The Master Settlement Agreement

The Master Settlement

In 1998, 52 state and territory attorneys general signed the Master Settlement Agreement (MSA) with the four largest tobacco companies in the U.S. to settle dozens of state lawsuits brought to recover billions of dollars in health care costs associated with treating smoking-related illnesses.   

Eventually, more than 45 tobacco companies settled with the Settling States under the MSA. Although Florida, Minnesota, Mississippi, and Texas are not signatories to the MSA, they have their own individual tobacco settlements, which occurred prior to the MSA.  

The MSA’s purpose is to reduce smoking in the U.S., especially in youth, which is achieved through: 

  • Raising the cost of cigarettes by imposing payment obligations on the tobacco companies party to the MSA. 
  • Restricting tobacco advertising, marketing, and promotions, including: 
    • Prohibiting tobacco companies from taking any action to target youth in the advertising, promotion or marketing of tobacco products. 
    • Banning the use of cartoons in advertising, promotions, packaging, or labeling of tobacco products. 
    • Prohibiting tobacco companies from distributing merchandise bearing the brand name of tobacco products. 
    • Banning payments to promote tobacco products in media, such as movies, televisions shows, theater, music, and video games. 
    • Prohibiting tobacco brand name sponsorship of events with a significant youth audience or team sports. 
  • Eliminating tobacco company practices that obscure tobacco’s health risks.  
  • Providing money for the Settling States that states may choose to use to fund smoking prevention programs. 
  • Establishing and funding the Truth Initiative, an organization “dedicated to achieving a culture where all youth and young adults reject tobacco.”

What is NAAG’s role with the MSA? 

The NAAG Center for Tobacco and Public Health works with the Settling States of the MSA to preserve and enforce the MSA’s monetary and public-health mandates, including: 

  • Representing, advising, and supporting the Settling States in MSA-related legal matters, including litigation and arbitrations. 
  • Representing the Settling States in bankruptcy cases filed by tobacco manufacturers. 
  • Representing the Settling States before the MSA Independent Auditor and Escrow Agent to ensure that annual MSA payments are properly calculated and disbursed to the States. 
  • Monitoring tobacco companies’ compliance with the MSA’s payment and public health provisions. 
  • Communicating as the Settling States’ collective counsel to tobacco companies, federal tobacco regulators, and other third parties about the MSA and other tobacco regulatory matters. 

The MSA Today   

The MSA continues to have a profound effect on smoking in America, particularly among youth.  Between 1998 and 2019, U.S. cigarette consumption dropped by more than 50%. During that same time period, regular smoking by high schoolers dropped from its near peak of 36.4% in 1997 to a low 6.0% in 2019. As advocates for the public interest, state attorneys general are actively and successfully continuing to enforce the provisions of the MSA to reduce tobacco use and protect consumers.   

Under the MSA, tobacco manufacturers are obligated to make annual payments to the Settling States in perpetuity, so long as cigarettes are sold in the United States by companies that have settled with the States. The NAAG Center for Tobacco and Public Health makes certain such payments are made. 

Tobacco Issues Beyond the MSA 

In 2009, the Family Smoking Prevention and Tobacco Control Act gave the FDA the power to regulate tobacco products. State attorneys general have been active participants in helping the FDA shape its regulatory authority.   

Also, because the contractual requirements of the MSA are in some ways broader than the authority granted to the FDA and are not subject to constitutional defenses, state attorneys general continue to step in where the FDA may be unable to act. 

State attorneys general have taken several initiatives to limit youth exposure to tobacco imagery and products, including: 

  • Urging the Hollywood creative community to protect young viewers from tobacco imagery.
  • Engaging with movie studios, production companies, and streaming services to curb tobacco imagery in popular media. 
  • Entering into agreements with major retail chains to ensure that retailers comply with state laws setting the minimum age at which tobacco products may be purchased and limiting the quantity and content of tobacco advertising at retail locations.