NCPA - National Center for Policy Analysis


September 21, 2004

In the 1990s, states brought lawsuits against major tobacco companies with the intent of collecting damages to fund public health and anti-smoking programs, but recent studies reveal that little of the settlement money has gone to public health.

The General Accounting Office reports that $11.4 billion will be paid out to states from tobacco settlements by the end of fiscal year 2004, yet a paltry 2 percent of that money will be used for tobacco control, while only 20 percent will fund health programs.

Additionally, the National Taxpayers Union reports:

  • In North Dakota, $717 million in settlement money was used for flood control projects.
  • Wisconsin opted for a lump-sum settlement payment of $1.3 billion just to balance their state's budget, while foregoing 25 years of settlement payments which would have totaled about $5.9 billion.
  • Los Angeles received $300 million in settlement money to make sidewalks handicapped accessible.
  • More than half a dozen states have invested some of their settlement money into index funds which include tobacco companies that they sued in the first place.

Moreover, the settlement money has benefited states, tobacco companies and trial lawyers, with little benefit to taxpayers or smokers who want to quit. The average cost of a pack of cigarettes has increased by 63 cents, adding up to about $230 per year for the average smoker, but the National Conference of State Legislators reveals that a paltry 5 percent of settlement monies have been spent on anti-smoking education or cessation programs.

Incidentally, trial attorneys involved in the tobacco lawsuits earned about $92,000 per hour.

Sources: Shawn Macomber, "Relighting the Tobacco Wars," American Spectator, July/August, 2004; Mark Schmidt and Jerry W. Terry, "Big Government, Big Contributors, and Little Taxpayers: Whose Interests Are Attorneys General Really Protecting With Government Lawsuits?" National Taxpayers Union, March 22, 2000; General Accounting Office, "Tobacco Settlement States' Allocations of Fiscal Years 2002 and 2003 Master Settlement Agreement Payments," General Accounting Office, February 2003 and "Tobacco Prevention and the Master Settlement Act, An Update on Trends in the States," National Conference of State Legislatures Spring Forum, April 30, 2004.

For GAO study


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