Most Favored Nation c/o settlelist
PROPOSED TOBACCO DEAL: ISSUES
The states that have already settled their lawsuits against the tobacco
companies have in their settlements what are called "Most Favored Nation"
provisions. These provisions establish that if subsequently settling states
reach a better deal with the tobacco companies, the earlier settling states
get the same terms.
Under the proposed multistate settlement, if subsequent state settlements
reached before October 1, 2000 offer better financial terms than the national
settlement, settling states get those terms. States bound to the multistate
deal can opt in to non-financial settlement terms of subsequent state settlements,
irrespective of the date.
The multistate agreement also give the companies the right to opt into
more favorable terms, if nationally settling states subsequently settle
with tobacco companies that do not choose to become party to this deal.
Questions and Concerns
The financial MFN provisions only apply until October 1, 2000 less
than two years away. Nationally settling states do not benefit from MFN
treatment for later settlements with more favorable terms.
The financial MFN provisions only apply to settlements reached before
trial, and do not apply to any jury verdicts. If a state reaches a settlement
after the jury is seated, then the nationally settling states cannot claim
MFN application. The same limitations may apply to non-monetary provisions.
MFN terms constitute a disincentive to settle with other firms
a smaller financial settlement with other firms, irrespective of their financial
strength and whatever non-monetary concessions they make will trigger
decreased payments by the settling firms.
Why shouldn't nationally settling states at least get an MFN clause applying
to Minnesota, meaning they would get the same level of per capita (or proportional
Medicaid) payment as made to Minnesota?
For more information, contact: Robert Weissman, Essential Action, 202-387-8030.