State has received more than $1.36 billion through agreement
DES MOINES — Tobacco companies involved in the 1998 landmark settlement have transferred about $52.9 million to the state treasury for this year's payment.
In the last 23 years, Iowa has received more than $1.36 billion in payments under the settlement. The state will continue to receive annual Master Settlement Agreement payments in perpetuity, based on the number of cigarettes sold in the United States. The MSA is the largest settlement in U.S. history.
“This settlement is nearly a quarter-century old, but our office must diligently monitor and enforce the agreement's provisions every year so Iowa gets its fair share of the settlement,” Attorney General Tom Miller said.
About $11.6 million of this year's payment — or 22%— will go to the state.
The 78% remainder will be used principally to pay bondholders who bought bonds issued by the Tobacco Settlement Authority.
State Treasurer Michael Fitzgerald announced Wednesday that Iowa refunded its tobacco settlement bonds this month, resulting in more than $167 million savings for the state over the life of the bonds.
In 1998, Miller and attorneys general of 45 states signed the MSA with the nation’s four largest tobacco companies to settle lawsuits to recover billions of dollars in state health care costs associated with treating smoking-related illnesses.
Since then, several other tobacco companies have signed onto the agreement. The 2021 payment came from 29 companies, including Philip Morris USA, R.J. Reynolds, Santa Fe Natural Tobacco, Vector, and Commonwealth Brands.
The settlement created restrictions on the advertising, marketing and promotion of cigarettes, including a ban on targeting children through advertising. It also includes prohibitions on outdoor advertising of cigarettes and the advertising of cigarettes in public transit facilities, as well as the use of cigarette brand names on merchandise, and a host of other restrictions.
The central purpose of the MSA was to reduce smoking, particularly among youth. Since it was announced, cigarette sales in the United States have fallen substantially. Adult smoking rates have fallen from 24% of the U.S. population in 1999 to 14% in 2019, according to the U.S. Centers on Disease Control and Prevention. Only 7.5% of high school seniors reported smoking a cigarette in the past 30 days in 2020, according to the Monitoring the Future survey.