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April 19, 2018

Iowa receives $50.9 million tobacco payment

Since 1999, state has received more than $1.2 billion through agreement

DES MOINES – Tobacco companies involved in the 1998 landmark settlement  transferred  about $50.9 million  to the state treasury on Thursday.

In the last 20 years, Iowa has received more than $1.2 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.

 “Our office carefully monitors and aggressively enforces this agreement so Iowa gets its fair share of the settlement,” 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.”

About $11.2 million of this year's payment -- or 22 percent -- will go to the state. 

The 78 percent remainder will be used principally to pay bondholders who bought bonds issued by the Tobacco Settlement Authority. 

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 2018 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 percent of the U.S. population in 1999 to 15 percent in 2016, according to the U.S. Centers on Disease Control and Prevention.  Only 5.4 percent of teenagers in grades eight, 10 and 12 reported smoking a cigarette in the past 30 days in 2017, according to the Monitoring the Future survey. 


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