Have the 1998 Tobacco Settlement Promises Gone up in Smoke?

A report released this month, just after the fifteen year anniversary of the November 1998 Tobacco Master Settlement Agreement (MSA), assessed whether the states have been living up to the promises made in the settlement, that is, whether the states have used significant portions of the annual payments the tobacco companies were required to pay in damages to attack tobacco use. According to the report, which is entitled “Broken Promises to Our Children: 1998 State Tobacco Settlements Fifteen Years Later,” despite the billions of dollars the states receive each year pursuant to the MSA, the states continue to spend only small fractions of those funds, far below the recommended levels set for each state by the Centers for Disease Control and Prevention (CDC), in efforts to prevent tobacco use.

Tobacco MSA

In November of 1998, 46 states joined four other states that had previously reached similar agreements–Mississippi, Texas, Florida, and Minnesota–and settled their lawsuits against four major tobacco companies, Philip Morris, Inc., R.J. Reynolds, Brown & Williamson, and Lorillard. The resulting tobacco MSA imposed significant marketing restrictions on the tobacco companies, including complete prohibitions on advertising campaigns targeted to youth. The MSA also mandated that the tobacco companies pay billions of dollars in damages annually and in perpetuity to the states for costs associated with treating tobacco related health issues.

“Broken Promises”

The recent report, which was released by the Robert Wood Johnson Foundation, American Cancer Society Cancer Action Network, Campaign for Tobacco-Free Kids, American Heart Association, Americans for Nonsmokers’ Rights, and American Lung Association, reveals that the states are projected to collect $25 billion in revenue from the MSA funds and tobacco taxes in 2014 but will only spend $481.2 million on programs aimed at preventing children from smoking and in helping individuals who currently smoke to quit. The CDC recommends that the states spend a combined $3.7 billion on efforts to limit or prevent smoking, yet according to this study the states have only budgeted to spend 13 percent of that suggested amount in 2014. While two states, North Dakota and Alaska, fund tobacco prevention programs at the levels set forth by the CDC, the rest of the states fall far short of those goals with only four other states–Delaware, Wyoming, Hawaii, and Oklahoma–devoting even half of the proposed amounts. 24 states spend less than 10 percent of the CDC-endorsed levels currently and New Jersey, which ranked last in the state-by-state report data, failed to allocate any funds to tobacco prevention this year.

Overall, of each dollar the states receive from tobacco revenue, only two cents of that dollar is put towards the effort to fight tobacco use. When compared to the amounts the tobacco companies spend on product promotion and advertising, the current state efforts also appear quite insignificant. The study approximates that the tobacco companies spend $8.8 billion a year on marketing, this means states only spend one dollar for anti-tobacco campaigns for every $18 dollars spent by the tobacco industry to promote the use of tobacco products.


Though the report recognizes that some strides have been made in tobacco use reduction and prevention since the 1998 settlements, it also points out that tobacco results in over 400,000 deaths per year and remains the number one preventable cause of death in the country. In light of such statistics, the report makes two general recommendations, one at the state level and one at the federal level. The study urges states to use the tobacco revenue and settlement funds to implement three strategies to prevent the continuation of current trends: funding at the recommended CDC levels; increasing tobacco taxes; and institution of smoke-free workplace laws. At the other end of the governmental spectrum, the report authors call for the expansion of CDC media campaigns and increase of the federal tobacco tax as well as the implementation of anti-smoking therapies under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148).

Why Should We Keep These Promises?

While the re-visitation of the promises made in the 1998 tobacco MSA focus significantly on the human aspects behind the efforts to help Americans quit smoking, the data collected also reflects on the financial reasons behind curbing tobacco use. After all, the MSA was the result of damages owed to the states for health care costs for tobacco related maladies. Relevantly, the report unveils findings from one state, Washington, that for every one dollar spent on tobacco prevention, five dollars are saved in future health care costs. In failing to enact tobacco prevention programs or anti-smoking campaigns using the MSA funds, the states are not only breaking the promises made to future generations fifteen years ago, they are also falling back into a vicious financial health care cycle associated with the side-effects of smoking.