Benefits of a Master Settlement Agreement

The Master Settlement Agreement is a law passed in 1998 that heavily affects the tobacco industry. The law immediately set an accord or agreement between states and the four biggest cigarette companies. It stated that those tobacco companies must repay the US government $10 billion annually. This figure was aimed at compensating the health care industry for smoking related diseases. The Master Settlement Agreement also imposed restrictions and regulations on their marketing activities. Tobacco companies could no longer actively promote their products to the young. After nearly two decades of the law, what have been the benefits?

Benefits

Reduced pressure on the health care industry. Thanks to a $10 billion per year check, the health industry is buoyed by this agreement. Smoking related illnesses and diseases take a huge toll on the heath care system. Smoking, of course, leads to heart problems, lung cancers, and general poor health. The compensated amount goes someway to taking the pressure off the industry. It also helped lower health insurance premiums across America.

Reduced numbers of smokers. The Master Settlement Agreement had the effect of cutting smoker numbers significantly. The tobacco companies had their hands tied in terms of advertising and marketing. Not only that, but anti-smoking promotion and advertising rose at the same time. The simultaneous effect was a drastic cut in smoking. On top of the $10 billion safety net, the health industry is now dealing with less smoking-related problems. Overall, it has lead to a cleaner, healthier America, which I’m sure we can agree is good thing.

Strict regulations on advertising. The law has effectively ended active advertising or promotion for cigarettes. When was the last time you saw a Big Tobacco advert on TV? The result is much lower exposure to cigarettes. When you are exposed to cigarettes, they’re certainly not shown in a good light. The law has succeeded in making them seem undesirable. At least, to anyone who isn’t already a smoker.

Less exposure to children. As well as banning advertising and active promotion, the law had another stipulation. Cigarettes could no longer be shown in cartoons or children’s TV programmes. They are banned from product placement in films and TV shows, and they cannot sponsor events. Ultimately, it means cigarettes are removed from modern culture. It makes them irrelevant to young people, and goes a long way to removing them from society.

Downside - Of course, the biggest loser here is Big Tobacco and the other three cigarette giants. Arguably, these restrictions place an enormous financial burden on some of America’s biggest companies. It limits their ability to grow, expand, and pay taxes to the US government. One could argue that allowing these companies to operate at full capacity would benefit the economy. Ultimately, the health benefits vastly outweigh the monetary gains of four companies.

If you have any thoughts or concerns about the Master Settlement Agreement or our comments here about it, please let us know. The attorney at Brock Law can offer general clarification regarding the applicable legislation and answer any questions you may have. If this law affects your business, Brock Law can help.