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April 28, 2017

Iowa Receives $65.8 Million Annual Tobacco Payment

Since 1999, state has received more than $1.1 billion through Master Settlement Agreement

DES MOINES – Tobacco companies involved in the 1998 landmark settlement with states over tobacco-related health care costs transferred more than $65 million to the state treasury this month in their annual payment to Iowa.

The tobacco companies remitted a regular annual Master Settlement Agreement (MSA) payment to Iowa of nearly $48 million, and an additional “Strategic Contribution Fund” payment of more than $17.8 million, for a total payment of more than $65.8 million.

Since 2008, Iowa has received additional annual “Strategic Contribution Fund” payments because of the roles of Miller and his staff in negotiating and reaching the 1998 MSA with tobacco companies.  Those additional payments to Iowa have totaled more than $186 million.

Since 1999, when tobacco companies sent their first MSA payments to the states, Iowa has received more than $1.1 billion in both regular and additional payments.

“Our office puts significant time and effort into ensuring that Big Tobacco pays Iowa its fair share through annual MSA payments,” Attorney General Tom Miller said. “We are pleased to see the results through this year’s payment, particularly in light of the state’s difficult budget situation.”

In 1998, Miller and attorneys general of 45 states signed the MSA with the nation’s four largest tobacco companies to settle state suits to recover billions of dollars in state health care costs associated with treating smoking-related illnesses.  Since then, more than 40 other tobacco companies have signed onto the agreement.

The MSA called for tobacco companies to pay the 46 states $206 billion over 25 years, and continue annual payments beyond 25 years based on the number of cigarettes sold in the United States.  The MSA is the largest settlement in U.S. history.

The MSA created a broad array of restrictions on the advertising, marketing and promotion of cigarettes.  For example, it bans 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, and particularly youth smoking in the United States.  Since it was announced, cigarette sales in the United States have fallen substantially and youth smoking has declined even more.

Despite these gains, tobacco remains the number one cause of preventable death in the United States.

“Our office will continue to do our part to hold tobacco companies accountable,” Miller said. “Our efforts help fight smoking and its many health consequences here in Iowa.”

Miller is the outgoing Board of Directors chair of the Truth Initiative, the largest non-profit public health charity in the nation devoted specifically to tobacco control.  Truth Initiative, formerly the American Legacy Foundation, was formed as a result of the MSA.

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