Kentucky Becomes Twenty-Third MSA State to Settle NPM Adjustment Disputes

Philip Morris USA (PM USA) and other cigarette manufacturers have reached an agreement with Kentucky to resolve Non-Participating Manufacturer (NPM) adjustment disputes under the Master Settlement Agreement (MSA). This brings to 23 the number of MSA states (including the District of Columbia and Puerto Rico) that have settled these disputes.

“We think this resolution is good for the Commonwealth of Kentucky and for PM USA” said Denise F. Keane, executive vice president and general counsel, Altria Group Inc. “We have always said we are open to resolving these disputes in a manner that makes sense to the states and to us, and that remains the case.”

Under the settlement announced today, Kentucky will receive its share of funds that have been set aside over a number of years in a disputed payments account, which will have the net effect of offsetting reductions in Kentucky’s MSA payment earlier this year. PM USA and the other companies will receive credits against future MSA payments.

In September 2013, an arbitration panel determined that six states – including Kentucky – failed to diligently enforce laws in 2003 requiring NPMs to make escrow payments.