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  Sunday, November 26, 2000

Cigarette makers profiting despite settlement

By SCOTT SHANE
The Baltimore Sun

Two years after states and tobacco companies reached the largest legal settlement in history, health advocates give the deal a mixed report card, expressing disappointment that it has not more radically changed cigarette marketing.

The deal's clearest impact was to help drive up the price of cigarettes, leading to a 9 percent drop in sales nationwide last year. Hundreds of millions of settlement dollars have begun to pour into anti-tobacco ads and quit-smoking programs that could produce future reductions.

Although the Marlboro Man came down from billboards, he rides on in the pages of magazines and newspapers and on posters plastered in convenience stores. Auto racing sponsorships and cigarette promotions in trendy bars still thrive.

"The settlement has made a difference, and its full impact hasn't been felt yet," says Matthew Myers, president of the National Center for Tobacco-Free Kids. "But it's had nowhere near the impact that was hoped for."

The difficulty of directing teen-agers' behavior makes some experts skeptical that the anti-smoking campaigns will succeed. Factors not controlled by the tobacco settlement, smoking in movies and on television, for instance, can wield huge influence. And burgeoning online cigarette sales might complicate attempts to stop underage purchases.

Cigarette makers have largely maintained their profits, frustrating advocates who had hoped to cripple the industry.

"The companies and their marketing, their lying, are still in place," says Richard A. Daynard, who founded the Tobacco Products Liability Project in 1984 and helped plot the legal assault. "The settlement was largely drafted by the tobacco industry to protect its profits. And it's done that."

Tobacco executives bristle at the notion that their companies' survival is proof that the settlement was not tough enough.

"I don't think anybody who looks at this objectively can say there hasn't been a lot of progress," says Brendan McCormick, manager of media relations at Philip Morris Cos., the largest U.S. cigarette maker.

McCormick says the tobacco giant has gone beyond settlement requirements, recently pulling ads from 50 magazines with 15 percent or more youth readership and dropping back-cover ads entirely.

In addition, it created a $100 million-a-year department to combat youth smoking. "Philip Morris is not the same company it was five years ago," McCormick says.

To end lawsuits filed by more than 40 states, cigarette makers agreed to pay about $246 billion over 25 years and to limit their marketing.

Tobacco companies raised prices to pay for the settlement, and with tax increases, the average price per pack rose from $1.74 in 1997 to $2.80 today, says David J. Adelman, a tobacco industry analyst with Morgan Stanley Dean Witter.