$300bn Tobacco Peace Deal May Be Close

Yet the settlement faces at least one big obstacle before it can become a reality: a strongly held conviction among some members of the health community that the tobacco industry is going to come out on top. Health advocates are strongly opposed to any deal that would give the tobacco industry blanket immunity from lawsuits brought by individuals suffering from smoking-related diseases.

Equally, the tobacco industry insists that this is a condition for any deal. With the anti-tobacco camp divided over this issue, the talks have been suspended to allow the anti-tobacco negotiators to resolve their internal differences. The tobacco industry is represented at the talks by lawyers for Philip Morris and R.J. Reynolds Tobacco, the two biggest US cigarette makers.

 

On the other side of the negotiating table are the attorneys-general for some of the 30 states suing the industry for the recovery of smoking-related healthcare costs, lawyers for individuals suing the industry, and a lone representative of the health community - a lawyer for the Coalition for Tobacco-Free Kids.

When the talks began two months ago, a settlement appeared unlikely. But the lawyers gradually produced a framework for a deal that would give the US tobacco industry extensive protection against lawsuits in return for payments totalling $300 billion over the next 30 years.The sum would be paid at the rate of $10 billion a year, to be split between the states and the individual plaintiffs.

Payments would be split between companies according to market share, with the first instalment of $10 billion due next year. On top of this, the industry would also meet the cost of damages won by individual smokers. But no smoker would receive more than $1 million in any one year, and the industrys total liability to individual smokers would be capped at $2 billion a year. There would be other limitations on individual lawsuits, too.

No class action lawsuits or punitive damages would be allowed; individuals would be able to sue only if they had given up smoking or entered a stop-smoking programme and failed to quit; and people who did not try to give up smoking by 2005 would lose the right to sue, as would those who took up smoking after 2000.

Although $300 billion is a lot of money, Wall Street analysts say a settlement would have little effect on the industrys profitability because cigarette makers would offset the cost by increasing cigarette prices in the US by 50 cents a pack. Even then, they would remain among the cheapest in the developed world. Gary Black, an analyst at Sanford C. Bernstein, calculates that the settlement would cut Philip Morriss growth in earnings per share from 16 per cent to 7 per cent next year.

But after that, the growth rate would bounce back, and the companys stock price would soar because the uncertainty over the litigation risk would have been removed. For this reason, some members of the health community regard the proposed settlement as a sell-out. They say the deal would leave US cigarette makers less heavily taxed and more lightly regulated than in most other developed countries, yet award them the prize of immunity from litigation in the most litigious country on earth. We are against any deal that would limit the ability of people to pursue actions against the tobacco companies, says Josh Cooper, legislative representative for tobacco control issues at the American Lung Association. They have caused a lot of death and destruction from their lies and deceit, and we just think that preserving this industry should not be a goal in these talks.

Any deal will require the approval of the White House and an act of Congress, so political acceptability will be crucial to the outcome: and public health advocates are already warning that they will do everything in their power to block it. This settlement would be a sell-out. Absolutely, we will lobby hard to kill it, says Robin Hobart, co-director of Americans for Nonsmokers Rights. If they think this deal is going to be acceptable to the public health community, they have got another think coming.

Richard Tomkins The US tobacco industry faces another legal threat this week with the opening of a trial in which non-smoking flight attendants are seeking $5 billion (3 billion) compensation for illnesses they claim to have suffered from second-hand smoke in aircraft cabins, Richard Waters writes.

The trial is significant because, if it goes against the industry, it could open the way for large numbers of other non-smokers to sue cigarette makers for injuries alleged to have been caused by passive smoking in confined workplaces. Stanley Rosenblatt and his wife Susan Rosenblatt, two Miami lawyers, are bringing the case in Dade County Circuit Court, Florida. Their lead plaintiff is Norma Broin, 42, an American Airlines attendant who had part of a lung removed when diagnosed for lung cancer in 1989.

Mr and Mrs Rosenblatt will try to prove second-hand smoke causes heart and lung disease, and will seek damages for the effects on flight attendants who worked for US airlines before thay banned smoking on most flights in 1990. The tobacco industry is expected to argue studies linking second-hand smoking with disease are junk science, and there is no statistical correlation between second-hand smoking and lung cancer.