The Tobacco Master Settlement: That Time We Got Em

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- Hey, and welcome to the podcast. I'm Josh and there's Chuck and Jerry's here too, and this is Stuff You Should Know. I think part of our ongoing corporate malfeasance at this time.

- Yeah, for sure, and the beginning of this episode ties in a lot with, we did episode about the history of the cigarette. - Sure. - Like just the thing that you shouldn't put in your mouth,

but people do. - Right. - And so we're gonna talk a little bit about that here

“at the beginning because you need to know a little bit”

about that as it leads up to what were the, you know, the lawsuits against Big Tobacco, and we should start by saying that it's been a long time that we've known that tobacco and smoking was really bad for you and would kill you.

Like the 1920s, we knew for sure, the 1950s, we really, really knew.

And the 1960s is when John F. Kennedy finally came out,

via his surge in general, Luther Terry, and said, "All right, everybody, it's 1964. "I'm finally gonna issue a government report based on, "you know, about it doesn't studies with lots of data "about a million male smokers."

And this stuff is really bad for you. So we're gonna have to start putting warning labels on packages. - Yeah. The great thing about those warning labels, though,

is you are educated to imagine Sammy Davis Jr, saying it in your head. - That's right. - So the cigarette companies, this is the beginning of their playbook

and their playbook was basically, nah, yeah. - Prove it. You can't prove it. This is the whole idea of settled science,

the idea that which is just a complete oxymoron.

Science is never settled, it's a constant ongoing process,

“but the idea that you have to have, 100% definitive proof”

before you can even begin talking about whether something is harmful or not. And really exploiting and manipulating the public through really horrible means, this is where that all started.

And the first response that cigarette companies came up with was to say, "Alright, how about we put filters on cigarettes?" Because as everybody knows, cigarettes make your throat kind of scratch.

Sometimes they can make you horse. And that's okay, that's as part of smoking. These new filters are going to help with all of that. And there you go, cigarettes are healthy, everybody. That's right, in the '60s and '70s,

say that's when we saw lighter cigarettes, or low-tar cigarettes, in the '50s, they got really sort of organized and official about there. PR campaigns, I guess, they're propaganda campaigns.

under the guise of studying the health hazards of smoking.

But it was very much just a PR move. They put out a ad called a Frank statement, the cigarette smokers early on, which said, "Hey, we're really, like, "your health is paramount to us."

As we sell you cigarettes, it's hard not to laugh. It's just so dumb to think about that people would have bought this.

“Yeah, but also just so cynical that they need to show this too, you know?”

But they said, "Alright, we're really going to pledge "to research this everyone because we care about your health." But also, again, you can't really prove that it's just the cigarettes. How do you know that these people dying of lung cancer

didn't also get it from all the other stuff that's going on in the world? Yeah, and actually that would become kind of codified in what's called the roper proposal. There was a tobacco institute vice president.

So in addition to the tobacco industry research committee, they also came up with the tobacco institute, and then they renamed the TIRC, the Council for Tobacco Research, no word of the industry in it, so it's even more trustworthy, right? And Fred Panzer was vice president of the Tobacco Institute,

and he wrote a memo in 1972

that said, essentially, here's what we should do.

We need to create doubt about the health charge without actually denying it. And essentially, it's a variation on the theme that the case is not proved. And he said, kind of what you were saying,

that these are, like, you can't really prove that it's cigarettes. So for example, extroverts are more likely to smoke cigarettes, but they're also more likely to get out in the world and drop dead of a heart attack. So maybe it's just that extroverts smoke cigarettes,

or that there was one called the Constitutional Hypothesis. That was people who get sick from smoking are biologically predisposed to get sick in general. So it's really them. This is all just thrown about in 1972 to basically lie

to the public and confuse the public about whether or not cigarettes were unhealthy or harmful. - Yeah, so they're pushing this campaign out. Behind the scenes, they're just throwing in the back file drawer, every study that they had that showed that nicotine was addictive,

that smoking was bad for you, like they're suppressing that information, as well as at the same time targeting children with, you know, product placement in movies, specifically Superman 2 in 1981 with Marboro.

Obviously, we've talked about Camel Joe before in the history of the cigarette. - Joe Camel was, what does that Camel Joe? - Yeah. - Oh, the Camel Joe.

- Okay.

“I think we should leave all this in there,”

except the beat. Although, if there's plenty of those, that's it. (laughing) - Yeah, let's get the beat out. - So that was in 1988, I like Camel Joe.

I like Camel Joe, I always called him Camel Joe.

I didn't know that wasn't the name. - I'm sure there's some retired tobacco industry guys, like man, we should have called him Camel Joe. That is way better. - Here's a Gen X stat for you,

which is fairly staggering, but completely believable. Youth smoking, like kids, and teenage or smoking had been on the decline, kind of through the 70s and 80s for the most part. And then in the 90s, when Gen X came around to,

like prime smoking age, it really jumped. It hit an all-time high in 1997, of 36.4% of youth were smoking. Adults were smoking at 24.7% at the time. And that's just a staggering number.

I think it's at like 3.8% now. So Gen X or we're smoking at a rate of 36%. - Yeah, and there's two things that they suggest head to do with that huge jump in youth smoking. One was this big campaign in push to target youth smokers

that tobacco industry called them replacements smokers. They would replace the other lifelong smokers that died off from smoking, right? And that's the thing too is like one of the things about smoking, very few people start smoking as adults.

We call them total morons. Most people who smoke started smoking and adolescents, so the tobacco industry had every incentive to go after kids. They just knew that society would not allow them to do that

if they did it overtly, so they had to do it, kind of under the radar with Camel Joe. The other thing is that there was a price war that started in the mid-90s, and that they think that the drop in the price of cigarettes

made it more likely for younger kids to smoke, because younger kids are more price sensitive than older people who are smokers.

“- Remember how cheap cigarettes were back then?”

- Yeah, like a buck 25 a pack or something?

- Yeah, I mean, I was at a regular smoke

or occasionally smoked, as we talked about before, so I wasn't buying packs, but I sold them at the Golden Pantry and Athens Georgia on the east side. And cigarettes were cheap, and there, somebody told me today that they were like 12 to $15 in like 20

something bucks in New York, a pack?

“- I believe that, I totally believe that.”

- Louis, no, what wealth we'll see why here in a minute. - So yeah, one of the other things too that they're doing at the same time besides suppressing studies, sewing doubt and confusion among the public about the harm of cigarettes,

they're just out and out denying publicly that not only your cigarettes, not harmful, they're not even addictive. That is recently is 1994. - Yeah.

- They were publicly saying, like the head of Philip Morris

was saying in interviews, we do not believe cigarettes

are addictive in the 90s. People had known like all you had to do is ask a smoker back in the '50s if they were addicted to cigarettes and they could tell you that they probably were. And like this, the industry in the 90s still wouldn't

fess up to that, like that was their tactic. Just a complete solid wall with zero cracks in it over and over again being reinforced publicly. - Yeah, actually in the 1950s, I think they probably said, like, no, I don't think they're addicted,

“but do you have a cigarette, can I have a cigarette?”

- Right. - I see you got where they're smoking. Do you think he has a next or cigarette for me? - Right. - All right, so in the 1950s,

we needed to start with sort of lawsuit talk. There were a lot of lawsuits all unsuccessful by the mid-90s when they were still saying that it was an addictive, they were at least 400 lawsuits

that they never lost, they never settled,

they had 100% record. - That's crazy. - Which is staggering to learn. They had obviously a ton of money to form like the best legal representation they could.

But they're also actively lobbying state governments about making it harder to sue, about tort reform because like, hey, tobacco's a natural product. So cigarettes fall into that category, like despite all the other stuff that's in there.

So you can't sue somebody for packaging a natural thing and selling it to people. - Yeah, that was the other thing they were doing too, is they were really lobbying government really effectively.

“Like, they spent a lot of money on lobbyists, right?”

- Not like now. - So yeah, they were like the Teflon Don of industries, I guess. - Yeah. - So back to industry was.

What did you just say not like now? - 'Cause I picked up a, like a seizure standstick. - Yeah, what were you mentioning? - I'm sure they're still pouring tons of money into the lobby. - Oh, sure, sure, yeah.

I'm sure too, but so they were just completely untouchable. Like, I mean, if you have 100% record, that in and of itself will prevent people from filing suit against you, right? - Yeah, 'cause it's expensive.

- It is, right? And you're just like, I'm not gonna win or the chances of me winning are so low, I might not even file suit. So the state, also, we should mention Congress is doing

almost nothing about this at this point. So the state attorneys general, William Sapphire, just smiled from heaven, led by a guy named Michael Moore, he was the attorney general from Mississippi. They got together and they said,

well, if the federal government's like in to do anything about it, we're going to. - Yeah, and one state might not be able to take on the tobacco industry, but every state, territory and DC together definitely can take

on the tobacco industry, not only can we take them on, we can seriously threaten to bankrupt the entire tobacco industry right out of existence if we really try. - Yeah, and they played their cards, right,

because they were like, how can we best go at them? Maybe Medicaid is the way to do it, because we have these Medicaid programs through our individual states that are not going bankrupt, but they're in bad shape in a lot of cases,

because they're treating all these smokers, who are really expensive to get through, like, you know, lung cancer treatment, and they have deceived us for all these years. So let's go after them for Rico status,

like fraud and racketeering. And that'll send a shiver, even through the spine of a Teflon Don. - Right, and they were turning up, like Libby says, like literal truck loads of documents

from the industry about them selling to teenagers, bearing studies, covering up what they knew about how addictive everything was. And there were, I mean, this would be a good, sort of thriller movie almost,

like a soda bird kind of thing, if I do a great job with it, where they're racing documents out of offices

Like, I think the guy from Texas was literally trying to put papers on a private jet, so they could be taken to a district judge before the state court could seal them up, because once the feds are investigating,

it can't be sealed at the state level. - Right, or even if they do seal it at the state level, this federal district judge is like that doesn't apply to me.

“So I can make these public or part of a court case, right?”

So yeah, I mean, yeah, that is like a thriller. - And there is something that kind of touched on this. It was the insider with who's the Australian actor, he used to get him fights all the time. - Russell Crowe.

- Yeah, Russell Crowe is Jeffrey Wiggand, I think. - Yeah. - Who was like this whistleblower in the movie? - Back on the show, it was great. I think that was a Michael Mann movie.

- Michael Mann, man, I, I nailed it. You should nail in all of it. I should be a guest on a movie crush. Oh, man, if only. But one of the other things,

we kind of touched on their strategy. Like the focusing on lying to the public and targeting teens, that was a really smart strategy because if they were just like, cigarettes are harmful and we need to get rid of them.

A lot of adults are like, you don't need to tell me whether I should smoke or not. I can kill myself if I want to. So they left that part alone. And they went after the fact

“that they were targeting teens and lying to the public”

because the public sentiment can get behind those two things. Like, yeah, it's around a bounce. We don't want them smoking. And, you know, we were lied to all these years by these same people, yeah, go get 'em.

So that was a really smart strategy that these attorneys general, like, took on. Like, it was amazing, an amazing court angle. I think is what they call 'em. (laughs)

- What a court angle. Look at that. (laughs) Yeah, for sure. And the writing was on the wall for investors

because we're talking about hundreds of billions of dollars at stake. And they were like, hey, this is gonna look really bad and our stock prices are gonna really go in the tank. And so you gotta cut a deal here.

So in which the tobacco company never had thought about,

you know, 'cause they had not only lost, never lost, they never settled anything. - Yeah. - So finally, in April of '97, they were set to go to trial in a few months.

And they're like, all right, let's get a meeting set up with this Michael Moore character from Mississippi, not the movie guy, obviously. - Sure. - And an attorney for tobacco-free kids

who was working with the states about all the marketing toward, you know, kids with Joe Cammel Joe and everybody. So they started negotiating, like, all right, out of the gate, let's just say, we'll get rid of Cammel Joe, we love 'em.

Kids love 'em, but we'll get rid of him in the Marlboro Man if that makes you happy. - Cramer. - And then a few months later in June, they said, all right, we gotta start talking,

hash out the money part.

So how does 368 and a half billion dollars sound over 25 years

as just an opening cell, though? - Yeah, and the states were like, "I was not expecting that, actually." But they said, they were like, okay, here's the problem, though. These are, like, we need to bring the feds in,

like, that Congress has to approve of this deal, the way that we've set it up. And there were some federal aspects to it. One was that the FDA would start regulating tobacco products.

Another one was that the companies, these tobacco companies would be protected against any further civil and class action lawsuits. - This is the big one, yeah. - Yeah, and exchange, they would create a fund

to pay some of those people off. And then there would also be federal restrictions on indoor smoking. And this did not go very far

“because of that protection of the companies, right?”

- Yeah, I mean, that was the sticking point. I think they could have not too happily lived with the rest of it. But that was a big one as far as Congress and soon enough the American people were like,

"Uh-oh, we can't have that." So Congress had a bill to ratify or at least considering a bill to ratify it. Universal tobacco settlement act as 14, 14. They were debating it.

All this disclosure comes out. And they're like, man, they were really awful companies. And it's worse than we thought, even. And the idea of them being protected moving forward, like, isn't gonna fly.

So the late Senator John McCain said, all right, how about S1415, where there's more money? Like, how does 520 billion sound? And we're not gonna protect you from now on. Like, you can be sued moving forward, too.

- Yeah, the industry lobbied, like,

they've never lobbied before to keep this from getting past through.

And again, you mentioned the stock prices. When all these stuff, the stuff is going on. Their stocks are tanking. When there would be a win in the negotiations for the tobacco companies or stock prices

would go back up. That's all very cynical.

did not get past. And one of the reasons it wasn't past

“is because other senators added, like, writers,”

that had nothing to do with tobacco. And I'm guessing unpopular writers, probably at the behest of the tobacco companies, I could not find the writers to save my life, to basically sink this bill.

You know, imagine if you had this great bill and then somebody's like, I'm also adding a writer to repeal the requirement for child sexual predators from having to register and they can limit my school style. Your bill's not gonna pass.

And I get the impression that that's kind of what happened to McCain's bill. - Yeah, for sure. There was another thing we just sort of should mention in passing at least.

There was another suit in October of '97. This is while they're debating these original bills in Congress, where they did settle. It was a separate class action suit that was filed '91 by Flight Attendants in the United States and like,

hey, smoking sections and planes are like killing us. And it's pretty awful. So it was a husband and wife team names, Stanley and Susan Rosenblatt, who filed this one

and they ended up settling for 300 million dollars

to fund medical research. And they said, this was a big sort of turning point and that's the first time they officially cave. - Yeah. - And again, this is why they're debating these bills

in the Congress. - Right. Chuck, I feel like we set things up pretty well for a break. Like we deserve an ad. We deserve a break today.

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- Okay, so things are just kind of not going quite well because the whole thing was handed over from the States to Congress and Congress just fumbled it as they do. So some of the States went on and were like,

we're gonna just keep going and negotiate in our own agreements with the tobacco companies. Florida, Minnesota, Mississippi, who had led the charge originally in the first place in Texas, they all came up with their own settlements.

And like pretty eye-popping amounts,

Texas got more than 17 and a half billion dollars

out of their agreement. Minnesota got a nice chunk of change, but they also had the foresight to say, not only are you gonna settle with money,

“part of this is that you have to disclose public records,”

all internal documents that are part of discovery in this process are going to be made public after this. And the tobacco companies had to agree with that. So that was where a lot of these disclosures came from that they had just been lying, lying, lying,

because these troves of documents that came up in discovery during these cases, just journalist went crazy. It was like a feeding frenzy on them. - Oh yeah, for sure, they saw the writing on the wall once again.

So they got together with the other remaining states who were all plaintus at this point in November of 1998. And agreed to what would end up being the tobacco, the tobacco, oh man, the tobacco settlement, can you imagine the numbers?

The tobacco master settlement agreement, the MSA,

which would include $206 billion paid out over 25 years

to 46 states, five territories in DC. And they would allocate it according to like, how many smokers they estimated each state had and how much was still based on the Medicaid thing.

“So how much they had to pay out and Medicaid”

for all these related costs. They said, we'll also stop targeting minors, even though they really like to smoke as it turns out. And they love cartoon camels. So no more cartoon characters in our ads

were not going to give away free cigarettes to minors. - Yeah, recess. - Which is crazy. We are going to shut down these sort of shell research companies that are really just PR firms for us, dissolving those.

We're going to release all these documents. And we're going to create a national foundation to address underage tobacco use in addiction. And we promised to care this time. - Yeah, we're a newer, gentler-loving tobacco company.

That's right. They also created what's now known as the Truth Initiative, which is this whole teen anti-smoking campaign that was funded originally by the tobacco companies. - Those commercials were great.

- Yeah, they're still around the Truth Initiative is. You seem to have migrated online. - Surprise, yeah. - Yeah, I'm sure. I mean, I guess that's where kids are. These days, there's something that's where the kids are.

So initially, this agreement was just between these 46 states and territories in DC and the four largest tobacco companies, which represented the vast majority of the market share of the tobacco industry in the United States, Philip Morris, RJ Reynolds, Brown and Williamson,

and Laura Lard. - Not only heard it's you with those. Yeah, for sure. I've heard of the other ones, but I cannot tell you what they make. - Okay. - Yeah, no idea.

I just leave it at that. - Maybe they make a box.

“I remember, I think we talked about bucks”

in the cigarettes episode. - So they were about the golden pantry. Those were the ones that I think the rumor was, at least they were just made from the sweet things. - The trimmings and sweet things up of factories,

it would just package them as bucks. - I'm quite sure that that is true to some degree. - I'm sure it is. - I'm sure it is. - I'm sure it is. - I'm sure it is. - And there's probably kernels of something

in those bucks. - I'm sure it's true. - Just to let me say that. - So a bunch of manufacturers were like, we don't need to take part in this. We didn't do that much damage.

They're called non-participating manufacturers. They were typically smaller players. I mean, if you weren't one of the big four,

you were basically by definition,

one of the smaller players. But the states were like, not so fast. You still are going to have to pay money to us for each cigarette that you sell. And those smaller players, most of them were like,

well, maybe we'll sign this master settlement after all. - Yeah, they did the math. - So they really lasted like a lot of tobacco manufacturers into this whole agreement. - Yeah, if you're wondering about DIP,

they had a different agreement, but it was still an agreement kind of under the spanner with US tobacco company, which makes Skoll and Copenhagen.

- Yes, I did.

One thing I never really did was chew.

That was, I tried it once and turned as green as you can get. - Yeah, I chewed tobacco early on. We might have spoken about this when I was a youth group from my church. It was pretty popular.

So I chewed like red man and leave by Garrett occasionally. And then here and there in college, I would dip with friends who dipped, but it never like all nicotine never got its hooks in me. Thankfully.

- Yeah, that is thankful for sure. 'Cause once it does, it's hard to get rid of. - Yeah, for sure. But one difference with the DIP companies is they were given out, and I remember this is a big deal.

They used to just give out reams of DIP to minor league baseball and major league baseball. That's what baseball was. And other sports too,

but baseball was always associated with Dipping,

but they were like, you can't give this stuff away to like high school and college baseball teams anymore in minor league baseball teams. - Yeah, I think any sports team because like kids look up to them, right?

Which was a big part of why they were doing this. So the sunflower seed companies rejoiced. - Yeah, for sure. - So there was another thing that came up that was fairly unpopular.

“But also, I think people were just kind of,”

what's not ambivalent, but were your up two minds and you're kind of tussling over it internally? - Yeah. - The internal tussle, we'll call it.

Five point one five billion dollars went to the National Tobacco Growers Settlement Trust Fund to compensate tobacco farmers because they were going to sell a lot less tobacco because of this.

- And it's interesting to think about. - Yeah, because you're like on the one hand, like who cares, it's tobacco and then on the other hand, you're like these are often family farmers who have been doing this for generations.

So I'm kind of, yeah, I'm tussling internally over it. - What word is it? I know what you're talking about. Yeah, I don't know, no, no, no, no. - Some are right in.

And then one other thing about this too that was part of the provision was people were like, well, what about the federal government because Medicaid is this joint state federal partnership and the Fed's fund a lot of this and the Fed's are like,

no, we're leaving ourselves out, we're waving any right to any of that money. This is the state's game and they did a great job with it. - Yeah, a lot of public health officials were like, not super happy about that because they were like,

hey, listen, unless we have the feds overseeing this, how do we know what the states are gonna use this money for and not to tease too aggressively. But I think we'll see an act three that that was very much a valid concern.

- Yeah, for sure. The feds did come after them though.

“I think this was, they were secretly going to do this”

when they were like, no, no, we're just gonna leave it to the states and the tobacco companies are like, woo, and the feds are like, we have our own thing we're about to do. There was U.S. versus Philip Morris at all.

And they saw billions and billions of dollars in compensation for health care money that they had spent out. I guess basically what they had sheld out as part of the Medicaid program. They also went after them for Rico as racketeers.

And as being, if you're convicted of racketeering as an organization and you're allowed to continue on as an organization, the feds can basically garnish your profits for a very long time or they can go back and seek previous profits.

And they did, they looked for, they wanted a portion of the company's profits from the past 45 years. In this case that was launched in 1999. - Yeah, and the meantime, Phil Morris was like,

hey, Phil Morris at all, thanks a lot.

Like, why is it always gotta be us?

(laughs) They're like, you got a great name, Phil. So the companies did not settle this time. They're like, all right, we're getting blood dry by the states.

Now the feds are coming after us. So we were gonna actually fight this thing. And they lost, in 2006, a district judge for the United States, ruled for the DOJ. Said, no, you guys are racketeers.

I'm gonna greatly reduce that financial penalty down to $10 billion from the hundreds they were asking for. But you know what, you got to admit to fraud.

“You have to issue what are called corrective statements.”

And we got to see all those documents 'cause we know there are still more documents in your coffers. - Yeah, I think there's something like 14 million documents that were eventually released internal documents.

- Yeah. - And then finally, remember, back as part of that first settlement agreement that they tried to kick to the feds to ratify that part of it was having the FDA to start regulating tobacco, that was in 1998.

- In 2009, the federal government finally got around

to having the FDA regulate the tobacco industry. - Yeah, all right, let's take a second break and we'll come back and talk about what this all meant and means right after this. (dramatic music)

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(upbeat music) - All right, we promised talk of what it all meant. And means, and it kind of depends on who you ask, or when you ask as well. Because when it happened and act,

the Effective National Action to Control Tobacco Group said, "You know what?"

“And I think other people too like American Cancer Society,”

the American Psychological Association, they all got together and said, "You know what, this isn't so great." Like that McCain bill really had teeth. And that didn't pass and we really wanted it to.

So this is sort of a win for the cigarette companies. It had a lot of like obvious immediate impacts. And you know, I talked about, you know, why cigarettes are so expensive and health. This is partially why, because they're,

what's not gonna happen is the investors aren't gonna lose any money. So they're gonna say like, we'll just start jacking up cigarette costs. And a lot less people are smoking.

So let's jack them up even more, because we're not gonna take a loss on this. - So where are they gonna do quit? - Yeah, so that started almost immediately as far as price hiking, like 45, 50 cents a pack.

Right out of the gate is was just the tip of the iceberg. - Yeah, I mean, did you say $20 a pack? I believe it, but that's still eye-popping.

but I haven't verified that. - So one of the things that really happened that people point to the MSA as being directly responsible for is that, like the youth smoking just dropped precipitously.

- Yeah. - Once they removed the ability for tobacco companies to market directly to kids, and they simultaneously had anti-smoking campaigns targeted towards kids.

Like it really had impact. Like you said, went from like 34% to 3.8% in 2021, I think it's even lower than that now.

- The problem is, we didn't learn anything

that, or we didn't leave it open enough to apply to future kinds of tobacco that hadn't been around. So companies like Jewel and other E-Sigarette and Vaped companies, they don't face these same regulations.

They can basically market a kids, they can use celebrity endorsers, and they do, but they still get sued a lot.

“I think Jewel paid out 462 million to six different states”

in 2023, so it's still going on, but that's been a huge dent in the incredible success of the curbing team smoking. It's gone back up if you include vaping and who cares and stuff like that.

But I have also the impression that kids are a little smarter than we were at that age. And they are seeing through a lot of this and it's not working quite as well as it did on us in the '90s. - Yeah, and more parental oversight,

and just there's a lot of factors for sure. On the E-Sig's, I think their day has come a little bit, but I think that it's really there and for some bad stuff moving forward because of just all the stuff that goes into that juice.

- Yeah, yeah, we took a pretty solid stand or position on vaping, I think you were, if I were correctly, we were opposed to it in our episode on vaping. - That's right, the other thing

that the settlements led to was just a turning of the tide, not just with kids smoking, but smoking in general, which was what they were after was like, let's just try and get smoking way down overall and individual states started enacting bands.

“I think in '98, Utah and California were the first”

and only ones to say like, hey, you can't smoke and restaurants anymore, you can't smoke in public places,

second hand smoke is a real thing,

and most states had these bands in place now, and people just generally look at smoking differently, like when someone lights up in public, I guess unless you're in Philadelphia, there are a lot of people now

that will look sort of like, what are you doing? Dude, who still does that? - Exactly, or when you flick a cigarette filter out the window when you're done with it? - Ah, she's so sorry, I just went to a dark place.

- No, I'm with you, I understand. - So exciting, yeah. - Especially when when flicks off your windshield and you see a spark bounce. - Well, that's kind of my favorites.

- Well, just briefly yes. - So there was a lot of success directly from the master settlement agreement. Let's talk about the problems with the master settlement agreement,

because a lot of people are like, this could have been done better. We should have done the McCain bill, right? And then really importantly, there were only a couple of states

that had the foresight to designate the payments from the master settlement agreement from the tobacco companies that are made annually. In perpetuity, I hadn't realized this. There's no end date to these payments as far as I know.

Which I don't fully understand

“because I think they settled on like an actual number, right?”

So that doesn't quite make sense to me, but I've seen in multiple places that these are in perpetuity payments. - Yeah, the only thing I can figure out there is they're like, hey, you're still selling cigarettes

and this is still a problem for Medicaid. - Right. - So it's not like that's ever gonna stop. That's the only thing I can figure out. - Yeah, I've got that, I get that too.

I think that that's probably it. That's the best argument for it. But then does that mean that their ultimate payouts are going to exceed that the hundreds of billions of dollars that they agreed to pay out to the states over 25 years?

Like, that's a part I don't get.

But the problem is that the states very few states

actually said this money is designated for anti-smoking programs to pay for health care for smokers or to repay public costs for health care that we spend on smokers, a lot of states don't do that. And in fact, most of the states use it

to fill budget gaps to build new roads. If they're strapped, they do something called securitization

from the tobacco companies, did you see that? - Yeah. - Yeah, that's kind of, you know,

“it's a shell game with a government in a way, in a lot of ways, I think.”

- Yeah, because not only are they,

I mean, it's just unsimely in the first place,

but secondly, when those bonds come due when they get that master settlement agreement annual payment to the state, they have to pay out not just the face value of the bonds that they sold,

they have to use some of that money to pay the interest too. So the state's getting less than it would have, if it didn't sell those bonds ahead of time, right? So that's, I think that's a sign of poor management of a state typically, if you ask me.

- Yeah, for sure. I think in the end, less than 3% of these funds have gone to smoking prevention and cessation programs, which was a lot of the reason they initially said, they were gonna do this, and I think no state

has funded anti tobacco programs at CDC recommended levels at all. - Right. And some states even used them to help the tobacco industry, I know North Carolina, man.

- They spent $45 billion, I think,

on modernizing tobacco farms, not, hey, here's money for your losses. And I think I said $45 billion, $45 billion, $42 million. - $42 million, not like here's some money that comes to say it for your losses.

Here's some money to get better at tobacco farming for the future.

“That's what North Carolina spent some of its money on.”

- Yeah, I think North Carolina picked a back of state, obviously. They used 75% of their settlement funds for tobacco production, that's crazy. - Some of that to private tobacco producers, like you talked about that and taken a hit.

But also, yeah, like you said, like, hey, you want a tobacco museum? We'll build it with that money. - Right. And if we build it, they will come the tobacco companies.

- Oh man, that's hard to believe on that one. - There's another thing too. The tobacco companies have an exactly paid out all this money. They were supposed to pay out the couple hundred,

I think, what was it, $300, something billion,

over 25 years as part of the settlement in 1998. They have paid out according to a press release from Vermont's Attorney General Office. 175 billion, so I think less than half of what they said. And it's been a lot longer than 25 years now, right?

And one of the reasons why is because as part of the agreement, the tobacco companies, there are two calculations that have to be taken into account. There has to be an inflation calculation that it's just for inflation,

so that the states are getting their actual value of the dollars that the tobacco companies agreed to, that makes sense. There's also a sales formula that they have to calculate every year

for to take into account the amount of profits that they're losing to companies that aren't part of the master settlement agreement and therefore aren't hamstrung by those payments. Which means that in some cases, some years,

there have been the sales calculation

“has been larger than the inflation calculation, right?”

So the states have shouldered the burden of competition for these tobacco companies. Like the states took on that loss for the tobacco companies, which is just disgusting to me. - Yeah, and when you just think about what's happened

with the raising the cost of cigarettes, there's a lot of people to look at the settlement of like, well, now you're just get it like the tobacco companies aren't paying states, like people who still smoke cigarettes are just funneling money through the tobacco companies

to the states. - Yeah, that's a great way to put it. Okay, Chuck, so one of the other things that the legacies of the master settlement agreement is it created a blueprint,

I think you said this kind of early on for other ways that states could get together and create real change against corporate malfeasance, specifically, again, in cases where there is harm that comes directly from using a product

as directed or intended, right? Not abusing it or something. You're just using it like it's supposed to be used and you're being harmed. So you have things like social media, opioids,

climate changes a trickier one, but fast food. And the reason why also they fit this master settlement agreement framework is these companies they're following a lot of the same techniques that the tobacco industry laid down

starting back in the '50s. - Yeah, it's interesting because there are two playbooks. On the one side you have the government now that's like, all right, now we've got a playbook moving forward so we can sue meta about social media and the harms

they're targeting children and harming children or opioids, of course, with the pharmaceutical companies, but then there's that other playbook like you were talking about where they were they end up getting sued, but meta and the pharmaceutical companies

were like, hey, you know what? If we can get kids hooked on the stuff and market to children, then we can make a lot more money for our investors. - Yeah, a good example of that, not necessarily targeting children,

but of just this completely screwing up the narrative for their own gain at the expense of people's lives, the opioid pharmaceutical industry with opioids.

Basically, flow to this idea called pseudo addiction

to where the people who were supposedly addicted to opioids weren't actually addicted. What was happening is that their pain wasn't being managed adequately. That's why they needed to take more

and we're going around from doctor to doctor and the answer to the solution was to up their dose. Don't cut them off, don't put them in treatment.

“Up their dose, that's what they really need”

'cause it's not really addiction, 'cause you can't get addicted to opioids. They actually publicly said stuff like that. And I mean, that's caused to go after them alone, you know? - Yeah, I mean, yeah, just as despicable

is any of these huge corporations sort of issuing these, really flimsy denials that the public just makes them look worse, you know, the public doesn't buy this stuff. - Yeah, it's true. - Now, I think we did before, you know?

- Yeah, you're probably right.

- You got anything else? - I got nothing else, that's, this is, we got it, yeah, I feel like this is in a suite of episodes we've done over the years. - Shosh and take on the world, big industry.

- Well, Chuck does have anything else. Chuck said the world and I said big industry, so that combination obviously unlocked listener mail. (bell ringing) - Hey guys, amongst my favorite things,

and that's favorite with an OU, so I think I know where Rebecca's from, or at least, you know, one of a few places she could be from. One of my favorite things about suffocionals, Josh's jokes that don't land, wow, all right.

Absolutely hates my jokes that don't land, by the way, so you should feel good. - Just stay in counting how many, no, no, okay. - And counting how many times Chuck says, that's right, in an episode.

I guess I feel like it's a sure more than that's right. - You say he was good. - Sure, for sure. - Yeah, for sure. - But just one time I was adding a first share of it.

First, for sure, for sure. - For sure. - My absolute favorite thing though, guys, has to be the interlude jingles before and after. - Yeah.

- I love how the jingle always matches the theme of the show.

For example, the short stuff on the benefits of singing in a group, at the Barbershop quartet. If so, about Shakespeare had the green sleeve style jingle in schoolhouse rock, had the clean style jingles. My favorite one might have been the techno punk jingles

on the cyberpunk episode, which is fantastic. All that to say shout out to Jerry and the folks who produce these, they are appreciated. And Rebecca, I'm glad you brought this up. We said it a lot over the years,

but it always bears repeating that, you know,

“these are written by stuff, you should know,”

listers and produced and performed. And we just get these and people are like, hey, use this thing. I made it as a love letter to the show. And then Jerry does a great job of selecting the episodes

where it has a nice fit. So we always like reiterating this is how it works. And Rebecca, since kind of regards in a PS shout out to Rebecca's twin sister Lauren, who introduced Rebecca to stuff you should know many years ago,

and they have been regularly discussing episodes weekly set. That's awesome. Yeah, thank you. We love it when a family member or a friend turns somebody on this stuff you should know.

And then they end up talking about or listening together. It's kind of the point. That's how a community is formed, everybody. Also shout out to Dave and Ben, too, who also do a pretty boss job of selecting jingles,

but I think Jerry's probably the goat. Agreed. If you wanna be like Rebecca and by proxy Lauren and get in touch of this via email, all you have to do is send it off

to [email protected].

“Stuff you should know is a production of "I Heart Radio."”

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