TheTobacco Master Settlement Agreement(MSA) is an agreement entered into in November 1998, originally between the four largest US tobacco companies and the Attorneys General of 46 states. The states settled their Medicaid lawsuits against the tobacco industry for recovery of their tobacco-related health care costs, and also exempted the companies from private tort liability regarding harm caused by tobacco use. In exchange, the companies agreed to curtail or cease certain tobacco marketing practices, as well as to pay, in perpetuity, various annual payments to the states to compensate them for some of the medical costs of caring for persons with smoking-related illnesses.

The tobacco companies agreed to the following conditions:

1. to restrict their advertising, sponsorship, lobbying, and litigation activities, particularly as those activities targeted youth;
2. to disband three specific "Tobacco-Related Organizations," and to restrict their creation and participation in trade associations;
3. generally to make available to the public documents the OPMs had disclosed during the discovery phase of their litigation with the settling states;
4. to create and fund the National Public Education Foundation, dedicated to reducing youth smoking and preventing diseases associated with smoking.
5. to make annual payments to the settling states in perpetuity.

States were to receive over $206 billion over 25 years:

1. Up-front payments - $12.742 billion.
2. Annual Payments, beginning April 15, 2000 - $183.177 billion through 2025.
3. Strategic Contribution Fund, 2008-2017 - $8.61 billion.
4. National Foundation ($250 million over 10 years).
5. Public Education Fund (at least $1.45 billion 2000-2003).
6. State Enforcement Fund ($50 million, one-time payment).
7. National Association of Attorneys General ($1.5 billion over next 10 years).
8. In FY 2010 states are projected to receive $8.1 billion in tobacco settlement funds and an additional 17.0 billion in tobacco tax revenues. The U.S. Centers for Disease Control and Prevention recommends that states use $3.7 billion to fund tobacco prevention programs in 2010.

Unfortunately for smokers, states are only projected to spend a measly $629.5 million of the $8.1 billion on tobacco prevention in 2010.

Only one state — North Dakota — currently funds a tobacco prevention program at the level recommended by the U.S. Centers for Disease Control and Prevention (CDC).  Only nine other states fund tobacco prevention at even half the CDC-recommended level, while 31 states and DC provides less than a quarter of the recommended funding.