Tobacco Companies Spend $28 to Market Products For Every $1 States Spend on Tobacco Prevention, Report Finds

Most States Fail To Adequately Fund Prevention Despite Collecting Record Tobacco Revenues

Nov. 30 2005

Washington, DC — There is a growing gap between the inadequate amounts states are spending on tobacco prevention programs and the record sums the tobacco companies are spending to market cigarettes and other tobacco products, putting at risk the nation’s progress in reducing youth smoking, according to a report released today by a coalition of public health organizations.

In the current budget year, Fiscal 2006, the states combined have allocated $551 million for tobacco prevention programs, while the tobacco companies are spending an estimated $15.4 billion annually, or $42 million a day, on marketing (tobacco marketing numbers are based on 2003 figures for cigarettes and 2001 figures for smokeless tobacco products, the most recent reported by the Federal Trade Commission, and are almost certainly much higher today). This means the tobacco companies spend at least $28 to market tobacco products for every one dollar the states spend on tobacco prevention. The tobacco companies spend more on marketing in a single day than 47 states and the District of Columbia spend on tobacco prevention in an entire year, the report finds.

The annual report, which assesses whether states are keeping their promise to use proceeds from the 1998 state tobacco settlement to fund programs to reduce tobacco use, found that only four states – Maine, Colorado, Delaware and Mississippi – currently fund such programs at minimum levels recommended by the U.S. Centers for Disease Control and Prevention (CDC). Thirty-five states and the District of Columbia fund programs at less than half the CDC’s minimum level or provide no state funding at all.

The report, "A Broken Promise to Our Children: The 1998 State Tobacco Settlement Seven Years Later," was released by the Campaign for Tobacco-Free Kids, American Heart Association, American Cancer Society and American Lung Association.

The report faults the states for not spending more on tobacco prevention programs despite collecting a record $21.3 billion this year in tobacco-generated revenue from the tobacco settlement and tobacco taxes and despite an improvement in the overall financial condition of most states after several years of tight budgets. While $551 million represents a small increase in tobacco prevention funding from $538.2 million a year ago, it is still 26.5 percent less than peak funding of $749.7 million in Fiscal 2002 and barely one-third of the $1.6 billion needed for every state to fund prevention programs at CDC-minimum levels. It would take just 7.5 percent of the states’ total tobacco revenue to meet CDC recommendations.

The report cites evidence that the recent cuts in tobacco prevention funding are undermining efforts to reduce youth smoking. A CDC survey released in April found no significant declines in high school and middle school smoking rates between 2002 and 2004 after several years of major declines. The CDC attributed the lack of progress to the 28 percent cut in state tobacco prevention funding from 2002 to 2004 and steep increases in tobacco marketing. From 1998, when they agreed to some marketing curbs as part of the tobacco settlement, to 2003, the tobacco companies increased their marketing spending by 123 percent to an estimated $15.4 billion.

"This report shows that the states’ efforts to protect kids from tobacco have failed to keep up with the record growth in the tobacco industry’s marketing of its deadly and addictive products," said William V. Corr, Executive Director of the Campaign for Tobacco-Free Kids. "States lack excuses for their failure to protect our children. We have mountains of evidence that prevention programs work to keep kids from smoking, save lives and save money by reducing tobacco-related health care costs. And the states are financially healthy again, in part because they are collecting record amounts of revenue from the tobacco settlement and tobacco taxes."

"In the competition between state spending on tobacco prevention and tobacco industry spending on marketing addictive products, the states continue to lag behind," said John R. Seffrin, PhD, Chief Executive Officer of the American Cancer Society. "If we are to have any chance of winning this critical battle, states need to do a better job of funding programs that help reduce tobacco use and protect the health of our youth. Funding tobacco prevention programs is one of the smartest and most fiscally responsible investments state governors and legislators can make. Yet, far too many states are missing this golden opportunity not only to prevent disease and death, but to save money by lowering tobacco-related health care costs."

"The evidence that tobacco prevention programs save lives and money is apparent; what is lacking is the political will to fund these programs. Policymakers throughout the country should stop turning a blind eye to the health and economic costs of tobacco use and addiction and join the few states in making a commitment to tobacco prevention programs," said John L. Kirkwood, President and CEO of the American Lung Association.

"The race to find an effective vaccine to fight avian flu has been in the headlines, but we should take heed and remember an epidemic we already face at home, and that's tobacco-related deaths," said M. Cass Wheeler, CEO of the American Heart Association. "The antidote is well-funded tobacco prevention programs which can break the cycle of addiction to tobacco, the single greatest cause of preventable deaths in the United States each year. It's time that the states kept their promises and took immediate steps to combat tobacco use."

The report cites growing evidence that tobacco prevention programs work. Maine, which ranks first in funding tobacco prevention for the fourth year in a row, reduced smoking by 64 percent among middle school students and by 59 percent among high school students from 1997 to 2005. Between 1999 and 2004, Mississippi reduced smoking by 48 percent among public middle school students and by 32 percent among public high school students. 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. 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. The demonstrated successes this year of tobacco prevention programs in Ohio, New York, Indiana and Washington State provide further proof that these programs are working in every state in which they are being adequately funded.

Despite these benefits, some of the most effective state tobacco prevention programs continue to face funding threats. In Mississippi, Governor Haley Barbour has filed suit to overturn a court order requiring that the state spend $20 million a year in tobacco settlement funds on tobacco prevention. Court proceedings are scheduled to resume Thursday.

After elected officials failed to adequately fund tobacco prevention, voters in Colorado and Montana supported ballot initiatives to do so, significantly boosting funding for tobacco prevention in these two states. This trend appears likely to continue in 2006 with ballot initiatives in Florida to set aside a portion of settlement funds to restore funding for that state’s once highly successful program and in California and Missouri to increase tobacco taxes and earmark a portion of the revenue for tobacco prevention.

The multi-state 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.

Tobacco use is the nation’s leading preventable cause of death, killing more than 400,000 people and costing more than $180 billion in health care bills and lost productivity each year. Nearly 90 percent of all smokers start at or before age 18. Every day in the U.S., another 1,500 kids become regular smokers, one-third of whom will die prematurely as a result. While we have made progress in reducing youth smoking in recent years, 21.7 percent of high school students still smoke, according to the CDC.

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