MANAGED CARE October 2000. ©2000 MediMedia USA
There's a lot I don't understand about the venture tort industry. In the most lucrative example of "tortuosity" to date, some lawyers have struck a rich deal with the tobacco industry. How and why are matters for legal historians. It's unclear to me just what form of justice this case represents. But this achievement — which we might call the "Tobacco Profit-Sharing Plan," or TPSP — creates a dazzling ethical paradox for all Americans.
In order to collect roughly $206 billion from the golden goose (or camel?) between now and 2025, we have to maintain and support tobacco sales for 25 years. This puts us in a bizarre ethical position. It's "us" because the direct and indirect beneficiaries include far more than the plaintiffs. The TPSP cash — at least the residue after legal fees — is to be shared among a number of state governments. So, a large number of us ordinary citizens, smokers and nonsmokers alike, suddenly find ourselves the surprise heirs to a gigantic estate, from a rich uncle we never expected to leave anything to us.
As in other fairy tales, there is a stern price attached to our windfall. To collect the spoils, we Americans must perform an astonishing philosophical feat, stranger than the labors of Hercules. Namely, we have to sell as many cigarettes as we can between now and 2025 — and be cheerful about it! The TPSP makes us all, in effect, stakeholders in the success of the tobacco industry. From the lawyers who cut the deal, to children not yet born, we can't get our payoff unless tobacco companies thrive.
So, now that we are tobacco salespeople, we must stretch our consciences around a moral position encompassing the lawsuit's two stunningly contradictory principles:
- Cigarettes are inherently unhealthy; and
- We've got to sell $206 billion worth of them over the next 25 years to enjoy the fruit of the suit.
Principle A would have us employ all reasonable political and social means to stop people from using tobacco. Principle B makes us all partners in the marketing and distribution of one of the world's most popular commodities. How should we feel about this?
Some of us have been dubious about the motives behind the tobacco lawsuit from the beginning. If its message was that cigarettes are inherently dangerous, wouldn't the plaintiffs want the manufacturers to quit making them? This is how it works in the therapeutic branch of the drug industry. If an ingredient or "delivery system" proves harmful, the usual thing is to take it off the market. Like thalidomide, right?
But the Tobacco Profit-Sharing Plan, applying to the entertainment branch of the drug industry, works differently. Under this model, the way to deal with thalidomide would be to stipulate a settlement amount in advance — say $9 trillion — and incorporate this as a production target into the business plan of the manufacturers.
First, I get $3 trillion for thinking up the idea. Then, we would use the rest to build roads, prisons, and sports stadiums. If we're following the tobacco model, we'd put 9.2 percent aside for the treatment of affected babies. (This is the percentage of the tobacco settlement earmarked for smoking prevention.)
This "vice-for-a-price" philosophy could also be used to address organized crime and other social ills. We've already applied the same logic to gambling and alcohol: In many states, we fund all kinds of admirable things from lottery money and beer tax. Why not strike a deal with the cocaine industry, to fund clinics for the uninsured? Or, perhaps use profits from prostitution to save the rain forests? Better yet, why not use revenue from medical malpractice suits to fund bilingual education? This would remove any hesitancy people have about suing their doctors, and surely would reduce errors in many medical clinics.
Back to tobacco ethics: It seems strange enough when "punitive damages" take the form of covert taxation. But structuring payments to require 25 more years of the activity that was the basis for the initial complaint?
One way for the United States to evade this moral dilemma might be to split the ethical problem in two. The "plausible deniability" shell game might work if we can pursue a "tobacco is bad for you" policy domestically, and a "tobacco is great for America" policy abroad.
We could form the Organization of Drug Exporting Countries. This ODEC cartel would consist of nations that, for a significant portion of their domestic economy, rely upon the consumption of drugs by people in other countries. For example, South America and Asia represent two huge potential markets for American tobacco products. How can we best encourage these folks to buy as many American cigarettes as possible? What television programs do their preteens watch?
The TPSP recipients can't wait to start spending their wonderful 25-year annuity. There's even a secondary market in financial instruments derived from hedging on the final payoff. Colorado's legislature has debated selling its rights at a discount, to protect against some kind of tragic and unforeseeable decrease in worldwide tobacco consumption. Heaven forbid, some blight threatened the American tobacco crop, and the FDA was unable to salvage it? This might bankrupt the companies we're depending on for our cash flow. Maybe they would need subsidies. Can you picture "save tobacco" bumper stickers? Or a campaign to import Turkish tobacco (but only until our domestic industry could get back on its feet)?
The TPSP creates its sharpest ethical quandary for those who anticipate becoming direct beneficiaries of tobacco funds. State agencies, charities, health care providers, researchers, and others are elbowing each other at the TPSP trough. Ask yourselves this: "Would you be willing to make a 30-second TV spot for MTV, encouraging kids to start smoking?"
If not, which eye are you going to close when you endorse your check?