In the lawsuit against the tobacco companies, the states were trying to recover some of their Medicaid cost for tobacco-related healthcare illnesses. As a part of the settlement, big tobacco companies were exempted from private tort-liabilities brought by individuals against these companies for harm caused by tobacco use. In exchange, the tobacco companies agreed to stop certain marketing practices, as well as to pay annual payments to compensate the states for the medical cost of smoke-related diseases. These payments were to be paid over a period of 25 years.
However, this April, when Missouri receives its annual payment, it will be about 70 million less than the expected 130 million, because an arbitration panel declared that Missouri officials had failed to diligently enforce the terms of the tobacco settlement. The decision by the arbitration panel goes back to 2003. They haven’t yet assessed Missouri’s enforcement efforts for 2004 or beyond. The settlement also allows the payments to be reduced if the tobacco companies suffer a loss in their market share, and if the state fails to enforce the settlement provisions intended to keep manufacturers who didn’t join the (MSA) from gaining a sales advantage.
Representatives of big tobacco companies, anti-tobacco activists and the Missouri Attorney General’s office, are all in agreement that the only way to stop the “financial bleeding” is to pass legislation that would essentially force a price hike on cheap cigarettes sold by smaller tobacco manufacturers who didn’t join the original settlement. Consequently, this has become a battle between “big tobacco” and “little tobacco” with the state of Missouri and her citizens the losers.
Little Tobacco currently has a competitive advantage over Big Tobacco because their value brand cigarettes sell for about $6 a carton less than the name brand ones. SB 820 and HB 1442 would seek to close this loophole in accordance with the MSA so that the state wouldn’t continue to lose settlement dollars.
Opponents of the legislation say that all tobacco issues boil down to money and market share. They also say it is not a “loophole” in Missouri’s law, “it’s just the deal Big Tobacco cut with 46 state attorney generals and now they want legislation to help them unilaterally change the deal.” Little Tobacco is saying that Big Tobacco wants this legislation to decrease the competitive price advantage it now has in the market place.
Supporters of SB 820 and HB 1242 say that the failure to close this loophole has created an artificial subsidy that favors smaller tobacco manufacturers over the larger producers. If this isn’t addressed, Missouri stands to lose millions of settlement dollars.
It’s important to note that state and federal tobacco excise taxes and local and state sales taxes are paid on all tobacco sales in our state. Missouri currently has the lowest state sales tax in the nation at 17 cents per pack of cigarettes, and efforts to raise this tax have failed three different times at the ballot box. The tobacco fight between “Big Tobacco” and “Little Tobacco” will continue over market share and money with consumers, small businesses, and the state caught in the crossfire. Inaction on the part of the General Assembly will cause the state to lose a substantial amount of money, money that is intended, at least in part, to help those who are suffering because of tobacco use.
Today in Missouri almost 24% of adults smoke, with 9,600 dying each year due to tobacco-related diseases. Our annual state healthcare cost that can be directly attributed to smoking is $3.03 billion. While research tells us that smoking kills more people than alcohol, AIDS, car crashes, illegal drugs, murders, and suicides combined, we also know that thousands more die from other tobacco-related causes, such as fires caused by smoking. Reports tell us that nationwide, these fires kill approximately 1,000 people per year. So while Big and Little Tobacco are fighting it out, you don’t have to just sit idly by. If you use tobacco, maybe now is the time to take a stand. Stop smoking, keep more of your hard-earned money, and help protect your health.