In 1998, the Attorneys General of 46 states signed the Tobacco Master Settlement Agreement (MSA) with the four largest tobacco companies in the United States: Brown & Williamson, Lorillard, Philip Morris, and R.J. Reynolds.
The purpose of the MSA was to settle lawsuits by the states to recover costs associated with the treatment of smoking-related illnesses. Four states – Florida, Minnesota, Texas, and Mississippi – settled their tobacco cases separately from the MSA states. The MSA authorizes additional tobacco product manufacturers to participate in the Agreement, and since November 1998, more than 40 other tobacco companies have joined the MSA.
As part of the MSA, in exchange for protections against lawsuits, the tobacco product manufacturers agreed to make annual payments to the 46 states including Nevada. The four original participating manufacturers agreed to pay a minimum of $206 billion over the first 25 years of the agreement.
The MSA also restricts the advertising, promotion, and marketing activities of tobacco companies, especially where those activities are targeting youth.
In 1999, the Nevada Legislature passed two bills (Assembly Bill 474 and Senate Bill 496) that decided how the tobacco settlement proceeds would be distributed. These bills said that approximately 60% of Nevada’s annual MSA payment would go toward health care programs and the remaining 40% of the funds would be used for Nevada’s Millennium Scholarship Program.
The U.S. Centers for Disease Control and Prevention (CDC) has developed estimates of what it would cost each state to adequately fund a comprehensive tobacco control effort. These estimates make it very clear that each state could run a strong statewide tobacco prevention program with only a fraction of the settlement payments they receive each year from the tobacco companies.
Fifteen years after the 1998 state tobacco settlement, Nevada ranks 40th in the nation in funding programs to prevent kids from smoking and help smokers quit, according to a national report.
Nevada currently spends $1 million per year on tobacco prevention and cessation programs using the MSA payments it receives, which is just 3.1% of the $32.5 million recommended by the CDC.
Other key findings for Nevada include:
- In 2014, Nevada will collect $138.8 million in combined revenue from the annual MSA payment and tobacco taxes, but will spend just 0.7% of it on tobacco prevention and cessation programs. This means Nevada is spending less than a penny of every dollar in state tobacco revenue to fight tobacco use.
- The tobacco companies spend $74.3 million each year to market their products in Nevada. This is 74 times what the state spends on tobacco prevention.
What will happen if tobacco prevention funding is cut?
Studies have found that once tobacco prevention funding is eliminated or reduced significantly, smoking rates begin to increase quickly, leading to a reversal of positive tobacco trends. A reduction of tobacco prevention funding could also result in job loss within Nevada’s public health work force, as it did just a few years ago when funding was eliminated.
Other states that have reduced or eliminated tobacco prevention funding such as Florida, Massachusetts, and California saw an increase in youth and adult smoking rates and an alarming increase in illegal sales of tobacco products to children. Tobacco use is the single most preventable cause of death and disease in our society. If Nevada does not invest in efforts to prevent and control tobacco use, Nevadans will experience not only increased smoking rates but also increased health complications, reduced quality of life, and increased medical costs associated with the chronic diseases that result from tobacco use.
The best way for a state to reduce tobacco use and its harms and costs is to establish an adequately funded comprehensive tobacco prevention program that employs a variety of proven approaches, including smoke-free laws and periodic tobacco tax increases. Published studies provide evidence of the effectiveness of comprehensive tobacco control programs and tobacco control policies, in both reducing harms associated with tobacco use and increasing quit rates among smokers.