Tobacco cos. make payments under state settlement

AP News
Posted: Apr 15, 2011 2:28 PM
Tobacco cos. make payments under state settlement

The nation's top cigarette companies said Friday they have made their payments as part of the 25-year settlement in which some cigarette makers are paying states for smoking-related health care costs.

Philip Morris USA, the nation's largest cigarette maker owned by Altria Group Inc., said that it made its full annual payment of about $3.5 billion as part of the 1998 Master Settlement Agreement.

The Richmond-based maker of Marlboro, Virginia Slims and Parliament cigarettes said the payment includes about $267 million that it says it doesn't owe that was deposited into a separate account and will try to get back through negotiations or arbitration.

No. 2 R.J. Reynolds Tobacco Co., owned by Reynolds American Inc., based in Winston-Salem, N.C., has paid nearly $2 billion for this year. The maker of Camel, Pall Mall, Kool and other brands, based in Winston-Salem, N.C., deposited the portion it disputes _ $477 million _ into a separate account, as allowed under the settlement.

No. 3 Lorillard Inc., Greensboro, N.C.-based maker of Newport, True and Maverick brand cigarettes, has paid $1 billion, including $107 million it disputes.

As part of the landmark settlement to reimburse states for smoking-related health care costs, participating tobacco product manufacturers agreed to make about $206 billion in payments to 46 states, Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, the Northern Mariana Islands and the District of Columbia over more than two decades.

Those companies say a provision in the settlement entitles them to a reduction if they lose market share to competitors that did not participate in the agreement. But the participating companies must prove the states did not adequately enforce laws requiring those competitors to place funds in escrow accounts in case of future litigation.

Philip Morris USA said it has paid more than $55 billion under the settlement and previous agreements since 1997. RJR said it has paid more than $26 billion under the agreement. Lorillard said it has paid about $13 billion.