Philip Morris, Reynolds Win Arbiter's Tobacco Ruling

Tobacco companies, including Philip Morris USA and Reynolds American Inc., won an arbiter's ruling that may allow them to reduce $1.2 billion in payments to states under a 1998 health care settlement.

The Brattle Group, a consulting firm hired by the states and cigarette makers, ruled advertising restrictions imposed by the accord have been a ``significant factor'' in reducing manufacturers' market share, according to a statement today from the National Association of Attorneys General in Washington.

Cigarette makers may use the decision to withhold part of the $6.5 billion they owe states under a provision that allows them to adjust payments based on market share. States have become dependent on the money and have used it for health-care programs, antismoking campaigns and to balance their budgets.

``Ultimately, we suspect that some sort of negotiated agreement will be the outcome -- sort of a settlement of the settlement,'' Prudential Equity Group LLC Robert Campagnino in New York wrote today. ``Given what we see as the level of dependency the states have on tobacco settlement funds, today's ruling will likely trigger a wave of litigation.'' Read the Bloomberg report here.