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The Battle Over Tobacco Money

Big Tobacco and the U.S. Government are back before the Supreme Court for a case that began during the Clinton Administration. The government’s preliminary $294 billion victory over the preeminent tobacco producers of Philip Morris USA (subsidiary of Altria Group Inc.), R.J. Reynolds, British American Tobacco Investments Ltd, and Lorillard Tobacco Co., was ultimately set aside by the courts barring it from collecting the funds. While the Obama Administration has renewed the fight to collect government money, the tobacco companies have filed appeals arguing that the government improperly used the Racketeer Influenced and Corrupt Organizations (RICO) laws to achieve a verdict. For more on this recent development, click here.

While $300 billion may seem excessive, this amount is supposed to represent a half century of deception by the tobacco companies that claimed smoking didn’t cause cancer. Additionally, the $300 billion award to the government is dwarfed by costs that smokers impose on the U.S. on an annual basis. According to the Centers for Disease Control and Prevention have cited figures that smokers cost the U.S. $96 billion per year in direct healthcare costs, and another $97 billion in lost productivity. More information on the cost of smoking here .

Even if the government gets the full $300 billion, this award will be swallowed up in a year and a half by the costs associated with smoking. In light of that fact, do you think that $300 billion is too much for the tobacco companies to payout?

-Tristan Lamb

Categories: General
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