CHARLES KRAUSE: In 1994, the tobacco industry went on record saying nicotine is not addictive.
SPOKESMAN: Do you believe nicotine is not addictive?
SPOKESMAN: I believe nicotine is not addictive.
SPOKESMAN: I believe nicotine is not addictive.
CHARLES KRAUSE: Since then, the $50 billion a year industry has been under attack. Last August, President Clinton and the Food & Drug Administration announced steps to regulate tobacco as a drug on the grounds that despite what the industry said nicotine is, indeed, addictive.
PRESIDENT CLINTON: Cigarette smoking is the most significant public health problem facing our people. The human cost is by far the most important issue. We have carefully considered the evidence. It is clear that the action being taken today is the right thing to do scientifically, legally, and morally.
CHARLES KRAUSE: The new regulations were designed to cut teenage smoking by restricting advertising and marketing of tobacco to minors. But the tobacco companies vowed to fight the new rules in court.
SPOKESMAN: There's too much common ground on this issue to allow the FDA to illegally seize regulatory authority from Congress and threaten to trample on the rights of the 45 million American adults who choose to smoke.
CHARLES KRAUSE: In April, a North Carolina federal court judge released a split decision on the issue. In a partial victory for the tobacco companies, the judge ruled that the FDA could regulate tobacco but could not restrict the industry's advertising and marketing. Still, last month, another government agency, the Federal Trade Commission, sought to restrict RJR Reynolds, the makers of Camel Cigarettes, from using the Joe Camel cartoon as part of its advertising campaign.
The FTC says the campaign is aimed at children. Meanwhile, cases against the tobacco companies have continued to be brought by individuals and states in courts around the country. In Florida, the only class action suit ever to go to trial against the tobacco industry began earlier this month. Over 60,000 current and former non-smoking flight attendants are seeking $5 billion in damages for the effects of secondhand smoke they inhaled before 1990, when smoking was legal on most flights. But the outcome of this is by no means assured.
The tobacco industry won a major victory last month in a case brought by the family of Jean Connor, a 49-year-old cancer victim who was a heavy smoker. In that case another Florida jury ruled that RJ Reynolds was not responsible for her death. Most of the public attention, though, has focused on a series of lawsuits filed by state governments. Over the past three years 40 states have sued the tobacco companies seeking to recoup billions of dollars for smokers' Medicaid bills.
And in March, the state scored a major breakthrough when the Liggett Group, the country's fifth largest tobacco company, signed a deal with 23 states attorneys general. Liggett admitted that cigarettes are addictive and cause cancer and that the company's marketing has targeted children. Liggett also agreed to release internal documents and pay a quarter of the company's pre-tax profit to the states to cover health care costs and an anti-smoking campaign.
Lawyers for the rest of the tobacco industry have been meeting with the states attorneys general since early April. Those meetings resulted in today's settlement under which tobacco companies will pay $368.5 billion over 25 years for public health and anti-smoking campaigns.
The industry's liability for compensatory and punitive damages would be capped at $4 billion a year and future class action lawsuits wouldn't be allowed. The FDA would have the authority to regulate nicotine and cigarettes and could eliminate it entirely after 12 years, if appropriate. Strict new advertising curbs would be set, including a ban on all outdoor and Internet advertising and a ban on human images and cartoon characters in tobacco ads.
Cigarette vending machines would be banned, and finally cigarette packages would carry new and tougher warning labels. The tobacco industry had this to say at a press conference this afternoon.
STEVE PARRISH, Philip Morris: Negotiations of this size and scope create compromise, not perfection. No one side achieves everything it seeks. In this context, the proposal is a bitter pill because our companies have made concessions that were extremely difficult. But, on balance, this plan is preferable to the continuation of a decades-long controversy that has failed to produce a constructive outcome for anyone.
In order to achieve a resolution in the public interest, the tobacco companies have agreed to support, subject to approval by our boards of directors, a package which includes certain legislative and regulatory provisions with which we disagree--with which we do not necessarily agree. Nevertheless, the companies are willing to accept legislation incorporating these provisions in the interest of reaching an overall resolution of the important issues facing the nation and the industry.
CHARLES KRAUSE: Congress and the president must approve the deal before it becomes law.