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Tobacco companies pay $6.5 billion to U.S. states

The payments are part of the $200 billion settlement over tobacco-related health care costs

Three major U.S. tobacco companies paid 46 U.S. states a total of $6.5 billion this year, as part of the landmark 1998 Master Settlement Agreement.

Under the 25-year deal, the country’s four largest cigarette companies agreed to pay a $200 billion sum to compensate states for tobacco-related health care costs. This year, Phillip Morris paid $3.5 billion, Reynolds American Inc. paid $1.9 billion and Newport-maker Lorillard contributed $1.1 billion.

All three totals, however, include millions of dollars in disputed money. Companies that joined the 1998 settlement are entitled to reduce their annual payments by the amount of market share they lose to non-participating competitors. The three major companies argue that the reductions are not large enough and have put the disputed money into escrow.

The tobacco industry has also made headlines recently for its ongoing fight over a Food and Drug Administration mandate requiring graphic labels on cigarette packaging.

Read more analysis at Reuters.

Alanna Byrne

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