[Senate Hearing 108-1015]
[From the U.S. Government Publishing Office]
S. Hrg. 108-1015
STATE SPENDING OF
TOBACCO SETTLEMENT REVENUES
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
NOVEMBER 12, 2003
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
21-176 PDF WASHINGTON : 2016
_______________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South
CONRAD BURNS, Montana Carolina, Ranking
TRENT LOTT, Mississippi DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas JOHN D. ROCKEFELLER IV, West
OLYMPIA J. SNOWE, Maine Virginia
SAM BROWNBACK, Kansas JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon JOHN B. BREAUX, Louisiana
PETER G. FITZGERALD, Illinois BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada RON WYDEN, Oregon
GEORGE ALLEN, Virginia BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire BILL NELSON, Florida
MARIA CANTWELL, Washington
FRANK R. LAUTENBERG, New Jersey
Jeanne Bumpus, Republican Staff Director and General Counsel
Robert W. Chamberlin, Republican Chief Counsel
Kevin D. Kayes, Democratic Staff Director and Chief Counsel
Gregg Elias, Democratic General Counsel
C O N T E N T S
----------
Page
Hearing held on November 12, 2003................................ 1
Statement of Senator Lautenberg.................................. 37
Prepared statement........................................... 37
Statement of Senator Lott........................................ 39
Statement of Senator McCain...................................... 1
Prepared statement........................................... 2
Statement of Senator Nelson...................................... 47
Witnesses
Durbin, Hon. Richard, U.S. Senator from Illinois................. 42
Prepared statement........................................... 42
Healton, Dr. Cheryl G., President and CEO, American Legacy
Foundation..................................................... 3
Prepared statement........................................... 5
Hudson, Hon. Deborah, Chair, Revenue and Finance Committee,
Delaware House of Representatives, On behalf of the National
Conference of State Legislatures............................... 16
Prepared statement........................................... 19
Moore, Hon. Mike, Attorney General, State of Mississippi......... 30
Prepared statement........................................... 33
Myers, Matthew, President, Campaign for Tobacco-Free Kids........ 8
Prepared statement........................................... 10
Scheppach, Raymond C., Executive Director, National Governors
Association.................................................... 24
Prepared statement........................................... 25
Appendix
Article dated November 14, 2003 from MMWR Weekly entitled
``Tobacco Use Among Middle and High School Students--United
States, 2002''................................................. 65
Letter dated November 14, 2003 to Hon. John McCain from Cheryl G.
Helton, Dr.P.H., President and CEO, American Legacy Foundation. 64
Letter dated November 24, 2003 to Hon. John McCain from John F.
Scruggs, Vice President, Government Affairs, Altria Group, Inc. 70
Letter dated October 17, 2003 to Hon. Dennis Eckhart, Senior
Assistant Attorney General, State of California from Howard A.
Willard III, Senior Vice President, Youth Smoking Prevention,
Philip Morris USA.............................................. 73
Ross, Sheila M., Washington Representative, Alliance for Lung
Cancer Advocacy, Support and Education (ALCASE), prepared
statement...................................................... 62
Seffrin, Ph.D., John R., Chief Executive Officer, American Cancer
Society, prepared statement.................................... 59
STATE SPENDING OF
TOBACCO SETTLEMENT REVENUES
----------
WEDNESDAY, NOVEMBER 12, 2003
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 9:30 a.m. in room
SR-253, Russell Senate Office Building, Hon. John McCain,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOHN McCAIN,
U.S. SENATOR FROM ARIZONA
The Chairman. Good morning. Today's hearing gives the
Committee an opportunity to learn more about how states are
spending revenues derived from the $247 billion Master
Settlement Agreement, MSA, that was reached in 1998 between the
states and the Nation's four largest tobacco companies. As this
month marks the 5-year anniversary of the MSA, now is an
appropriate time to revisit the effects of the agreement.
I would like to have our witnesses come forward now.
In the U.S. alone, an estimated 400,000 people die each
year as a result of a smoking-related illness, which equates to
approximately 1,200 smoking-related deaths per day. Nearly
2,000 children start smoking each day. Sixty percent of smokers
in this country begin before the age of 14, and nearly 90
percent become addicted by age 19. While the Surgeon General
estimates that 75 percent of smokers want to quit, only
slightly over 2 percent actually succeed each year. Globally,
the World Health Organization estimates that eight out of a
hundred people who are currently alive will die from smoking.
These statistics underscore the importance of both
investing in tobacco prevention programs and preventing
targeted tobacco marketing designed to allure our children. The
MSA settled lawsuits filed by numerous states seeking
reimbursement for decades of healthcare expenditures on
tobacco-related illnesses and deaths. While the MSA does not
direct how states allocate their settlement payments, one of
the most recurring and dominant refrains of state officials
pursuing litigation was the critical need to reduce the use of
tobacco products by our youth. In fact, several of the recitals
set forth in the beginning of the MSA expressly indicate the
settling state's intention to dedicate significant MSA fundings
to the reduction of youth smoking.
In addition, in a resolution that was passed in 1999 and
2001 by the members of the National Governors Association, the
Nation's Governors committed to spending, ``a significant
portion of the settlement funds on smoking-cessation
programs.'' However, the state legislatures have committed
their settlement revenues for other purposes. The NGA's
promises have eroded over time. This fact is most apparent in
its 2003 resolution that omits any reference to spending
settlement funds on smoking-cessation programs.
The Campaign for Tobacco-Free Kids is expected today to
release a report that confirms that the vast majority of states
are failing to live up to their promises to fund tobacco-
related programs. The report will show that only four states
are funding tobacco prevention programs at the minimum
recommended level suggested by the U.S. Centers for Disease
Control, a level that typically amounts to only a fraction of a
state's overall tobacco revenue. Despite the nearly $20 billion
the states expect to receive from the MSA in Fiscal Year 2004,
states will spend less than 3 percent of that total on tobacco
prevention programs, which is less than half the CDC's
recommended funding level.
We are all fully aware of the budget shortfalls that are
being experienced by the states, but isn't an ounce of
prevention better than a pound of cure, from both a long-term
economic perspective and a moral perspective? I'd like to
better understand why states are, to a large degree, ignoring
the problem of youth smoking.
The Surgeon General testified in the year 2000, before this
Committee, that smoking prevention programs work and that
proper funding of these programs could cut smoking rates in
half by 2010. I believe that the MSA settlement revenues may be
our best chance to dramatically reduce smoking rates,
especially among our children.
Before we proceed any further, I want to mention my
disappointment that the U.S. Department of Health and Human
Services declined our invitation to have the CDC appear today.
Perhaps that's an indication of the Department of Health and
Human Services' involvement and interest in this issue.
[The prepared statement of Senator McCain follows:]
Prepared Statement of Hon. John McCain, U.S. Senator from Arizona
Good morning. Today's hearing gives the Committee an opportunity to
learn more about how states are spending revenues derived from the $247
billion Master Settlement Agreement (MSA) that was reached in 1998
between the states and the Nation's four largest tobacco companies. As
this month marks the five-year anniversary of the MSA, now is an
appropriate time to revisit the effects of the agreement.
In the U.S. alone, an estimated 400,000 people die each year as a
result of a smoking-related illness, which equates to approximately
1,200 smoking-related deaths per day. Nearly 2,000 kids start smoking
each day. Sixty percent of smokers in this country begin before the age
of 14, and nearly 90 percent become addicted by age 19. While the
Surgeon General estimates that 75 percent of smokers want to quit, only
slightly over two percent actually succeed each year. Globally, the
World Health Organization estimates that eight out of 100 people who
are currently alive will die from smoking. These statistics underscore
the importance of both investing in tobacco prevention programs, and
preventing targeted tobacco marketing designed to lure our children.
The MSA settled lawsuits filed by numerous states seeking
reimbursement for decades of health-care expenditures on tobacco-
related illnesses and deaths. While the MSA does not direct how states
allocate their settlement payments, one of the most recurring and
dominant refrains of state officials pursuing the litigation was the
critical need to reduce the use of tobacco products by our youth. In
fact, several of the recitals set forth in the beginning of the MSA
expressly indicate the settling states' intention to dedicate
significant MSA funds to the reduction of youth smoking.
In addition, in resolutions passed in 1999 and 2001 by the members
of the National Governors Association (NGA), the Nation's Governors
committed to spending ``a significant portion of the settlement funds
on smoking cessation programs.'' However, as state legislatures have
committed their settlement revenues for other purposes, the NGA's
promises have eroded over time. This fact is most apparent in its 2003
resolution that omits any reference to spending settlement funds on
smoking cessation programs.
The Campaign for Tobacco Free Kids is expected today to release a
report that confirms that the vast majority of states are failing to
live up to their promises to fund tobacco-related programs. The report
will show that only four states are funding tobacco prevention programs
at the minimum recommended level suggested by the U.S. Centers for
Disease Control (CDC), a level that typically amounts to only a
fraction of the states' overall tobacco revenue. Despite the nearly $20
billion the states expect to receive from the MSA in Fiscal Year 2004,
states will spend less than three percent of that total on tobacco
prevention programs; which is less than half of the CDC's recommended
funding level.
We are all fully aware of the budget shortfalls that are being
experienced by the states, but isn't an ounce of prevention better than
a pound of cure? From both a long-term economic perspective and a moral
perspective, I would like to better understand why states are, to a
large degree, ignoring the problem of youth smoking.
The Surgeon General testified in 2000 before this Committee that
smoking prevention programs work, and that proper funding of these
programs could cut smoking rates in half by 2010. I believe that the
MSA settlement revenues may be our best chance to dramatically reduce
smoking rates, especially among our children.
Before we proceed any further, I want to mention my disappointment
that the U.S. Department of Health and Human Services (HHS) declined
our invitation to have the CDC appear today. I thank the witnesses for
being here and I look forward to your testimony.
The Chairman. Our witnesses today are the Honorable Mike
Moore, Attorney General of the State of Mississippi; Mr. Matt
Myers, President of Campaign for Tobacco-Free Kids; Mr. Raymond
C. Scheppach, the Executive Director of the National Governors
Association; the Honorable Deborah Hudson, Delaware State
Legislature; and Dr. Carol Healton, President and CEO of the
American Legacy Foundation.
Dr. Healton, we'll begin with you.
STATEMENT OF DR. CHERYL G. HEALTON, PRESIDENT AND CEO, AMERICAN
LEGACY FOUNDATION
Dr. Healton. Chairman McCain, Senator Hollings, and other
distinguished Members of the Committee, I deeply appreciate
this opportunity to testify on behalf of the American Legacy
Foundation.
Our mission is to build a world where young people reject
tobacco and anyone can quit. Every day in America, 1,200 lives
are lost to tobacco-related disease. On that same day, 4,400
young people under the age of 18 smoke their first cigarette.
We are the national foundation born of the Master
Settlement Agreement and funded through dollars directed to us
by the states. Among the members of our Board are two--of
directors--are two representatives each, designated by the
National Association of Attorneys General, the National
Governors Association, the National Conference of State
Legislatures. I am especially pleased to serve on a panel with
these organizations.
Governor Napolitano, of Arizona, currently serves as one of
the NGA representatives on our board, and she sends her special
greetings to you, Chairman McCain.
We are here, not to lobby today, but rather to assist the
Committee in its oversight responsibilities by sharing our
insights and experiences regarding the use of the MSA funds by
the states. Perhaps because of our board's structure, Legacy is
sensitive to the Solomon-like choices that must be made by
states facing unprecedented budget deficits and escalating
demands for resources. Nonetheless, we must add our voice to
the public-health chorus that would remind states of the long-
term consequences of today's decision to rob Peter to pay Paul.
The tobacco epidemic costs the U.S. $158 billion a year and
hundreds of thousands of lives needlessly lost.
Because only a small proportion of the original funds
disbursed to the states via the MSA have been spent by the
states to prevent or reduce tobacco use, and because of recent
budget shortfalls, Legacy has become a de facto safety net at
the national level. It is a role that will be increasingly
difficult for Legacy to fulfill.
At a time when state programs are critically wounded or
disappearing, including some of the most effective, like those
in California, Florida, Massachusetts, or Oregon, Legacy is
faced with its own funding cliff, which is shown on the charts
here.
Payments would be made to Legacy under the agreement only
if the participating manufacturers controlled 99.05 percent of
the market share of tobacco sales nationally. Last April,
Legacy received what it believes to be its last major payment,
pursuant to the MSA, and that payment would be $330 million, so
the wound is quite critical.
In 2001 alone, the tobacco industry spent a record $11.2
billion marketing their products, up by $5 billion since the
MSA was signed, and outspending Legacy's national public-
education campaign 200-to-one.
So far, Legacy, along with others, has been able to hold
its ground in the David-versus-Goliath struggle, and youth
smoking is now at its lowest level in 28 years. We are proud of
the role Legacy has played in this life-saving effort. Programs
like our award-winning Truth Youth Counter-Marketing Campaign
have been cited as one of the reasons for the sharp and
accelerating declines in youth smoking. Circle of Friends,
another of our signature programs, provides social support for
women smokers, 70 percent of whom want to quit. I am wearing a
Circle of Friends pin, which symbolizes my support for the 20-
million-plus women who are struggling to quit smoking. The
encouraging trends in youth smoking rates and the number of
people who have quit smoking could end tomorrow, but they don't
have to end.
I'd like to conclude my testimony by issuing four
challenges to the Committee and a pledge from Legacy. We must
recommit, as a Nation, to youth smoking prevention. The
American Legacy Foundation pledges to partner with the states
to fund programs like Truth. Already, Legacy has spent over $3
million in coops with the state and has committed six million
next year of our own foundation funds for cooperative
agreements with 15 states, including some of those Committee
Members represent.
We must turn our attention to the 47 million Americans who
are smokers, most of whom want to quit, and the 177 million
remaining Americans who should help them. Over the course of
the coming year, the American Legacy Foundation is committed to
leading a consortium of partners to raise $100 million, about
$2 per smoker, to assist the states and the Nation in
motivating and helping smokers to quit.
We must encourage new and expanded public-private
partnerships to help increase the lifesaving benefits of
prevention programs and smoke-free workplaces throughout the
country. Legacy proudly salutes those private sector partners
that have already joined with us, including Avon, QVC,
Novartis, the BlueCross/BlueShield Association, and the
Entertainment Industry Foundation.
Finally, Legacy urges this Committee and the U.S. Congress
to continue your oversight responsibilities, tracking the
progress of the MSA, and encouraging the Federal Government to
find appropriate avenues to become a more direct partner in
tobacco prevention and cessation programs at the national
level.
Legacy's role as a crucial funding and strategic
counterweight against the tobacco industry will continue. We
pledge that our efforts to partner with those states and
organizations that are genuinely committed to the moral
contract they made in the MSA will be redoubled in the months
and years ahead.
Mr. Chairman, I commend you for holding today's important
oversight hearing, and thank you for including the American
Legacy Foundation on the panel. I would be pleased to respond
to questions.
[The prepared statement of Dr. Healton follows:]
Prepared Statement of Dr. Cheryl G. Healton. President and CEO,
American Legacy Foundation
Chairman McCain, Senator Hollings, and other distinguished Members
of the Committee, I deeply appreciate this opportunity to testify on
behalf of the American Legacy Foundation. Our mission is to build a
world where young people reject tobacco and anyone can quit.
We are the national foundation borne of the Master Settlement
Agreement (MSA) and funded through dollars directed to us by the
states. Our Board of Directors includes among its members two
representatives each designated by the National Association of
Attorneys General, the National Governors Association, and the National
Conference of State Legislatures. I am thus especially pleased to serve
on a panel with representatives from those organizations. Governor
Napolitano of Arizona currently serves as one of the NGA
representatives on our Board and she sends her special greetings to you
Chairman McCain.
Chairman McCain and Members of the Committee, let me say at the
outset that Legacy is prohibited from lobbying pursuant to the terms of
the MSA. Today, we are here not to lobby, but rather to assist the
Committee in its oversight responsibilities, by sharing our insights
and experiences regarding the use of MSA funds. Because of the unique
circumstances of our birth, the American Legacy Foundation is a
creature of the states. Therefore, we feel well qualified to share our
views regarding the significant progress that has been made at the
state level as a result of the MSA. And, we are equally qualified to
point out where states have fallen short--despite the infusion of funds
by the MSA--because of competing fiscal priorities.
The Centers for Disease Control (CDC) issued their Best Practices
for Comprehensive Tobacco Control Programs guidelines in August of
1999, with a call to action on the percentage of funds that should be
spent by each state for tobacco control programs. These recommendations
became an important benchmark for the public health community. In 2003,
the states will spend only 8 percent of the total tobacco settlement
revenues they are expected to receive this year. That translates to
just $682 million dollars that are committed to tobacco control
programs of $8.7 billion total. Most states have failed to meet the
minimum recommendations set forth by the CDC to promote tobacco
prevention programs, let alone the ideal funding level which could
aggressively address the epidemic of tobacco-related death and
disability.
Every day in America, 1,200 lives are lost to tobacco-related
disease. On that same day, 4,400 young people under the age of 18 take
their first puff of a cigarette, steering many of them down the road to
a lifetime of tobacco addiction. Because lives are at stake, advocates
from the tobacco control, medical and public health communities in the
states are understandably disappointed that so few of the MSA dollars
have been devoted to tobacco control programs. And the alarming trend
shows no sign of abatement. Compounding the problem, some of the most
effective state programs have already been lost or critically wounded,
including California, Massachusetts, Oregon and Florida. Many feel
strongly that the States have squandered an unprecedented opportunity
to save lives and have argued that decisions to direct all--or
virtually all--MSA dollars to other programs are especially short
sighted in economic terms since smoking cessation dramatically reduces
the enormous sums needed to treat sick and dying smokers in the long
term and greatly curtails productivity losses. The tobacco epidemic
costs the U.S. 158 billion dollars a year.
Perhaps because of our board structure, Legacy is uniquely
sensitive to the Solomon-like choices that often must be made by states
that are facing unprecedented budget deficits and escalating demands
for resources. However, we must nonetheless add our voice to the public
health chorus that would remind States of the long term consequences of
today's decision to rob Peter to pay Paul--including millions of lives
needlessly lost and billions of dollars spent on preventable death and
disease.
Because only a small portion of the original sums disbursed to the
States via the MSA have been spent by the states to prevent or reduce
tobacco use, Legacy has become a de facto safety net at the national
level to fill many of these gaps. It is a role that will be
increasingly difficult for Legacy to fulfill.
Notably, at a time when state programs are disappearing, Legacy is
facing its own funding cliff as a result of what was in essence a
``sunset provision'' in the MSA. That cliff is shown on the chart here.
Specifically, Legacy was only guaranteed major payments from the
states via the participating manufacturers for the first five years.
Thereafter, payments would be made to Legacy only if the participating
manufacturers controlled 99.05 percent market share of tobacco sales
nationally. Because of the number of small companies not participating
in the MSA, the 99.05 threshold was never met--although there were
strong incentives built in to join the agreement. Last April, Legacy
received what it believes will be its last major payment pursuant to
the MSA.
The sun is setting at a time when the industry is spending more
than ever before on its marketing and advertising campaigns. In 2001
alone, the tobacco industry spent a record $11.2 billion dollars
marketing their products--up by 5 billion dollars since the MSA was
signed. Although Legacy does its share of counter marketing through the
truth campaign and other programs, the industry routinely outspends us
by 200 to 1.
So far, Legacy--along with others--has been able to hold its ground
in this David vs. Goliath battle. But the threat of litigation haunts
any successful tobacco-control advertising campaign--as you have
witnessed in the State of California--and as the American Legacy
Foundation currently finds itself engaged in the State of Delaware.
Simply put, our foundation is working to save lives and the tobacco
companies are in business to sell cigarettes. Effective efforts to
reduce smoking that significantly decrease industry marketshare, have
been met with long-term litigation that serves to distract us from our
mission, rob us of limited resources and if successful, can ultimately
silence our work and close our doors.
Smoking is at its lowest level in 28 years. The American Legacy
Foundation is proud of this achievement by the community as a whole,
including the states.
We are also proud of the role Legacy has played in securing this
success through our programs, such as truth our award-winning youth
counter marketing campaign that has been cited as one of the reasons
for the sharp declines in youth tobacco use. We are also proud of
``Great Start,'' our innovative cessation program for pregnant women,
which was the brainchild of the former First Lady of Utah, Jackie
Leavitt. The program worked with 20 First Ladies to spread the word to
women about the benefits of quitting before and during pregnancy and
staying smoke free.
``Circle of Friends'' is another signature foundation campaign
designed to provide social support for women smokers, 70 percent of who
want to quit but need strong social support to be successful in the
long-term. I am wearing a Circle of Friends pin today, which symbolizes
my support for the over 20 million women who are struggling to quit
smoking.
Mr. Chairman, on the anniversary of the MSA, we are at a
crossroads. The encouraging trends in the number of people who have
quit smoking and the number of youth who never start could end
tomorrow. But they don't have to end. The MSA still has decades left to
achieve the vision of a smoke free society--and the American Legacy
Foundation is committed to staying the course, to help shape a society
where all young people reject tobacco and anyone can quit.
The past five years have taught us a great deal about what works in
the effort to get the truth about tobacco to the American people--
especially our youth. We've also learned that it takes a partnership
between states, Federal agencies, and private organizations such as
Legacy to address the nationwide tobacco epidemic. We are working
aggressively to forge partnerships with our colleagues in tobacco-
control and public health as well as states, national organizations and
corporate America, who share in our conviction that working together,
we can eliminate tobacco addiction and achieve healthier and longer
lives for all Americans. But, these partnerships require the states to
remain committed to the spirit of the MSA and require all of us to
remain actively engaged.
I'd like to end my testimony by issuing four challenges to the
Committee and a pledge from Legacy:
(1) We must re-enforce and renew our commitment as a nation, and in
the individual states, to youth tobacco prevention. The
American Legacy Foundation pledges to partner with the states
in funding programs like truth. Already, Legacy has spent over
$3 million--with a commitment to spend $6 million--of our own
foundation funds on cooperative agreements with 15 states from
coast to coast, like Alaska, Arkansas, Indiana, Kentucky, New
Mexico, New York and Wisconsin, to leverage state dollars with
Legacy funds to provide sustainable state-led efforts.
(2) We must turn our attention to the 47 million Americans who are
smokers, most of whom want to quit, and the 177 million
remaining Americans who need to help them quit. Over the course
of the coming years, the American Legacy Foundation is
committed to leading a consortium of partners in raising 100
million dollars--about $2 per smoker--to assist the states and
our Nation in motivating and assisting smokers to quit.
(3) We must encourage new and expanded public/private partnerships
between business, unions, communities, states and the Federal
Government that will help us expand the life-saving benefits of
prevention programs and smoke-free workplaces throughout the
country. Legacy proudly salutes those private sector partners
that have already joined us including Avon, QVC, Novartis, the
Blue Cross Blue Shield Association, the Entertainment Industry
Foundation and others. We need more businesses, associations
and organizations to join us in these efforts.
(4) Finally, Legacy urges this committee and the United States
Congress to continue your oversight responsibilities, tracking
the progress of the MSA and encouraging the Federal Government
to find appropriate avenues to become a more direct partner in
tobacco prevention programs at the national level. Here, as
well, Legacy pledges our support and full partnership with you.
We are putting our faith in the proven power of partnership to help
us achieve the promise of a smoke-free future. Legacy's role as a
crucial funding and strategic counter-weight against the tobacco
industry will continue, and I pledge to this committee that our efforts
to partner with those states and organizations who are genuinely
committed to the moral contract they made in the MSA will be redoubled
in the months and years ahead.
Mr. Chairman, smoking is the number one killer in America today and
all of these deaths are completely preventable. The American Legacy
Foundation offers our resources, depth of knowledge and fierce
determination to help states, and the Nation as a whole, meet these
challenges. We commend you for holding today's important oversight
hearing and thank you for including The American Legacy Foundation's on
the panel.
The Chairman. Thank you very much.
Mr. Myers?
STATEMENT OF MATTHEW MYERS, PRESIDENT,
CAMPAIGN FOR TOBACCO-FREE KIDS
Mr. Myers. Mr. Chairman and Members of the Committee, first
I want to thank you very much for holding this hearing. The
spotlight you shine on how the tobacco settlement money is one
of the most important public health issues of our time.
Let me briefly summarize our testimony. As you correctly
said, when the states sued the tobacco industry and when they
settled, they said that they were both suing and settling for
very specific purposes. They were trying to stop an epidemic of
tobacco use among children, and they were trying to stop the
crushing rise in Medicaid costs the states were experiencing
due to tobacco-related diseases.
These quotes are typical. Pennsylvania Attorney General
Mike Fisher, ``Emphysema, heart disease, cancer, more than
20,000 Pennsylvanians die from tobacco-related diseases each
year. This money will not bring back those who have died, but
it may be used to keep others from starting this deadly
habit.''
West Virginia Attorney General Darrell McGraw, ``The reason
we got into this fight was to protect public health and prevent
underage smoking. A significant portion of this money should go
toward these curses.''
When the states came to this Committee and to Congress in
1999 and asked you to waive any potential right the Federal
Government had to direct the spending of that money, or to its
share of that money so that the Federal Government would have
more funds to fight this battle, they also made specific
promises. You correctly quoted the National Governors
Association's resolution. But in May 1999, the National
Governors Association said something else, and I quote,
``States are already spending state funds on smoking-cessation
programs and will substantially increase funding as the
effectiveness of these programs is established.''
Mr. Chairman and Members of the Committee, as I will note
later on in our report, the effectiveness of these programs has
been established, and the states have done just the opposite.
Three years ago, you held a hearing. At that time, you were
harshly critical, as were we, of the fact that the states were
only spending 9 percent of the tobacco settlement money at that
time on tobacco prevention programs. Well, today we and the
American Cancer Society, the American Heart Association, and
the American Lung Association are issuing a new report
entitled, ``A Broken Promise To Our Children.'' What it shows
is that the case has become substantially worse. The amount of
money the states are now spending on tobacco prevention has
dropped by 28 percent in the last 2 years. It is now down to
$541.1 million out of a total of that the states have received
this year from tobacco excise taxes and tobacco settlement
money of over $19 billion.
Mr. Chairman and Members of the Committee, we can't win
this war if we don't wage it, and currently we are not waging
it.
The situation is even worse in another respect. The cuts in
tobacco spending have decimated some of the most effective
programs this Nation has ever seen, programs whose
effectiveness is beyond debate, programs that have already
saved lives, programs in California, Massachusetts, and
Florida, which have proven they can dramatically drive down
tobacco-use rates. And yet today, Massachusetts and Florida's
programs barely exist, and California's program has been cut in
half.
This tragedy comes about at a time when the need for strong
action is greater, not less than it was 5 years ago. We had
hoped that the tobacco industry would take advantage of the
Master Settlement Agreement to decrease their targeting of
young people and young people's exposure to tobacco marketing.
The data shows that they have done just the opposite of that.
There's a chart in our report that shows that in the 3 years
after the Master Settlement Agreement, tobacco marketing
actually increased by 66 percent to a record $11.5 billion.
What does that mean today? It means that today the tobacco
industry is spending $20 marketing this product for every
dollar the states are spending to prevent the sale of its
product. What it means is that in 3 weeks, the tobacco industry
spends more money marketing its products than all of the states
combined spend in an entire year.
What does that mean? The variation from state to state is
dramatic. States like Maine and Delaware, that have committed
substantial funds to this program, are only being outspent
three to one, and it's the reason we're seeing results in those
states. But a state like Florida, whose program was a model for
the Nation when it was created, whose program resulted in the
most dramatic decrease in youth tobacco use in history over a
4-year period, is now being outspent 655 to one by the tobacco
industry. We're already seeing smoking rates among the youngest
kids in Florida turn around. It isn't an accident that it's
happening.
And that's the critical fact, Mr. Chairman. We're not
asking the states to spend money on unproven programs. We're
asking the states to spend money on programs that are
scientifically based, that have been fully evaluated, and that
have been found to reduce tobacco use.
Attorney General Moore, at the end, today, will talk about
what's going on in Mississippi, but Mississippi is not an
isolated case. In Maine, they used the Master Settlement money
to fund comprehensive tobacco prevention programs, increased
excise taxes, and expanded clean indoor air. Maine went, in 4
years, from a state with the worst youth smoking rates to one
of the best, from over 39 percent to 20 percent.
Mr. Chairman, we have--we have an antidote to lung cancer.
We know how to prevent lung cancer from ever happening if we
would only spend the money that the states promised to spend.
We know that budget times are tight. But when you compare the
results of our study with the published data from the states,
what you find is that in this fiscal year the states are
spending more money on tobacco farmers than they're spending on
tobacco prevention.
Our organization has worked with tobacco farmers. We want
to help them. But it is a tragedy beyond comprehension, it is
political malpractice, for a nation to be spending its money
this way. They're hard choices. That's why we elect public
officials, to make hard choices. These funds came for a
specific purpose. We don't need to spend all of them. If the
states will spend just 8.2 percent of the tobacco revenue
they're receiving on tobacco prevention and cessation programs,
they can meet the minimum recommended by the CDC. This is not a
partisan issue.
The current director of the CDC issued a report only 2
months ago that carefully evaluated the effectiveness of
tobacco prevention programs and isolated the impact of tobacco
prevention from smuggling, excise taxes, and other factors. And
this is what the current director of the CDC said at that time,
``This study provides our clearest evidence to date that
tobacco control programs are an excellent investment in public
health.''
Mr. Chairman, we applaud this Committee for holding this
hearing. Literally, the lives of millions of our children are
at stake. We hope this hearing is the first step in a real
focus in asking the question how we can ensure that the states
spend the money that they say they received to deal with the
problem of tobacco control to help protect our Nation's
children.
Thank you.
[The prepared statement of Mr. Myers follows:]
Prepared Statement of Matthew Myers, President,
Campaign for Tobacco-Free Kids
Good morning Mr. Chairman, and members of the Committee. My name is
Matthew Myers. I am the President of the Campaign for Tobacco-Free
Kids, a national organization created to protect children from tobacco
by raising awareness that tobacco use is a pediatric disease, by
changing public policies to limit the marketing and sales of tobacco to
children, and by actively countering the special interest influence of
the tobacco industry.
Mr. Chairman, I want to thank you for your continued leadership on
the issue of tobacco control. Many others and I are very grateful for
your willingness to stand up for our kids, take on the tobacco
companies, and hold the states accountable for living up to their
commitment to spend a significant portion of the funds they received
from the tobacco industry in settlement of their cases to prevent kids
from starting to smoke and help adults to quit.
Summary of Key Points
Let me summarize my key points:
(1) When the states sued the tobacco industry and then again when
they settled their cases against the tobacco industry, they
said they were doing so because of what they described as a
tragic epidemic of tobacco use among children and the crushing
and rising burden of tobacco-related disease on state Medicaid
expenditures. Their goal and their promise was to insure that
the states had adequate funds to address these problems.
(2) When the states came to Congress in 1999 and asked the Federal
Government to waive its claim to a portion of these funds, the
leaders of the National Governors Association pledged to spend
``a significant portion of the tobacco settlement funds on
smoking cessation programs, health care, education and programs
benefiting children'' if Congress agreed to waive its right to
any of these funds.
(3) Over three years ago you held a hearing on the use of revenues
from the tobacco settlement. This hearing took place before the
states faced serious budget crises. At that hearing we released
a report that showed the states were not then living up to
their promise. Today we are releasing an update of that report
and the picture has become significantly worse. The report
released today by the Campaign for Tobacco-Free Kids, the
American Cancer Society, the American Heart Association and the
American Lung Association demonstrates that far fewer states
are spending a significant amount of their tobacco settlement
money on tobacco prevention and cessation. As of October 2003,
24 states have cut their funding for tobacco prevention and
cessation, including several of the programs that have proven
most successful at reducing youth tobacco use, such as the
programs in California, Massachusetts and Florida. It appears,
sadly, that there is no relationship between success and
continued funding.
(4) The failure of the states to do as they promised will have
tragic consequences for the health of our Nation's children and
the amount taxpayers are forced to pay in the future to cover
the costs of tobacco-related Medicaid expenditures. The
scientific evidence is now conclusive-comprehensive tobacco
prevention programs have been proven to be effective in
reducing tobacco use, particularly among our Nation's children.
Every state that has implemented a well-funded tobacco prevention
program in accordance with the guidelines issued by the Centers for
Disease Control and Prevention (CDC) has experienced a significant
reduction in tobacco use. The data from California, Washington, Oregon,
Arizona, Minnesota, Alaska, Maine, Mississippi, Florida, New York,
Massachusetts and Indiana all tell the same story. These programs work.
As the current Director of the CDC, Dr. Julie Gerberding, said just
two months ago in conjunction with the release of the most
authoritative study ever done on the impact of tobacco control
programs, ``This study provides our clearest evidence to date that
tobacco control programs are an excellent investment in public
health.''
Thus, the failure of the states to do what they promised their
citizens and Congress is having very real world consequences. We too
often think of tobacco in statistical terms. To tobacco victims-
parents, children, grandchildren, husbands, wives and siblings
tobacco's victims are not statistics. A couple of examples from our
website, ``Voices Against Tobacco'' show that:
Ever since I was 3 there was a big green oxygen tank sitting in
the front room of my house and a small portable one sitting
next to it. They were there to help my mother breathe because
she was dying from emphysema, a smoking disease. My family was
never able to do the things that most families could do, like
go on vacations and weekend camping trips because we always had
to worry about my mom. When I was 9 she died, at the age of 49,
it was hard growing up without a mother. She wasn't there for
the mother daughter talks that all my friends were having with
theirs. I promised myself that I will never let that happen to
me.
Joyce R., West Valley City UT, November 10, 2003
On March 23, 2000, l lost my sister, Mary, to lung cancer. She
started smoking at age 13 and stopped when she was 32. She had
a lot of stress in her life when she was diagnosed with lung
cancer. She was 46 years old. She was 47 years old when she
passed away. Watching her wither away and suffer through the
inability to breathe was very painful. It's something you never
forget. I miss her a lot.
Eileen R., Dimondale MI, November 10, 2003
I lost my father to a tobacco-related heart attack. It was just
10 days after my 13th birthday in 1996. I was home getting
ready to go to my Boy Scouts meeting and watching TV and my mom
and myself received the phone call that my dad had died that
day. He was just 48 yrs old when he died. I lost more than just
a father because anyone can be a father but it takes someone
special to be a dad and I lost my dad. Everyday I think about
my dad and wonder if he would be proud of me. April 30th, 2003
will be 7 years I have had to live without my dad because he
smoked cigarettes. Is that fair?
Ray L., Punta Gorda FL, May 29, 2003
The funds from the Master Settlement Agreement gave the states an
historic opportunity to improve the lives of their citizens. Former
U.S. Surgeon General David Satcher who testified at your hearing three
years ago concluded that investing tobacco settlement dollars in these
comprehensive prevention programs represented the greatest opportunity
in public health since the polio vaccine. Unless the public officials
who make the decisions about how these funds or the funds from state
tobacco excise taxes are used, literally millions of citizens will die
prematurely from wholly preventable tobacco-caused deaths. We can do
better and we must hold our public officials accountable.
Background
Mr. Chairman, as you know, between 1994 and 1998 every state sued
the tobacco companies. In state after state Attorneys General indicated
that the primary purpose for filing the lawsuits was that far too many
children were smoking, the tobacco companies were targeting minors with
their marketing campaigns and the states could no longer afford the
rising costs from tobacco-related Medicaid expenditures. Something had
to be done to address these problems, these public officials said, and
these lawsuits were the answer.
On November 23, 1998, 46 states settled their lawsuits against the
major tobacco companies to recover tobacco-related health care costs,
joining four states (Mississippi, Texas, Florida and Minnesota) that
had reached earlier, individual settlements. These settlements required
the tobacco companies to make annual payments to the states in
perpetuity, with total payments over the first 25 years estimated at
$246 billion. The multi-state settlement, known as the Master
Settlement Agreement (MSA), also imposed limited restrictions on the
marketing of tobacco products.
At the press conference announcing the settlement, the tobacco
settlement was presented as an historic opportunity to attack the
enormous public health problem posed by tobacco use in the United
States. As described by state Attorneys General and Governors, the
promise of the settlement was two-fold: It would significantly increase
the amount of money the states were spending on programs to prevent
kids from starting to use tobacco and help those already addicted to
quit, and it would greatly reduce youth exposure to tobacco marketing.
Mr. Chairman, while the multi-state settlement did not dictate how
states should spend the money, state Attorneys Generals and Governors
from across the Nation pledged that they would use the tobacco
companies' own money to address the tobacco problem.
Why did we think these cases were about reducing the death toll
from tobacco? Listen to what our public officials said:
New Jersey Governor Christine Whitman: ``Every penny of these
funds should be used for health purposes including prevention
programs and counter advertising to protect kids, cessation
programs and community partnerships to serve those who have
already put their health at risk by smoking, in addition to
existing important health programs such as charity care and
Kidcare''
Indiana Governor Frank 0'Bannon: ``This money can go a long way
toward preventing Hoosier Kids from ever getting hooked on
tobacco and toward helping our citizens stop smoking and
recover from smoking-related illness.''
Utah Attorney General Jan Graham: ``Utah has a moral duty to
invest a good part of this money in keeping our kids away from
cigarettes. One-third of kids who start smoking will die of
smoking caused disease''
Pennsylvania Attorney General Mike Fisher: Emphysema, heart
disease, cancer more than 20,000 Pennsylvanians die from
tobacco-related diseases each year.'' ``I sued the tobacco
industry because it conspired to increase the addictive
properties of tobacco products and suppressed vital information
about the deadly nature of tobacco. This money will not bring
back those who have died, but it may be used to keep others
from starting this deadly habit.''
West Virginia Attorney General Darrell V. McGraw: ``The reason
we got into this fight was to protect public health and prevent
underage smoking. A significant portion of this money should go
toward these causes.''
North Carolina Governor Jim Hunt: the consent decree gives
North Carolina ``a balanced approach'' to allocate tobacco
settlement money. ``It will address our efforts to crack down
on underage smoking and to protect the health and well-being of
North Carolinians.''
State officials made similar promises to Congress less than a year
later. Shortly after the settlement, the Health Care Financing
Administration (HCFA) notified the states that Medicaid related
recoveries would be subject to recoupment under Medicaid third party
recovery provisions.
The Clinton Administration indicated a willingness to let the
states keep all of the funds but wanted to require the states to spend
a portion of the funds on reducing teenage smoking among others things.
Instead, the states pressed Congress to change the existing Medicaid
law to allow them to keep the Federal Government's share of the
settlement without any strings attached. The states promised Congress
that they would do the right thing with the funds and that they were
committed to reducing tobacco use.
In order to persuade Congress, the states made explicit promises.
The National Governors' Association, the National Conference of State
Legislators and others stated
``[We] are committed to spending a significant portion of the
tobacco settlement funds on smoking cessation programs, health
care, education, and programs benefiting children.''
In May 1999, the National Governors Association told Congress,
``States are already spending state funds on smoking cessation
programs and will substantially increase funding as the
effectiveness of these programs is established.''
Some made an even more explicit commitment according to Washington
State Attorney General Christine Gregoire. According to Attorney
General Gregoire,
``The representations we (the states) made to them (Congress)
were that states would use not less than 50 percent of the
money for health and anti-tobacco causes.''
Five years after the November 1998 state tobacco settlement, we
find that most states have failed to keep their promise to use a
significant portion of the settlement funds to reduce tobacco's
terrible toll on America's children, families and communities. We also
find that the settlement's marketing restrictions have done little to
reduce the tobacco companies' ability to market their products
aggressively in ways effective at reaching and influencing our
children.
Disturbingly, in the past two years the states have cut funding for
their tobacco prevention programs by more than a quarter, and several
states have completely eviscerated some of the most successful and
promising tobacco prevention and cessation programs in history.
Remember the program in Florida that received so much publicity because
it reduced tobacco use by 35 percent among high school students and by
50 percent among middle school students in just four years? In 2003
Florida's governor and legislature virtually eliminated it.
Massachusetts is another case in point. In the 10 years its program was
in existence, cigarette consumption dropped by 36 percent versus just
16 percent in the rest of the country. Nonetheless, in the last two
years Massachusetts' governor and legislature also virtually wiped out
the program and with this decision, we can expect to see a decade of
progress gradually eroded.
As the report we release today details, the states lack credible
excuses for their failure to do more to protect our children from
tobacco. They are collecting record amounts of tobacco revenue from the
tobacco settlement and tobacco taxes. To protect our children states
only need to spend a small portion--20 to 25 percent per state and an
even smaller percentage of a state's total tobacco revenues from the
tobacco settlement and tobacco taxes--of those funds on tobacco
prevention and cessation programs to meet the minimum levels
recommended by the CDC.
The findings for this year:
Only four states--Maine, Delaware, Mississippi and
Arkansas--currently fund tobacco prevention programs at minimum
levels recommended by the CDC. Last year Maryland and Minnesota
were in this category, but both cut funding.
Only eight other states are funding tobacco prevention
programs at even half the minimum levels recommended by the
CDC. Last year a total of 15 states fell into this category.
Thirty-three states are spending less than half the CDC's
minimum amount. Another five states--Michigan, Missouri, New
Hampshire, South Carolina and Tennessee--and the District of
Columbia allocate no significant state funds for tobacco
prevention.
In the current budget year, Fiscal Year 2004, the states
cumulatively plan to spend $541.1 million on tobacco prevention
programs. This amounts to just 33.8 percent of the CDC's
minimum recommendations for all the states, which total $1.6
billion.
Over the past two years, the states have cut total annual
funding for tobacco prevention by 28 percent, or $209 million
(from a high of$749.7 million in Fiscal Year 2002 to $674.4
million in Fiscal Year 2003 and $541.1 million in Fiscal Year
2004).These cuts have decimated three of the Nation's longest
standing and most successful tobacco prevention programs, in
Florida, Massachusetts and Oregon, and they have seriously
hampered some of the Nation's most promising new programs,
including those in Indiana, Maryland, Minnesota, Nebraska and
New Jersey.
While many states have cut funding for tobacco prevention,
the tobacco industry increased its marketing expenditures to
record levels, up 66 percent in the three years after the
settlement to a record $11.45 billion a year, or $31.4 million
a day, according to the Federal Trade Commission's most recent
annual report on tobacco marketing. While the FTC report was
for calendar year 2001, there is strong evidence that tobacco
industry marketing expenditures have continued to increase.
Based on the latest FTC figures, the tobacco companies are
spending more than twenty dollars marketing their deadly
products for every dollar the states spend to prevent tobacco
use. Put another way, the tobacco companies spend more in three
weeks marketing their products than all 50 states spend over a
full year trying to prevent tobacco use.
The settlement included important restrictions on tobacco
marketing, but since the settlement, the tobacco companies have
simply shifted their resources and increased spending on other
forms of marketing that appeal to kids, especially promotions
in convenience stores and other retail outlets. These include
payments for highv·isibility store placements and
displays, price discounts that make cigarettes more affordable
to kids, and free gifts with purchase. The settlement's
restrictions on tobacco marketing, thus, did not succeed in
reducing the tobacco companies' ability to market their
products aggressively to either children or adults. The need
for the states to act is no less today than it was when the
settlement took place five years ago.
The states this year will collect $19.5 billion in tobacco-
generated revenue from tobacco taxes and the tobacco
settlements. It would take just 8.2 percent of this total for
every state to fund tobacco prevention programs at the minimum
levels recommended by the CDC ($1.6 billion for all the
states). The states are spending only about one-third of what
the CDC recommends for tobacco prevention, amounting to only
2.8 percent of their total tobacco revenue. (Looking only at
settlement money, the National Conference of State Legislatures
recently reported that in Fiscal Year 2004 states are spending
just three percent of their tobacco settlement money on tobacco
prevention.)
At least 20 states and the District of Columbia have also
sold to investors, or securitized, their rights to all or part
of their future tobacco settlement payments for a much smaller,
up-front payment, or have passed laws authorizing such action.
Several states used the revenue generated to balance budgets
for just one year. Securitization eliminates or reduces the
amount of settlement money available to fund tobacco prevention
and meet other needs in the future.
Why States Should Increase Funding for Tobacco Prevention Programs
The states' funding of tobacco prevention and cessation is woefully
inadequate given the magnitude of the tobacco problem. The amount the
states are spending on tobacco prevention today pales in comparison to
the enormity of the problem. Tobacco use is the number one cause of
preventable death in the United States, claiming more than 400,000
lives every year. The annual cost of treating tobacco-caused disease
exceeds $75 billion. Despite recent progress in reducing youth smoking
rates, more than a quarter of high school seniors (26.7 percent) still
graduate as smokers, and every day another 2,000 kids become regular,
daily smokers, one-third of whom will die prematurely as a result.
These children are the tobacco companies' valued ``replacement
smokers.''
The evidence is conclusive that state tobacco prevention and
cessation programs work to reduce smoking, save lives and save money.
Every scientific authority that has studied the issue, including the
National Cancer Institute, the Institute of Medicine and the U.S.
Surgeon General, has concluded that when properly funded and
implemented, these programs reduce smoking among both kids and adults.
For example, the 2000 Surgeon General's report, Reducing Tobacco
Use, provides an in depth analysis of tobacco intervention strategies.
This report offers a science-based blueprint for achieving the goal of
reducing tobacco use among both adults and children. A key conclusion
of the Report is that the Federal Government's Healthy People 2010
objectives with regard to tobacco can be achieved, but only if
comprehensive tobacco prevention and cessation approaches to tobacco
control are implemented.
In September 2003 a study conducted jointly by the Research
Triangle Institute, the CDC, and the University of Illinois published
in the Journal of Health Economics, provided the most powerful evidence
yet of the effectiveness of comprehensive tobacco prevention programs.
The study found that states with well-funded, sustained tobacco
prevention programs during the 1990s--Arizona, California,
Massachusetts and Oregon--reduced cigarette sales more than twice as
much as the country as a whole (43 percent compared to 20 percent).
This is the first study to compare cigarette sales data from all the
states and to isolate the impact of tobacco prevention program
expenditures from other factors by controlling for changes in excise
taxes, cross-border sales and other state specific factors. The study
shows that the more states spend on tobacco prevention, the greater the
reductions in smoking, and the longer states invest in such programs,
the larger the impact. The study concludes that cigarette sales
nationwide would have declined by twice as much as they did between
1994 and 2000 had all states fully funded tobacco prevention programs.
These studies are buttressed by the real life examples of every
state that has committed significant funds to tobacco prevention in
accordance with the CDC guidelines. A case in point: In 1997, Maine had
one of the highest youth smoking rates in the country at almost 40
percent. That year, Maine increased its cigarette tax and used a
portion of the funds to establish a comprehensive tobacco prevention
program known as the Partnership for a Healthy Maine. Maine
subsequently expanded its program with settlement money to meet the
CDC's minimum funding level and has now achieved dramatic results.
Between 1997 and 2003, smoking among Maine's high school students
declined by an astounding 48 percent, falling from 39.2 percent to 20.5
percent. Smoking among middle school students declined by 59 percent,
from 21 percent to 8.7 percent. This report ranks Maine first in the
Nation in its funding of tobacco prevention.
Mississippi, which has also used settlement funds on a
comprehensive program and ranks third among the states in funding
tobacco prevention, reduced smoking by 48 percent among public middle
school students and by 29 percent among public high school students
between 1999 and 2002. As Mississippi Attorney General Mike Moore often
states, ``What state has an excuse to not fund tobacco prevention when
we have done it in Mississippi, one of the poorest states.''
Maine and Mississippi's experience is similar to what happened in
other states. Programs in Washington, Alaska, Oregon, Arizona, Florida,
Minnesota, New York, California, Massachusetts and Indiana all have
reduced tobacco use. The only place these programs haven't worked is
where they haven't been seriously tried.
Florida is a very visible example of the power of these programs to
save lives and what happens when a state guts a successful program.
Florida's once innovative and successful program served as a model
around the country. Despite the program's success, the Florida
legislature and Governor cut the funding for the program each year
since the program's inception and then virtually eliminated the program
in 2003. Florida's kids are already paying a price for the decision to
dismantle a program that reduced high school smoking by 35 percent and
middle school smoking by 50 percent in four years. In 2002 there was no
decline in smoking among middle school students. Even more disturbing,
smoking between 6th and ih grades and between 7th and 8th grades rose
in 2001 and the increases in smoking between 6th and 7th grades
persisted in 2002. There is no excuse and there can be no excuse for
Florida's decision to abandon a program whose results were proven and
universally applauded.
The evidence also shows that when sustained over time,
comprehensive, well-funded tobacco prevention programs also save lives
and money. Two recent studies show that California, which started the
Nation's first tobacco prevention program in 1990, has saved tens of
thousands of lives by reducing smoking-caused birth complications,
heart disease, strokes and lung cancer. Other studies have shown that
California and Massachusetts, which started their tobacco prevention
programs in 1990 and 1993 respectively, have saved as much as $3 in
smoking-caused health care costs for every dollar spent on tobacco
prevention.
The states have a clear source of revenue to address the problem.
Despite their recent budget shortfalls, the states are actually
collecting more tobacco-generated revenue than ever before from the
tobacco settlement and tobacco taxes. That is because 32 states and DC
have increased tobacco taxes since January 1, 2002. Altogether, the
states this year will collect $19.5 billion in tobacco-generated
revenue. It would take just 8.2 percent of this tobacco revenue, about
$1.6 billion, for every state to fund tobacco prevention programs at
the minimum levels recommended by the CDC. That leaves plenty of
tobacco revenue to balance budgets and meet other needs. But the states
are spending barely a third of what the CDC recommends.
Assessing Other Aspects of the Tobacco Settlement
Mr. Chairman, the news is not all bad. Smoking rates, particularly
among children, are down. While the tobacco settlement has failed to
deliver on its promises to provide significant funding for state
tobacco prevention programs or to curtail tobacco marketing, it has
contributed to the significant reductions in tobacco use over the last
five years. First, the settlement led the major cigarette companies to
increase their prices by more than $1.10 per pack between 1998 and
2000. Part of these increases was used to pay the states, but about
half of the price increases bolstered the tobacco companies' profits.
Second, the settlement included about $300 million a year in
industry payments over five years to create a new national foundation,
the American Legacy Foundation, to conduct public education campaigns
to reduce tobacco use. Both the settlement-related price increases and
the Legacy Foundation's campaigns along with the states that have
implemented their own programs have contributed significantly to the
reduction in youth smoking rates in the last several years.
While tobacco price increases are effective at reducing smoking,
especially among children, they are not a substitute for prevention and
cessation programs. The research shows that tobacco price increases are
most effective when part of a comprehensive approach that includes
prevention and cessation programs and smoke-free workplace policies. In
addition, the benefits of price increases are difficult to sustain over
time prices erode with inflation and can be undermined by tobacco
industry price reductions.
The Legacy Foundation's programs have been highly effective, but it
will lose a large portion of its funding after this year because of a
loophole in the settlement that lets the major tobacco companies cease
payments after 2003. In addition, Legacy's programs were always
intended to enhance and not to replace state tobacco prevention
efforts.
Today we are at a critical juncture in determining the settlement's
long-term impact. Our hope is that this hearing will make a difference.
Our nation has made important progress in recent years in reducing
youth tobacco use. Continued progress will not occur unless more states
use more of the billions of dollars they are receiving from the tobacco
settlement, and from tobacco taxes, to fund comprehensive tobacco
prevention and cessation programs based on the recommendations of the
CDC. If they do, the 1998 state tobacco settlement could yet mark a
historic turning point in the battle to reduce tobacco's terrible toll.
If they do not, it will be a tragic missed opportunity for the Nation's
health.
In conclusion, Mr. Chairman and Members of the Committee, our
policy makers in the states are in a rare position on this issue.
We know exactly what the problem is--that tobacco use is the cause
of more than 400,000 preventable deaths and millions of illnesses each
year.
We have also identified an evidence-based solution to the problem
that we know will work when implemented.
We have a clear source of revenue to implement the solution.
And, we have the support of the voters as 86 percent of Americans
support spending a significant portion of tobacco settlement funds on
tobacco prevention and cessation.
We simply have no excuses for not exercising the political will to
spend tobacco money on tobacco prevention. Thank you.
The Chairman. Thank you.
Ms. Hudson, welcome.
STATEMENT OF HON. DEBORAH HUDSON, CHAIR, REVENUE
AND FINANCE COMMITTEE, DELAWARE HOUSE OF
REPRESENTATIVES, ON BEHALF OF THE NATIONAL
CONFERENCE OF STATE LEGISLATURES
Ms. Hudson. Thank you very much. Good morning. It's very
nice to be here.
Chairman McCain and distinguished Members of the Committee,
I'm Deborah Hudson, a member of the Delaware House of
Representatives, where I serve as Chair of the Revenue and
Finance Committee, and I'm also on the Delaware Health Fund
Advisory Committee, which was established in 1999 to make
recommendations to the Governor and our General Assembly about
how to spend Delaware's allocation of the tobacco settlement
funds. But I am here today on behalf of the National Conference
of State Legislatures to discuss the states' use of tobacco
settlement funds.
On November 23, 1998, the Attorneys General and other
Representatives of 46 states, Puerto Rico, U.S. Virgin Islands,
American Samoa, the Northern Marianna Islands, Guam, and the
District of Columbia signed an agreement with the five largest
tobacco manufacturers, ending a 4-year legal battle between the
states and the industry, a battle that began in 1994, when
Mississippi became the first state to file suit. The settlement
funds became available in 2000, and I am honored to be a part
of this distinguished panel today to talk about the settlement.
In keeping with the rules, I will be as brief as possible,
but I need to make four points. One, the states have dedicated
the largest percentage of tobacco funds to healthcare services
and programs. Second, a growing number of states are
securitizing their tobacco settlement funds, and many more are
expressing interest in securitization. Third, the number of
nonparticipating tobacco manufacturers is growing. And, fourth,
Federal legislation is needed to help some states in key areas.
It is really difficult to discuss all of the programs that
the states currently support with tobacco settlement funds.
It's even more difficult to compare and contrast among the
states. But the Master Settlement Agreement provided no
direction to states and imposed no restrictions regarding the
allocation of the tobacco settlement funds. So, as such, these
funds are treated as state revenue and are subject to regular
appropriations. Most states, like Delaware, do receive
continuing feedback from citizens regarding the allocation of
these tobacco funds. And, as a result, state tobacco settlement
fund expenditures, by and large, reflect the priorities
established by citizens of each state. Delaware has dedicated
the majority of its tobacco settlement funds to healthcare. We
are very comfortable with our decision, but would not venture
to second-guess the other states that have made different
decisions.
I've been asked to talk about other states. NCSL has
tracked states' tobacco expenditures since FY-2000 and has
divided the expenditures into nine categories: health services,
long-term care, tobacco use and prevention, research,
education, children and youth services, tobacco farmers,
endowment and budget, and the other category of ``other.''
In nearly 5 years since the beginning of the historic
settlement, much has changed, though. State fiscal conditions
have eroded, tobacco manufacturers are facing their own
challenges.
So how have states spent the funds? Health services, as I
said before, represents the largest single category of tobacco
settlement fund expenditures. In FY-2000 and 2001, a third of
the tobacco settlement funds went toward healthcare services.
Today, these expenditures represent 28 percent of the total
fund expenditures.
The kind of health services vary by state. For instance, in
Arizona, our Chairman's state, the people, in 2000, voted for
Proposition 204, which directed the state to use tobacco
settlement funds to expand eligibility for the Arizona
Healthcare Cost Containment System. That's the state's Medicaid
program.
Now, South Carolina was one of the first states to
securitize its tobacco settlement fund. The state received $791
million, and distributed the funds as following: 75 percent of
the funds to the healthcare endowment, 15 percent to the
community trust fund for farmers affected by the drop in
tobacco demand and prices, 10 percent for economic development
grants to the I-95 corridor of tobacco communities, and 2
percent for water and sewer projects in rural communities.
In my state, we established the Delaware Health Fund and
the Health Fund Advisory Committee to make recommendations to
the Governor, and this has worked very successfully.
The second largest category of expenditures was, until this
year, endowments and budget reserves. The dramatic shift in
funds allocated from endowments and budget reserves to the
``other'' program is very clear, and a dramatic illustration of
the serious fiscal challenges facing states today.
While experts may differ on the adequacy and level of each
state's expenditures for tobacco use and prevention, in the
aggregate they remained constant at about 5 percent until the
current Fiscal Year. This year, states increased the percentage
of tobacco settlement funds that were allocated to education.
Tobacco-producing states also increased the amount of funding
allocated to tobacco farmers and as part of their commitment to
provide economic and educational alternatives to tobacco
farmers and the communities in which they live.
Now, in Delaware, as I said, we have a Health Fund Advisory
Committee, which is chaired by our Secretary of Health and
Social Services, which advises the Governor and the legislature
of how to allocate the funds. I am a member of this committee.
The committee has regular open, public meetings, and we
maintain a Website where our advisory committee meetings are
listed, and the minutes are listed, as well, so people can see
our recommendations.
All of Delaware tobacco fund settlement money is dedicated
to healthcare programs and services and to tobacco prevention
and control. But, like many other states, we have reduced our
reserve funds this year, but only to assure full funding for
state healthcare priorities. We've slightly increased funding
for tobacco prevention and control, as people want us to, and
have provided level funding for most other ongoing programs. We
are happy that we were able to maintain this.
But now some states choose to securitize their settlement
funds. Securitization is the process by which states sell their
revenue streams of the tobacco settlement payments for a set
number of years in return for a single up-front payment.
Although the up-front payment is less than the normal sum of
the annual payment, the state receives a lump sum, and the
funds are immediately available. It is comparable to receiving
a lump-sum payment instead of an annuity.
There has always been a level of uncertainty regarding
whether tobacco funds would continue into perpetuity, so
initial interest in securitization was popular among states
that feared bankruptcy of one or more of the tobacco
manufacturers. Now, decreasing state revenues, continuing
class-action litigation against manufacturers, makes this a
more vulnerable to bankruptcy, and, therefore, decreasing
tobacco sales.
To date, sixteen states have securitized all or part of
their tobacco settlement funds. We've seen a dramatic decline
in the volume of cigarettes shipped by participating
manufacturers. It is due, in part, to lower demand for
cigarettes, but much of the decline can be attributed to the
growing number of nonparticipating manufacturers who have
entered the market and who sell their products at a deep
discount. These deeply discounted products are more attractive
to children, because they are often sold over the Internet and,
therefore, are more available. This represents a serious
problem for states and for people who support reducing youth
access to tobacco. In addition, there is a reduction in the
volume of cigarettes shipped by participating manufacturers.
Five years ago, the most immediate task for state
legislators related to the Master Settlement Agreement was the
model statute. This statute was designed to provide a level
playing field between participating and nonparticipating
manufacturers by creating a reserve fund into which
nonparticipating manufacturers are to pay future claims. Since
the signing of the Settlement Agreement, we have found that the
model act needs some fine-tuning to close loopholes in the
participating manufacturers. NCSL is working with the National
Association of Attorneys General to close these loopholes in
existing state laws.
The National Council of State Legislators and individual
legislators are also working with Congress to enact Federal
legislation that would strengthen the Jenkins Act and provide
states with additional tools to enforce both the Jenkins Act
and existing state laws. This legislation will help states
reduce youth access to tobacco products and to collect state
tobacco tax revenue that is not currently being collected.
A recent Government Accounting Office report advised that
states would lose approximately----
The Chairman. Ms. Hudson, if you----
Ms. Hudson. Yes.
The Chairman.--could----
Ms. Hudson. Yes.
The Chairman.--complete your statement. We usually----
Ms. Hudson. I certainly could.
The Chairman.--give 5 minutes for----
Ms. Hudson. I'm talking about the part where we would like
to cooperate with you, and we would like to do that the best
way we can to make sure that this program is the most effective
that it can be.
And we thank you for your time today.
[The prepared statement of Ms. Hudson follows:]
Prepared Statement of Hon. Deborah Hudson, Chair, Revenue and Finance
Committee, Delaware House of Representatives, On behalf of the
National Conference of State Legislatures
Good morning Chairman McCain, Senator Hollings and Members of the
Committee:
I am Deborah Hudson, a member of the Delaware House of
Representatives where I serve as chair of the Revenue and Finance
Committee. I also serve as a member of the Delaware Health Fund
Advisory Committee, which was established in 1999 to make
recommendations to the governor and to the General Assembly regarding
the allocation of Delaware's tobacco settlement funds.
I am here today on behalf of the National Conference of State
Legislatures (NCSL) to discuss the states' use of tobacco settlement
funds. On November 23, 1998 the Attorneys General and other
representatives of 46 states \1\, Puerto Rico, the U.S. Virgin Islands,
American Samoa, the Northern Mariana Islands, Guam and the District of
Columbia signed an agreement with the five largest tobacco
manufacturers, ending a four-year legal battle between the states and
the industry. A battle that began in 1994, when Mississippi became the
first state to file suit. The settlement funds became available to
states in 2000. I am honored to be a part of such a distinguished panel
on a day so close to the fifth anniversary of the historic tobacco
settlement agreement.
---------------------------------------------------------------------------
\1\ Florida, Minnesota, Mississippi and Texas had previously
settled with tobacco manufacturers for $40 billion.
---------------------------------------------------------------------------
In keeping with the rules of the Committee, my oral statement will
be limited to five minutes. I am submitting my written statement to be
included in the hearing record. Today I will focus on the following
observations:
(1) States have dedicated the largest percentage of tobacco funds to
health care services and programs.
(2) A growing number of states are securitizing their tobacco
settlement funds and many more are expressing interest in
securitization.
(3) The number of non-participating tobacco manufacturers is
growing.
(4) Federal legislation is needed to help states in some key areas.
It is difficult to discuss the myriad programs that states
currently support with tobacco settlement funds. It is even more
difficult to contrast and compare among the states. The Master
Settlement Agreement (MSA) provided no direction to states and imposed
no restrictions on states regarding the allocation of their tobacco
settlement funds. As such, these funds are treated as state revenue and
are subject to the regular appropriation process. Most states, like
Delaware, receive continuing feedback from citizens regarding the
allocation of tobacco settlement funds. As a result, state tobacco
settlement fund expenditures by and large reflect the priorities
established by the citizens of each state. Delaware has dedicated the
majority of its tobacco settlement funds to health care. We are
comfortable with our decision, but would not venture to second-guess
states that have made other choices.
State Tobacco Settlement Expenditures
I have been asked to provide an overview of how states have spent
and are spending their tobacco settlement funds. NCSL has tracked state
tobacco settlement expenditures since FY 2000 and has divided
expenditures into nine categories: health services, long term care,
tobacco use prevention, research, education, children and youth
services, tobacco farmers, endowments and budget, and other. In the
nearly five years since the signing of the historic tobacco settlement
agreement, much has changed.
State fiscal conditions have eroded and tobacco manufacturers are
facing their own financial challenges. How have states spent the funds?
What are the trends? Below is a summary of what we have observed.
Table 1.--Allocation of Tobacco Settlement Funds by Category, FY 2000-FY 2004
[Dollar figures represent total allocation for the fiscal year]
----------------------------------------------------------------------------------------------------------------
FY 2000/FY 2001 FY 2002 ($10.97 FY 2003 ($9.83 FY 2004 ($7.9
($10.97 billion) billion) billion) billion)
----------------------------------------------------------------------------------------------------------------
Health Services 33% 29% 29% 28%
----------------------------------------------------------------------------------------------------------------
Long Term Care 3% 7% 8% 6%
----------------------------------------------------------------------------------------------------------------
Tobacco Prevention 5% 5% 5% 3%
----------------------------------------------------------------------------------------------------------------
Education 4% 8% 3% 5%
----------------------------------------------------------------------------------------------------------------
Research 3% 6% 3% 3%
----------------------------------------------------------------------------------------------------------------
Children & Youth Services 4% 2% 3% 3%
----------------------------------------------------------------------------------------------------------------
Tobacco Farmers 3% 3% 2% 4%
----------------------------------------------------------------------------------------------------------------
Endowments and Budget 29% 24% 18% 2%
Reserves
----------------------------------------------------------------------------------------------------------------
Other 16% 16.2% 29% 47%
----------------------------------------------------------------------------------------------------------------
Source: National Conference of State Legislatures, Health Policy Tracking Service, 2003
Trends in State Expenditures
Health Services represents the largest single category of tobacco
settlement fund expenditures. In FY 2000/FY 2001 a third of the tobacco
settlement funds went toward health care services. Today these
expenditures represent 28 percent of total expenditures. The kinds of
health services vary considerably by state. For instance in Arizona,
the chairman's state, the people in 2000 voted for Proposition 204
which directed the state to use the tobacco settlement funds to expand
eligibility for the Arizona Health Care Cost Containment System
(AHCCCS), the state's Medicaid program. South Carolina was one of the
first states to securitize its tobacco settlement funds. The state
received $791 million and distributed the funds as follows: (a) 75
percent of the funds to the Health Care Endowment \2\; (b) 15 percent
to the Community Trust Fund for farmers affected by the drop in tobacco
demand and prices; (c) 10 percent for economic development grants to
the I-95 corridor of tobacco communities; and (d) 2 percent for water
and sewer projects in rural communities. We established the Delaware
Health Fund and the Delaware Health Fund Advisory Committee to make
recommendations to the Governor and General Assembly regarding the
allocation of Delaware's tobacco settlement funds.
---------------------------------------------------------------------------
\2\ The initial awards from the endowment supported the state's
pharmaceutical assistance program.
---------------------------------------------------------------------------
The second largest category of expenditures was, until this year,
endowments and budget reserves. The dramatic shift in funds allocated
to endowments and budget reserves between FY 2003 and FY 2004 to the
``Other'' program category is a very clear and dramatic illustration of
the serious fiscal challenges facing the states. While experts may
differ on the adequacy of each state's expenditures for tobacco use
prevention, the level of expenditures for tobacco use prevention in the
aggregate remained constant at about 5 percent until the current Fiscal
Year. This year states increased the percentage of tobacco settlement
funds that were allocated to education. Tobacco-producing states also
increased the amount of funding allocated to tobacco farmers as part of
their commitment to provide economic and education alternatives to
tobacco farmers and the communities, in which they live and work.
Delaware Health Fund
The Delaware Health Fund Advisory Committee, a twelve member board,
chaired by the Secretary of the Delaware Health and Social Services
Department, advises the governor and the legislature on how to allocate
the state's tobacco settlement funds. I am a member of the advisory
committee. The committee has regular, open meetings and maintains a
website where advisory committee meeting minutes and the advisory
committee recommendations can be read and downloaded. All of Delaware's
tobacco settlement funding is dedicated to health care programs and
services and to tobacco prevention and control. Like many other states
we have reduced our reserve fund this Fiscal Year to provide funding
for state health care priorities. We have slightly increased funding
for tobacco prevention and control and have provided level funding for
most ongoing programs. We are happy that we are able to maintain this
commitment despite the fiscal challenges we face. (See Table 2 for
details).
Securitization of State Tobacco Funds
Securitization is the process by which states sell the revenue
stream of its tobacco settlement payments, for a set number of years,
in return for a single, up-front payment. Although the up-front payment
is less than the sum of the annual payments, the state receives a lump
sum payment and the funds are immediately available. It is comparable
to receiving a lump sum payment instead of an annuity. There has always
been a level on uncertainty regarding whether the tobacco funds would
in fact continue into perpetuity. Initial interest in securitization
was among states that feared that the bankruptcy of one or more of the
tobacco manufacturers would undermine the settlement agreement.
Decreasing state revenues, continuing class action litigation against
tobacco manufacturers that may in fact make tobacco manufacturers
vulnerable to bankruptcy, and decreasing tobacco sales, have increased
the interest among states in the securitization of tobacco settlement
funds. To date, 16 states \3\ have securitized all or part of their
tobacco settlement funds. (See Table 3 for details)
---------------------------------------------------------------------------
\3\ Alabama, Alaska, Arkansas, California, Connecticut, Iowa,
Louisiana, New Jersey, New York, North Dakota, Oregon, Rhode Island,
South Carolina, South Dakota, Washington, Wisconsin
---------------------------------------------------------------------------
Growing Number of Non-participating Tobacco Manufacturers
The dramatic decline in the volume of cigarettes shipped by
participating manufacturers is due in part lower demand for cigarettes,
but much of the decline can be attributed to the growing number of non-
participating manufacturers who have entered the market and who sell
their products at a deep discount. These deeply discounted products are
more attractive to children and because they are often sold over the
Internet, are more available to children. This represents a serious
problem for states and for people who support reducing youth access to
tobacco. In addition, the reduction in the volume of cigarettes shipped
by participating manufacturers can result in an overall decrease in
state tobacco settlement fund allocations.\4\
---------------------------------------------------------------------------
\4\ Under the provisions of the MSA, if the total aggregate market
share of the participating manufacturers decreases more than 2 percent
and an economic consulting firm determines that the provisions of the
MSA were a significant factor contributing to the market share loss,
the payments to states may be reduced based on that loss. This
reduction in state payments is called the non-participating
manufacturers (NPM) adjustment. This analysis is done annually. A
state's enactment of the model statute is significant because if there
is an NPM adjustment in any year, a specific state's share of the funds
from the payment in question will not be reduced at all if that state
has passed and has in force the model statute.
---------------------------------------------------------------------------
Five years ago, the most immediate task for state legislatures
related to the Master Settlement Agreement was the consideration and
enactment of the ``Model Statute'' included in the settlement
agreement. This model statute was designed to provide a level playing
field between participating and non-participating tobacco manufacturers
by creating a reserve fund into which non-participating manufacturers
are to pay future claims. Since the signing of the settlement
agreement, we have found that the Model Act needs some fine-tuning to
close some loopholes the non-participating manufacturers have
discovered. NCSL is working with the National Association of Attorneys
General (NAAG) to close these loopholes in the existing state laws.
We are also working with Congress to enact Federal legislation that
strengthens the Jenkins Act and provides states with additional tools
to enforce both the Jenkins Act and existing state laws. This
legislation will help states reduce youth access to tobacco products
and to collect state tobacco tax revenue that is not currently being
collected. A recent Government Accounting Office (GAO) report advised
that states would lose approximately $1.5 billion in tax revenues by
the year 2005 if the current state of Internet tobacco sales continues.
As you know, the Senate Judiciary Committee recently reported S. 1177,
the Prevent All Cigarette Trafficking Act (PACT Act), a bill that
amends both the Jenkins Act \5\ and the Contraband Cigarette
Trafficking Act.\6\ A related piece of legislation, H.R. 2824, amends
the Jenkins Act and is pending in the House Judiciary Committee. NCSL
looks forward to working with you to work towards passage of this
important legislation.
---------------------------------------------------------------------------
\5\ The Jenkins Act (18 U.S.C. 375) requires any person who sells
and ships cigarettes across state lines to anyone other than a licensed
distributor, to report the sale to the buyer's state tobacco tax
administrator, allowing state and local governments to collect the
taxes due. The current penalty for violating the Act is a misdemeanor.
\6\ The Contraband Cigarette Trafficking Act (CCTA) (18 U.S.C.
2342) makes it unlawful for any person to ship, transport, receive,
possess, sell, distribute, or purchase contraband cigarettes.
---------------------------------------------------------------------------
I thank you for this opportunity to share NCSL's thoughts and
observations with you. I would be happy to answer questions.
Table 2.--Delaware Health Fund Appropriations State FY 2002-FY 2004
[in thousands]
----------------------------------------------------------------------------------------------------------------
Initiative FY 2002 FY 2003 FY 2004
----------------------------------------------------------------------------------------------------------------
Continuing Initiatives
----------------------------------------------------------------------------------------------------------------
Strategic Reserve 6,025 9,843 5,291
----------------------------------------------------------------------------------------------------------------
DE Prescription Drug Assistance 5,150 7,213 7,500
----------------------------------------------------------------------------------------------------------------
Tobacco Prevention/Control 5,005 5,009 5,072
----------------------------------------------------------------------------------------------------------------
Medical Coverage for SSI Transition 1,485 1,485 4,485
----------------------------------------------------------------------------------------------------------------
DHCC Uninsured Action Plan 1,000 885 500
----------------------------------------------------------------------------------------------------------------
Chronic Disease Pilot 500 500 500
----------------------------------------------------------------------------------------------------------------
Medicaid Increase for Pregnant Women 409 408 408
----------------------------------------------------------------------------------------------------------------
Public Access Defibrillation 375 141 134
----------------------------------------------------------------------------------------------------------------
Substance Abuse Transitional Housing 200 200 200
----------------------------------------------------------------------------------------------------------------
Lesser-Known Illnesses 150 100 100
----------------------------------------------------------------------------------------------------------------
DHCC Staff Assistance 57 57 57
----------------------------------------------------------------------------------------------------------------
Heroin Residential Program 500 500 500
----------------------------------------------------------------------------------------------------------------
Attendant Care 340 430 430
----------------------------------------------------------------------------------------------------------------
Breast & Cervical Cancer Treatment 150 150 150
----------------------------------------------------------------------------------------------------------------
Cancer Care Connection 150 150
----------------------------------------------------------------------------------------------------------------
The Wellness Community 200 200
----------------------------------------------------------------------------------------------------------------
DE Breast Cancer Coalition 40 40 40
----------------------------------------------------------------------------------------------------------------
Delaware School survey (Statewide) 48
----------------------------------------------------------------------------------------------------------------
New Nurse Formation Programs 750 1,297
----------------------------------------------------------------------------------------------------------------
Disease Cost Containment Initiatives 500 500
----------------------------------------------------------------------------------------------------------------
Perinatal Association 200 200
----------------------------------------------------------------------------------------------------------------
Southbridge Community Health Outreach 120
----------------------------------------------------------------------------------------------------------------
University of Delaware/Drug & Alcohol Studies 48
----------------------------------------------------------------------------------------------------------------
Instruments for TB & Metabolic Disorders 150 150
----------------------------------------------------------------------------------------------------------------
Fire Suppression Program 500 750
----------------------------------------------------------------------------------------------------------------
Support for People with Cancer 200
----------------------------------------------------------------------------------------------------------------
Gift of Life 105
----------------------------------------------------------------------------------------------------------------
Resource Mothers 200
----------------------------------------------------------------------------------------------------------------
Council on Cancer Inc. & Mortality 4,938
----------------------------------------------------------------------------------------------------------------
DE Ecumenical Council 100
----------------------------------------------------------------------------------------------------------------
Total Initiatives $20,325 $19,986 $24,509
----------------------------------------------------------------------------------------------------------------
Total Program and Reserves $26,391 $29,829 $29,800
----------------------------------------------------------------------------------------------------------------
Source: Delaware Health and Social Services Department, Delaware Health Fund Advisory Committee (http://
www.state.de.us/dhss/healthfund.html)
Table 3.--Securitized State Tobacco Settlement Funds
------------------------------------------------------------------------
State Year Amount Purpose
------------------------------------------------------------------------
Alabama 2000 $50 million Industrial bonds to
attract new jobs
------------------------------------------------------------------------
Alaska 2000, 2001 $242 million Remodel and build new
schools, rehabilitate
buildings at the
University of Alaska
and update several port
facilities
------------------------------------------------------------------------
Arkansas 2001 $60 million Biomedical research
facilities
------------------------------------------------------------------------
California 2002, 2003 $4.2 billion Deficit
------------------------------------------------------------------------
Connecticut 2003 $300 million General revenue
------------------------------------------------------------------------
Iowa 2001 $644 million Retire capital debt to
free up general fund
revenue for health care
services
------------------------------------------------------------------------
Louisiana 2001 $1.2 billion Millennium Fund
(endowment) to be used
for health care,
education and
scholarships
------------------------------------------------------------------------
New Jersey 2002 $1.8 billion Deficit
------------------------------------------------------------------------
New York 2003 $4.2 billion Deficit
------------------------------------------------------------------------
North Dakota 2000 $32 million Debt service on water
resource and flood
control projects
------------------------------------------------------------------------
Oregon 2002 $200 million Deficit
------------------------------------------------------------------------
Rhode Island 2002 $685 million Retire capital debt,
deficit
------------------------------------------------------------------------
South Carolina 2000 $934 million 73% to the Health Care
Endowment \7\, balance
for rural
infrastructure and
tobacco farmers
------------------------------------------------------------------------
South Dakota 2002 $278 million Education endowment
------------------------------------------------------------------------
Washington 2002 $518 million Deficit
Wisconsin 2001 $1.6 billion Deficit
------------------------------------------------------------------------
\7\ The initial awards from the fund supported the state's
pharmaceutical assistance program.
The Chairman. Thank you very much. Thank you for coming to
help us in this very difficult issue.
Mr. Scheppach, welcome.
STATEMENT OF RAYMOND C. SCHEPPACH, EXECUTIVE DIRECTOR, NATIONAL
GOVERNORS ASSOCIATION
Mr. Scheppach. Thank you, Mr. Chairman and Members of the
Committee. I thank you for the opportunity to represent the
Nation's Governors before this Committee today.
The MSA was reached on behalf of the attorney generals of
46 states, five commonwealths and territories, and the District
of Columbia in 1998. That agreement, worth $206 billion over 25
years, is actually worth $246 billion, when combined with the
other four states.
The MSA did not require set-asides. There was a fundamental
difference between the settlement reached and the proposals
being promoted in the late 1990s involving Federal legislation.
In fact, on May 21, 1999, President Clinton signed into law the
measure PL 106-31, recognizing that decisions about how to
spend the tobacco settlement dollars were more appropriately
made at the state level, where Governors and legislators could
be the most responsive to the unique needs and circumstances of
their citizens.
Over the 2000 to 2003 period, I think states have received
about $37 billion from the Master Agreement. Over this period,
there has been substantial stability in the allocation of these
revenues. About 36 percent went to healthcare services and
long-term care, another 4 percent to tobacco use prevention, 12
percent went to research, education, and services for children.
Also, states allocated 3 percent to tobacco farmers for crop
diversification and efforts to reduce the state's dependence on
tobacco production. The remainder went to endowments, budget
reserves, and other programs.
One area that did witness a major change over the last 3
years was in the percent allocated to endowments and budget
reserves, which went from 29 percent in 2000 to 18 percent in
2003, and to 2 percent in 2004.
Throughout the last 2 years, due partly to the budget
crisis, as well as concerns regarding bankruptcy of tobacco
firms, 16 states have securitized their tobacco settlement
revenues, for total proceeds of about $13 billion.
The tobacco settlement funds are allowing states to develop
a significant number of innovative programs in biotechnology
and economic development, smoking cessation, early childhood
and prevention healthcare. This period of innovation and
experimentation, which helped states develop best practices,
will pay great dividends over time.
The most important issue facing states today is the dismal
fiscal situation. States are enduring the worst fiscal crisis
since the second world war. And although the national economy
is beginning to recover, state revenue growth has not yet
responded.
The fiscal situation is driven by two major factors--an
obsolete tax base and lower revenues, and exploding Medicaid
and other healthcare costs. Unfortunately, in 2001 states
witnessed both a reduction in total state revenues of 5
percent, at the same time Medicaid exploded to grow 13 percent
per year. Medicaid has now become the Pac-Man of state budgets,
gobbling up every additional dollar of revenues. Medicaid
growth rate has average 10 percent per year during the past two
decades and now represents 21 percent of the average state
budget, up from 12.5 in 1990. Other healthcare costs represent
another 10 percent of state budgets. The major reason for the
Medicaid continued growth is that it serves to supplement the
Medicare program for many services Medicare beneficiaries do
not obtain other places.
It is shocking to note that the Medicaid's 50 million
beneficiaries, the six million who are dual-eligible for
Medicare and Medicaid, account for 42 percent of the Medicaid
budgets. Prior to year 2001, state spending over those previous
two decades was growing about 6.5 percent per year. For the
last 3 years, spending essentially has been flat or negative,
essentially no growth.
This fiscal crisis has had several major impacts--number
one, on the allocation of funds from the Master Settlement
Agreement, two, the cost of tobacco products, and, three, total
spending on healthcare.
First, settlement dollars that originally were to be placed
in rainy day funds or specific endowment funds were utilized to
balance state budgets. Second, a larger number of states were
forced to securitize part of their funds. Third, funds for
tobacco prevention from the MSA were reduced. And, fourth, a
large number of states enacted significant increases in excise
taxes on cigarettes, which should have a huge impact on
smoking, over time. Since January 2002, 28 states plus the
District have increased cigarette taxes, some as high as over a
dollar a pack. The median has increased to 58 cents from 28
cents, over a hundred-percent increase. We have not seen yet
the impacts of these tax increases.
Finally, Medicaid spending growth at 10 percent per year,
all states have enacted changes to moderate the growth of
Medicaid.
I would say, Mr. Chairman, this is about hard choices. And,
unfortunately, Governors and state legislatures have had to
look at the potential of pushing as many as a million to two
million women and children off the rolls of Medicaid, and
compare that to smoking cessation programs. That's what's going
on, in terms of hard choices, when you have virtually no
revenue growth.
In conclusion, given the long history of state expenditures
for smoking-related illnesses and the fiscal pressures facing
states, the financial flexibility provided to states in the MSA
is not only appropriate, but vitally necessary. The state
fiscal crisis will continue, and, without flexible use of MSA
funds to target emerging priorities, states will be forced to
cut education spending and make painful cuts in Medicaid
expenditures for prescription drugs and other programs.
Thank you, Mr. Chairman. I'd be happy to answer any
questions.
[The prepared statement of Mr. Scheppach follows:]
Prepared Statement of Raymond C. Scheppach, Executive Director,
National Governors Association
Chairman McCain, Senator Hollings, and members of the Committee, my
name is Ray Scheppach and I'm the Executive Director of the National
Governors Association. Thank you for the opportunity to represent the
Nation's Governors before this committee today.
The tobacco Master Settlement Agreement (MSA) was reached on behalf
of the Attorneys General of forty-six states, five commonwealths and
territories, and the District of Columbia on November 23, 1998. That
agreement, worth $206 billion over a 25-year period, is actually worth
$246 billion when combined with previous settlements on behalf of
Florida, Minnesota, Mississippi, and Texas.
The MSA Contains Many Important Provisions to Discourage Smoking
Two major programs in the settlement are dedicated to reducing teen
smoking and educating the public about tobacco-related diseases. A
total of $250 million was used to fund the creation of the American
Legacy Foundation, a national charitable organization, to support the
study of programs to reduce teen smoking and substance abuse as well as
prevent diseases associated with tobacco use. An additional $1.45
billion was utilized to create a National Public Education Fund to
counter youth tobacco use and educate consumers about tobacco-related
diseases.
In addition, the price of tobacco has increased. Immediately after
the MSA, the price of tobacco products jumped by 40 to 50 cents per
pack. Additional price increases have occurred as companies attempt to
maintain profit margins and make settlement payments. These price
increases will substantially reduce smoking over time.
The settlement agreement also has a significant number of
restrictions on advertising and promotion. The settlement prohibits
targeting youth in tobacco advertising, including a ban on the use of
cartoon or other advertising images that may appeal to children. The
settlement also prohibits all outdoor tobacco advertising, tobacco
product placement in entertainment or sporting events, and the
distribution and sale of apparel and merchandise with tobacco company
logos. Further, the settlement places restrictions on industry lobbying
against local, state, and Federal laws. These restrictions on tobacco
companies' ability to market their products to children and young
adults will eventually have a major impact on smoking.
The MSA Did Not Require Set-Asides
There is a fundamental difference between the settlement we reached
and the proposals being promoted in the late 1990s involving Federal
legislation. For that reason, Congress acted wisely in 1999 in
declaring that decisions about the MSA funds should be made at the
state and local level.
In the original lawsuits, states filed complaints that included a
variety of claims, such as consumer protection, racketeering,
antitrust, disgorgement of profits, and civil penalties for violations
of state laws. Medicaid was not mentioned at all in a number of cases
and was only one of a number of issues in many others. Further, the
state-by-state allotments were determined, not based on Medicaid
expenditures, but on an overall picture of health care costs in a given
state.
It is important to note that, ultimately, the master settlement
agreement bore no direct relationship to any particular state lawsuit.
The master settlement agreement represents a global settlement approach
that encompassed states who sued for Medicaid, states that had Medicaid
claims thrown out of court, and other states that simply did not sue at
all. The attorneys general were attempting to obtain a fair monetary
recovery for all states considering the variety of claims and requests
for relief and the common goals of the multistate settlement process.
The Federal Government was invited to participate in the state
lawsuits, but declined. Therefore, states were forced to bear all of
the risk initiating the suits and the entire fiscal burden of carrying
forth the unprecedented lawsuits against a well financed industry that
had never lost such a case before. It was not until after state victory
was ensured that the Federal Government began to pay renewed attention
to state activities.
Simply put, the master settlement agreement negotiated between the
Attorneys General and the tobacco companies is separate and distinct
from the agreement that was proposed in the 105th Congress. That
proposal would have represented almost 50 percent more money, $368
billion compared to the current settlement of $246 billion. That
agreement was much more comprehensive, representing both state and
Federal costs and requiring congressional approval. In the context of
the negotiations over the $368 billion amount, the Federal Government
may have had a legitimate claim to a share of the settlement, but the
proposal's inability to garner enough votes for passage in Congress
fundamentally changed the debate. Without passage of supporting
legislation, states were forced to proceed with their own lawsuits and
negotiate settlements based on nonfederal claims.
Congress Acted Definitively to Give States Spending Authority
On May 21, 1999, President Clinton signed into law a measure (P.L.
106-31) recognizing that decisions about how to spend the tobacco
settlement dollars were most appropriately made at the state level,
where Governors and legislators could be the most responsive to the
unique needs and circumstances of their citizens. Championed by a large
bipartisan group of Senators led by Sen. Kay Bailey Hutchison (R-Tex.)
and Sen. Bob Graham (D-Fla.), the provision was successfully added to
the FY 1999 Emergency Supplemental Appropriations bill.
State Spending
Over the 2000 to 2003 period, states have received $37.5 billion
from the Master Settlement Agreement. Over this period there has been
substantial stability in the allocation of revenues. About 36 percent
went to health services and long-term care. About four percent went to
tobacco use prevention. Another 12 percent went to research, education,
and services for children. Also, states allocated three percent to
tobacco farmers for crop diversification efforts to reduce their
states' dependence on tobacco production. The remainder went to
endowments, budget reserves, and other programs.
The one area that witnessed a major change over the three year
period was the percent allocated to endowments and budget reserves,
which went from 29 percent in 2000 to 18 percent in 2003 and then two
percent in 2004. This was caused by the worst state fiscal crisis since
World War II. Regardless of this crisis, 37 states continued to spend
funds on health services and about 33 maintained their commitment to
tobacco use prevention.
Throughout the last two years, due partly to the budget crisis as
well as concerns regarding the bankruptcy of tobacco firms, 16 states
have securitized their tobacco settlement revenues. The proceeds from
this securitization were about $13 billion.
Innovative Programs
The tobacco settlement funds allowed states to develop a
significant number of innovative programs in biotechnology and economic
development, smoking cessation, early childhood, and preventive health
care. This period of innovation and experimentation, which helped
states develop ``best practices'', will pay dividends for a long time.
States are proud of the smoking cessation initiatives and other
programs they've developed with the tobacco settlement funds.
There are several innovative programs designed to prevent maternal
smoking that are showing great promise. Smoking during pregnancy is
currently responsible for 20 percent of all low-birth weight babies, 8
percent of preterm births, and 5 percent of all perinatal deaths.
Several states have invested a portion of its tobacco settlement to
target smoking cessation among pregnant women. These include both
classes and one-on-one counseling on the dangers of smoking; effective
protocols for breaking the smoking habit; statewide quit lines, and
media campaigns aimed at women of childbearing age. Besides traditional
cessation education and counseling, these services address a range of
barriers to cessation, including weight gain, by providing support such
as free enrollment in sports clubs.
Other states have used portions of the settlement to develop unique
approaches to enhance education opportunities for low-income and
disadvantaged students; strengthening foster care and child welfare
initiatives; and expanding options for early childhood development and
Healthy Start programs.
Many states have used tobacco settlement funds to make critical
investments in pharmaceutical assistance programs for seniors and home
and community-based care programs for people with disabilities. As many
as 16 states have invested funds in biomedical research or research on
cancer and other tobacco-related illnesses. The dividends that these
investments pay will benefit all the other states as well.
Finally, the largest investment has been in traditional health
care. States have invested billions in funds for indigent care
programs, primary care, increasing insurance coverage for the working
poor, for hospital charity care, community health centers as well as
Medicaid and the State Children's Health Insurance Program (S-CHIP).
Fiscal Condition of the States
The most important issue facing the states today is the dismal
fiscal situation. States are enduring the worst fiscal stress since
World War II, and although the national economy is beginning to
recover, state revenue growth has not responded, and historically has
lagged Federal recoveries by upwards of 18 months. In fact, the current
state crises are likely to endure well into Fiscal Year 2005. These
fiscal conditions are driven by two major factors, sagging revenues and
exploding Medicaid costs.
States have responded sensibly to these difficult conditions.
Although the need for services has increased rapidly, state spending
has only increased by 1.6 percent over the last two years, and our
estimates for 2004 are that state spending will actually decrease by 2-
3 percent State spending will have been essentially flat for three
years.
On the spending side, the program that has been responsible for the
deteriorating fiscal condition is Medicaid, the state-federal health
care entitlement for the poor, the elderly, and the disabled. Now
larger than Medicare in terms of total population, total expenditures,
and annual growth rate, Medicaid has become the ``Pac-Man'' of state
budgets, gobbling up every additional dollar of revenue. Medicaid's
growth rate has averaged 10 percent per year during the past two
decades and now represents 21 percent of the average state budget, up
from 12.5 percent in 1990.
The major reason for Medicaid's continued growth is that it quietly
serves to supplement the Medicare program for the many services
Medicare beneficiaries can not obtain anywhere else. Medicaid pays for
the prescription drugs and long-term care that Medicare does not cover,
and subsidizes the significant cost-sharing burdens that Medicare
places on its poorest beneficiaries.
It is shocking to note that of Medicaid's 50 million beneficiaries,
the six million people eligible for both programs (the ``dual
eligibles'') account for 42 percent of Medicaid's budget. Therefore, 42
percent of a $280 billion budget is being spent on people who are
already receiving the FULL Medicare benefits package. State budgets
simply cannot sustain this growing cost shift.
The 2001-2004 state fiscal crisis has had major impacts on:
The allocation of funds from the Master Settlement
Agreement;
The cost of tobacco products in the states; and
Total spending on health care.
First, settlement dollars that originally were to be placed in
rainy day funds or specific endowment funds were utilized to balance
state budgets. Second, a larger number of states were forced to
securitize part or all of their funds. Third, funds for tobacco
prevention from the MSA were reduced. Fourth, a large number of states
enacted significant increases in excise taxes on cigarettes which
should have a huge impact on smoking cessation over the next 20 years.
The proceeds from some of these taxes went into other endowment funds
that are being used for smoking cessation. Finally, with Medicaid
spending growing at 10 percent per year all states enacted changes to
moderate the growth in Medicaid.
Tobacco Prevention and Control is Important to the States
The Federal and state governments have always had the
responsibility of ensuring and protecting the public health of its
citizens. Smoking, as the leading cause of preventable death and
disease, results in $150 billion in direct and indirect medical costs
per year.
In 2001, 22.8 percent of the population were reported to be
smokers, a reduction from 25 percent reported in 1993. Progress
continues to be made in meeting national goals related to reduction in
the percentage of the population who smoke. States are leaders in these
efforts--through direct program efforts and changes to public policy.
Twenty states increased funding in Fiscal Year 2003 for
tobacco prevention.
Forty three states have laws restricting smoking in public
places, 45 restrict smoking in government buildings, and 25
have laws restricting smoking in private work places.
Five states have comprehensive laws with statewide
restrictions on indoor smoking in restaurants, bars, and other
public places.
Between 1990 and 2000, cigarette sales fell 20 percent.
Since January 2002, 28 states and the District of Columbia have
implemented or enacted new cigarette tax increases. These increases are
as high as $1.01 per pack in Connecticut and are more than 50 cents per
pack in a dozen states. This raises the median tax rate to 58 cents per
pack, an increase from 28 cents in July 2002.
Conclusion
The nation's Governors feel strongly that the states are entitled
to all of the funds awarded to them in the tobacco settlement agreement
without Federal restrictions. The master settlement agreement is
fundamentally different from the earlier proposals considered by
Congress. It is a global settlement of myriad claims.
Given the long history of state expenditures for smoking related
illnesses and the fiscal pressures facing states, the financial
flexibility provided to states in the MSA is not only appropriate, but
vitally necessary. The state fiscal crisis will continue, and without
flexible use of MSA funds to target emerging priorities, states will be
forced to cut education spending and make painful cuts in Medicaid
expenditures for prescription drugs and long-term care as well as other
public health and health promotion activities.
I thank you again for the opportunity to appear before the
Committee, and I would be happy to answer any questions you may have.
Cigarette Tax Increases Since January 2002
------------------------------------------------------------------------
Increase Per
Rank State Pack Effective Date
------------------------------------------------------------------------
1 Connecticut $1.01 April3, 2002 and March 15, 2003
2 Massachuset 0.75 July 25, 2002
ts
2 Vermont 0.75 July 1, 2002 and July 1, 2003
4 New Jersey 0.70 July 1, 2002
4 New Mexico 0.70 Jul1, 2003
------------------------------------------------------------------------
6 Pennsylvani 0.69 July 15, 2002
a
7 Oregon 0.60 November 1, 2002
7 Washington 0.60 January 1, 2003
9 Arizona 0.58 November 25, 2002
10 Kansas 0.55 July1, 2002 and July 1, 2003
------------------------------------------------------------------------
11 Montana 0.52 May 1, 2003
12 Michigan 0.50 August 1, 2002
12 Rhode 0.50 May 1, 2002 and July 1, 2003
Island
14 Wyoming 0.48 July 1, 2003
15 lllinois 0.40 July 1, 2002
------------------------------------------------------------------------
15 Indiana 0.40 July l, 2002
17 New York 0.39 April 3, 2002
18 West 0.38 May 1, 2003
Virginia
19 District of 0.35 January 1, 2003
Columbia
20 Maryland 0.34 July 1, 2002
------------------------------------------------------------------------
21 Ohio 0.31 July 1, 2002
22 Hawaii 0.30 October 1, 2002 and July 1, 2003
22 Nebraska 0.30 October 1, 2002
24 Idaho 0.29 June 1, 2003
25 Arkansas 0.25 June 1, 2003
------------------------------------------------------------------------
26 South 0.20 March 18,2003
Dakota
27 Utah 0.18 May6, 2002
28 Louisiana 0.12 August 1, 2002
29 Tennessee 0.07 July 15, 2002
------------------------------------------------------------------------
Source: Federation of Tax Administrators and news reports
State Excise Tax Rates on Cigarettes, 2003
------------------------------------------------------------------------
Rank State Cents Per Pack Rank State Cents Per Pack
------------------------------------------------------------------------
1 Connecticu 151.0 26 Idaho 57.0
t
1 Massachuse 151.0 27 Indiana 55.5
tts
3 New Jersey 150.0 28 Ohio 55.0
3 New York 150.0 28 West 55.0
Virginia
3 Rhode 150.0 30 South 53.0
Island Dakota
6 Washington 142.5 31 New 52.0
Hampshire
7 Hawaii 130.0 32 Minnesota 48.0
8 Oregon 128.0 33 North 44.0
Dakota
9 Michigan 125.0 34 Texas 41.0
10 Vermont 119.0 35 Iowa 36.0
11 Arizona 118.0 36 Louisiana 36.0
12 Alaska 100.0 37 Nevada 35.0
12 Maine 100.0 38 Florida 33.9
12 Maryland 100.0 39 Delaware 24.0
12 Pennsylvan 100.0 40 Oklahoma 23.0
ia
16 Illinois 98.0 41 Colorado 20.0
17 New Mexico 91.0 41 Tennessee 20.0
18 California 87.0 43 Mississipp 18.0
i
19 Kansas 79.0 44 Missouri 17.0
20 Wisconsin 77.0 45 Alabama 16.5
21 Montana 70.0 46 Georgia 12.0
22 Utah 69.5 47 South 7.0
Carolina
23 Nebraska 64.0 48 North 5.0
Carolina
24 Wyoming 60.0 49 Kentucky 3.0
25 Arkansas 59.0 50 Virginia 2.5
------------------------------------------------------------------------
Source: Campaign for Tobacco-Free Kids, May 2003
The Chairman. Thank you.
Attorney General Moore, welcome.
STATEMENT OF HON. MIKE MOORE, ATTORNEY GENERAL, STATE OF
MISSISSIPPI
General Moore. Thank you, Senator McCain. And it's great to
see my friend, Senator Lautenberg, back again, and Senator
Durbin, Senator Nelson, and my hometown Senator, Senator Lott.
It's good to be with you.
I will just talk from my heart a little bit today. Some of
the information that I've just heard just grieves me just a
little bit, and I think we might ought to rewind history a
little bit and remember what this was all about.
I know the courage that Senator McCain showed, and Senator
Lott and others, who worked with us to put this bill in the
Commerce Committee back in 1997. People seem to forget about
that, that there was really an original settlement that came
before Congress that turned into the McCain bill. It had FDA
jurisdiction in it, something that a lot of the naysayers said,
``Oh, we'll get that through the courts.'' Well, we didn't. It
had, eventually, $550 billion worth of dollars in there, some
that would go to the Federal Government, some that would go the
State Government. It had advertising and marketing restrictions
way beyond anything any public-health person had ever even
thought about.
In my opinion, had the McCain bill passed the United State
Senate, we would have seen a 50 percent or greater reduction in
teen smoking in this country by this point. We certainly
wouldn't be having this argument with the states about how
they're spending the money. But, unfortunately, we're not
there.
In 1997, Mississippi settled its case that it had fought
for about 4 years. Florida followed, settling its case. Texas
followed, and Minnesota. Later on, Plan B, which was the 46-
state settlement, which didn't have the same type advertising
and marketing restrictions, and much less money, because the
leverage had changed in those years.
All those things that the naysayers said were going to
happen didn't happen. We lost FDA. A lot of the states' cases
were lost. And so by the time of the 1998 settlement, basically
the leverage was lessened.
My point about that is, if you rewind history a little bit,
a couple of things come to mind. When we settled our case and
Florida settled their case, the tobacco companies gave us an
extra amount of money while the bill was pending in Congress.
To do what? To start prevention programs. I got $62 million
extra, on top of my settlement, to immediately start a pilot
program to find out what worked on prevention. Florida got $200
million. Texas got above $200 million.
Mississippi, one of the poorest states in America, and
Florida, started their programs. We began to see immediate
reduction in teen smoking and even adult smoking in our states
over the first two or 3 years. The plan was for us to use that
as a template for all the other states, should there be a
national settlement.
Texas--it hasn't been pointed out, but I'll point out--
never even used the $200 million that they were given, on top
of their settlement, for prevention programs statewide. They
expended it in just a few counties. They put the money in the
bank, even though their settlement said they ``shall have a
prevention program.'' And, unfortunately, that didn't occur.
So, fast forward. The settlement occurs in 1998, the MSA
that everybody talks about. And then all of a sudden we start
getting letters. Senator Lott will remember this, because I
think that was the first phone call I made. Donna Shalala sent
me a letter and said she wanted 80 percent of my money, in
Mississippi. And I remember what happened. The Governors of the
country, the legislators of the country, and attorneys general
of the country, what we said together was, ``The states fought
this fight. The Federal Government didn't fight this fight,
even though we invited them in. They thought we were foolish
and we didn't have a chance to win.'' I'll never forget them
telling me that when I went to see them in 1994. So what we did
is, we asked Congress, the House and the Senate, ``Please pass
a bill, let the states keep all the money. And, if you do, so
there won't be any Medicaid claim, trust us''--I remember it,
because I was one of the messengers going to each and every one
of your offices and saying this--``trust us, we'll spend the
money on prevention and public health matters.'' Trust us. The
Governors said that, the national legislative groups said that.
Trust us. There was even a debate--Senator Lott, you will
remember, ``I don't know if we can trust the states or not,
maybe we ought to have a set-aside,'' and Senator Lott--I guess
I can say it now--was helping us, ``Maybe we should have as
much as a 25 percent set-aside.'' Some wanted 50 percent. But,
``No,'' we heard from the Governors and others, ``let the
states decide how to spend this money. But, trust us, we'll
spend it on this prevention program.''
This was a tobacco lawsuit. It didn't have anything to do
with highways. It didn't have anything to do with sewers. It
didn't have anything to do with creating a morgue out in North
Dakota. It didn't have anything to do, in Michigan, for
creating college scholarships for middle- and upper-class
students. This was about the number one public health problem
in America. Now, whether people believe it or not, more people
die from this cause than any other cause in this country.
And I was glad to hear my friend, Matt Myers and Senator
McCain, say that now only 2,000 kids start smoking a day. When
we were debating this in Congress, it was 3,000 kids start
smoking a day, and it was 430,000 people die. Now it's only
400,000 people a year die from tobacco-related disease.
My point to you is, if you know that more people die from
one thing than anything else in this country--I remember the
debate. You guys debated this for a solid year on the floor of
the Senate and the House, and I didn't hear, one time, people
talking about budget deficits. What I heard was, ``We need--
help our children, protect our children. Prevent the tobacco
companies from hooking them into a horrible addiction that will
turn out to lung cancer and heart disease and emphysema.'' And
I heard about all the great things that Senator Lautenberg did,
and Senator Durbin, Senator Wyden, and all these courageous
people before us that did this. It was just a great cause. It
was the number one story on every newspaper, TV show. It was a
great thing, and people were really going to do something. We
were going to change the public health of this country.
And then guess what happened? We settled the cases. We got
the money to do it. Not a little bit of money. $246 billion. To
do what? To clean up the mess.
And are we cleaning up the mess? I've been to 44 states
giving a speech called ``Spend The Money On What The Fight Was
About.'' And one of the analogies I use, and I'll say it very
quickly, is, what if, in Alaska, when the Exxon Valdez ship
crashed, and the oil spilled out into the beautiful, pristine
Sound and all the little oily fish and oily birds and the
pristine environment was destroyed--what if the Governor and
the legislature in Alaska had said, ``You know, when we get
this money from Exxon, we need some new schools. You know, we
need to build some new roads. You know, we have a budget
deficit this year. We've got a hole in our budget. Leave the
mess out there. Leave the oil out there.'' You see, everybody
in this country and the world would have been in an outrage.
Why? Because you can see the mess. I mean, you can see the
birds and the fish and all the terrible environmental disasters
that are occurring, so of course they had to clean up the mess.
I'm not talking about oily fish here, Senator. I'm not
talking about little floppy birds. I'm talking about 400,000
grandmas and grandpas and uncles and aunts, and I'm talking
about 2,000 real children who are beginning a life that, one
third of them, are going to die from it. And I'm talking about
having the antidote, having the penicillin, having the
substance that we can inject and make a change.
Some say I'm in the poorest state in America in
Mississippi. Sometimes I think we're the richest state in
America. Who has an excuse in this room? Mississippi takes all
of its money from the tobacco settlement, places 100 percent in
a healthcare trust fund, by statute. On top of that, we've
spent over $20 million on a prevention program. And, Senator
Lott knows this, we've reduced teen smoking in Mississippi by
over 30 percent. We've reduced middle-school smoking by 50
percent. We've reduced adult smoking by 20 percent. That's the
astounding number. We have 70 percent more smoke-free homes now
than we had when we started.
The only place that prevention programs don't work are
where they're not being tried. I've used some strong words in
my speeches across the country. I call it ``moral treason.'' I
remember why we filed these cases. With all due respect to the
Governors and the legislators in this country who are making
decisions about this, this money didn't fall out of heaven. It
really didn't fall out of heaven. It has a connection with a
lawsuit that we filed that was real. And if it wasn't real, we
wouldn't have settled, we wouldn't have won this money.
Governor Chiles, in Florida, God rest his soul, would turn
over in his grave today if he knew what had happened in Florida
to his program. Tremendous gains. And then all of a sudden,
well, we're successful, so let's quit doing it.
Every single state in this country that's doing the right
thing, including Delaware, by the way, are making a difference.
So if I sound like I've got a hollow place in my belly about
this, I do. I'm proud of my state, and we're doing good, and
we--Senator McCain, we lived up to what I told you. I told you,
``Trust us. You let us keep all the money, and we'll do the
right thing.'' But the majority of the states in this country,
frankly, think the money fell out of heaven, and I really wish
that Congress would do something about this injustice. We had
one chance to change the public health of this country for the
better, and I think we're wasting it.
Don't tell me about the budget deficits. Don't tell me
about needs coming Mississippi. I'm going to have a $700
million budget deficit next year, in Mississippi. $700 million
bucks. That's a lot of money. They're not going to attack my
prevention program. Do you know why? Because in the long run,
every dollar you invest in prevention in tobacco saves you
three dollars.
All this woe about the Medicaid program? Why do you think
we filed this lawsuit? The majority of people who smoke are the
folks who are on Medicaid. They're the poorest people in this
country. If you reduce the number of people that are the
poorest from smoking, you will stop heart disease and lung
cancer and emphysema and all those things, and you will,
therefore, reduce your Medicaid budget tremendously.
So it is shortsighted thinking to securitize your money, to
sell off the future of your children and your people. It is
shortsighted thinking to take the money that you have and spend
it on other things because you have a budget deficit. My
question to the Governors and the legislators today is, What
would you have done if we didn't have a tobacco settlement?
Thank you, Senator.
[The prepared statement of Attorney General Moore follows:]
Prepared Statement of Hon. Mike Moore, Attorney General,
State of Mississippi
Good morning, Chairman McCain and Members of the Senate Commerce
Committee.
It is my pleasure to again appear before you and address the
important public health issues concerning the historic tobacco
settlement. I remember very well the days, weeks, months, and years put
into the historic battle with the tobacco companies. I remember the
legal battles, the political battles, and the legislative battles.
Mississippi filed the first case against the Tobacco Industry in
May of 1994. We claimed the tobacco companies were killing 430,000
people a year, attracting 3,000 new teenage smokers every day by their
marketing and advertising, and costing our state millions of dollars a
year in the medical treatment for those indigent citizens in our health
care programs.
The industry responded that the use of their product did not cause
death and disease, that nicotine was not an addictive drug and they
certainly didn't advertise and market to children. They were proven
wrong on all counts. In June of 1997 a historic settlement was
announced among all the states Attorneys General and the Tobacco
Industry. That settlement provided Food and Drug Administration (FDA)
regulation over nicotine, $368 billion for the states and various
Federal programs, major marketing and advertisement restrictions and
much more. This Committee with the leadership of Senator McCain brought
forward the settlement in legislation, held hearings, added many
refinements and strengthened the original settlement. Unfortunately,
that fell a few votes short of the requisite 60 votes needed to pass
the Senate. In the interim between June of 1997 and June of 1998 the
landscaped had changed. Mississippi, Florida, Texas, and Minnesota
settled their cases, taking away some of the toughest cases against the
industry. Some of the states had legal setbacks, FDA regulation looked
shaky and thus leverage had shifted. In November of 1998 a settlement
of $206 billion that included some of the advertising and marketing
provisions of the original settlement was announced by the remaining 46
states. Known as the Master Settlement Agreement (MSA) this settlement
did not require any Congressional approval and settlement dollars began
to flow to all the states in the next year. A huge public health
victory-we had what we needed to immediately impact the number one
cause of death in this country.
Since the Tobacco Settlements I have been in 44 states giving a
speech called ``spend the money on what the fight was about.'' I have
discovered that some governors and state legislators must believe that
the tobacco settlement dollars fell out of heaven . . . that the
dollars have no connection to the public health lawsuit that we
brought. The money is being spent on one-time budget deficits, college
scholarships, tobacco warehouses, roads, anything but prevention,
cessation, and improving public health of this country.
If tobacco really kills 430,000 people a year in America-If tobacco
related disease really is the number one cause of preventable death in
America-then why is it we get $246 billion to do something about the
problem and only a few states are using the money at a substantial
level to make a difference. Comprehensive tobacco prevention programs
work. They have worked everywhere they have been implemented. The only
place they don't work is where they have not been tried.
In Mississippi, one of the poorest states in this country, we take
all the money from our tobacco settlement and place it by law in our
Health Care Trust Fund. These dollars can only be spent on public
health matters. We spend $20 million a year on a prevention/cessation
program call the Partnership for a Healthy Mississippi. It is truly a
successful comprehensive program. In the first few years we have
reduced the number of public high school students smoking by more than
20 percent and middle school students smoking by almost 50 percent.
That means that there are 28,000 fewer kids smoking in Mississippi
since the start of the program. We have dramatically reduced adult
smoking by 20 percent and changed attitudes across our state about the
importance of clean indoor air increasing the number of smoke-free
homes by 63 percent since 2000--that means 406,000 people are no longer
exposed to second-hand smoke in their homes.
I have heard all the arguments by those states that have chosen not
to live up to the purposes of the tobacco fight.
1. That the settlement documents don't say we have to spend the
money on tobacco prevention and cessation. To them I say the
preamble of the settlement provides ample language that public
health improvements, protection of our children, and the
reduction of death and disease from tobacco form the basis of
the agreement. When did doing the right and moral thing have to
be spelled out? These same public officials promised Congress
in 1999 that if Congress would prevent the Department of Health
Human Services from requiring the states to reimburse the
Federal Government the Federal percentage of Medicaid from the
tobacco settlement dollars they would spend appropriate amounts
on tobacco prevention and cessation. Governors and legislators
all over the country rallied and lobbied to keep Secretary
Donna Shalala from seizing the Federal share, promising they
would do the right thing-I was there, I heard it, they said
'trust us'. Congress agreed, passed the appropriate legislation
and most of the states have not lived up to word.
2. I also hear ``we have a budget problem-a hug deficit, so we need
this money to fill the hole.'' This short-term thinking makes
little sense when compared with the dollars saved by a long
term investment in reducing deaths and disease from tobacco use
and preventing our children from starting. We have had the
capability to reduce the deaths, disease and the billions spent
in health care costs by half. This public health campaign
should have begun in every state in American in 1999 but
unfortunately it has not.
I congratulate all those states like Maine who just announced
dramatic reductions in youth smoking this month. Florida,
Massachusetts, and California all had great results but have now been
cut back. I know we can do better. The Attorneys General of this
country fought long and hard to achieve this important public health
victory, I hope that this committee will take action to make sure that
this victory does not tum into another defeat by Big Tobacco.
Senator Nelson. Mr. Chairman, may I take a point of
personal privilege to commend the attorney general of
Mississippi, who was one of the great leaders in this fight,
and I was aware of it at the time, as a statewide elected
official in Florida, where Florida and Mississippi, our two
attorneys general, Bob Butterworth and Mr. Moore, consulted so
frequently. And there is a tale of two states. The State of
Mississippi today, that all that tobacco money is being spent
as it was intended, on prevention, and the State of Florida,
the chart that makes that chart pale by comparison, having $840
million a year coming in, and they are spending on prevention
now one million dollars. It's a sad commentary.
Thank you, Mr. Chairman.
The Chairman. Well, thank you very much.
I'd like to mention that Senator Lott was the Majority
Leader at the time we passed this bill through this Committee
with a vote of 13 to 1. He was the one that allowed us to spend
weeks on the floor of the U.S. Senate in an effort to get that
bill passed. And I'm grateful for his support. And I understand
why we had to pull the bill. And so I want to personally thank
him and all others who were involved in this issue.
You know, Mr. Scheppach, my beloved friend, Mo Udall, used
to have a saying. He said, ``There's a politician's prayer that
goes, `May the words that I utter today be tender and sweet,
because tomorrow I may have to eat them.' ''
[Laughter.]
The Chairman. Here's what our public officials said at the
time of the MSA. New Jersey Governor Christine Whitman, quote,
``Every penny of these funds should be used for health
purposes, including prevention programs and counter-advertising
to protect kids, cessation programs, and community partnerships
to serve those who have already put their health at risk by
smoking, in addition to existing important health programs,
such as Charity Care and Kid Care.'' New Jersey now ranks 30th
amongst the states.
Indiana Governor Frank O'Bannon, ``This money can go a long
way toward preventing Hoosier kids from ever getting hooked on
tobacco and toward helping our citizens stop smoking and
recover from smoking-relating illness.'' They now rank 26th.
It goes on and on. It's really disturbing, because Attorney
General Moore and others came to us and said, ``Stay out of
this. Don't make the states devote any money to prevention and
treatment of tobacco illness. Trust us. Trust us.''
North Carolina Governor Jim Hunt, the consent decree gives
North Carolina, quote, ``a balanced approach to allocate
tobacco settlement money. It will address our efforts to crack
down on underage smoking and to prevent the health and well-
being--protect the health and well-being of North
Carolinians.'' They now rank 33rd in the country.
Dr. Healton described what's going on here.
My first question is to you, Mr. Scheppach, and I know
you'll spout the party line, just as you did in your opening
statement, but how do you answer Attorney General Moore's
statement, if Mississippi can do it, the poorest nation in the
country, why is it that other states in this country can't live
up to the promises and commitments they made to their citizens
and to Congress when they made this deal?
Mr. Scheppach. Well, I'm sorry it wasn't somewhat better,
in all honesty. I mean, the--I wish the percentage was 8 to 10
percent, rather than 4 percent, in this particular area. I do,
however, say that it does take us awhile--yes, I think we do
know what our effective programs are now, but I don't know that
we knew that, necessarily, 3 or 4 years ago.
Plus, this fiscal crisis has really been impacted very
differentially across the states. When I say, ``This is the
worst fiscal crisis since the second world war,'' I mean it. In
2001, revenues were down over 5 percent. We have never had a
year of negative revenue growth for states since the second
world war. We've had quarters, but we've never had a year. We
were down negative five percent. Medicaid growth over the boom
period, 1995 through year 2000, was down to 5 percent. Those
are the baselines we were working with. Medicaid jumped, in
2001, to 13 percent growth, and other healthcare, which is
another 10 percent of the budget, jumped, as well. So I think
states were caught in a very, very difficult situation. And it
was differential. Places like New Jersey, New York, and
California were hit extremely hard, where other states were hit
less hard.
So I wish it was better. My hope is that, as revenues turn
around and begin to grow, that larger amounts of money go into
these particular programs. States have experienced when they've
taken money from trust funds in the past that they have, in
fact, replenished them when revenues did grow.
The Chairman. Well, I thank you, Mr. Scheppach, and I
understand what your job is, and I appreciate you coming here
today, unlike the Department of Health and Human Services.
But I just--and I don't--it's not useful for me to keep
kicking you around, but a resolution adopted by your members in
1999 states, ``The Nation's Governors are committed to spending
a significant portion of the settlement funds on smoking
cessation,'' unquote. In a 2001 NGA resolution, the same
commitment is repeated. In 2003, silence. This is what gives
politicians a bad name.
Ms. Hudson, securitization, I understand that you think
that that's a good idea. Is that right?
Ms. Hudson. I do not.
The Chairman. You do not. Isn't this--and maybe the other
witnesses--well, I'm about out of time--isn't this, sort of, a
commitment to keep the use of tobacco products as a viable way
of continuing revenue?
Ms. Hudson. Well, I just think that states should have done
what Delaware did, and put it into an account and spend it for
health. Securitization is so risky, and it really hasn't been
that successful. And it doesn't necessarily solve the problem,
in that it'll be spent in the right way when they do have it to
spend. I also think it would be good if states would pass a
clean indoor-air bill, so that there wouldn't be an opportunity
to smoke in indoor public places, that would go with all of
this, and many states are doing that.
The Chairman. Thank you.
Dr. Healton, do you want to comment on that?
Dr. Healton. On securitization?
The Chairman. Yes.
Dr. Healton. Well, I think securitization is the
penultimate example of robbing the--you know, robbing the fund
and making the chance that a poor decision during a fiscal
crisis can be changed in the future. I think that's the great
tragedy. And I also think--I don't know the exact percentage--
but it's fiscally foolish, given the amount that's being paid
on the dollar at this juncture, given the liability situation
and the litigation situation for the tobacco industry.
The Chairman. Senator Lautenberg?
STATEMENT OF HON. FRANK R. LAUTENBERG,
U.S. SENATOR FROM NEW JERSEY
Senator Lautenberg. Thanks, Mr. Chairman. And I thank you
for your interest in resolving this dispute over tobacco.
You've been a staunch supporter.
My work on tobacco began here, and Dick Durbin was on the
other side of the Capitol. We did it together, started in 1986,
it was our activity in 1987, we got a bill passed. And it's
very disappointing to see the reduction in prevention funds
that we are regularly dealing with.
I want to say this, as kind of a start. First, Mr.
Chairman, I want to ask consent that my full statement be
included in the record.
The Chairman. Without objection.
[The prepared statement of Senator Lautenberg follows:]
Prepared Statement of Hon. Frank R. Lautenberg,
U.S. Senator from New Jersey
Mr. Chairman:
I know that you and I both are dedicated to protecting Americans--
especially our youth--from the dangers of tobacco. I applaud your
leadership in this regard and thank you for holding this important
hearing.
Today, five years after the settlement agreed to by 46 states and
five major tobacco companies, tobacco control remains one of America's
most pressing public health issues.
It is estimated that direct medical expenditures attributed to
smoking now total more than 75 billion dollars per year.
I used to smoke--a lot. Fortunately, my daughter, when she was a
young girl, convinced me to quit. Since then, I have been fighting the
tobacco industry. I'm proud to say that my work on the public health
side of the tobacco debate started long before tobacco control became a
mainstream issue.
I authored the law banning smoking on airplanes, which protected
people from deadly secondhand smoke. That law changed our culture's
attitudes about smoking in public places.
I also wrote the laws banning smoking in all federally-funded
places that serve children. And I have consistently supported higher
tobacco taxes to pay for expanding health coverage for children and the
uninsured.
We have made progress over the past several years but we still have
so much further to go. Tobacco use continues to be the No. 1 leading
cause of preventable death and disease. Each year, tobacco claims over
400,000 lives here in the United States.
According to the Centers for Disease Control (CDC), if current
tobacco use patterns persist in the United States, an estimated 6.4
million children will die prematurely from a smoking-related disease.
Every day, nearly 5,000 young people try cigarettes for the first time.
On a positive note, smoking among adults has slowly but steadily
declined since 1993; however, 46.5 million American adults still smoke.
After the flawed ``Global Tobacco Settlement'' proposal failed, and
Chairman McCain's good tobacco bill was killed by the industry, the
states struck their own, separate settlement with the tobacco industry.
While this ``master settlement'' did not tell states how they
should spend the money, the governors and other officials from many of
the States promised that they would use the funds for tobacco
prevention and anti-smoking campaigns targeted to children.
At the time I was skeptical of the state settlement because it did
not earmark funding for health. Unfortunately my doubts proved correct.
A study by the Campaign for Tobacco Free Kids found that only four
states currently fund tobacco prevention programs at the level
recommended by the CDC.
This is deeply disturbing. Especially when you consider that
tobacco companies continue to spend more than 20 times as much to
market their deadly products as the States spend to protect kids from
tobacco.
The states are facing their biggest fiscal crisis since World War
II or, in some instances, the Depression. It's no surprise that
financially-strapped State officials are diverting tobacco settlement
funds. But it's disappointing and it's short-sighted. Spending
settlement money on tobacco control now will save money down the road
by reducing health care costs. More important, spending settlement
money on tobacco control now will save lives down the road as well.
Thank you, Mr. Chairman.
Senator Lautenberg. And that is that we suffer from a
depletion of funds. And, you know, Attorney General Moore and
Matt Myers and--we had a lot of contact. It's been several
years since I've seen you. You're looking well.
And also, oh, for those days when we were constantly on the
press and doing the right thing, and we thought that this was a
role that was going to really curb smoking, and we wind up
dealing with what I'll say is an opposition that never stops
writhing, never stops fighting back, in such devious ways, at
times, we don't recognize what's happening.
But I do want to say that the reduction in Federal funding
in the states has caused us great distress. And I don't approve
of what New Jersey did, and I don't approve of what other
states have done, either. But some of it is to reduce
pollution, which causes lots of lung problems, and some of it
is designed to reduce accidents, which causes death and
destruction. None of them have the impact, however, of tobacco.
And a dear friend of mine, who stopped smoking 30 years
ago, just in the last couple of months was diagnosed with a
lung cancer that evolved from his smoking days, and the future
is bleak. Even though he's a mature man, the fact is that he
was in the good state of life.
Matt Myers, I want to ask, should the FDA--should we
continue to fight that fight and see if we can get tobacco
regulated under the FDA? Can we trust them to do the job? What
do you think?
Mr. Myers. Senator Lautenberg, thank you for your question.
We need a comprehensive approach. We need the states living up
to their promise and spending tobacco settlement money on
tobacco prevention. But we also need to regulate tobacco. It
remains the least regulated consumer product in this Nation. We
need to do both.
It's shocking that if Philip Morris sells macaroni and
cheese, they have to test the ingredients, notify consumers of
the ingredients, label the ingredients. If they put a known
carcinogen in Marlboro, they don't have to do any of those
things. We need to do that, and we need to do it soon.
But it's also not a substitute for states doing the right
thing. I mean, Mike Moore said it correctly. If states as poor
as Maine and Mississippi can find a way to protect their
children from tobacco, every state can find a way to protect
their children from tobacco.
Senator Lautenberg. I think that's fair to say. Again, not
defending state action and not doing these things, but the
states are in a pinch that has not been seen, perhaps, for 50
to 60 years.
Mr. Myers. You know, while we all talk about that as a
critical issue, and it is, tobacco has actually come to the
rescue of revenue in over half the states in this nation,
because they've increased their excise taxes, as did New
Jersey. If the states would devote just a small percentage of
those excise-tax increases, even after they securitize, we can
protect our children. All we really need is them to spend about
8.2 percent of their tobacco revenue. This is money that came
off of the backs of smoking so that we can do both. We
shouldn't have to choose, in this country, between protecting
our kids.
If we announced that, because of a budget crisis, we were
going to withdraw polio immunization from our children, would
anyone be saying, ``Well, there's a budget crisis. That's OK''?
That's what we've done with regard to tobacco.
Senator Lautenberg. That's a pretty good comparison. The
problem is that it takes a long time for the impact of tobacco
to----
Mr. Myers. Actually, we see relatively rapid results in
certain areas. For example, Massachusetts and California both
targeted pregnant women. They reduced smoking among pregnant
women by 50 percent, and paid for the entire cost of the
program by doing so. They also reduced heart disease caused by
tobacco within 12 months. That's not a 20 year lag time, as for
lung cancer. Tobacco-prevention programs begin to pay dividends
immediately.
Senator Lautenberg. Mr. Chairman, there is lots more that
we'd like to hear from our witnesses. It's an excellent panel,
and we thank you, but time is up. I don't know whether you
intend to----
The Chairman. Sure.
Senator Lautenberg.--go around again.
The Chairman. Be glad to, Senator.
Senator Lautenberg. Thank you.
The Chairman. Senator Lott?
STATEMENT OF HON. TRENT LOTT,
U.S. SENATOR FROM MISSISSIPPI
Senator Lott. Well, first, thank you, Mr. Chairman, for
having this hearing and having this very good panel here this
morning. And thanks to all of you for being here. I apologize
for not directing a lot of questions to the other four
panelists, but he is from my home state and my hometown, so I'm
going to address most of my questions to our attorney general
from Mississippi.
And I want to say we appreciate the job you have done. You
know, if people want to know why Mississippi was able to put
this money where it needed to go and handle it in the right
way, the simple answer is because Mike Moore wouldn't let them
do otherwise. But you did also, I guess, we'd have to say, have
cooperation from the state legislature to set it up in the way
that it was done, and I'm very proud of how our state is
handling it.
As a matter of fact, those funds are being used in ways
that do some things that would need to be done by regular
funding from the state if they didn't have this fund, so it's
not a zero-sum game. We're taking some of the programs that
needed funding and are taking care of it.
But let me ask you some specific questions for the benefit
of those that have not been as wise as Mississippi. What did
you do to make sure it was handled this way in Mississippi?
Other than being a watchdog and snarling at anybody that
started breathing heavily on it. What did you and the state
legislature and the Governor do to set it up the way it was
done?
[Laughter.]
General Moore. Well, if you'll remember, we didn't get a
lot of cooperation from the Governor. The Governor actually
sued me to try to stop the lawsuit, so we--that wasn't going to
work. The Governor at the time was opposed to it. So the first
thing we did was, I got it written in our court order that
settled our case, that the money should just be used for
healthcare and prevention programs. And that could be
challenged, the legislature could have challenged that, but
when presented with a court order, let's just say they were
cajoled very easily into saying that we ought to spend--pass a
law that says create a healthcare trust fund, put all the money
in there, and the original idea was just to spend the interest
on expanded healthcare programs in Mississippi. And that worked
for the first two or 3 years. The last couple of years, one of
the things they could spend some money on is the expansion of
new programs for Medicaid, so they took some money out to spend
on Medicaid.
But separate and apart from that, we also put in a court
order the establishment of the Partnership for a Healthy
Mississippi, which is our comprehensive prevention program, and
that has remained unchallenged through the years. Part of it is
cooperation, Senator Lott. Truthfully, part of it is its
success. Had it been a failure, had numbers not gone down in
Mississippi, I guarantee you I would have had folks challenge
me in court about the validity of the court order, and they
would have tried to dismantle the Partnership for a Healthy
Mississippi. But because it's been just a remarkable success,
you know, we don't believe in shutting down success in
Mississippi when you get it going, like some of the other
states have done. I think Senator Nelson mentioned that, in
Florida.
Senator Lott. But the legislature did pass the legislation
to set up the----
General Moore. The healthcare trust fund, absolutely.
Senator Lott. What is it being spent on? Other than, you
know, the prevention programs, the programs that have been
targeted at children, trying to make sure they understand that
they shouldn't be smoking. You mentioned some of the Medicaid
programs. Could you give me just two or three examples?
General Moore. Sure. We've expanded some Medicaid programs,
covering more folks, which was the original intention of the
settlement. Matt will remember this, when we were in
discussions with the White House and others, part of this
money--Senator Lautenberg and--or, he's gone--Senator Durbin,
you will remember--to fund the extra part of children's
healthcare, the match for the Federal--and we're using part of
our money--matter of fact, the first 2 years, we took $6
million from the interest that funded the entire match for
Mississippi to expand our children's healthcare by 50,000
folks. We set up trauma centers in hospitals that didn't have
any trauma centers, a lot of things for the disabled. So it's
been--it's done very well.
Senator Lott. OK. All right. So we have a problem, though,
in all these other states that have not followed your example
and our example. What is the solution? And is this going to be
resolved again in the courts? Do we need to come back and
address it again at the Federal level?
General Moore. Well, you know, for years--and you and I
have talked, Senator McCain and I have talked--about the
possibility, and especially when you had the hearing 3 years
ago--I always, in these speeches, tell folks, you know, what
Congress gives, Congress can take away. You know, you gave an
exemption for the expenditure of this tobacco money, basically
saying that there wouldn't be any Medicaid claim. I would
certainly hope that Congress didn't do that, but it might be
that this statute ought to be revisited and take a look at how
the states are spending their money, because it was a deal.
I mean, the reason I remember it is, I was up here every
single day, walking into offices, talking to legislators,
saying, ``Believe me, trust us, we're going to do this the
right way.'' And we met with the Governors Association, met
with the legislators, and they just wanted autonomy, but they
said, ``Trust us.'' If they'd never said that, you would have
never passed that bill. Kay Bailey Hutchison, in your body, and
Chairman Bilirakus, in the other body, never would have gotten
those things passed had we not said, ``Trust us, we'll spend
the money the right way.''
So I'm saying most of the states have reneged on the deal
they made with the U.S. Congress to get that historic change in
the Medicaid law. Maybe we should revisit it.
Senator Lott. Well, thank you for being here. I'm proud to
hear the statistics that you've given about, you know, what's
happened in our State of Mississippi. It's been a good week,
with this information and beating Auburn, too.
[Laughter.]
General Moore. That's exactly right.
Senator Lott. We're on a roll. Let's keep it going.
General Moore. Six-and-oh, Senator, and we're--and thank
you, again, too, for the leadership that you provided to us and
the help behind the scenes, especially with this issue.
The Chairman. In all due respect to the great State of
Mississippi, isn't it true that Mississippi has been noted as
the poorest state in America; and it is the poorest people,
generally speaking, lowest income people, that are addicted to
smoking.
Senator Lott. Right.
The Chairman. So, therefore, what's been achieved in
Mississippi is truly remarkable, when put in that context. Is
that right, Mr. Myers?
Mr. Myers. That's exactly right, Your Honor, and--I mean--
Your Honor----
[Laughter.]
Mr. Myers.--Mr. Chairman. You like that, too.
The Chairman.--you're talking to Senator Lott.
[Laughter.]
Mr. Myers. That's exactly right. And when we talk about
crushing Medicaid burden, that's what we have to understand, is
that states like Mississippi and Maine and several others have
proved that we can literally lift that burden off our poorest
citizens, who can least afford it, and that's a burden that
falls on every taxpayer, because it translates into billions of
Medicaid dollars that are needlessly spent.
We can do something about state budgets if we lower smoking
rates among the poorest citizens. And programs like the program
in Mississippi, the program that originally existed in Florida,
were doing just that.
The Chairman. Senator Durbin?
STATEMENT OF HON. RICHARD DURBIN,
U.S. SENATOR FROM ILLINOIS
Senator Durbin. Mr. Chairman, thank you for inviting me
here. I'm not a Member of this Committee, and I came to
testify, and you were kind enough to let me come take a seat.
Bill Nelson was kind of enough to let me precede him in
questioning. And I'd like to make my statement part of the
record, with your permission.
The Chairman. Without objection. You're welcome here,
Senator Durbin.
[The prepared statement of Senator Durbin follows:]
Prepared Statement of Hon. Richard Durbin, U.S. Senator from Illinois
Mr. Chairman, Ranking Member Hollings, and Members of the
Committee, thank you for holding this important hearing on how states
have allocated their settlement revenues since signing the 1998 Master
Settlement Agreement (MSA). I would like to commend you, Mr. Chairman,
for your work 6 years ago to try to enact comprehensive legislation to
hold the tobacco industry accountable for the harm it has caused to so
many millions of Americans. While it was an assignment you might not
initially have sought, you worked valiantly to promote a public health-
oriented solution. And while your bill did not become law, I think it
is fair to say that the Master Settlement Agreement between the states
and the tobacco companies would not have been as strong as it was
without your efforts.
I also salute you, Senator Hollings, for standing up for public
health and accountability with a position that must have required a
deft handling of some of your constituents back home.
I am sure that a lot will be said today about the importance of
holding states to their commitment to use a significant portion of the
settlement funds to attack the enormous public health problem posed by
tobacco use in the United States. As we reach the 5th anniversary of
the MSA, I agree that states have a responsibility to adequately fund
these prevention programs.
The Institute of Medicine, the Surgeon General, and the National
Cancer Institute have all issued reports on reducing youth tobacco use.
These reports signal that state funds spent on tobacco prevention and
cessation will produce important results for the health of our country.
In fact, in its August 2000 report, the Surgeon General found that the
United States could make unprecedented progress and reduce tobacco use
by 50 percent in one decade through the implementation of nationwide
prevention and cessation programs.
Clearly, state tobacco programs play a vital role in decreasing
tobacco use among youth, and it is critical that we take a close look
at how states have been using the settlement funds. However, we must
also recognize that an overwhelming majority of states, facing severe
budget constraints, have turned to settlement funds to provide
essential services, such as health care. I would hope that as the
economy improves and the gaps in states' budgets are filled in, they
will devote more of their MSA funds to launch tobacco prevention
programs. But, we cannot ignore the fact that the ultimate
responsibility of reducing youth tobacco use rests with the tobacco
industry.
It is no accident that more than 80 percent of adult smokers today
started smoking before the age of 18 and over half before the age of
16. Despite claims that their products are intended for adults, for
years tobacco companies have targeted kids and have been deceptive
about their alleged efforts to reduce youth tobacco consumption.
Eighteen months prior to the signing of the MSA, the tobacco
industry claimed, during negotiations on a broader proposed agreement,
that youth smoking would decline by approximately 40 percent over a 5-
year period and 67 percent over a 10-year period. If those targets
weren't reached, the industry agreed to be subject to penalties. The
tobacco industry appeared to be committed to these goals. However, when
I offered an amendment to include these ``lookback'' provisions in the
tobacco settlement bill and hold individual companies accountable for
their share of the reductions to which they agreed the previous year,
these same companies opposed my amendment.
So, here we are, five years later. Has the tobacco industry
followed through on its promise, on its commitment to our Nation's
children? The answer to this question, I am sad to say, is a resounding
NO.
While youth smoking has decreased, we have not reached the goals
that would have been established in the lookback. The decline has
largely been the result of cigarette tax increases despite the
industry's insistence that youth smoking is not price sensitive. Five
years have passed, yet we find ourselves still fighting the same
battle, youth smoking.
So, let's take a look back. Since 1998, tobacco companies have
launched youth anti smoking campaigns, buying full page ads in the
Washington Post, the New York Times, and the Wall Street Journal,
saying that they adamantly oppose the sale of tobacco to kids. Hearing
these claims, one would assume that the tobacco industry had turned
over a new leaf, finally committing itself to reducing youth smoking.
But, a California judge thought differently, and just a year ago, fined
R. J. Reynolds $20 million for continuing to target kids through their
advertisements in youth oriented magazines ads, which directly violate
the MSA.
So, why would tobacco companies continue to advertise their
products in magazines with high youth readership when their products
are intended for adults? The answer is so simple that I will quote
directly from a 1981 Philip Morris report:
``Today's teenager is tomorrow's potential regular customer,
and the overwhelming majority of smokers first begin to smoke
while still in their teens.''
It is no surprise that in the first year after the MSA was signed,
advertising in youth-oriented magazines, especially for the three
brands most popular with youth, increased by 15 percent, jumping from
$58.5 million in 1998 to $67.4 million in 1999.
We can no longer tum a blind eye to what is going on. The tobacco
companies have continued to wage a war against our communities, and our
youth are the most innocent of its victims. Clearly, as the system
stands today, the tobacco industry continues to benefit from youth
smoking. There is no incentive for the tobacco industry to truly work
to prevent kids from smoking, so we must get rid of that profit motive
that makes teen smoking attractive to them.
We cannot ignore the critical foundation that was laid five years
ago by the state attorneys general in fighting youth tobacco use, and I
agree that we must hold states accountable for their use of settlement
funds. But we must broaden this discussion to include holding the
tobacco industry to its promises as well.
I hope that out of this hearing today, we will develop a plan to
successfully tackle this problem of youth smoking. I think it is time
resurrect the lookback mechanism to hold each company accountable for
its share of youth smoking. We owe it to our nation, our communities,
and especially to the 5 million kids who are regular smokers and find
themselves facing a deadly addiction.
I commend this Committee for taking the first step in that
important direction. Again, thank you Mr. Chairman. I appreciate the
opportunity to share my views. It is important that we continue to
monitor this issue, and I look forward to working with you in that
regard.
Senator Durbin. Thank you.
Mr. Chairman, let me start by saying thank you. We don't
talk about tobacco anymore around this place. There hasn't been
a good conversation about tobacco on Capitol Hill in a long,
long time. Thank goodness you're an exception and are willing
to step out and continue to lead on this issue. It really is a
matter of life and death. And the fact that you're showing this
political leadership is not lost on this Senator and a lot of
your colleagues and people who are following these hearings.
Tobacco has been an important part of my life, personally
and politically. When I was a sophomore in high school, my
father died of lung cancer. He was 53 years old. I didn't stand
by his bedside as he gave his last breath and say, ``I'll get
even with those bastards,'' but when I was elected to Congress
and started facing these tobacco issues, whether it was wasted
money on the so-called ``safe cigarette'' research or some of
the things we're doing to promote tobacco in other places, it
wasn't lost on me that there were a lot of people around
America who shared the same life experience that I did and my
family did. And that's why I joined Senator Lautenberg--and we
were successful many, many years ago now, Frank--in banning
smoking on airplanes, and why I stood and watched, with real
admiration, Senator McCain, as you led the way in trying to
show some Federal leadership on this issue.
Today, we are discussing the obvious. We are not putting
money into tobacco prevention, and more children are becoming
addicted, and those addicted children will ultimately--at least
one out of three of them--die from this addiction. That's the
simple fact of the matter.
We've talked about the lack of money that's there. But, in
my mind, it is not so much a depletion of revenue, but a
depletion of resolve. A depletion of resolve at the State and
Federal level.
Attorney General Moore, thanks for your leadership. You
have been a national leader on this issue. And, Matt Myers, you
and I have been colleagues on this for a long, long time. I
would just say your Prince William Sound Exxon Valdez analogy--
I'd take it a step further, for Mr. Scheppach and the
Governors. How many of these Governors are willing to walk away
from earmarked funds, from gasoline taxes, and highway trust
funds, and say, no, we're going to spend those on Medicaid? You
know what would happen in my state capital and most others? The
contractors and the labor unions and the mayors would all be
there screaming bloody murder, ``Wait a minute. That money was
for highways. That money's not for Medicaid.'' And yet when it
comes to the tobacco money to save the lives of people in those
states and to prevent death and disease among children, there
isn't this same level of anger.
And at the Federal level, I was afraid, when Senator
Hutchison offered her amendment, that we'd be sitting here
today, 5 years later, saying, ``They didn't keep their word.''
The states didn't spend the money as they were promising they
would, and we let them off the hook. We let them off the hook
here on Capitol Hill, and that is sad and unfortunate.
Dr. Healton, I want to tell you something. I really admire
what Legacy's done. And I watch those Truth ads and think,
``Right on.'' If we could get those ads on the air on the right
program and across America, it'll have as great an impact as
raising the cost of the product does with children.
I read your testimony and hear that you may be going away.
Is that a fact?
Dr. Healton. Well, our revenue source has declined by 90
percent because of a provision in the Master Settlement
Agreement. It required that the participating manufacturers
collectively represent 99.05 percent of the market for us to
receive a payment. If they represent 99.04, we do not receive a
payment, which, in essence, is a sunset clause, though Mike
Moore may want to comment a little more on it.
So our existence is threatened. But, because the board
wisely set aside some of the payments to us, we will operate at
a level, but it will be so substantially below the current
level that we will be unable to provide a national ad campaign.
And I would just comment, Senator Durbin, that I want to
thank you for coming to the event that we had here on the Hill
for staffers about the Truth Campaign, and just also point out
that presently spending about $75 million in the advertising
marketplace for the Truth Campaign and bringing it to the
highest risk kids, it has been enormously successful, and it's
probably responsible for about half of the decline that has
been observed in youth smoking.
If the rates stayed where they were in 1997, when you folks
were talking about this issue here on the Hill, two million
more young people would be regular smokers than are today. So I
think we should all collectively be proud of the successes we
have had, while we remain vigilant about what still needs to be
done. And I thank you for your interest in the program and your
support for, at times, a controversial campaign that's intended
to grab the hearts and minds of our most at-risk adolescents.
Senator Durbin. Mr. Chairman, the voice of Truth, the voice
of the Legacy campaign, is a small voice against the roar of
tobacco advertising, but it's so good that we can't let it go
away. I don't know what I can do. I hope that you'll join me,
Frank Lautenberg, and Bill Nelson, and any other Senator. We
can't let this go away. If this is all that we make a
commitment to do, we can't force Governors to spend this money
at this point, but we can't let this go away. And I hope we can
find a way to find the revenue to keep you on the air.
Thank you, Mr. Chairman.
Mr. Scheppach. Mr. Chairman, can I make a comment?
The Chairman. Yes, sir.
Mr. Scheppach. Since everybody's talking about the
commitment of the Governors, I just want to read from our
resolution that was longstanding, and it was that they're
committed to----
The Chairman. In what year, Mr. Scheppach?
Mr. Scheppach. Well, this goes all the way back, I
believe--it's been in existence from probably 1997 or so.
But the commitment was to spend a significant portion of
the settlement funds on smoking cessation, healthcare,
education, and programs benefiting children. Now, I think that
that depends upon what you define as significant, but I think
45 percent of the money is, in fact, going to those areas. Now,
everybody has focused on cessation, and, you know, our hopes
are that that can be increased over time. But as far as I
remember, that was our commitment. Now, I can't speak for any
individual Governor, but as far as the organization is
concerned, I think that's been our commitment.
The Chairman. Well, I guess that deserves a response. Mr.
Moore?
General Moore. What I know is that, you know, it's great to
put something down on a piece of paper and have a vote and read
it. The people who came up here and lobbied Congress, we would
have never gotten Congress to pass the exemption that they
passed with a, you know, ``We'll spend a little money,'' or,
``Don't worry about it, we'll take care of it.'' I mean, it
was--you remember, President Clinton and Donna Shalala, from
the Administration, were against this bill, and they were only
for it if the states spent the money on prevention programs and
expansion of children's healthcare and had four categories that
he was for. So I can't imagine that we would have been
successful without the cohesiveness of Governors and
legislators and others at least telling a convincing story
that, ``Trust us, we'll spend the money the appropriate way.''
And I understand all the excuses. I've heard them all. I
live in Mississippi. I hear all the excuses about needs and
deficits and all those kind of things. But this was a lawsuit
against tobacco. This had nothing to do with any of those other
things.
Mr. Myers. Mr. Chairman, could I just also respond to--
because I think it's important to note--and it's very
disturbing--that when the National Governors Association was
seeking the waiver, they came forth with a resolution to
contain the commitment. But when Congress stopped looking, they
revised the resolution, and they took out that paragraph, that
promise.
I don't think that was a promise for 2 years or 3 years.
That money is coming in in perpetuity. I thought that was a
long-term promise that the states and the Governors made to
Congress, not that they would change the second that no one was
looking.
The states do face hard choices. But, in 2000, they spent
43 percent of the money on health, now it's down to 28 percent.
In 2000, they spent 9 percent on tobacco prevention, now it's
down to 3 percent.
If we're going to solve the problem with tobacco, it
requires a straight-up, honest commitment of a long-term and
sustained nature, not that we go somewhere else as soon as
someone stops looking. I don't think we can afford to see this
continued diversion of funds if we're going to protect our
kids.
The Chairman. Mr. Scheppach, I don't want--again, I don't
want to continue this debate, because I think facts will take
care of this argument. But these two statements, of 1999 and
2001, clearly they are talking about healthcare and education
as related to tobacco. That's why policy position tobacco
settlement funds policy. I mean, when you read the entire
statement, in 1999 and 2001, you draw the obvious conclusion
we're not talking about taking care of Medicare. We're talking
about tobacco-related illnesses. That's certainly the way that
I read this statement.
Now, you can draw out--say, ``Oh, healthcare, so it's OK
for us to spend the money on our Medicaid programs,'' but
that's not the way that reads in its context, at least from my
viewpoint and that of others.
And I also, again, want to repeat, I know that you are here
to defend your organization, and I appreciate that. But I can't
let it go, just say, ``Well, we said that it would be
healthcare.'' It's clear that this statement is about health-
related illness--tobacco-related illnesses and could be--I
don't see how you could interpret it any other way.
And, in interest of fairness, please, you respond if you
would like to.
Mr. Scheppach. Yes. I mean, you have the advantage of, in
report language and other things, of knowing what the debate
was. I think I was there at the time and listened to the
debate. We did a lot of analysis on the effectiveness of
cessation programs at the time, and the feeling was you
couldn't put $8 billion or $10 billion a year of additional
money in cessation programs and make them effective. So I
think----
The Chairman. Well, I----
Mr. Scheppach.--we were talking more broadly.
The Chairman. Are you talking about treating health-related
illnesses, too--tobacco-related illnesses?
Mr. Scheppach. Well, you get into problems, I think, of
defining what is specifically tobacco related. I think, you
know, you've got to deal with those in the broader programs
that we've got.
The Chairman. Well, I guess I wish that I had been in there
when the debate and discussion took place, because then I would
have had a different position about earmarking funds that--and
making it mandatory that it be spent for certain purposes. And
I thank----
General Moore. Senator, if I could respond for just 1
second?
The Chairman. Yes, sure.
General Moore. Just very quickly. I don't want anybody to
be confused. In 1999, when this decision was made, the
California results had been in for years and years and years
and years, about the reduction in their program. The Florida
numbers had come in that year, humongous reduction.
Massachusetts numbers were in. We knew, in this country, what
worked. And the reason I know that is, we modeled our program
in Mississippi, starting in 1998, on the successful programs of
Florida and Massachusetts and California and others.
And another point, and I'll quit, is that we're not talking
about if a state receives $100 million a year, to take that
$100 million and spend it on TV anti-tobacco. What we're saying
is if you even spent 20 percent of that money--if you took 20
million out of that hundred and take the 80 and do whatever it
is you want to do with it--if you took 20, you could have a
huge impact on this problem. But what we're doing is, we're
taking 3 percent nationwide, and that's just not--it's not
good.
The Chairman. Senator Nelson?
STATEMENT OF HON. BILL NELSON,
U.S. SENATOR FROM FLORIDA
Senator Nelson. Mr. Chairman, what we've heard here is
shocking to me; it's not surprising. And I must say that I am
chagrined, Mr. Chairman, that the states being in the fiscal
distress that they are, and we had in front of this Congress,
earlier this year on the tax bill, a question of how much money
we were going to send to the 50 states who are in fiscal
distress. What ultimately emerged in the package was $20
billion to the states, close to a billion dollars going to my
state alone. There was an amendment that I voted for, $40
billion to help the states in their fiscal distress. And yet
what we're hearing today, shockingly, is the money that came
from the tobacco settlement, which was clearly stated at the
time that a certain portion of this was going to go for
prevention so that ultimately the states would have less
healthcare costs through Medicaid, that that money is not being
spent. That's unconscionable.
And, again, I go back with great commendations for
Mississippi and the attorney general, who's with us today, of
where the recommended spending by the CDC that Mississippi
today, years later, over half a decade later, after the
settlement, that Mississippi is exceeding that in spending on
tobacco prevention.
And then, sadly, I turn to the page on Florida. Florida,
having settled its case one month after Mississippi, a much
bigger state than Mississippi, with a lot more dollars coming
in, and lo and behold, what the CDC's recommended spending on
tobacco prevention--Florida today is spending 1 percent of the
CDC's recommendation. And yet we send $20 billion to the
states, and I voted for a version that was to send $40 billion
to the states because of their fiscal distress. So it
distresses me.
You know, Mr. Scheppach, one of the things that the
Governors ought to be asking themselves is how much of the
dollars that they are spending for smoking-related illnesses--
how does that compare to what you're spending for prevention?
Are the Governors asking themselves that?
Mr. Scheppach. I would probably disagree that, in the short
run, there would be significant savings. Medicaid, most of that
money is going into nursing homes, and people generally are
going to end up there at some point in time. Women and children
are relatively inexpensive. Most of the money is in long-term
care, drugs, it's for the so-called dual-eligibles for Medicare
and Medicaid. That's where all the money is.
Senator Nelson. Well, do you know what's happening in
Florida right now? Now that you brought up nursing homes?
What's happening--under Florida law, a person who is in a
nursing home, under Medicaid, pays their income to the State of
Florida in return for being treated. But there are certain
exceptions that the State of Florida is to deduct for their
income--how much they pay out for health insurance, how much
they pay out-of-pocket healthcare costs for deductibles and co-
pays. And do you know that the State of Florida, right now, is
not deducting that money, but, instead, is taking that money
from the senior citizens to the average of $125 a month, or,
for 15,000 seniors in Florida that are affected, that's $35
million a year that seniors on Medicaid in nursing homes are
paying that they're not supposed to be paying, under the
eligible law, because Florida, the State of Florida, is not
adhering to the Federal law. So when you start talking about
nursing homes, you've just hit a hot button of mine.
I want to get back to tobacco.
Mr. Myers. Senator, could I also just--a quick comment on
getting some facts straight. You do see a quick turnaround in
Medicaid costs. Over half the pregnant women who smoke in this
country are on Medicaid, because it is so directly related to
poverty. A low birth weight baby, due to smoking, costs an
additional $60,000 in healthcare costs. If you can dramatically
reduce that, not only do you improve the life of our youngest,
most vulnerable children, you save immediate taxpayer dollars,
let alone the huge taxpayer dollars that you will save over the
long run. It's not just shortsighted. It's wrong to think that
tobacco prevention doesn't save money quickly.
Senator Nelson. I believe that that's true. I mean, it just
is common sense to understand what you just said. But even if
it weren't true, to save those 2,000 children a day that are
beginning to get hooked every day, and the long-term healthcare
costs to the country and to the states? That's worth it, right
there.
Mr. Myers. There's no question about that.
Senator Nelson. You know, this is something that we
shouldn't be divided on. The tobacco companies, I would think,
are on the same side of this issue of what we're arguing. And
yet the tobacco settlement is not being implemented in the way
that it was supposed to, with the understanding and the
promises.
Mr. Myers. To quote a tobacco industry lobbyist this year
in the state legislature, ``You know, my job would be a lot
easier if my state had spent the money on roads and other
things, like other states had.'' And I fear that that's true.
They recognize that tobacco prevention programs work and make
an immediate difference. We can't afford not to treat this
problem seriously.
Senator Nelson. Amen.
Mr.----
The Chairman. Senator----
Senator Nelson.--Chairman, that light is red, and I've got
a couple more questions that I need to ask, so I'll wait.
The Chairman. Senator Lautenberg?
Senator Lautenberg. Thanks, Mr. Chairman.
This settlement-lite, which is what we got, as compared to
the tobacco industry--and, by the way, just to make sure that
people understand where the industry is going, you know, we see
the ads that say, ``Buy nourishing food, and this is where you
get it,'' and all that stuff, but lurking behind there, I
suspect, is a lot of tobacco revenue still coming in there. And
what do we do further to acquaint the public with the fact--
when they buy a cigarette lite, that the fact is that, in many
cases, they're damaging their health even more than if they
smoked the regular cigarettes? And one of the things, Dr.
Healton, that we see--and Senator Durbin adequately, I think,
described our dismay at the fact that your voice isn't out
there. How do we get these messages across, when the companies
are spending, what, $7 billion a year, I think it is, on
marketing?
Mr. Myers. That's now up to 11 and a half billion dollars,
31 million dollars a day. The answer is, we need a sustained
public-education campaign, both from Truth and from the Federal
Government and in each state. The scientific evidence is now
conclusive. Lite and low-tar cigarettes are not safer or less
hazardous than regular cigarettes. Millions of smokers have
switched to these products thinking that they were reducing
their risk, and we now know it's not true.
We need a sustained media campaign to educate every
consumer before they make that mistake and to help every
consumer understand that the only safe cigarette is the one you
don't smoke.
Senator Lautenberg. We look at the cost--and I thought
Senator Nelson was going there some--and that is, the costs of
the deferrals of investment in the smoking-cessation programs,
have we--is there a way to calculate that? That we say, look,
this thing that you don't do today will not get you out of a
financial obligation, no matter what, that these costs are
inherently there, and you're going to just get them. Is there
anything that you see that has a--that can attract the kind of
attention that we'd like to see put into this that says, ``Hey,
if you don't spend the money today, you're going to spend it
tomorrow,'' because I agree with much of what was said here
about the irresponsibility of the states, and mine included,
that says, ``Hey, spend it on other things. Spend it on debt
forgiveness.'' There are other ways that we could generate
revenues, but, instead, it's--I guess it's easier to give away
something that people don't see for awhile.
General Moore. I think yours is a salient question. The
best way I can describe it for you is that, you know, we just
talked about the numbers--3,000, we used to say, kids start
smoking a day, and now, 7 years later, we're at 2,000 a day.
The best way to say what the cost would be is, what if it was a
thousand a day? What if we had actually reduced it down to a
thousand a day? Then your cost is, for not acting, there are a
thousand new kids a day who are going to start an addiction,
and at least we know one third of them are going to die, so 333
kids a day times 365 days a year. Those are real lives that
will be lost, and we forget about that. I mean, statistics--you
know what statistics are. People just--the numbers go over your
heard. But they're real people, Senator Lautenberg. I mean, all
that you've done, all that this Committee's done, all that this
settlement has done, we save lives.
The other thing is the saving in the money. What I don't
understand--and, you know, you talked about polio--or was it
you or--what if we had the polio vaccine, and we had a lot of
folks that are infected with polio virus, and we had it here,
and we said, ``You know, we're going to put all this money into
a trust fund, and we're going to wait a few years before we
innoculate folks.'' Well, what would be the result? People
would die from polio, right? Or they would suffer illness,
disability from polio. It's the same very thing. The longer you
wait to apply the serum to this problem, the more people who
are going to be addicted, the more people who are going to have
lung cancer and heart disease and the like.
It is just unfathomable to me that we're waiting to use the
funds, when we know exactly what works to solve the problem,
but we're not doing it. And then our excuses are so weak,
``Well, we need to spend money in another area.'' That's so
weak, when we're talking about real lives. We're not talking
about somebody getting injured and recovering. We're talking
about somebody starting a behavior that will kill them.
I mean--and the other thing I'll mention to you--boy, times
have changed. When we began this lawsuit, you know, we were
telling--the tobacco companies were still lying, they were
testifying before Congress in March 1994 that, ``No, nicotine
is not an addictive drug,'' and, ``No, it doesn't cause cancer,
and we certainly don't market and advertise to children.'' That
was in March 1994. Every day, you turn on the TV, and there's
Philip Morris with their little, you know, message, ``Cigarette
smoking causes cancer, cigarette smoking is addictive.'' I
mean, of course, they're doing that for a reason, and the
reason is because they've got lawsuits pending and they want
to, you know, invade the populace out there and maybe even
infect the jury pool. I'd do the same thing. But----
So the tobacco companies are saying it. I mean, Philip
Morris is saying, ``This will kill you if you do it.'' We've
got $246 billion out here to impact the problem. And are we
doing it? No, we're not. I mean, even--it's not just the Matt
Myers of the world telling us that it's bad for you, it's now
the tobacco companies who are saying, ``This will kill you.''
And, in America, what we're saying is, ``We don't care.''
Senator Lautenberg. Yes, it's an obtuse kind of thing,
because it gets their name out there. They look like good
citizens, but they know that those people who are hooked, they
are staying hooked, and the more they stay hooked, the more the
cash register rings, and that's the ultimate mission. It's like
saying, you know, ``If you speed, get up to crazy speeds, it
can kill you.'' Does that stop people from speeding? I don't
think anybody who is making the decision says, ``You know what?
If I do this, it could kill me.''
Mr. Myers. That's why youth prevention programs are so
critical. The way to stop this problem is to get them before
they start. If we do that, we can save a generation of American
children from dying.
Senator Lautenberg. If the members of the board of these
companies, or the executives of the companies, were wearing a
white, kind of, dress with a turban, we'd have the FBI and the
DEA and the Marine Corps and everybody else in there, ``They're
out to kill 400,000 Americans? What is going on here?'' The
rest is in your imagination, which----
Mr. Myers. Senator, you asked an economic question, though,
and we do have data. You know, we know several things. We know
that the programs in Florida--in Massachusetts, in California,
saved between two and three dollars in healthcare costs for
every single dollar they spent. That's an enormous savings to
our country. We can calculate the reduction in healthcare costs
from a reduction in smoking in any state. And we have often
provided that information to state legislators. What we need to
do is get across the immediacy of it. This isn't a long-term
problem. We have to stop our kids from starting today.
Dr. Healton. I'd like to embellish that a little bit. That
report that Matt is talking about is a report that was produced
by the Legacy Foundation and co-branded with many leading
public-health groups, including Tobacco-Free Kids. It did a
state-by-state analysis of the additional Medicaid revenues
that would accrue for a 25 percent and a 50 percent decline in
smoking within the 50 states. And it demonstrated the
advantages. It excluded adolescents and kids and newborns, and
we are now producing another report that will be out shortly
that very compellingly makes the case that Medicaid savings
accrue very, very rapidly, because approximately one in ten
babies in NICUs are there because of tobacco-related--low birth
weight or other tobacco-related complications, not to count the
thousands upon thousands of asthma incidents, asthma attacks,
otitis media, surgeries, and bed days related to that problem.
And the one in four fire deaths--one in four of all fire deaths
in the United States are caused by tobacco. The medical care
costs associated with that are enormous. Controlling smoking in
the home can take a huge bite out of that. You don't hear a lot
about it.
And I want to just mention one more thing, for the record.
The Philip Morris ad campaign does not say the product will
kill you. And I've pointed that out to Steve Parrish, that
that's one item that is not mentioned in any of their ads.
General Moore. They do say it causes cancer.
Dr. Healton. That's right.
The Chairman. Senator Nelson?
Senator Nelson. Mr. Chairman, there have been a lot of
accolades coming your way. I want to add to that, because the
multi-state agreement had placed some limits on tobacco product
advertising and marketing, but it didn't go far, as far as your
bill. And so what we're left with is that the multi-state
agreement does not restrict print advertising, it does not
restrict Internet advertising, or marketing and advertising
inside of retail stores, it does not include any provisions
limiting youth access to tobacco products, nor does it provide
for the enforcement of Federal and state minimum-age-of-sale
laws, and if fails to address the FDA regulation of tobacco
products, indoor smoking restriction, and smoking cessation.
Now, I'm curious, Dr. Healton, tell me--the agreement was
to restrict advertising on television, but there seems to be a
lot of advertising of tobacco products going on in movies these
days. Now, it's one thing, under freedom of speech, to
accurately portray whoever the actor or actress is portraying
and whatever brand of cigarette, but it's another thing if the
cigarette companies are paying for the placement of that. Your
organization recently did a study on this. Would you share with
us your conclusions?
Dr. Healton. Yes. I would start by saying that we are not
in a position, though I think the attorneys general are, to
prove whether or not money exchanged hands or any form of a
quid pro quo exists, both of which would be a violation of the
MSA agreement and possibly also of the FTC reporting
requirements, because they are indicating that such exchanges
are not occurring.
The findings in the study were highly provocative. What we
did is, we looked at the prevalence of smoking in R, PG-13, PG,
and G movies, and we found proportional declines in the
presence of smoking across each of the ratings, such that it
looks as if there's a quota for how much smoking. But, more
importantly, and the area that I think needs serious evaluation
is the ads for the movies that are 30- and 60-second spots that
are televised and that are highly salient to adolescents. I
have two adolescents and one 22-year-old. They look up when a
movie ad starts, because it's the coming attraction.
A very substantial proportion of those 30- and 60-second
spots have a smoking scene in them. In the typical movie, only
about 2 to 4 minutes include smoking if it has smoking in the
movie. So it's, first of all, statistically bizarre that so
many of these televised commercials include smoking. But what's
more important and what I think may, in fact, be a ``smoking
gun'' is that if there is a brand appearing in a movie, the
probability that there will be smoking in the televised ad is
fourfold.
Senator Nelson. Very interesting. But you, at this point,
do not have any proof of the actual exchange of remuneration in
return for that, in effect, cigarette advertising in the movie
promotion.
Dr. Healton. Right, because obviously I'm not in the
position of doing that type of research. But, of course--
because that's a legal matter, in my view. However, you, of
course, know that for many years that practice was legal and
did occur. And the tobacco documents, which, thanks to the work
of attorneys general like Mike Moore, have become available,
and the endowment that the Legacy Foundation gave to UCSan
Francisco to make those forever available to scholars, has
unearthed a very large number of communications related to
product placement practices, and I think that they begin to lay
out the roadmap, as do documents that are provided to the FTC
on an annual basis, what the companies themselves represent.
We've been in a dialogue with the FTC about that information,
and we do have some information available to us.
But, again, what I find most curious is that there's a
steady increase in the amount of smoking that is occurring,
there's a steady increase in the amount of smoking on
television. I mean, I'll be perfectly frank, the new show where
Whoopi Goldberg appears, who's an actress whose talents, I
think, are enormous, she is holding a pack of Marlboros in
every show. Maybe it's a coincidence. Maybe she just decided to
smoke Marlboros on an NBC show. But I think it's pretty
extraordinary, and that's, by no means, the only example.
A few years ago, a movie came out called ``The Smokers,''
and it's about a gang of five adolescent girls, who literally
had a cigarette in their hand for the entire duration of the
film. It was shown on HBO over and over and over again over the
last 2 years. So there's definitely something going on. The
question is, what is it? And I know that the AGs are looking
into it. A coalition of 26 of them have begun a dialogue with
Jack Valenti, which isn't a moment too soon, in my view.
Senator Nelson. Do you think the FTC is an appropriate
agency to further look into this?
Dr. Healton. Well, I think they are. They look into it
every year, when they ask some very specific questions. And I
would point out, as I think Mike Moore probably knows, after
the settlement, the nature of the questions that the FTC asked
of the industry tightened up considerably, such that it covers
a broader range of activities, including a wink on the golf
course. So I think it's fairly interesting, and they would
certainly be one venue. But I don't think they're the only one.
I think that there was--there was very strong language in the
Master Settlement Agreement, and I'm--as I often say, one of my
favorite movies involved cutting out all the kisses, and it was
a, you know, terrific European film in which, at the end, the
young man looks at all the kisses that the town priests had
removed.
I am a great defender of the First Amendment. I don't think
this has anything to do with the First Amendment. I think it
has to do with maintaining market share in some fashion. Now,
I'm speculating, and maybe it's inappropriate to do so, but I
think it deserves serious consideration, particularly given the
most recent study in The Lancet that, very convincingly--and
it's my understanding Jack Valenti actually agreed that the
science was clear and did not debate the science--that 50
percent of adolescent uptake of smoking is related to the
depictions of smoking in film.
Senator Nelson. General Moore and Mr. Myers, you all are
familiar with the agreement, and certainly the settlements in
your state. Was it clearly your intent that paid advertising
for cigarettes be banned from television advertising?
Mr. Myers. Actually, that was done by Congress, in 1969.
The Master Settlement Agreement addressed the issue of paid
advertising for product placement in movies, and explicitly
banned it. If it were happening, the state attorney generals
would have an opportunity to take strong--and I would hope
would, in fact, take very strong and quick action. Finding it
is the key.
Senator Nelson. And so if you found such evidence, General
Moore, of payment in return for product placement in a movie or
in a promotional for a movie, what would be the response of the
attorney general of Mississippi?
General Moore. We are in a dialogue right now with the
motion-picture industry. I'm not going to prejudge it, but I'm
not sure that it's going to bear fruit. There's supposed to be
a meeting very soon with Jack Valenti to begin a discussion
about how and what is going on. Of course, they think that they
should have the freedom to do this. The thing that they cannot
do is to pay money, such as the Brown & Williamson documents
revealed, that Sylvester Stallone, for example, was paid by
Brown & Williamson to--you know, on one occasion, a half a
million dollars to smoke their brands in his particular movies.
That's what they're prohibited from doing.
We've got some ramifications from the settlement that we
can take on in fines, penalties, and I think you would see AG's
file litigation against the industry if we found them doing
that. It's absolutely a direct violation of the agreement, but
it--to me, it's also even more egregious than that. If we catch
them doing that, then there'll be a whole new series of
litigation that we won't settle until the very end.
I think Dr. Healton mentioned something that's worth
saying, that 50 percent of the folks who begin smoking are
impressed by the smoking in the movies. When that move, the
``Titanic'' came out and, you know, the cute young fellow on
the front of the boat was smoking a cigarette the whole time,
that did more to set us back on teen smoking than just about
anything that could happen, because Leonardo Di Caprio was up
there, and all the little girls were, you know, saying, ``Oh, I
want to be--you know, be like him,'' or, you know, whatever it
might be. It's just such an image, it's hard for us to impact
that.
And then this idea that they don't advertise, Matt's right,
they got rid of advertising on TV, promoting the brands, but
every day you can see, whether it's Philip Morris or somebody
else, telling us how good they are to us, you know, ``We're
also Kraft Foods, and we give to the poor, and we donate money
to domestic violence, and we do this, and we do that.'' They
spend more on building themselves up in the minds of the public
than they do on the prevention programs that they ask for so
much acclaim for. So I----
And then a group comes in my office every single day--it
might be the 4-H Clubs or the Boy Scouts or whoever it might
be, and they're telling me that, ``Well, do you think we ought
to take this money from Philip Morris? They're going to give us
some money, several million dollars, to do so and so.'' And I
said, ``What do you have to do for it?'' ``Well, they want us
to--they say really nothing,'' but really what they want is,
they want to be able to advertise that the Boy Scouts of
America or the 4-H Clubs of America have been endorsed and
supported by Philip Morris Tobacco Company.
Again, that hurts us in our effort to demonize them, as you
will, so that people don't take up smoking. So it's hard, it's
very hard. We've got a little bitty small message going out
there that says, ``Don't smoke,'' and they have a humongous
message that's really overpowering us, saying, ``Do smoke.''
And that's why this whole hearing is important, Senator
McCain. It's an unfair fight. I mean, it's still an unfair
fight. We thought we had leveled the playing table, but it--
their spending has increased and increased and increased, and
the state spending has been diminished and diminished and
diminished. And, you know, but for Legacy's loud message
nationwide in a few spots around the country, there's not
another message that says, ``Don't smoke.''
There are no prevention programs in schools anymore, like
there used to be. You remember the days of the drug and alcohol
abuse programs? If you look around this country, those programs
have slowly gone away, too. So there are very few programs left
that tell our kids, at a very early age, to stay away from this
product.
So I'm extremely concerned that--in 1997 we had a peak in
teen smoking, and we've gone down, and we're headed that way.
I'm afraid that it may go back up if the loud message
continues.
Mr. Myers. That's a very important message. There is good
news. We have seen youth smoking rates decrease every year
since 1997. The question is, what would have happened had the
states spent the money properly? And the best available data
says they would have dropped by twice that rate.
And then the second question is, Now that we know actually
how to impact these things, will we put our political will
behind the scientific knowledge we have? We do have the
opportunity, in the next 10 years, if we spend the money
wisely, literally to decrease the number of kids in this
country who become addicted to tobacco to a very small number,
and it's solely a matter of political will.
The Chairman. Dr. Healton wanted to comment.
Dr. Healton. I just wanted to add two comments. One, that
the last time I looked at it, which was about 2 years ago,
Kraft spends about a billion, with the networks and magazines
alone, and I'm certain also spends a considerable amount in
product placement in film for Kraft products. And I believe the
same, in a letter that I just looked at that R.J. Reynolds
penned to their product placement firm. They, too, at least at
that time, had Lifesavers and Planters as two products that
they were having placed. And there was significant discussion
in that letter, which I can make available to you, about where
they were able to get products appearing in film.
So I think it's a very complicated web of relationships
that one would have to look at. And as the final note, my
understanding of the MSA language--and I may have it wrong, but
I was at a meeting with the attorneys general preparing for the
meeting with Jack Valenti--I believe that it isn't just paid
product placement that would be literally a check in exchange
for a placement. I think any form of quid pro quo also is
implied in that.
The Chairman. I want to thank----
Please, Mr. Scheppach.
Mr. Scheppach. Just one comment, Mr. Chairman. We seem to
be saying that all the decrease in smoking is due to cessation
programs. I think we underplay the fact that we're in a market
economy, and actually the Master Agreement did raise the price
of cigarettes quite considerably. And, second of all, I think
the tax increases that states have just done are important, and
I suspect some of that, in that there is probably some
interaction between raising of prices and cessation programs.
So I think the evidence is that at least that group of children
that we're trying to hit, the young teens, are fairly
responsive to the tax increases.
So I don't think it is a one-way street.
The Chairman. And I assume that the states that raised
taxes did it because they said, ``Gee, we'd like to stop kids
from smoking, so we'll raise these taxes.''
Mr. Scheppach. Oh, I think it was both, Mr. Chairman.
The Chairman. I don't think so.
Ms. Hudson, you've been strangely unpummeled here.
[Laughter.]
The Chairman. I would like to allow you to speak, but I
would also like, before you do, to say that I think you should
be proud of what Delaware has done, but you are here
representing, as I understand it, the National Conference of
State Legislatures. I don't think you can be proud of what the
state legislatures have done. Please go ahead.
Ms. Hudson. I am not. And that's what I wanted to say. It
makes me feel very awkward here. But what I think is important
is that legislators realize what we did today was discuss with
you our successes and our failures, and they need to know your
frustration and disappointment with the states that are not
spending the money on tobacco cessation and health-related
issues.
And I will recommend to the National Conference of State
Legislatures that they have sessions on this at their
conferences and they put something, a really good article, in
their magazines to let legislators know that they really are
wrong, and perhaps we need to step up our language with them
and let them know just how serious we are.
The Chairman. Thank you. I hope they would invite our
witnesses, all of them, including Mr. Scheppach, to these
deliberations so that they can hear all sides of this issue.
We try very hard in these hearings, despite the bias that I
may bring to it, to allow the other side to be heard. And, Mr.
Scheppach, I think you have earned your considerable salary
this morning at this----
[Laughter.]
The Chairman.--at this hearing.
Mr. Scheppach. You've never seen it, Senator, so----
[Laughter.]
The Chairman. I do thank you for appearing this morning,
and I mean that, on behalf of the National Governors
Association.
Attorney General Moore, it's always a pleasure to see you
again. Mr. Myers, thank you for your dedicated efforts. Ms.
Hudson, thank you for being here. And, Dr. Healton, I hope we
can do something to keep your program alive, and I'll work with
others in trying to see that that happens.
I thank you all, and this hearing is adjourned.
[Whereupon, at 11:25 a.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of John R. Seffrin, Ph.D., Chief Executive Officer,
American Cancer Society
On behalf of the millions of volunteers and supporters of the
America Cancer Society, I thank you, Mr. Chairman, and your Committee
colleagues for the opportunity to submit testify on the fifth
anniversary of the multi-state agreement, the Master Settlement (MSA),
with the tobacco companies.
Tobacco is highly addictive and causes more than 440,000 deaths
each year in the United States, including approximately 150,000 cancer
deaths. Put another way, we know that one out of every three cancer
deaths in this country is caused by tobacco use. That is an
unacceptable fact.
Shortsighted states with budget crises and other priorities have
frustrated the heroic efforts of tobacco advocates to get states to
commit substantial funds for comprehensive tobacco prevention and
cessation programs. Out of $11.6 billion the states received in Fiscal
Year 2003, states spent only $682.3 million on tobacco prevention and
cessation. Over the past year, funding levels have fallen even further
and successful programs in states like Oregon, Florida, Massachusetts,
and California have suffered major cuts.
The American Cancer Society has long been at the forefront of
efforts to educate the public about the dangers of smoking and to
advocate on behalf of policies, including regulation, to reduce
disease, suffering, and death caused by tobacco use.
It is impossible to evaluate the success or failure of the 1998
Master Settlement Agreement without awareness that the MSA was the
aftermath of the failed effort by the state attorneys general to bring
about broad comprehensive public health change through the settlement
of their lawsuits against the tobacco companies in June 1997. That
settlement led to the comprehensive national tobacco control bill
proposed by Senator John McCain, as the chairman of the Senate Commerce
Committee.
The McCain bill, launched by a 19-1 vote of the Senate Commerce
Committee, proposed landmark tobacco control goals far beyond the reach
of the MSA. However, a combination of tobacco industry opposition and a
splintered public health community resulted in the bill's demise. While
the tobacco companies fiercely opposed the McCain bill, so did many
tobacco control advocates, but not because of its public health
provisions, which addressed almost every policy objective dreamed of by
tobacco control advocates over the past 30 years. They opposed the
McCain bill because it set a ``cap'' at $8 billion on the amount of
product liability damages the cigarette companies could be forced to
pay out in a single year. This concession to the tobacco companies
would protect them against a possibility some advocates considered
highly likely--that, as Dr. Stanton P. Glantz, a leading opponent,
predicted, ``given patience and hard work, the tobacco industry will
lose enough of these cases to be brought to their knees.''
The tobacco companies and their supporters in the Senate greeted
the public health community's opposition as a welcome opportunity to
delay the bill's passage. By the time the Senate was prepared to vote
on the McCain bill, the New York Times reported that the eight-week
national advertising blitz the tobacco industry launched in the interim
``has been remarkably successful in turning what tobacco opponents view
as a bill that would discourage teenage smoking into a tax issue and an
assault on working stiffs who cannot afford to pay more for
cigarettes.''
Even so, the bill came within just three votes of the 60 needed to
override a tobacco industry-spawned filibuster on the Senate floor. But
those three missing votes were enough. Few observers of the White House
and the Congress believe we shall soon again, if ever, see a serious
piece of legislation with the same potential for saving lives as the
McCain bill embodied.
Innovative lawsuits against the tobacco companies brought by state
attorneys general led by Mike Moore of Mississippi, Christine Gregoire
of Washington, and Hubert Humphrey III of Minnesota, had forced the
companies to agree to the June 1997 settlement that laid the
foundations for the McCain bill. The bill's death, the failure of the
public health community to support the state attorneys general initial
settlement efforts, and independent settlements by four states that
changed the situation dramatically for all the state attorneys general.
Some feared losing at trial. Others remained deeply concerned about the
public health impact of their cases. But the vast majority cared only
about the amount of money they could bring home to their state. Now the
state attorneys general, not the tobacco industry, felt the pressure to
settle.
With this shift in leverage, it was not surprising that what
emerged from the 1998 Master Settlement Agreement negotiations bore no
resemblance to the scope of the 1997 settlement or to the McCain
legislation. Public health advocates were united in their concern about
its flaws and limited scope. Even the attorneys general who negotiated
the MSA were quick to acknowledge that it accomplished far less than
the changes proposed only a year earlier, although they still argued
that it would bring about meaningful progress.
It is in this setting that we should view the MSA and the efforts
of tobacco control advocates to make the most of the settlement. What
was lost when the McCain bill died? Has the MSA lived up to its promise
of change?
The core of the MSA focused on marketing restrictions on the
tobacco industry, funding for the states, and the creation of the
independent American Legacy Foundation. The agreement's stated goals
were to curtail marketing to children, to provide the funds necessary
for sustained comprehensive tobacco prevention and cessation efforts,
and to better address the health problems caused by tobacco. It also
funded a long-term national public education campaign through the
American Legacy Foundation.
Comparing the MSA to the 1997 settlement and the McCain legislation
exposes startling contrasts. For example, the McCain bill contained
comprehensive restrictions on tobacco marketing that would have sharply
curtailed the tobacco industry's ability to reach kids. Since the
industry has easily thwarted the MSA's limited restrictions in this
area, despite the enforcement efforts of the state attorneys general.
True, cigarette billboards have disappeared, along with promotional
materials like t-shirts and caps with company logos. But the tobacco
industry's marketing expenditures have increased each year since the
MSA and the results continue to bombard our children.
Through a penalty scheme that few tobacco control advocates had
dared dream of, the McCain bill held the tobacco companies responsible
if youth tobacco use did not fall dramatically: penalties up to $2
billion annually if the companies failed to reduce youth smoking by 30
percent in five years; 60 percent in ten years. The MSA contained no
such provision.
The McCain bill and the 1997 settlement specifically earmarked more
than $2.5 billion every year for tobacco prevention and cessation-on
top of revenue from the uncommitted funds each state was to receive.
Unfortunately, states' budget crises and other priorities have
frustrated the heroic efforts of tobacco advocates to get states to
commit substantial funds to comprehensive tobacco prevention and
cessation programs.
The earlier provisions also proposed permanent funding for public
education about tobacco prevention and cessation without restrictions
as to its content. By contrast, the MSA's funding of the American
Legacy Foundation prohibits the Foundation from ``vilifying'' tobacco
companies. Further, the MSA guarantees funding for the Foundation's
public education for only five years. As a result, funding for the
Legacy's education campaign is about to end and the Foundation faces
continuing attacks by the tobacco companies.
Most important, the McCain bill granted the U.S. Food and Drug
Administration broad power to regulate every aspect of tobacco product
manufacturing, distribution, and marketing. It authorized a Federal
agency, for the first time, to regulate the tobacco product itself; it
forced the tobacco companies to disclose the ingredients in tobacco
products and what they knew about the products. Five years later,
regulation of tobacco remains an unmet priority.
Another advantage of the 1997 settlement and the McCain bill was
the ability to impose additional costs on all tobacco manufacturers.
The MSA applied only to the specified defendants. The upshot? Other
manufacturers can sell cigarettes at far lower prices. Some adult
smokers who might have quit because of the increased cost can still buy
low-priced cigarettes. This very likely has reduced the impact of our
efforts on both youth starting to smoke and adult consumption.
The 1997 settlement would have provided funding to charities to
replace the dollars they would have received from the cigarette
companies, so that worthy causes would no longer be forced to choose
between their desperate need for funds and their integrity. But the
failure of the 1997 settlement and the McCain bill left open a critical
window of opportunity for the tobacco companies to resurrect their
reputations through a big-budget propaganda campaign, focused on their
philanthropy and new-found acknowledgement of tobacco's risks. At the
same time, they continue to buy the silence of many worthy causes that
must now rely indefinitely on tobacco money.
From the beginning, the MSA was a missed opportunity to make
historic change; it is not surprising that, five years later, its
achievements pale compared to the promise of the 1997 settlement and
the McCain bill. To date, the MSA has not lived up even to the limited
advances it promised.
The tobacco control movement has nevertheless made significant
progress in the last five years. And that progress has come from the
remarkable level of effective advocacy and action from a movement that
picked itself up and fought on heroically. We have made huge strides in
raising tobacco excise taxes, expanding clean indoor air protection,
and--yes, even in bleak times increasing funds for tobacco prevention
and control programs. And we have proven to the world that
comprehensive programs work.
A significant number of states funded their programs substantially
and these states have achieved powerful results. As one inspiring
illustration, Indiana, a state notably lackluster in its tobacco
control until the MSA settlement. Tobacco control advocates in
Indiana--a notoriously fiscally conservative state--persuaded the state
legislature to allocate $32.5 million to tobacco control for Fiscal
Year 2002 and 2003. Under the direction of veteran tobacco control
leader Karla Sneegas, Indiana launched a comprehensive, state-of-the-
art tobacco control program. By the fall of 2002, when the program
conducted the state's first adult tobacco survey, 193,000 Indiana
adults had quit smoking. Overall cigarette consumption had fallen 18
percent.
And Maine, with ample funding, has gone from the state with the
highest teen smoking rate to one of the lowest. Maine has cut smoking
among kids literally in half.
Finally, we need to give the MSA credit for two signal
achievements. First, it changed the debate about what adequate spending
is for tobacco control. With the MSA and the publication of Center for
Disease Control and Prevention's Best Practices, even half hearted
state legislators now acknowledge that meaningful comprehensive tobacco
prevention costs more than they assumed-much more.
The high cost and lack of access to effective smoking cessation
therapies are among the biggest obstacles to achieving the Nation's
Healthy People 2010 goal of reducing smoking rates from 23 percent
today to 12 percent by 2010.
In August 2002, Health and Human Services Secretary Tommy Thompson
created a Subcommittee on Cessation of the Interagency Committee on
Smoking and Health. He appointed 16 tobacco policy experts as committee
members. The Subcommittee was charged with developing a series of
broad-based recommendations to substantially increase tobacco cessation
in the United States. He asked the Subcommittee to look at action steps
that could be employed by the Federal Government as well as the private
sector to reduce the number of people who smoke. I was privileged to
serve as a member ofthe Subcommittee.
The Subcommittee considered the existing body of scientific
evidence regarding effective tobacco dependence strategies and
policies. Numerous effective treatments exist today to treat tobacco
dependence. These treatments can double, triple or even quadruple the
likelihood that a smoker will be able to quit. There are also proactive
policies that are being employed to assist smokers in their efforts to
quit such as, telephone quitlines, paid media campaigns, cigarettes
excise tax increases, and reducing out of pocket costs for cessation
treatment.
The report entitled Preventing Three Million Premature Deaths,
Helping Five Million Smokers Quit: A National Action Plan for Tobacco
Cessation, was submitted to the Interagency Committee on Smoking and
Health for its approval. The full Committee voted unanimously to accept
the recommendations and to transmit the report in its entirety to the
Secretary. The success of our efforts was due in large part to the
tremendous work of many organizations and individuals who attended the
public hearings, submitted comments, and provided visibility for the
Committee's activity.
I want to highlight just two of the ten recommendations.
The Subcommittee's first recommendation was to establish a
federally-funded National Quitline network by 2005 that will provide
universal access to evidence-based counseling and medications for
tobacco cessation. This quitline would work with existing state or
regionally managed quitlines. Research has shown that quitlines are a
very effective tool in assisting smokers to quit. To date thirty-four
states provide some level of quitline service.
The American Cancer Society provides Quitline services through our
call center in Austin, Texas. The center receives approximately 12,000
calls per year from people of all walks of life with one thing in
common--they recognize that they need help to quit smoking. The trained
counselors who answer the quitline work with the callers to set a quit
date and provide them with materials and other support to help them in
their efforts. It is important to remember that tobacco is addictive.
Therefore, the most successful cessation strategies and policies
combine counseling with FDA-approved pharmacotherapies. Studies have
shown that the combination of counseling and drugs substantially
increases the likelihood that a smoker will quit.
The second recommendation of the Subcommittee was to increase
awareness by launching an ongoing, extensive paid media campaign by
Fiscal Year 2005 to help Americans quit using tobacco products.
The American Legacy Foundation's truth campaign has been a
success, supported by rigorous evaluation. The Foundation has shown
that an aggressive, well-executed, well funded public education
campaign can make a difference at the national level, and it has helped
drive down youth tobacco-use rates. Whether or not the Foundation gains
new financing, its experience gives us a powerful argument for future
major national investment in tobacco control.
This otherwise dismal history offers lessons to us all. Perhaps the
most painful, in the words of the ancient Taoist poet Lao-Tzu, is
``that we know, but never learn.'' Windows of opportunity can slam
shut; the passion for the perfect can sabotage the attainable near
perfect.
But there are affirming lessons, too: A civic movement deeply
grounded in a passionate vision for a future free of preventable misery
and death can recover from internal dissension and setbacks, renew its
pursuit of the common good, and continue to march toward that vision.
______
Submission for the Record
This article can be found in Journal of Health Economics 22 (2003)
843-859 and online at www.sciencedirect.com
The impact of tobacco control program expenditures on aggregate
cigarette sales: 1981-2000
Matthew C. Farrellya, Terry F. Pechacekb,
Frank J. Chaloupkac
a RTI. 3040 Cornwallis Road, Research Triangle Park, NC
27709, USA
b Office on Smoking and Health, Centers for Disease
Control and Prevention, Research Triangle Park. NC, USA
c Department of Economics, University of Illinois at
Chicago, Chicago, IL, USA
______
Prepared Statement of Sheila M. Ross, Washington Representative,
Alliance For Lung Cancer Advocacy, Support And Education (ALCASE)
Mr. Chairman:
The Alliance for Lung Cancer Advocacy, Support and Education
appreciates this opportunity to make a statement for the record on the
hearing you are holding today on how the 46 states that were parties to
the 1998 Master Settlement Agreement (MSA) with the Nation's five
largest tobacco companies are allocating their settlement revenues
since the signing of the MSA.
We thank you, Mr. Chairman, and commend you for holding this
hearing.
ALCASE was founded in 1995 to help lung cancer patients and their
families, to educate the public and to advocate for a change in public
health policy on lung cancer. It is the only national organization
dedicated to those goals. I present this testimony on behalf of ALCASE,
as a survivor of two bouts of lung cancer and as a former Hill staffer
for nearly 20 years.
The MSA was negotiated with, to best of our knowledge, no input
from those most affected by tobacco: lung cancer patients and their
caregivers and families. Indeed, we cannot ascertain that even a single
dollar of the $213 billion settlement has gone to lung cancer research.
The primary reason is this: The mortality rate of lung cancer is so
high that not enough people remain alive long enough to establish a
grass roots organization with sufficient political clout to demand more
attention and funding.
Lung cancer kills more people each year than breast, prostate and
colon cancers combined. Yet it receives a miniscule amount of Federal
research funding and that inequity is reflected in the statistics.
Since the passage of the Cancer Act of 1971 the five year survival rate
for breast cancer has risen to 88 percent and for prostate cancer to 97
percent. Thirty years ago the 5 year survival rate for lung cancer was
12 percent. Today it is 15 percent. The cancers with the highest
survival rates and the largest advocacy groups consistently receive the
most funding, up to ten times as much per death as lung cancer.
In a recent study, even the National Cancer Institute conceded that
lung cancer is being funded far below its public health impact.
(Progress Review Report on Lung Cancer, August 2001.)
At the state level, lung cancer research lost out again when the
MSA funds were allocated, again for lack of political support.
Ironically the pay outs to the states are predicated on prospective
tobacco sales. Followed to its logical conclusion, unless states want
to reduce their anticipated, and in many cases already appropriated
revenues, it is in their interest that cigarette sales be at least
maintained.
In this surreal world of the MSA settlement, the states did set
aside or earmark hundreds of millions of dollars for tobacco cessation
programs. So much money was spent so fast that many of these programs
have been of dubious success. The sheer number of these programs has
also unfortunately served to stigmatize lung cancer as a life style
choice rather a disease, which stimatization, in turn, has become a
convenient fig leaf to hide the addiction of the state legislatures to
tobacco money.
The fact is, Mr. Chairman, that over 60 percent of new lung cancers
are being found in former smokers, people who quit smoking, many of
them years ago, or in people who have never smoked. U.S. women have the
highest lung cancer mortality in the world. Since 1988 more women in
the United States have been dying each year from lung cancer than
breast cancer and the number is increasing so rapidly that by 2006 lung
cancer deaths among women will be double that of breast cancer. People
are not being told these statistics.
The sad truth is that by the time symptoms, such as a cough, occur,
it is already too late. The only hope is to find it early and treat it
early. Finally we can do that Advances in spiral CT and computer
assisted diagnostic technology can detect small nodules in the lungs
even before they become cancerous.
We must research these nodules and early disease management now. We
must leap at this opportunity to finally make a dent in lung cancer
mortality. 438 people are dying from lung cancer every day in the
United States. We cannot allow this to continue. These facts cannot be
covered up any longer.
We recognize, Mr. Chairman, that the Federal Government cannot
dictate to the states how they should allocate their revenues. However,
with the Federal suit against big tobacco still in utero in the
Department of Justice, and with this opportunity for a breakthrough on
lung cancer finally at hand, the Federal government can suggest and
encourage the states to put some of the MSA money into lung cancer
research and treatment.
And hopefully, Mr. Chairman, in the FY 05 budget, the Federal
government will do its part by directing money and a mandate to its
agencies to turn these promising breakthroughs in to better outcomes
with dispatch and urgency.
Please speak for us, Mr. Chairman. We need your voice.
______
American Legacy Foundation
November 14, 2003
Hon. John McCain,
Chairman,
U.S. Senate Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Senator McCain:
It was an honor to have the opportunity to testify before the
Senate Commerce Committee on November 12 and to share the American
Legacy Foundation 's insights on States' use of Tobacco Master
Settlement Agreement Funds. I wish to thank you again for your
leadership in holding this hearing. After the hearing, several Senators
requested detailed information about Legacy's funding situation and the
threat it poses to the continuation of our truth youth counter
marketing campaign. We are pleased to provide you with the information
below.
As I stated during my testimony, Legacy has become the de facto
safety net at the national level for youth tobacco prevention programs.
In most states, truth television ads are the only tobacco prevention
messages that young people see.
Legacy is facing an alarming funding cliff as a result of a sunset
clause in the MSA. Legacy received what it believes will be its last
major payment of approximately $300 million from participating
cigarette manufacturers pursuant to the MSA in April of this year.
While Legacy has prepared for this ``rainy day,'' the sharp decline in
funding means that we will be forced to sharply reduce, if not
eliminate, many of our programs. Although Legacy will do all it can to
preserve truth, the fact is that an effective national counter
marketing campaign cannot be staged with less than $40-60 million for
media placement.
It is worth noting that the youth market is among the most
expensive segments to buy. It is also a significant consideration that
this $40-60 million figure does not include the cost of cultural
immersion and study required for creative development, which is the
heart of truth. Nor does it include our aggressive and innovative
grass roots and web based outreach efforts. Today, these efforts are
combined with state based youth empowerment grants and all of this work
is the subject of the unprecedented evaluation of the campaign's impact
on youth smoking. These non-media efforts, again at a minimum, would
cost an additional $30-40 million.
To put this into context, Legacy is already on a glide path to a
greatly reduced overall operating budget, which is reflected on the
attached funding cliff. By 2008, we expect our overall operating budget
to be $30-$35 million in today's dollars. Consequently, even if Legacy
were to shut down every other program, truth as we know it would
ultimately be silenced.
Youth smoking rates are at their lowest level in 28 years. Evidence
suggests that truth is responsible for a very substantial proportion
of that decline. Included with this letter is an MMWR report from the
Centers for Disease Control that was released today. It provides some
of the most recent data on youth smoking rates, as well as an analysis
of truth's contribution to those declines.
What is most alarming is that the loss of truth is coming at a
time when States, for whatever reason, have backed away from their
commitments to fund comprehensive tobacco control pro rams, including
youth prevention. We know that 90 percent of smokers . start before
their 19th birthday. It is estimated that the steady decline in youth
smoking since 1997 has prevented over 2 million teenagers from becoming
adult smokers and thus saved a minimum of 700,000 lives. Thus, if we
can continue to inoculate young people with a dose of truth, millions
of lives will be saved in the long term.
Senator McCain, I commend you again for holding the hearing and
thank you for allowing me to testify. Should you or your staff require
any additional information about the American Legacy Foundation or our
truth counter marketing campaign, please do not hesitate to contact me
at (202) 454-5547.
Sincerely,
Cheryl G. Healton, Dr.P.H.
President and CEO.
enclosures
MMWR Weekly--November 14, 2003
Tobacco Use Among Middle and High School Students--United States, 2002
Each day in the United States, approximately 4,400 youths aged 12-
17 years try their first cigarette (1). An estimated one third of these
young smokers are expected to die from a smoking-related
disease(£). The National Youth Tobacco Survey (NYTS), conducted
by the American Legacy Foundation, provides estimates of usage among
U.S. middle and high school students for various tobacco products
(i.e., cigarettes, cigars, smokeless tobacco, pipes, bidis [leaf
wrapped, flavored cigarettes from India], and kreteks [clove
cigarettes]). This report summarizes tobacco use prevalence estimates
from the 2002 NYTS and describes changes in prevalence since 2000. Both
tobacco use and cigarette smoking among students in high school (i.e.,
grades 9-12) decreased by approximately 18 percent during 2000-2002;
however, a decrease among students in middle school (i.e., grades 6-8)
was not statistically significant. The lack of progress among middle
school students suggests that health officials should improve
implementation of proven antismoking strategies and develop new
strategies to promote continued declines in youth smoking.
Sampling frames for the 2002 NYTS were stratified by U.S. Census
Bureau region; black, Hispanic, and Asian students were oversampled. A
partial panel design was used (i.e., comprising a newly drawn sample
and a sampling of schools that participated in the 2000 NYTS). The
sampling frame for the drawn sample consisted of all public and private
schools in the United States. A total of94 primary sampling units
(PSUs) (i.e., large counties or groups of counties) were selected in
the first stage of the sampling, and 215 schools were selected from
these PSUs in the second stage of the sampling; 83 additional schools
were selected randomly for the panel sample. Of these 298 eligible
schools, 246 (83 percent) participated in the 2002 NYTS. Approximately
125 students were then drawn from each school by selecting classes
randomly, depending on the average class size of each school, from a
required subject area (e.g., English or social studies). Participation
was voluntary and anonymous, and school parental permission procedures
were followed; students recorded their responses on a computer-
scannable sheet.
Among youths attending the 246 participating schools, 26,119 (90
percent) (i.e., 12,581 middle school students and 13,538 high school
students) completed the survey, resulting in an overall response of75
percent. Data were weighted to be nationally representative. STATA 7
was used to compute 95 percent confidence intervals for prevalence
estimates, which were used to identify differences among populations.
Current use of a specific tobacco product was defined as having used
that product on at least one occasion during the 30 days preceding the
survey. Current use of any tobacco product was defined as having used
any of the listed products on at least one occasion during the 30 days
preceding the survey.
In 2002, a total of 13.3 percent of middle school students reported
current use of any tobacco product (Table 1). Cigarettes (10.1 percent)
were the most commonly used product, with no statistically significant
differences in usage by sex. Cigars (6.0 percent) were the second most
commonly used tobacco product, followed by smokeless tobacco (3.7
percent), pipes (3.5 percent), bidis (2.4 percent), and kreteks (2.0
percent). Males were more likely than females to use all tobacco
products except for cigarettes. No significant differences were found
for any type of tobacco use by race/ethnicity.
Among high school students, 28.4 percent reported current use of
any tobacco product (Table 2). Cigarettes (22.9 percent) were the most
commonly used product, with no difference by sex; however, white
students were more likely to use cigarettes than black, Hispanic, or
Asian students. Cigars (11.6 percent) were the second most common
tobacco product, followed by smokeless tobacco (6.1 percent), pipes
(3.2 percent), kreteks (2.7 percent), and bidis (2.6 percent). Males
were more likely than females to use all tobacco products except for
cigarettes. Asian students were less likely to use cigars) and white
students were more likely to use smokeless tobacco than students in
other racial/ethnic groups.
During 2000-2002, current use of any tobacco product among high
school students decreased from 34.5 percent to 28.4 percent; cigarette
use decreased from 28.0 percent to 22.9 percent, cigar use from 14.8
percent to 11.6 percent, bidi use from 4.1 percent to 2.6 percent, and
kretek use from 4.2 percent to 2.7 percent (Iable 2). However, no
significant change was found among middle school students in the
prevalence of tobacco use (Table 1).
Reported by: JA Allen, MA, D Vallone, PhD, ML Haviland, DrPH, C
Healton, DrPH, American Legacy Foundation, District of Columbia. KC
Davis, MS, MC Farrelly, PhD, Research Triangle Institute, Research
Triangle Park, North Carolina. CG Husten, MD, T Pechacek, PhD, Office
on Smoking and Health, National Center for Chronic Disease Prevention
and Health Promotion, CDC.
Editorial Note
The declines in cigarette smoking and overall tobacco use among
high school students reflect downward national trends since 1997 (3,4).
The declining use of cigars) bidis) and kreteks and the unchanged use
of smokeless tobacco and pipes among high school students suggests that
students are not substituting other tobacco products for cigarettes and
that efforts to reduce cigarette smoking might be reducing use of all
tobacco products. However, the lack of any statistically significant
decline in tobacco usage among middle school students is cause for
concern.
The findings in this report are subject to at least two
limitations. First) these data apply only to youth who attended middle
school or high school and are not representative of all youths in these
age groups. Nationally, approximately 5 percent of youths aged 16-17
years were no longer in school (4). Second, the data were from self-
reports of survey participants. Although underreporting of tobacco use
by youths has been minimal in previous surveys (5), recent declines in
the acceptability of smoking might have led to increased
underreporting.
Why middle school and high school students appear to be responding
differently to the current antismoking environment is not clear.
Factors expected to discourage youth from smoking include increases in
cigarette prices (i.e., approximately 88 percent from December 1997 to
December 2002) (6); implementation of smoke-free laws and policies;
restrictions on tobacco advertising; and local, state) and national
antitobacco campaigns (e.g., the truth campaign) (7). However,
spending on tobacco industry marketing doubled during 1997-2001 (8),
and tobacco industry-sponsored media campaigns have been determined to
reduce the impact of public health campaigns (7).
The data in this report suggest that further refinements in
evidence-based strategies will be needed to decrease tobacco use among
middle school students. Efforts might focus on (1) devising more
targeted and effective media campaigns, (2) reducing depictions of
tobacco use in entertainment media (9), (3) instituting campaigns to
discourage family and friends from providing cigarettes to youths, (4)
promoting smoke-free homes, (5) instituting comprehensive school based
programs and policies in conjunction with supportive community
activities, and (6) decreasing the number of adult smokers (e.g.,
parents) to present more nonsmoking role models.
Because tobacco use is the leading cause of preventable death in
the United States, efforts to reduce tobacco use must remain a public
health priority. Preventing tobacco use among youth is essential to
reduce future smoking-related illness and associated costs. However, in
2003, states cut spending for tobacco use prevention and control
programs by $86.2 million (11.2 percent) (10). For the decline in
tobacco use among youth in the United States to continue, such funding
must be restored and perhaps expanded.
References
1. Substance Abuse and Mental Health Services Administration.
Summary of findings from the 2001 National Household Survey on Drug
Abuse: Volume II. Technical appendices and selected data tables.
Rockville, Maryland: U.S. Department of Health and Human Services,
2002; NHSDA Series H-18; DHHS publication no. (SMA)02-3759.
2. CPC. Projected smoking-related deaths among youth. MMWR 1996
45:971-4.
3. Johnston LD, O'Malley PM, Bachman JG. Monitoring the future:
national survey results on drug use, 1975-2002. Volume 1: secondary
school students. Bethesda, Maryland: National Institutes of Health,
National Institute on Drug Abuse, 2003; DHHS publication no. (NIH) 03-
5375.
4. Grunbaum JA, Kann L, Kinchen S, et al., Youth risk behavior
surveillance--United States, 2001. In: Surveillance Summaries (June
28). MMWR 20Q2; 5l(No. SS-4).
5. Office on Smoking and Health. Preventing tobacco use among young
people: a report of the Surgeon General. Atlanta, Georgia: U.S.
Department of Health and Human Services, CDC, National Center for
Chronic Disease Prevention and Health Promotion, 1994.
6. U.S. Department of Labor, Bureau of Labor Statistics. Consumer
price index--all urban consumers (current series). Washington, DC: U.S.
Department of Labor, 2003. Available at http://data.bls.gov/
labjavaloutside.jsp?survey=cu.
7. Farrelly MC, Healton CG, Davis KC, Messeri P, Hersey JC,
Haviland ML. Getting to the truth: evaluating national tobacco
countermarketing campaigns. Am J Public Health 2002;92:901-7.
8. Federal Trade Commission. Cigarette report for 2001. Federal
Trade Commission, 2003. Available at http://www.ftG.gov/opa/2003/06/
2001cigrpt,hl;m.
9. Sargent JD, Dalton MA, Beach ML, et al., Viewing tobacco use in
movies: does it shape attitudes that mediate adolescent smoking? Am J
Prev Med 2002;22:137-45.
10. Campaign for Tobacco-Free Kids, American Lung Association,
American Cancer Society, American Heart Association, SmokeLess States
National Tobacco Policy Initiative. Show us the money: a report on the
states' allocation of the tobacco settlement dollars. Washington, DC:
National Center for Tobacco-Free Kids, 2003. Available at http://
www.tQbaccofreekids.org/reportsLsettlements/2003/fullnm_ort.pdf.
Table 1.--Percentage of &tudents in middle school (i.e., grades 6-8) who were current users* of any tobacco product. by product type, sex, and race/
ethnicity--National Youth Tobacco Survey, United States, 2002 and 2000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Any Cigarettes Cigars Smokeless Pipes Bidis Kreteks
tobacco ------------------------------------ tobacco -----------------------------------------------------
Characteristic ------------------ ------------------
(95% % (95% CI) % (95% CI) % (95% CI) % (95% CI) % (95% CI)
% CISec. ) % (95% CI)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Middle school, 2002
Sex
Male 14.8 ( Cigarettes. cigars. smokeless tobacco, pipes. bidis (leaf-wrapped, flavored cigarettes from India), or kreteks (clove cigarettes).
Sec. Confidence interval.
Table 2.--Percentage of students in high school (i.e., grades 9-12) who were current users* of any tobacco product, by product type, sex, and race/
ethnicity--National Youth Tobacco Survey, United States, 2002 and 2000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Any Cigarettes Cigars Smokeless Pipes Bidis Kreteks
tobacco ------------------------------------ tobacco -----------------------------------------------------
Characteristic ------------------ ------------------
(95% % (95% CI) % (95% CI) % (95% CI) % (95% CI) % (95% CI)
% CISec. ) % (95% CI)
--------------------------------------------------------------------------------------------------------------------------------------------------------
High school, 2002
Sex
Male 32.9 ( Cigarettes. cigars. smokeless tobacco, pipes. bidis (leaf-wrapped, flavored cigarettes from India), or kreteks (clove cigarettes).
Sec. Confidence interval.
______
______
Altria Group Inc.
Washington, DC, November 24, 2003
Hon. John McCain,
Chairman,
Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Mr. Chairman:
Attached hereto is written testimony from Philip Morris USA that we
respectfully request be included in the record of proceedings before
the Committee on Commerce, Science, and Transportation conducted on
November 12, 2003 to consider State use of tobacco settlement funds.
During the course of that hearing, two issues in particular were
discussed that believe warrant further information be provided to the
Committee. Thus, the attached statement discusses the position of PM
USA on the use of cigarettes in movies, as well as the company's
current marketing and promotion practices and expenditures. Should the
Committee desire additional information on these matters, beyond that
contained in our statement, please do not hesitate to have your staff
contact this office.
Thank you for your consideration of this request.
Sincerely,
John F. Scruggs,
Vice President,
Government Affairs.
cc. Senator Ernest F. Hollings
Ranking Minority Member,
Committee on Commerce, Science, and Transportation
______
Attachment
Written Comments of Philip Morris USA
Philip Morris USA is pleased to submit these comments regarding the
Committee's November 12, 2003 hearing on the use of tobacco settlement
funds. That hearing was held to discuss, among other things, the issue
of whether states are devoting enough tobacco settlement funds to youth
smoking prevention efforts.
We want to express our appreciation to the Committee and to
Chairman McCain for holding a hearing on this subject. As we have
stated over the years, Philip Morris USA encourages the states to spend
a significant portion of the tobacco settlement funds on youth smoking
prevention efforts. We share the disappointment expressed by many at
the November 12 hearing that more states have not taken advantage of
the opportunity to use these funds to support programs that can help
reduce youth smoking. Indeed, there is no question that support for
youth smoking prevention efforts is a worthy and appropriate use for
the tobacco settlement funds. For our part, as the manufacturer of a
product intended for adults that causes serious disease in smokers such
as lung cancer, emphysema, and heart disease, and which is addictive,
we believe we have a responsibility to help prevent youth smoking. In
fact, with a dedicated Youth Smoking Prevention staff and an annual
budget of over $100 million, we support positive youth development
programs, research, and communications aimed at helping parents talk to
their kids about not smoking. We believe there is a great opportunity
for the States to increase their support for these kinds of activities.
For Philip Morris USA, youth smoking prevention is a long-term
commitment, and we stand ready to work with members of the Committee,
as well as other interested stakeholders, in making progress on this
important policy issue.
Philip Morris USA would like to take this opportunity to address
two other issues that were raised during the hearing.
Product Placement and Smoking Scenes in Movies and Television Shows
We share the concern raised by a number of the hearing participants
about the incidence of smoking in motion pictures and television shows.
In connection with our marketing activities generally, Philip Morris
USA conducts extensive training and continuously monitors compliance
with our obligations under the Cigarette Advertising and Promotion Code
(the ``Ad Code'')-a voluntary agreement originally entered into by the
major domestic manufacturers in 1964 and most recently updated in 1990-
as well as our internal guidelines and the terms of the Master
Settlement Agreement (the ``MSA''), which collectively address issues
with respect to the content and placement of our cigarette advertising.
With regard to product placement in particular, our policy for more
than a decade has been to deny all third party requests for permission
to use, display or make reference to our cigarette brand names,
products, packages, or advertisements in media such as motion pictures
or television shows produced for viewing by the general public,
irrespective of whether the target audience is adults or minors. Since
that policy was implemented, Philip Morris USA has not made, or caused
to be made, any payment, or given other consideration to any person or
entity to use, display or make reference to or use as a prop our
cigarette brand names, products, packages or advertisements in any form
of media covered by the policy, including movies or television shows
produced for viewing by the general public.
This policy is consistent with the terms of the MSA, which, as
Attorney General Moore correctly noted in his remarks, prohibits
participating manufacturers from paying for product placements in
movies, television shows, or other performances or video games.\1\
Philip Morris USA has been in full compliance with the MSA and the Ad
Code, including all provisions relating to product placement
prohibitions. Moreover, no Attorney General has taken any enforcement
action against us with respect to these provisions. If any State
believes that there is any evidence suggesting that there is any
question about our compliance, we stand ready to address those
concerns. In fact, we recently received an inquiry from the California
Attorney General on the topic of smoking in movies. In response, we
provided information on our policy and practices 1related to this topic
and included copies of letters--referenced below--that we sent to the
heads of movie studios encouraging them to take action on this issue.
---------------------------------------------------------------------------
\1\ The Master Settlement Agreement creates a few narrow exceptions
to this rule, for media that are not intended to be distributed to the
public or are intended to be viewed in Adult-Only Facilities or
instructional media for adult smokers regarding non-conventional
cigarettes.
---------------------------------------------------------------------------
The fact that we do not pay for product placement, and the fact
that we deny all requests to use our brands and brand imagery in movies
and television shows, does not mean, of course, that our products never
appear in movies or television shows. The fact of the matter is that
some producers and directors of motion pictures and television shows do
use or depict Philip Morris USA brands in their works without seeking
or obtaining our permission. This is a frustrating situation for us,
since our position is clear we do not want our brands or brand imagery
to be depicted in movies and television shows. Among other things, such
usages of our brands and brand imagery perpetuate the misunderstanding
in the minds of some that we pay for or otherwise encourage these
depictions, when, in fact, we are legally barred from doing so, and
have followed a strict policy for more than a decade that prohibits
such activity. However, irrespective of our views or our business
practices, current law clearly allows the ``fair use'' of our brands or
brand imagery-even without our permission which hinders our ability to
take proactive steps to prevent usages of our brands or brand imagery
in movies and television shows.
Nevertheless, we have joined others in encouraging the motion
picture industry to reduce or eliminate smoking scenes from movies
targeted towards kids, and, in addition, to cease using cigarette
brands or brand imagery in all movies. As Howard Willard III, Senior
Vice President of Philip Morris USA's Youth Smoking Prevention
Department, stated in an October 17, 2003 letter to a group of motion
picture producers:\2\
---------------------------------------------------------------------------
\2\ Letter from Howard Willard to heads of major U.S. motion
picture studios, dated October 17, 2003. Copies attached.
I am writing to express Philip Morris USA's support of the
proposal by 25 State Attorneys General encouraging the motion
picture industry to reduce or eliminate smoking scenes in
movies that are directed towards kids. In addition, consistent
with Philip Morris USA's policy of denying permission for the
use of our products or trademarks in films, we also want to
strongly encourage the motion picture industry to voluntarily
refrain from portraying or referring to cigarette brands or
---------------------------------------------------------------------------
brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip
Morris USA. Our Youth Smoking Prevention (YSP) Department has a
dedicated staff of 20 people and a budget in excess of $100
million. We focus our efforts in the following four areas: (i)
communications and education for parents to help and encourage
them to talk to their kids about not smoking; (ii) grants to
support youth smoking prevention and positive youth development
programs; (iii) support for youth access prevention programs
and (iv) research to help us understand the latest developments
in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that
smoking was depicted in 64 percent of PG-13 and 37 percent of
PG movies included in their analyses.\3\ Research suggests that
youth exposure to smoking in movies has an impact on their
attitudes and behaviors related to smoking. For example,
researchers found that children who had the highest exposure to
smoking in movies were almost three times more likely to start
smoking than were children who had the lowest exposure to
smoking in movies.\4\ I have attached a brief summary of this
and other relevant research on this issue.
---------------------------------------------------------------------------
\3\ American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
\4\ Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online http://
image.thelancet.com/extras/03art1353web.pdf (June 10, 2003).
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who
share our goal. We have significant resources available in our
YSP programs and YSP research groups that could provide you
with support as you tackle this issue. Please contact me if we
---------------------------------------------------------------------------
can be of assistance.
In short, we believe it is appropriate for the motion picture and
television industry to reduce or eliminate depictions of cigarettes and
smoking from movies and shows aimed at kids, and to refrain from using
cigarette brands and brand imagery in any movies.
Changes in Cigarette Advertising, Marketing and Promotional
Expenditures
During the hearing, a number of comments were made regarding
changes in industry expenditures on cigarette advertising, marketing
and promotional efforts since the MSA was signed. Contrary to what some
at the hearing implied, Philip Morris USA has dramatically reduced its
expenditures on newspaper, magazine, and point of sale advertising in
every year since the MSA was signed in 1998. Traditional brand image
advertising represented less than 8 percent of the Company's total
expenditures in 2001, the most recent year for which the FTC has
published aggregate industry expenditures, continuing a four-year
decline from 21 percent of spending in 1998. And these downward trends
have continued through to the present.
The $11.5 billion figure reported by the FTC that was cited at the
hearing is an aggregate industry figure for an FTC designated expense
category that includes not only expenditures on brand advertising
(which for us has been dramatically reduced) but also expenditures on
price promotions. Philip Morris USA has expanded the breadth and depth
of its price promotions following its commitment to the MSA in order to
compete effectively in the marketplace, particularly in light of the
deep discount prices charged by competitors that did not sign the MSA
and recent drastic increases in state excise taxes. A significant
percentage of our marketing and promotional expenditures are for price
promotions. Yet, despite our use of price promotions to remain
competitive, the price of our products is still among the highest in
the industry. Recently, some tobacco control advocates have implied
that the substantial level of expenditures on price promotions
constitutes an increase in brand advertising. That is simply not the
case. We not only disagree with that characterization; we believe it
reflects a misunderstanding of current industry dynamics, which require
manufacturers to compete on price to remain competitive in a rapidly
changing industry.
For its part, Philip Morris USA is meeting that challenge
responsibly. For example, Philip Morris USA's marketing and promotional
expenditures include promotional allowances we pay to retailers who
agree to take significant steps to help reduce youth access to tobacco
products and to otherwise responsibly merchandise the cigarette
category. Philip Morris USA offers retailers the highest level of
promotional incentives for a non self-service environment, no displays
or signage on the counter and implementing the We Card program, which
trains retail employees to comply with minimum age laws.
As the testimony at the hearing made clear, the extra costs imposed
by the MSA on participating manufacturers--which have been exacerbated
by dramatic increases in State excise taxes in the past several years--
have spurred considerable growth over the last few years of the ``deep
discount'' segment of the domestic cigarette market. Manufacturers that
don't compete effectively on price will continue to lose share to those
manufacturers that have not agreed to comply with the terms of the MSA.
This trend clearly undermines the goals of those who want to reduce the
visibility of cigarette advertising, because those manufacturers are
not bound by the MSA's marketing restrictions.
Not only have we reduced the amount that we spend on traditional
cigarette brand advertising, we have also significantly changed the
nature of our marketing and advertising practices to further reduce the
profile of our advertising. Part of this change is compelled by the
MSA, which prohibits participating manufacturers such as Philip Morris
USA from marketing its brands through billboards, mass transit, and
most other forms of outdoor advertising, and which imposes other
important restrictions on the way we communicate with adult smokers.
But the changes we have experienced go above and beyond what the MSA,
or other applicable laws require, and include restrictions that we have
voluntarily adopted to better align our practices with society's
expectations. For example, three years ago Philip Morris USA withdrew
all of our advertising from the back covers of all magazines. We have
also set voluntary standards that prohibit us from advertising in any
magazine with significant youth readership in particular, in any
publication in which readers younger than 18 years of age constitute 15
percent or more of the total readership of the magazine or that is read
by more than two million persons younger than 18 years of age. These
readership standards are the same as those contained in the tobacco
rules proposed by the Food and Drug Administration. However, having
severely restricted the amount of print advertising we run, our current
print advertising practices go well beyond these standards.
Conclusion
We thank the Committee for the opportunity to submit these written
remarks, and we would be happy to provide further detail or
clarification regarding our practices and positions.
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Hon. Dennis Eckhart,
Senior Assistant Attorney General,
Office of the Attorney General,
State of California,
Sacramento, CA.
Dear General Eckhart:
I have attached copies of the letters I recently sent to the major
movie studios expressing Philip Morris USA's support of the proposal by
25 State Attorneys General encouraging the motion picture industry to
reduce or eliminate smoking scenes in movies that are directed towards
kids, as well as our request that the motion picture industry
voluntarily refrain from portraying or referring to cigarette brands or
brand imagery in any movies. I have been committed to communicating
with the movie studios on this issue since our correspondence in
August. However, prior to sending the letters we conducted a review of
the relevant research to both better inform our communication and to
share with the movie industry executives.
I am hopeful that our efforts will help contribute to continued
declines in youth smoking rates.
Sincerely yours,
Howard A. Willard III,
Senior Vice President,
Youth Smoking Prevention.
Attachments
______
Attachments
Philip Morris U.S.A.
New York, NY, October 17, 2003
Jonathan Dolgen,
Chairman,
Paramount Pictures,
Los Angeles, CA.
Dear Mr. Dolgen:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Michael D. Eisner,
Chief Executive Officer,
The Walt Disney Company,
Burbank, CA.
Dear Mr. Eisner:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Harvey Weinstein,
Co-Chairmen,
Miramax Films,
Los Angeles, CA.
Dear Mr. Weinstein:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Robert Weinstein,
Co-Chairmen,
Miramax Films,
Los Angeles, CA.
Dear Mr. Weinstein:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Steven Spielberg,
Chairman and Chief Executive Officer,
Dreamworks,
Glendale, CA.
Dear Mr. Spielberg:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
John Calley,
Chairman and Chief Executive Officer,
Sony Pictures Entertainment,
Culver City, CA.
Dear Mr. Calley:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Alex Yemenidijan,
Chairman and Chief Executive Officer,
MGM Pictures,
Santa Monica, CA.
Dear Mr. Yemenidijan:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Stacey Snider,
Chief Executive Officer,
Universal Pictures,
Universal City, CA.
Dear Ms. Snider:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Barry Meyer,
Chief Executive Officer,
Warner Brothers Studios,
Burbank, CA.
Dear Mr. Meyer:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Jim Gianopulos,
Co-Chairmen,
Fox Filmed Entertainment,
Los Angeles, CA.
Dear Mr. Gianopulos:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Philip Morris U.S.A.
New York, NY, October 17, 2003
Tom Rothman,
Co-Chairmen,
Fox Filmed Entertainment,
Los Angeles, CA.
Dear Mr. Rothman:
I am writing to express Philip Morris USA's support of the proposal
by 25 State Attorneys General encouraging the motion picture industry
to reduce or eliminate smoking scenes in movies that are directed
towards kids. In addition, consistent with Philip Morris USA's policy
of denying permission for the use of our products or trademarks in
films, we also want to strongly encourage the motion picture industry
to voluntarily refrain from portraying or referring to cigarette brands
or brand imagery in any movies.
Youth smoking prevention is a serious commitment for Philip Morris
USA Our Youth Smoking Prevention (YSP) Department has a dedicated staff
of 20 people and a budget in excess of $100 million. We focus our
efforts in the following four areas: (i) communications and education
for parents to help and encourage them to talk to their kids about not
smoking; (ii) grants to support youth smoking prevention and positive
youth development programs; (iii) support for youth access prevention
programs and (iv) research to help us understand the latest
developments in youth smoking prevention.
In May 2003, an American Legacy Foundation study found that smoking
was depicted in 64 percent of PG-13 and 37 percent of PG movies
included in their analyses.\1\ Research suggests that youth exposure to
smoking in movies has an impact on their attitudes and behaviors
related to smoking. For example, researchers found that children who
had the highest exposure to smoking in movies were almost three times
more likely to start smoking than were children who had the lowest
exposure to smoking in movies.\2\ I have attached a brief summary of
this and other relevant research on this issue.
At Philip Morris USA we are committed to helping prevent youth
smoking. We welcome the opportunity to work with others who share our
goal. We have significant resources available in our YSP programs and
YSP research groups that could provide you with support as you tackle
this issue. Please contact me if we can be of assistance.
Sincerely yours,
Howard A. Willard III
cc: Jack Valenti, President, Motion Picture Association of America
Senior Assistant California Attorney General Dennis Eckhart, w/encl.
Denise Keane, Senior Vice President and General Counsel, Philip Morris
USA.
References
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a cohort
study'' The Lancet 362 (2003): 281-285; published online (June 10, 2003).
______
Summary of Research and Perspectives on the Portrayal of Tobacco in the
Movies in an Effort to Help Prevent Youth Smoking
Prepared by Philip Morris USA's Youth Smoking Prevention Department as
an enclosure to its letter to U.S. movie industry executives--October
17, 2003
Prevalence of Smoking/Tobacco Use in Movies
American Legacy Foundation Analysis (2003) covered 216 movies and their
trailers \1\
--67 percent of the movies and 14 percent of the trailers depicted
smoking
--The survey found that smoking was depicted in the following:
85 percent of R-rated movies
64 percent of PG-13 movies
37 percent of PG-rated movies
--Television-aired trailers were more likely to include smoking
imagery if the movie being promoted showed a specific brand
If a brand appeared in the movie, there was a 45 percent
incidence of the trailer including tobacco imagery
If the movie included smoking with no brand appearance,
there was only a 15 percent incidence of the trailer including
smoking
STARS Project (American Lung Association) Study (2003) reviewed 145
movies playing between May 31, 2002 and May 26, 2003 \2\
--106 of the 145 movies (73 percent) that made the box office
weekly Top 10 featured tobacco use
--The study found that tobacco use was depicted as follows:
76 percent of R-rated movies
82 percent of PG-13 movies
39 percent of PG-rated movies
--Reviewers classified segments according to perceived tobacco
messages:
30 percent did not portray tobacco use or depicted the
negative consequences of its use
39 percent either used numerous pro-tobacco or glamorous
portrayals
20 percent used specific brand depictions and/or showed a
minor or pregnant women use tobacco
Massachusetts Public Interest Research Group (MASSPIRG) (2002) reviewed
PG-13 films and compared the amount of tobacco use in 1996-97 (pre-MSA)
and 1999-2000 (post-MSA). The top 10 grossing films and top 5 video
rentals in America during the specified years were reviewed.\3\
--Tobacco use remains prevalent in PG-13, youth oriented movies
82 percent of post-MSA movies
80 percent of pre-MSA movies
--From the perspective of total film time, tobacco use is up 50
percent in post-MSA films
1.35 minutes of tobacco use post-MSA
.89 minutes of tobacco use pre-MSA
--Most films portray smokers and smoking in a positive or neutral
light
83 percent of post-MSA movies with tobacco use conveyed the
perception that smoking is acceptable and even ``cool'' (no
comparison to pre-MSA made)
--Fewer films feature negative statements about tobacco use
Before the MSA, 31 percent of movies showed tobacco use as a
negative; post-MSA that number fell to 17 percent
Impact of the Depiction of Smoking/Tobacco Use in Movies
Although there are a limited number of studies in this area,
academic research has increased recently and preliminary findings
indicate that exposure to cigarette smoking in movies has an impact on
youth attitudes and behaviors related to smoking. A number of peer-
reviewed studies have suggested that children may be influenced to
smoke by watching movies that portray smoking:
Dalton, et at. (2003)--``After controlling for baseline
characteristics, adolescents in the highest quartile of
exposure to movie smoking were 2.71 times more likely to
initiate smoking compared to those in the lowest quartile. The
effect of exposure to movie smoking was stronger in adolescents
with non-smoking parents than in those whose parents smoked . .
. Our results provide strong evidence that viewing smoking in
movies promotes smoking initiation among adolescents.'' \4\
Sargent, et al., (2002)--``Our research documents a strong
relationship between viewing tobacco use in movies and more
positive attitudes toward smoking among adolescent never-
smokers . . . This is consistent with the idea that viewing
tobacco depictions in movies softens adolescents' resistance to
peer offers, enhances their perceptions of the positive
benefits of smoking, and makes them more likely to consider
trying smoking in the future.'' \5\
Pechmann and Shih (1999)--``. . . smoking (versus
nonsmoking) scenes positively . . . enhanced their [youth]
perceptions of smokers' social stature, and increased their
intent to smoke. However, youths' opinions were malleable, and
showing them an antismoking advertisement before the film
effectively repositioned the smoking from forbidden to tainted,
thereby nullifying the aforementioned effects.'' \6\
Distefan, et at. (1999)--``We conclude that there is a
relationship between adolescents' choice of favorite movie
actors and actresses and their smoking status. Favorite movie
stars may provide normative behavior models that are emulated
or used to justify subsequent smoking . . . the recent increase
in the portrayal of smoking in the movies is alarming,
particularly as it has been associated with a large increase in
smoking among adolescents.'' \7\
Perspectives on the Subject of the Depiction of Smoking/Tobacco Use in
Movies
``Movies are rated on the basis of language, violence, sexual content,
and drugs . . . The MPAA does not consider smoking -the most widely
used additive drug that kills the most people--in assigning ratings.''
Stanton Glantz, Professor of Medicine at the University
of California, San Francisco and founder of the Smoke
Free Movie project, Excerpt from an Editorial entitled
Rate Movies with Smoking ``R'' \8\
``Substantial research indicates that exposure to cigarettes and
smoking in movies has a measurable impact on youth . . . The appearance
of tobacco in PG and PG-13 movies has steadily increased . . .! invite
the film industry's cooperation in reducing the amount of tobacco and
smoking in movies by eliminating the appearance of tobacco except where
absolutely integral to a scene. I think it is reasonable to expect that
cigarette brand names not appear at all . . .''
Bill Lockyer, Attorney General, State of California,
Letter to Jack Valenti, President of Motion Picture
Association of America \9\
``. . . not everyone supports the claim that movies are an important
influence on children's smoking behaviors. Moreover, the evidence
supporting this claim is limited to a few observational studies; and
all such research faces the difficult challenge of disentangling the
effect of movies from adolescent personalities and parenting
characteristics.''
Steven Woloshin, MD, MS and Lisa Schwartz, MD, MS;
Excerpt from an Editorial entitled Smoke-Free Movies:
Sense or Censorship? \10\
Recommendations from the Public Health Community
The World Health Organization,\11\ American Medical Association,
American Legacy Foundation, and others--including the Los Angeles
Department of Public Health and U.S. Public Interest Research Group--
have endorsed the following four policies:
--Certify No Pay-Offs
The producers should post a certificate in the credits
at the end of the movie declaring that nobody on the
production received anything of value (cash money, free
cigarettes or other gifts, free publicity, interest-
free loans or anything else) from anyone in exchange
for using or displaying tobacco.
--Require Strong Anti-Smoking Ads
Studios and theaters should require a genuinely strong
anti-smoking ad (not one produced by a tobacco company)
to run before any film with any tobacco presence,
regardless of its MPAA rating.
--Stop Identifying Tobacco Brands
There should be no tobacco brand identification nor the
presence of tobacco brand imagery (such as billboards)
in the background of any movie scene.
--Rate New Smoking Movies ``R''
Any film that shows or depicts tobacco should be rated
``R.'' The only exceptions should be when the
presentation of tobacco clearly and unambiguously
reflects the dangers and consequences of tobacco use or
is necessary to represent smoking of a real historical
figure.
--The American Legacy Foundation\12\ also recommends adding:
Eliminate the practice of portraying smoking in aired
movie trailers.
References Cited
1. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
2. American Lung Association of Sacramento-Emigrant Trails. PR
Newswire, ``Give Most PG-13 Movies an `S' for Smoking'' May 30,
2003.
3. Ng, Crystal and Bradley Dakake of Massachusetts Public Interest
Research Group. Tobacco at the Movies. 2002.
4. Dalton, Madeline A., Sargent, James D., et al., ``Effect of
viewing smoking in movies on adolescent smoking initiation: a
cohort study'' The Lancet 362 (2003): 281-285; published online
(June 10,
2003).
5. Sargent, James D., Dalton, Madeline A., et. al. ``Viewing
tobacco use in movies: Does it shape attitudes that mediate
adolescent smoking?'' American Journal of Preventative Medicine
22 (2002):137-145.
6. Pechmann, Cornelia and Chuan-Fong Shih. ``Smoking in movies and
antismoking advertisements before movies: Effects on youth.''
Journal of Marketing 63 (July 1999): 1-13.
7. Distefan, Janet, Elizabeth Gilpin, et al., ``Do movie stars
encourage adolescents to start smoking? Evidence from
California.'' Preventative Medicine 28 (1999): 1-11.
8. Glantz, Stanton. ``Rate movies with smoking ``R''. Effective
Clinical Practice 5 (2002):31-34.
9. Lockyer, Bill (Attorney General of California), letter to Jack
Valenti, President of the Motion Picture Association of
America. 'World No Tobacco Day (May 31, 2003)'' 11 June 2003.
10. Woloshin, Steven and Lisa M Schwartz. ``Smoke-free movies: Sense
or censorship?'' Effective Clinical Practice 5 (2002):31-34.
11. World Health Organization. (2003, January 31). ``Rationale for
Framework Convention on Tobacco Control.'' (cited 20 August 2003).
12. American Legacy Foundation. ``Big Tobacco on the Big Screen''
(Press Release). May 31, 2003.
[all]