Report on Fifth Anniversary of 1998 Tobacco Settlement Finds Most States Fail to Adequately Fund Tobacco Prevention Programs

Tobacco Companies Spend Twenty Dollars To Market Products for Every Dollar States Spend To Reduce Tobacco Use

Nov. 12 2003

 

Washington, DC — Five years after reaching $246 billion in legal settlements against the tobacco industry, most states have failed to keep their promise to spend a significant portion of the money on programs to protect kids from tobacco and help those already addicted to quit, according to a report released today by a coalition of public health organizations. The report also finds that the limited restrictions on tobacco marketing contained in the November 1998 multi-state settlement have failed to curtail the tobacco industry's ability to aggressively market its products, including in ways that appeal to children.

Only four states – Maine, Delaware, Mississippi and Arkansas – currently fund tobacco prevention and cessation programs at minimum levels recommended by the U.S. Centers for Disease Control and Prevention (CDC), which usually amount to about 20 to 25 percent of a state's annual settlement payments. Thirty-eight states and the District of Columbia fund tobacco prevention programs at less than half the CDC's minimum level or provide no state funding at all, according to the report.

Over the past two years, the states collectively have cut funding for tobacco prevention programs by 28 percent, or $209 million. In contrast, the tobacco industry has increased is marketing expenditures to record levels. In the first three years after the settlement, tobacco marketing increased by 66 percent to a record $11.5 billion in 2001, or $31.4 million a day, according to the most recent report on tobacco marketing by the Federal Trade Commission (FTC).

Based on the latest FTC figures, the tobacco companies spend more than twenty dollars marketing tobacco products for every dollar the states spend to reduce tobacco use. The margin by which tobacco marketing exceeds state tobacco prevention spending ranges from about three to one in Delaware and Maine to 655 to one in Florida, indicating the wide disparities in state tobacco prevention efforts.

The report, entitled "A Broken Promise to Our Children: The 1998 State Tobacco Settlement Five Years Later," was released by the Campaign for Tobacco-Free Kids, American Heart Association, American Cancer Society and American Lung Association. Its release coincided with a hearing on the tobacco settlement by the U.S. Senate Commerce Committee, chaired by Senator John McCain (R-AZ).

"The twin promises of the 1998 tobacco settlement were to significantly increase how much the states spend on programs that protect children from tobacco and to reduce kids' exposure to tobacco marketing. Neither promise has been kept," said Matthew L. Myers, President of the Campaign for Tobacco-Free Kids, who testified at the Senate hearing. "The tobacco companies are marketing their deadly products more aggressively than ever before. It is as important as ever that the states properly fund tobacco prevention and cessation programs."

"What we have here is a real missed opportunity to reduce and prevent suffering from tobacco related illness," said John R. Seffrin, PhD, chief executive officer of the American Cancer Society. "States that have invested in tobacco prevention and control are reaping the benefits in healthier citizens and prolonged lives, not to mention much needed health care savings in a time of fiscal crisis. Comprehensive tobacco control programs work, but only if they receive funding. States are doing a real disservice by not living up to promises made in the settlement agreement."

The public health groups today also released the results of a new poll that finds 76 percent of Americans believe that one-half or more of the tobacco settlement funds should be spent on tobacco prevention, and 86 percent believe that at least one-quarter of the settlement money should be used for tobacco prevention. The nationwide survey of 1,000 respondents was conducted November 3-5, 2003, by Synovate's TeleNation and has a margin of error of +/- 3.1 percentage points.

The report finds that states have failed to do more to reduce tobacco use despite having more tobacco-generated revenue than ever before to fund tobacco prevention and cessation programs and more evidence than ever before that these programs work to reduce smoking and other tobacco use, save lives, and save money by reducing tobacco-caused health care costs.

The states, 32 of which have increased cigarette taxes since January 1, 2001, will collect $19.5 billion in revenue this year from the tobacco settlement and tobacco taxes. It would take about eight percent of their total tobacco revenue for the states collectively to fund tobacco prevention programs at minimum levels recommended by the CDC, but the states are spending only about a third of the amount needed. (The CDC's minimum funding recommendations for all states total $1.6 billion, but the states are spending $541.1 million on tobacco prevention this year.)

States that have properly funded tobacco prevention programs have produced dramatic declines in tobacco use. Maine, which ranks first among the states in funding tobacco prevention, has reduced smoking by 48 percent among high school students and 59 percent among middle school students since launching its tobacco prevention program in 1997. Mississippi, ranked third in the report, reduced smoking by 48 percent among public middle school students and 29 percent among public high school students between 1999 and 2002. Studies show California's program, started in 1990, has helped save tens of thousands of lives by reducing smoking-caused heart disease, lung cancer and other diseases. Studies show California and Massachusetts, before recent cuts in their programs, were saving as much as $3 in smoking-caused health costs for every dollar spent on tobacco prevention.

Despite these clear benefits, budget cuts have decimated three of the nation's oldest and most successful tobacco prevention programs, in Florida, Massachusetts and Oregon, and have seriously hampered several promising new programs, including those in Indiana, Maryland, Minnesota, Nebraska and New Jersey.

"Tobacco prevention programs work – reducing smoking and the deadly illnesses that result, like cardiovascular disease," said M. Cass Wheeler, CEO of the American Heart Association. "But they won't work without funds. It is tragic so few states have kept their promise to use settlement funds to address the terrible toll of tobacco, especially given the opportunity we have to knock out this public health menace and thereby save lives, and healthcare costs, down the road."

"In spite of their dismal record thus far, states still have the opportunity to live up to their 1998 Master Settlement Agreement promises by committing funds to tobacco prevention. Tobacco control is a sound investment for the future and one of the surest ways to protect health and cut health care costs. Funding prevention programs makes both good health sense and good fiscal policy," said John L. Kirkwood, President and CEO of the American Lung Association.

The tobacco settlement, signed by 46 states and the major tobacco companies on November 23, 1998, requires the tobacco companies to make annual payments to the states in perpetuity as reimbursements for health care costs related to tobacco use. Four states – Mississippi, Texas, Florida and Minnesota – reached earlier, individual settlements. Payments under the settlements were estimated to total $246 billion over the first 25 years.

The multi-state settlement also banned or restricted some forms of tobacco marketing, including billboard and transit advertising, the use of cartoon characters, tobacco brand name merchandise, and event sponsorships. However, these restrictions affected less than 20 percent of total tobacco marketing at the time of the settlement, and the tobacco companies since have increased spending on other forms of marketing, many of which are effective at reaching children. These include high-visibility store displays, price discounts that make cigarettes more affordable to kids, and free gifts with purchase.

Tobacco use is the nation's leading preventable cause of death, killing more than 400,000 people in the U.S. and costing the nation $75 billion in smoking-caused health care bills every year. Nearly 90 percent of all smokers start at or before age 18. Every day in the U.S., 4,000 kids try their first cigarette, and another 2,000 kids become regular, daily smokers, one-third of whom will die prematurely as a result.

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November 2003 Report

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