten-year anniversary of the signing of the landmark MSA. Cigarette sales nationally are down about 25% since the agreement went into effect and the public health provisions of the MSA that restrict cigarette advertising and promotion in numerous ways have changed the way cigarettes are marketed in the United States. The number of cigarettes sold in the United States in 2007 was the lowest since 1951 although the U.S. population has doubled and per capita cigarette consumption in the United States is at its lowest level since the 1930s. This decline will have significant long-term effects on the health of Kentucky citizens and in health care costs related to smoking in the future.
Although a portion of the payment was withheld, Participating Manufacturers still paid the States that are signatories to the Agreement nearly $7 billion this week, bringing the total payments made under the MSA thus far to all settling States to more than $60 billion.
# posted by Joe Kinzer @ 6:12 PM 
