Cigarette Prices Hiked 6 Cents a Pack

Philip Morris Cos., the largest U.S. cigarette maker, has raised the price of a pack of cigarettes 6 cents, or 3%, and rival cigarette makers including RJR Nabisco Holdings Corp. promptly followed suit.

The increase is the industry’s fifth since September, raising in total the price of a pack of cigarettes 25 cents. The latest increase indicates that U.S. cigarette producers are closing in on a $196-billion agreement to settle state claims seeking the costs of treating sick smokers, analysts said.

“Philip Morris is signaling there’s going to be a new deal,” said Gary Black, tobacco analyst at Sanford C. Bernstein & Co.

Typically, when one cigarette maker raises prices, others quickly follow.

The tobacco industry already has reached separate settlements with the first four states that sued--Florida, Minnesota, Mississippi and Texas--for more than $39 billion over 25 years.

The industry raised cigarette prices after each settlement to defray the costs.

Philip Morris, RJR Nabisco, Loews Corp. BAT Industries, and UST Inc. are set this week to resume talks to settle 37 pending state Medicaid-recovery suits and provide money to the nine states that haven’t yet filed such suits.

The monthlong talks have made progress in resolving some issues--such as an agreement to end tobacco billboards and ban the sale of merchandise with cigarette brand logos--yet further restrictions, such as limits on tobacco advertising in magazines, remain unresolved.

In New York Stock Exchange trading, shares of Philip Morris rose 31 cents to close at $44.13, while RJR’s stock was unchanged at $24.44. Loews fell 50 cents to $80.13, BAT fell 4 cents to $22.50, and UST was unchanged at $27.