Author: Staff Writer

R. J. Reynolds Tobacco, Philip Morris USA and Lorillard have reached an agreement with 17 USstates, the District of Columbia andPuerto Rico to settle 10 years of claims related to the Non-Participating Manufacturer (NPM) adjustment provisions of the Master Settlement Agreement (MSA).

Under the agreement, Reynolds will receive credits currently estimated to be worth more than $1 billion for its claims relating to 2003 through 2012. The credits will be applied to the company’s MSA payments during the next five years.

The agreement includes a mechanism that allows additional states to join under certain conditions. If additional states join the settlement, the amount R.J. Reynolds and the other participating manufacturers will recover under the settlement will increase, and the cost of the settlement to participating states could decrease.

PM USA’s credit is estimated to total about $450 million. ‘This estimate is subject to change depending on a variety of factors related to the calculation of the credit,’ the company said in a note posted on its website. ‘The agreement is also subject to approval by an arbitration panel. ‘Upon final determination of the amount and approval of the arbitration panel, PM USA is expected to record a corresponding increase in its reported pre-tax earnings.

‘The agreement also puts into place revised and streamlined NPM adjustments for future years.’

Lorillard expects to receive credits during the next five years of at least $198 million on its outstanding claims, with the majority of the credits occurring in April next year and the remainder during the following four years.

“We are very pleased to have settled this long-standing dispute with the signatory states and believe that it is an equitable resolution for all parties involved,” said Ronald S. Milstein, executive vice president and general counsel of Lorillard. “Importantly, today’s announcement also puts into place a new method to better determine future adjustments – providing greater clarity for the states and Lorillard.”

The NPM adjustment disputes arose out of the MSA, which the leading cigarette manufacturers entered into with 46 states to resolve the states’ health care cost recovery litigation against the manufacturers. ‘The MSA imposed significant restrictions on how cigarettes are advertised, marketed and sold in the United States and required participating manufacturers to make annual payments to the states in perpetuity,’ PM USA said in its note. ‘So far, states participating in the MSA have received more than $85 billion.

‘The NPM adjustment disputes relate to the state escrow statutes, under which non-participating cigarette manufacturers are required to make escrow payments for volume sold in each MSA state. The MSA allows participating manufacturers to receive downward adjustments in MSA payments if the MSA is a significant factor in market share loss for the participating manufacturers. States that demonstrate that they diligently enforced state escrow statutes during a disputed year can avoid the downward payment adjustment for that year.’

The jurisdictions that have agreed to join are Alabama, Arizona, Arkansas, California, District of Columbia, Georgia,Kansas, Louisiana, Michigan, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, Puerto Rico, Tennessee, Virginia, West Virginia and Wyoming.

An annual Harris Poll that measures how people in the US perceive various industries has found that tobacco is not among the top ranks when it comes to being ‘generally honest and trustworthy’, according to a press note issued through PRNewswire.

In fact, the tobacco industry was at the bottom of the heap with only three per cent of people saying they thought it was generally honest and trustworthy. Still, only six per cent trusted the oil industry, only eight per cent trusted social media, only nine per cent trusted managed care and telecoms, only 11 per cent trusted health insurance, and only 12 per cent pharmaceuticals, car manufacturers, airlines and life insurance.

Thirty six per cent said they didn’t find any of the 19 large ‘industries’ covered by the poll generally honest and trustworthy so that you normally believed a statement by a company working in that industry.

The poll found that the most trusted were supermarkets (38 per cent), hospitals (36 per cent), online search engines (22 per cent), computer software and hardware companies (20 per cent), banks (20 per cent), and electric and gas utilities. (20 per cent)

The industries that the biggest proportion of people would like to see more regulated are oil (45 per cent), pharmaceutical (43 per cent), health insurance (40 per cent), banking and tobacco (34 per cent), electric and gas utilities (31 per cent), and managed care companies (30 per cent).

But 31 per cent of people didn’t want any of the industries to be more regulated.

The Harris Poll surveyed 2,383 adults online between November 14 and 19, 2012.

Star Scientific said yesterday that it was getting out of the smokeless tobacco business because of low sales and financial losses, the regulatory environment in the US, and the fact that its association with tobacco was making it difficult for it to interest research centers in undertaking clinical research into its pharmaceutical products.

According to a story by Richard Craver for the Winston-Salem Journal, the company will concentrate on its pharmaceutical business, which is focused on dietary supplements and cosmetic products under the brand name Anatabloc.

But it will try to find licensing opportunities for its dissolvable tobacco products, including Ariva BDL and Stonewall BDL, and its StarCured tobacco-curing process.

Star’s board of directors said it was “motivated to take this action in light of continued losses and low sales for our dissolvable tobacco products over the last several years.”

But it said also that restrictions under the Family Smoking Prevention and Tobacco Control Act, which went into effect in 2009, had prohibited the company from making statements about the comparative safety of various types of tobacco products.

And it added that the dissolvable tobacco business had had ‘a negative impact on our ability to interest leading scientific and medical research centers in undertaking clinical research related to our anatabine compound in managing excessive inflammation’.

The full story is at: http://www.journalnow.com/business/business_news/national_international/article_890daa3a-48b2-11e2-93e3-0019bb30f31a.html.

New York City is to offer community boards rewards of $10,000 to convince landlords to ban smoking in apartments, according to a report by Gary Baumgarten for CBS New York, quoting The New York Post.

Under the scheme, the community boards would work with property managers and tenants to enact smoke-free policies in exchange for the $10,000 ‘bounty’ for landlords.

The bounties would be paid out of a Centers for Disease Control and Prevention grant.

Co-operatives and condominiums that wanted to ban smoking would need about 66 per cent of tenants to vote in favor.

Rent-regulated tenants would not be affected because their original leases do not ban smoking.

Tobacco growers in Khyber-Pakhtunkhwa, Pakistan, say they have decided not to grow tobacco next year because the prices on offer do not cover the cost of production, according to a story by Muhammad Irfan for the Express Tribune.

A study led by the Islamabad Director of the National Agriculture Council, Dr. Sharif Zia, in February found that the cost of production for farmers in Khyber-Pakhtunkhwa was Rs183.40 per kg.

The Pakistan Tobacco Board set the price of flue-cured at Rs117.00 per kg, a figure that has been raised to Rs141 for 2013.

The survey was carried out among 1,100 farmers in the districts of Charsadda, Mardan, Swabi and Mansehra, where 98 per cent of tobacco is cultivated.

Tobacco is the only cash crop grown in Khyber-Pakhtunkhwa and about 78,000 people there are said to be directly associated with tobacco.

The European Commission is due to adopt its proposals to revise the EU’s tobacco products directive on Wednesday.

According to the Commission’s Top News, the proposed legislation comprises new and strengthened rules on how tobacco products may be manufactured, presented, and sold.

The proposals, which are said to involve a substantial revision of the current EU law, take into account ‘market, scientific and international developments’, and respond to requests from the European Parliament and the Council of Ministers.

‘The main objective of the revision is to improve the functioning of the internal market, whilst assuring a high level of public health,’ the Top News story said.

Once the proposals have been adopted, they will be discussed in the European Parliament and by the Council of Ministers.

Proposed revisions for the EU’s tobacco products directive will include a prohibition on slim cigarettes, a requirement for graphic health warnings, a ban on ‘taste-enhancing’ additives and a ban on descriptors such as ‘light’, according to a story in the German newspaper, Bild.

The story was said to be based on a draft document obtained from the EU’s executive.

The information contained in the draft indicated that cigarettes would have to have a minimum diameter of 7.5 mm.

It indicated that the ban on additives would be likely to encompass menthol.

And it indicated that graphic warnings would take up three-quarters of the front and back of cigarette packs.

The European Commission’s proposed revisions to the tobacco products directive are due out on Wednesday.

Sweden’s Trade Minister, Ewa Björling, has said the EU faces “all out war” with Sweden if revisions to the tobacco products directive due out on Wednesday threaten Swedish snus, according to a story in The Local.

“This has been a low intensity conflict for years,” Björling told the TT news agency after leaving a one-hour meeting with Dr. Tonio Borg, the European Commissioner for Health and Consumer Policy.

“Depending on what the directive actually says… we’re facing all out war.”

Meanwhile, according to an Esmerk Swedish News story,Sweden’s Minister for Public Health, Maria Larsson, has said that Swedish snuff had to be exempted from EU regulations on additives if the export ban to other EU countries remained in place.

Larsson said it was illogical that a product that was excluded from the EU’s inner market was subjected to the EU’s control system.

The Swedish government would agree to follow regulations on snus contents if the export ban were lifted, Larsson said.

Former workers at a cigarette factory in the Bandarban area of Chittagong, Bangladesh, have threatened to step up their protests on Wednesday if production at the factory has not been resumed by then, according to a story in The Financial Express.

About 800 workers have been jobless for the past two months following the closing of Azizuddin Ltd’s factory at Bandarban.

The Express said the factory, which had been producing ‘cheaper varieties’ of cigarettes, had been closed in the face of continuing business losses.

Quoting a journalist on a local paper, Alauddin Shahriar, the Express said the workers had staged a demonstration demanding the management resume production in the 50-year old factory. The workers had formed a human chain in front of the Bandarban Press Club on December 12 and said they would protest further if production were not resumed by December 19.

Production is continuing at National Tobacco, another unit of Azizuddin Ltd, which is in the Kalurghat area of Chittagong city.

Japan Tobacco Inc. said today that it would be launching Camel Black Box and Camel White Box in selected stores across Japan, excluding Okinawa Prefecture, in the middle of January.

The new-to-Japan products are said to have excellent flavour balance and smoothness and to be presented in curved packs.

Camel Black Box cigarettes deliver 10 mg of tar and 0.8 mg of nicotine, while Camel White Box cigarettes deliver 6 mg of tar and 0.5 mg of nicotine.

JT said in a press note that Camel, which was launched in theUSin 1913, was the first in the world to use the American blend that has since evolved into the mainstream blend.

Camel Black Box and Camel White Box are currently on sale in more than 20 countries, mainly inEurope.