Tobacco Settlement Reduction Could Cut Funding for Prescription Drugs, Smoking Cessation, and More

The Pennsylvania Attorney General’s office recently announced that an arbitration panel ruling will cause the commonwealth’s annual share of the tobacco master settlement agreement to be reduced by an estimated $180 million. As a result, Budget Secretary Charles Zogby said funding has been frozen for health research, prescription drugs for low-income elderly residents, uncompensated care, and smoking cessation programs. Funding dedicated to long-term care and services for the disabled will not be reduced.

The Pennsylvania Medical Society (PAMED) will continue to monitor the situation and provide updates as this progresses.

Pennsylvania is one of six states that received an adverse arbitration panel ruling concluding that the state apparently failed to properly enforce tobacco laws to collect escrow payments from 2003. Payments to Pennsylvania typically yield more than $300 million a year. The Attorney General’s office, however, believes that the calculation is inaccurate and has filed an appeal.

The Department of Public Welfare (DPW) also released a press statement indicating that the only DPW program affected will be uncompensated care payments to hospitals.

The Master Settlement Agreement of 1998 is the settlement between the tobacco industry and 46 U.S. states, including Pennsylvania. Over the next 25 years, Pennsylvania is expected to receive an estimated $206 billion.