The tobacco Master Settlement Agreement

In the 1990s several states sued the major cigarette makers for what Medicaid and other public programs had spent treating sick and dying smokers. Mississippi, Florida, Texas and Minnesota reached separate settlements first; the Congressional Research Service put their combined value at more than $40 billion over the first 25 years.

The other states settled together. On 23 November 1998 the attorneys general of 46 states, the District of Columbia, Puerto Rico and four other territories signed the Master Settlement Agreement with Philip Morris, R.J. Reynolds, Brown & Williamson and Lorillard. It ended the governments' suits but did not cover the claims of individual smokers. Dozens of smaller manufacturers joined later. Payments run in perpetuity, for as long as the settling companies sell cigarettes in the United States, and the Congressional Research Service estimated them at about $206 billion through 2025.

The agreement also bound the companies' conduct. It barred them from targeting young people and banned cartoons in advertising, packaging and labeling. Billboards and transit advertising went, except near shops that sell tobacco, and so did paid product placement in entertainment media, branded merchandise and free samples outside adult-only venues. Until the end of 2001, packs had to hold at least 20 cigarettes. The Tobacco Institute, the Council for Tobacco Research and the Center for Indoor Air Research were dissolved, and the companies had to post online the nonprivileged documents they had handed over in discovery.

The states could spend the money as they chose; smoking prevention was one option. The agreement created and funded a national foundation, the American Legacy Foundation, which ran the anti-smoking "truth" advertising campaign and is known today as the Truth Initiative. Actual payments have run below the base amounts written into the agreement, because cigarette shipments fell faster than the inflation adjustment raised them.

The National Association of Attorneys General coordinates enforcement for the states. It reports that US cigarette consumption fell by more than half between 1998 and 2019, and that regular smoking among high school students dropped from 36.4% in 1997 to 6.0% in 2019.