Tobacco Makers Say Key Parts of Settlement Need Clarification

Two leading cigarette industry representatives said Thursday that the key provisions of the pending $368.5-billion tobacco settlement have not been adequately explained to Congress and the public, creating misconceptions that could block the settlement’s enactment into law.

“It’s a complicated deal,” said one of the representatives. “What has struck me is the lack of knowledge and understanding of the agreement; we have a lot of work to do.”

The industry spokesmen, both of whom were involved in the negotiations with state attorneys general that resulted in the settlement, spoke on condition of anonymity to reporters at a Washington office.

“It’s not a perfect agreement,” one conceded. But too many changes, they said, could bring the entire accord crashing down--a point already made by proponents of the deal on the other side of the issue, such as Mississippi Atty. Gen. Mike Moore.

The fact that the tobacco representatives initiated Thursday’s meeting with reporters was itself a sign of the industry’s concern over the settlement’s prospects. Since the massive deal was announced June 20, aspects have been pummeled by criticism from public health advocates, legislators and President Clinton.

Last week, Clinton, following the lead of former Surgeon Gen. C. Everett Koop and former Food and Drug Administration chief David A. Kessler, said the agreement’s provisions that would restrict the FDA’s ability to regulate the nicotine content of cigarettes are unacceptable.

On Thursday, the tobacco spokesmen said the industry stands behind the agreement’s three prerequisites for nicotine reduction: that it be technologically feasible, reduce health hazards significantly and not create a black market.

The industry representatives said the black market issue was originally raised by negotiators for 39 state attorneys general.

Moore acknowledged in an interview later in the day that the attorneys general were concerned about potential law enforcement problems that might arise if the nicotine content of cigarettes was sharply reduced without any alternatives for the nation’s 47 million smokers, most of whom, in Moore’s view, are addicted to cigarettes.

While stressing that the industry is concerned about having procedural safeguards before the FDA took any action on nicotine content, one industry representative acknowledged, “I’d be less than candid if I didn’t say people will make changes” in this part of the deal.

The representatives also asserted that the settlement increases the likelihood that a safer cigarette would be created.

Matthew Myers, director of the National Center for Tobacco-Free Kids, said, “I don’t believe in the concept of a safe cigarette--it’s the ultimate Holy Grail.”

But Myers, who played a key role in the settlement talks, added that the agreement contains “meaningful incentives” for the industry to develop products that did not cause addiction and had fewer carcinogens.

On another key issue, the industry representatives said the tax-deductibility provisions of the agreement have been unfairly criticized. They stressed that all damages paid out by companies as a result of litigation--both compensatory and punitive--are normally tax-deductible and that there is no reason why this case should be any different.

The accord calls on the industry to pay $368.5 billion over 25 years to settle lawsuits filed by 39 states and 17 private class-action lawsuits demanding reimbursement for the costs of treating people with lung cancer and other diseases that can be traced to smoking.

The industry also agreed to accept severe restrictions on advertising and marketing, to place stark new warning labels on cigarette packages, and to incur penalties of up to $2 billion a year if the rates of smoking among minors don’t decline sharply.

In return, the industry could not be hit by future lawsuits by the states or by private class-action lawsuits, nor could it be assessed punitive damages for prior misconduct. Its liability in individual lawsuits could not exceed $5 billion a year.