Tobacco companies are unlikely to change their business models despite the proposed settlement: Prof

Tobacco policy experts say major companies are unlikely to shift their business models to less harmful alternatives without further pressure, despite a proposed settlement that will see three industry giants pay out billions to smokers and their families.

Under a newly proposed deal filed in court Thursday, JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd. paying nearly $25 billion to provincial and territorial governments.

More than $4 billion would go to the Quebec class action members and another $2.5 billion would be paid to smokers in other provinces and territories diagnosed with lung cancer, throat cancer or chronic obstructive pulmonary disease between March 2015 and March 2019 was stated.

The three tobacco companies would also invest more than $1 billion in a foundation to combat tobacco-related diseases.

But University of Toronto professor Michael Chaiton, who researches tobacco and addiction, said the agreement provides little incentive for companies to ditch tobacco products that continue to boost their profits.

“The lesson of these lawsuits is that cigarettes … should not be a profitable consumer product and that alternatives are available,” he said.

“Functionally, I think part of the settlement protects the companies so that they can continue to sell those products, rather than switching.”

Chaiton said major industry players have remained willing to promote tobacco-based products in recent years and fight proposed regulations that would curb their use, despite offering alternatives such as e-cigarettes.

He said companies have marketed vaping products as a way to transition to a “smoke-free world,” but their actions have not matched that promise.

“We haven’t seen a large number of people who used to smoke cigarettes switch to these products,” he said.

“The large percentage of people using vaping products are people who have never smoked cigarettes. So it’s really not a public health issue.”

David Hammond, a professor of public health at the University of Waterloo, said he was disappointed that the proposed settlement does not require the companies to implement reforms that affect their business models.

“Their business practices essentially have not changed and will not change,” Hammond said.

“The industry still generates billions in profits from cigarettes, which is why I believe they will continue the practices that generated those revenues.”

He said the industry’s cigarette revenues have actually increased over the past decade as companies have implemented “aggressive” price increases. With the companies facing billions of dollars in damages, they are unlikely to phase out their most profitable products, Hammond said.

“If they try to find ways to pay for these settlements, that gives them even more incentive to increase those revenues,” he said.

The $32.5 billion settlement proposal, which still needs to be approved by creditors and approved by the court, is the result of a corporate restructuring process triggered by a legal battle over the health effects of smoking.

The three companies sought protection from creditors in Ontario in 2019 after Quebec’s highest court upheld a ruling ordering them to pay nearly $15 billion in two class-action lawsuits.

Jacob Shelley, co-director of the Health Ethics, Law and Policy lab at Western University in London, Ont., said the case has broad implications for industries other than tobacco, which produce foods and drinks that can cause harm.

“Ultimately, we currently have a number of products on the market where the same obligations exist to warn of the risks arising from their use,” Shelley said.

“We know alcohol is a carcinogen. We know the risks, but we also know that consumers are unaware. We know they are unaware of the cancer risks.”

Shelley said the same legal principle applies to products such as high-caffeine energy drinks and sugary drinks.

“When you put a product on the market… you have a duty to make sure you warn consumers about the risks,” he said.

“You can’t just bury your head in the sand.”

This report by The Canadian Press was first published Oct. 18, 2024.