Big Tobacco’s Deal All Highly Predictable

I can think of a few big stories that have gripped America’s attention involving U.S. businesses over the years. But none is more earth shattering than the cigarette industry’s move to pony up big bucks to ward off lawsuits.

Call it clairvoyance, good business or a well-timed effort to prevent staggering losses.

The move by Philip Morris and RJR Nabisco two of this country’s biggest cigarette makers - to make $300 billion available as a settlement with plaintiffs has to rank right up there with the mega-mergers and hair-raising acquisitions of the ‘80s and ‘90s.

It’s no big secret that the leading cigarette companies saw the handwriting on the wall before offering up some sort of settlement now with the government and others.

Attorneys-general from a growing number of states had become so aggressive in hauling the tobacco manufacturers into court, on an assortment of expensive claims, that it was just a matter of time before the companies would end up crying uncle.

Either tobacco interests in this country have finally realized their product continues to have a debilitating effect on a lot of people - or they have been in denial for all of these years, deliberately misrepresenting and misstating the perils of smoking.

I can’t help but think about that indelible spectacle several years ago on Capitol Hill, when top executives of the nation’s tobacco companies went before federal lawmakers and denied tobacco was addictive.

There they were, almost in unison, extolling the so-called virtues of smoking, while denying their product failed to cause anybody to become hooked.

There are some who still feel the manufacturers are in a state of denial. But their willingness to make a few long-overdue concessions, still being mulled over by the Food and Drug Administration and others, is a pretty good indication tobacco companies finally have had enough.

Or have they? One thing for sure, five years ago it would have been inconceivable to expect the companies to accept bans on billboard advertising, which reportedly is part of the landmark agreement - not to mention agreeing to no longer use pictures of people in cigarette ads. At least one longtime critic of tobacco, former U.S. surgeon general C. Everett Koop, believes cigarette makers are getting off light by being allowed to negotiate a sort of 25-year insurance policy against future claims. That’s the period in which tobacco companies are to receive so-called lawsuit protection - and abide by strict advertising curbs.

Koop has likened the still-to-be-finalized deal to a physician entering into a special monetary agreement with a patient in order to prevent a malpractice claim.

He says such arrangements in medicine are illegal - and ought to be rejected by the federal government and others in the eye-popping settlement discussions.

I don’t think we will know for some time whether a settlement with tobacco companies will end up in the best interests of consumers.

On the other hand, it’s fair to say cigarette makers never would have agreed to anything, if they thought they would come out on the losing end.

That’s for sure.

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The following fields overflowed: CREDIT = Fred Davis Washington State University