Tobacco Talks Encounter Mood Of Pessimism Deal In Doubt On Several Points As Multibillion-Dollar Trial Nears

Tobacco peace negotiators who resumed discussions in New York on Thursday are in a race against the clock, with some participants saying that talks aimed at reaching a sweeping settlement of the industry’s legal and regulatory problems will have to be abandoned if no deal is reached within the next 10 days.

Casting a deepening shadow on the talks are seven approaching megatrials, including a multibillion-dollar Mississippi case that is to start July 7, just five weeks from now. Participants say that if they can’t bring a deal to Congress very soon, lawyers for Mississippi and the tobacco companies will have no basis to seek a postponement from the judge.

“I don’t think the prospects (of a deal) look too good if we don’t get some real movement by the end of the week - and certainly as of June 10th, I think everybody goes home,” said one negotiator who spoke on condition of anonymity. Another source close to the negotiations said that “a mood of pessimism” had set in this week.

Tobacco representatives, on one side, and state attorneys general and private anti-tobacco lawyers, on the other, have reached tentative agreement on several important provisions of a complex settlement that would define U.S. tobacco policy for more than a decade.

But key sticking points remain, including industry efforts to limit the authority of the Food and Drug Administration to reduce nicotine levels in tobacco products. FDA authority to control nicotine was recently upheld in a landmark federal court case, but the industry plans to appeal.

In another potential deal-breaker, the industry is seeking language that would bar the FDA from banning tobacco products in the future, in the highly unlikely event the agency would seek to do so.

Negotiators also continue to wrestle over accepting significant restraints on future claims by individual smokers. And there is not yet an agreement on how much money the industry would have to cough up to fund a deal.

“We’ve got a lot of work to do in a short period of time,” said one participant late Thursday, adding that there were “no big breakthroughs” during the day.

Because a settlement would involve some limits on future lawsuits, congressional approval would be required. Although it would probably take months for Congress to debate and pass legislation implementing any settlement, some negotiators believe that pending trials might be delayed if a proposed deal gets to Congress in June.

The July 7 case in Mississippi will be the first trial of some 30 pending lawsuits by states seeking to recover Medicaid funds spent to treat indigent sufferers of smoking-related disease. Florida’s Medicaid case is scheduled to start in August, and Texas’ in September.

In addition, private class-action lawsuits on behalf of tens of thousands of smokers are scheduled for trial between September and December in Florida, Pennsylvania, New York and Louisiana.

As the talks resumed in New York at the offices of Wachtell, Lipton, Rosen, & Katz, lawyers for Philip Morris, former FDA Commissioner Dr. David Kessler and former U.S. Surgeon General Dr. C. Everett Koop set next Thursday for the first meeting of a public health advisory panel that will scrutinize any proposed deal. Nine anti-smoking congressmen last week appointed Kessler and Koop to co-chair the committee, which will meet in Washington, D.C., to begin formulating criteria for an acceptable deal.

Although the industry has offered concessions that would have been unimaginable just a few months ago, some critics in Congress and anti-smoking groups have questioned the wisdom of a settlement - arguing that the stability the $50 billion industry seeks through a settlement might be bad for public health.

“We (tobacco foes) don’t need legislation. They need legislation,” said Rep. Henry Waxman, D-Calif., one of the lawmakers sponsoring the committee.

Kessler told the Los Angeles Times that he does not oppose a settlement, but that “the important thing that has to guide these discussions is public health … I think that has to be (on the) front burner - not money, not immunity ((from lawsuits).”

Deputy White House counsel Bruce Lindsey has been closely monitoring the talks and is regularly briefed on their status. Kessler and Koop are considered leading figures in the tobacco and health debate, and it would be politically difficult for President Clinton to support a settlement they oppose.

Matt Myers, executive director of the National Center For Tobacco-Free Kids, and Mississippi Attorney General Mike Moore, who have been playing key roles in the talks, received a cool reception Wednesday at a Chicago meeting of 100 antitobacco activists convened by the American Medical Association.

Many who attended voiced concern about the secrecy of the negotiations and complained that they got few details from Moore or Myers.

Although participants stressed that no dollar amounts have been finalized, the industry would probably be required to pay between $250 billion and $375 billion over the next 25 to 30 years to compensate sick smokers, repay state health care costs and fund anti-smoking programs. The money would be raised from a cigarette price increase of about 50 cents per pack, which itself would reduce cigarette consumption.

In exchange for the payments, which might amount to some $10 billion to $12 billion per year, the states would dismiss their Medicaid claims, pending class action suits also would be dropped, and future state and class actions suits would be barred.

According to participants, other areas of tentative agreement include:

An anti-smoking campaign of up to $1 billion per year to be funded by the industry.

A ban on use of cartoon figures and human models, such as the Marlboro cowboy, in cigarette ads. That would render moot Wednesday’s decision by the Federal Trade Commission to seek a ban on R.J. Reynolds’ use of the ubiquitous Joe Camel cartoon figure. Advertising also would be banned on billboards and in store windows, on the Internet and at sports arenas.

The use of much larger and more strongly worded warnings on cigarette packs.