Gar Mahood was inducted as an officer of the Order of Canada for his work as a tobacco control advocate. In a leaked document, he was once called the number one global enemy of big tobacco—by the industry itself.
This is for good reason. Over decades, Mahood, with a small but talented staff, first at the Non-Smokers’ Rights Association and now at the Campaign for Justice on Tobacco Fraud, pushed governments at all levels, as well as health organizations and medical professions, to tackle the tobacco issue in Canada. Along the way, he was awarded a World Health Organization gold medal and the Canadian Cancer Society’s citation of merit for “creative and forceful leadership in the cause of cancer prevention.”
Now, Mahood is denouncing a proposed mediated legal settlement more than five years in the making and worth $32.5 billion. The settlement could see the three largest tobacco manufacturers in Canada (JTI-Macdonald; Rothmans, Benson & Hedges; and Imperial Tobacco Canada) pay close to $24.7 billion to Canadian provinces and territories and $4.2 billion to smokers in Quebec harmed by the industry’s fraud—the result of a class action court award. Another $2 billion is committed to smokers elsewhere in Canada who were harmed by the industry. As well, the mediation would produce a much-criticized $1.2 billion fund, largely earmarked for research into tobacco-related illnesses.
Here, Gar Mahood weighs in on the proposed deal: the winners and losers, the massive bag of money attached, and who would actually foot the bill.
What led to this settlement with Canada’s three largest tobacco companies?
The lawsuits at the heart of the mediation arose out of tobacco industry negligence and fraud over five decades. Going back to the 1950s, research showed that tobacco products caused massive illness and death. According to established Canadian law, the industry had a duty to warn its customers about the risks of its products and the magnitude of their harm. I will use the example of lung cancer. Many Canadians have no idea what they face if they get lung cancer. We know that lung cancer is caused by tobacco-industry products 85 percent of the time. So the industry had a duty to warn people about that risk of lung cancer and tell them what the magnitude of harm would be if they got lung cancer, that 80 percent of the time they will die within three years if they contract this disease.
When the industry says, “Everyone knows that smoking is bad for you,” that’s a joke. Many smokers don’t fully understand the risks. So these government lawsuits were based largely on negligence and the failure to warn. And related to that illegality are the lying and deception that accompanied the predatory marketing and the outright denial of the harms the industry’s products caused. So the damage to health and the desire for justice are what propelled some in the health community to press for these lawsuits.
$32.5 billion is a lot of money. What do you think of that figure as it relates to the health costs for Canadians and the price of justice?
The settlement went from $500 billion in claimed damages—the costs to the health care system for treating smoking-related illnesses—to just over $24.7 billion. It’s a financial cave-in that will be paid for by current addicted smokers, the most at-risk group in the proposed settlement, and youth who will become addicted.
Is there a comparable legal precedent for the settlement?
Yes. In the 1990s, forty-six US states sued the American tobacco industry. What emerged after intense negotiations was the Master Settlement Agreement (MSA). This was an agreed-upon payout from big tobacco to American states—worth $206 billion (US), to be paid out over twenty-five years.
When you look at that settlement in comparison to ours, you have to consider that, while it is true that Canada’s population is approximately 10 percent of the US’s, Canadian governments provide more health care services to our citizens than US states do to theirs, and that means higher costs here and thus greater claimed damages. But the cost recovery that the provinces and territories were willing to accept amounts to five cents on the dollar against what they claimed in damages.
But it is more complicated than that. Even a back-of-the envelope calculation will show that when you adjust the MSA settlement figure for currency differences and correct for the present value of those dollars, the provincial and territorial governments settled for about half of what was acceptable to aggressive US states. The deal the governments negotiated is simply embarrassing.
And, again, it’s the remaining Canadian smokers, most addicted as children, before the age of responsibility, who are going to be paying the cost of any settlement, through higher prices. Other taxpayers will pay via provincial health care dollars spent to treat smoking-related diseases.
But there is little justice if money is the only real outcome of the settlement.
If the proposed settlement figure is low, why would the provinces agree to it?
The provinces and territories will accept the proposed settlement because they are conflicted out by dependence upon huge tobacco tax revenue. Billions of dollars are delivered each year from tobacco taxation.
So you think that our provinces and territories didn’t want to interrupt the revenue already being generated from big tobacco?
Absolutely. The mediation process between the governments and tobacco companies took place behind closed doors, and our ministers of health were AWOL—absent without leave—from these discussions.
The suspected scenario is that we had mediation between the departments of finance and attorneys general and a tobacco industry that was in bankruptcy protection. Bankruptcy legislation exists to protect the viability of companies that could collapse. Bankruptcy law was a legal measure created in the Depression era to stop companies from shedding jobs and aggravating an economic crisis. It is a corporate protection in need of correction. It ended up protecting the tobacco industry during the mediation process.
Do you believe that the provincial governments could have negotiated a different outcome?
The provincial governments had leverage. They had the freedom to talk about any scenario they wanted, because the mediation was held in secrecy.
The provinces had the ability to talk turkey with the industry and to say: “Politically, we have a lot of pressure from the health community. We’re going to have to produce health outcomes out of this negotiation. Those benefits can be produced in these discussions or produced through legislation. Which will it be? There has to be a financial settlement to repair the damage and a contract that will require your behaviour to change.” That’s what could have taken place. But it obviously didn’t.
There will be no health benefit to Canada created from this settlement if it is approved, because a real health perspective was absent from the negotiating table.
There is a $1.2 billion fund set aside to create a foundation to study cancer-related illnesses. Isn’t that a health benefit?
In the US Master Settlement Agreement, a health fund was negotiated that included primary prevention and keeping kids out of the market—not curing tobacco diseases after addiction takes place. That fund was allowed to deliver the truth campaign. It was based on the award-winning health awareness campaign created in California. It was effective at encouraging youth to reject tobacco marketing.
The billion-dollar foundation being proposed in Canada as part of this settlement will not permit programs designed to protect youth or to reduce the number of Canadian smokers or focus on harm reduction for existing smokers. The fund is restricted to the very narrow area of studying tobacco illnesses—research that has already generated tens of thousands of studies. What a gift to the industry. Disease research won’t affect the industry’s sales.
What should Canadians have wanted from this proposed settlement?
Health organizations wanted a change in industry behaviour. One thing that could have been produced is a legally mandated reduction target for youth smoking, just like the legislation brought before the US Congress by the late senator John McCain. It would have required that smoking prevalence among youth drop and huge financial penalties occur if reduction targets were not met. The industry knows how to bring kids onto the market. So it knows how to keep them off the market.
What would Canadians get out of this proposed settlement as it stands?
Not disease prevention. And not justice. There is no fairy-tale happy ending.
Sixty years after governments learned that the tobacco epidemic is absolutely preventable, we still have 46,000 Canadians a year dying of tobacco industry–caused diseases. The proposed settlement will not address these tragic numbers. The focus should have been on primary prevention, not protecting tobacco revenue streams. Now it’s back to keeping youth out of the tobacco market.
With regard to our 4 million currently addicted smokers, the health community should start to pay attention to harm-reduction policies.
