CNMI to receive millions more for tobacco-related illnesses • Senate okays legislation requiring all cigarette manufacturers to deposit money into a trust fund beginning 2000

All tobacco manufacturers will be required to deposit substantial amount of money to a proposed trust fund which will finance future cigarette-related medical services that may be needed by CNMI smokers.

The Senate on Friday passed legislation that will require even those who are non-participants to the Master Tobacco Settlement Agreement to deposit money into the to-be established escrow fund.

Under the proposed measure, all tobacco manufacturers whose products are being sold in the Northern Marianas market will be forced to participate in the Master Settlement Agreement.

The Senate approved the amendments to House Bill 12-260 following a warning from the Attorney General’s Office that CNMI will lose millions from the Tobacco Master Settlement Agreement if amendments to the proposed measure are not promptly made.

Under the amended bill, manufacturers selling cigarette in the US will be responsible for the health and medical needs of people who got sick due to tobacco use.

“Any tobacco product manufacturer selling cigarettes to consumers within the CNMI after the date of enactment of the Act shall become a participating manufacturer and generally perform its financial obligations under the agreement”, the bill reads.

The bill also asked manufacturers to place into a qualified escrow fund by April 15 of the year the following amounts: $.01047 per unit sold after the date of enactment of the Act; for each 2001 and 2002, $..01675 per unit sold and for each of 2007 and each year after, $.01885 per unit sold.

Based on reports, lung cancer rates in the Commonwealth continue to soar in recent years, exceeding prevailing rates in the mainland United States.

In fact, an estimated 18 percent of the total cost of hospital days in 1994 for Chamorro and Carolinian patients were attributed to smoking-related ailments such as coronary heart disease, chronic obstructive lung disease and a variety of cancer.

Smoking presents serious public health concerns and may induce serious financial problems for the Commonwealth government.

The CNMI government pays millions of dollars each year to provide Commonwealth residents with medical assistance for health conditions associated with smoking.

House Committee on Health and Welfare Chair Malua Peter pointed out that although tobacco-related diseases do not appear until many years after the person begins smoking, the CNMI has a legal obligation to provide medical assistance to the person in question.

She explained that the CNMI has to establish a source of recovery from tobacco manufacturers who are not participants to the Tobacco Master Settlement Agreement.

AGO consumer counsel David Lochabay earlier alarmed Ms. Peter on the proposed 30-day notice posted by MSA states and territories regarding the 1999 Non-Participating Manufacturers Statutes.

In a letter to Attorney General Herbert D. Soll and Ms. Peter, Mr. Lachobay disclosed that the Northern Marianas is at greater risk that some other states of having its payments reduced to potential 2000 NPM Adjustments.

Mr. Lochabay said this is due to the failure of the Legislature to enact a Model Statute. If the Model Statute is not enacted by July 1, NMI risks being uniquely subject to any 2001 NPM adjustments.

Immediately, the AGO placed the Commonwealth as one of the signatories to the proposed 30-day Notice to Participating Manufacturers concerning the NPM adjustments.

“It is urgent that actions be taken on House Bill 12-260 which requires cigarette manufacturers and distributors who do not choose to become participants under the MSA to post evidence with the CNMI government of financial responsibility,” said Mr. Lochabay.

The proposed enactment of a statute, also known as the Model Statute, requires all states and territories participating in the MSA to pass such an act or be subject to an NPM deductions.

Besides, MSA recognizes that tobacco manufacturers signing the MSA will have higher costs of products than those not signing due to annual payments, added the consumer counsel.

The purpose of the Model Statute is to level the playing field and offer incentives to cigarette manufacturers and distributors to become participants under the agreement.

“All of the states and territories have now enacted Model Statutes legislation except the CNMI. This means that any NPM adjustment imposed in the future would only be directed against the CNMI,” explained Mr. Lochabay.

He stressed it is imperative that the Legislature immediately act and get HB 12-260 enacted as soon as possible to prevent possible losses from the settlement agreement.

Since December 1999, the CNMI government received about $815,254.94 in five separate payments. The Commonwealth’s share from the settlement totals to $30 million whose payment will be spread in 25 years.

These are part of the $206 billion master tobacco settlement agreement with giant US cigarette manufacturers in exchange for dropping of the lawsuit over health costs on treating sick smokers. (EGA)