BY MAURICE WILLIAMS
In what they tout as a "historic settlement," representatives of the U.S. tobacco industry, attorneys general of 40 states, and plaintiffs' lawyers announced June 30 that the cigarette bosses would pay $368.5 billion over 25 years in an agreement that would limit lawsuits and curb tobacco marketing and advertising.

While the tobacco companies profess to be making a concession, they will save large chunks of the estimated $600 million a year currently paid out in litigation costs, as well as cut advertising costs. Diana Temple, an analyst of Salomon Brothers, told the Financial Times of London she expects tobacco share prices to leap by 20 percent if the accord is approved by Congress.

Most of the money the tobacco companies would have to pay - $10 billion initially, $8.5 billion yearly for five years and increased to $15 billion a year afterwards -would be tax-deductible. Tobacco executives plan to hike cigarette prices by 50 cents to $1 a pack to offset the cost of the deal.

Meanwhile, if sales of cigarettes drop below 1996 levels, companies would receive a rebate on their annual settlement payments. Other aspects of the pact include limiting awards against tobacco companies for the health impact of smoking to $5 billion a year. Current and future class action lawsuits against them would be barred. Suits filed by 40 states seeking repayment for Medicaid costs incurred by smokers would halt. The tobacco barons are mandated to pay $50 billion up front in exchange for a prohibition on future punitive damages. Supposedly some of this money would be used to pay for health coverage for children.

The deal says cigarette companies will have to spend $500 million on anti-smoking campaigns, with goals of reducing the number of teenage smokers by 30 percent in five years, 50 percent in seven years, and 60 percent in 10 years. The industry would be required to pay up to $2 billion per year if the targets are not met.

The Food and Drug Administration (FDA) will be given the power to regulate nicotine as a drug, and to ban the substance after 2009, under the agreement. The FDA recently won a court decision strengthening its jurisdiction over nicotine. The accord also bans cigarette sales from vending machines. Human and cartoon figures, including Joe Camel and the Marlboro Man, would be eliminated from advertisements.  
 
 
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