Philip Morris USA Reaches $66M Settlement With Washington State Over MSA Payment Dispute

Key Points

• Party: Philip Morris USA (Altria-owned U.S. entity)
• Amount: $66 million to Washington State
• Context: Dispute over annual obligations under the 1998 MSA
• Period Covered: 2005–2015 payout adjustments
• Core Issue: State’s “diligent enforcement” obligations regarding non-participating manufacturers

2Firsts, November 4, 2025 — According to the Washington State Attorney General’s Office, Philip Morris USA will pay $66 million to settle longstanding payment disputes tied to the Master Settlement Agreement (MSA), the landmark 1998 public-health settlement between U.S. states and major tobacco manufacturers.

The settlement brings an end to years of arbitration and legal challenges concerning payments owed by Philip Morris USA from 2005 through 2015.

In April, R.J. Reynolds and other manufacturers agreed to pay $277 million to Washington under the same settlement framework.

The MSA, signed by 46 states including Washington, requires participating tobacco firms to make annual payments to cover public-health costs from smoking, prohibit youth-targeted advertising, and comply with strict marketing restrictions. In exchange, states agreed not to pursue further health-related claims against the companies.

Washington has received approximately $3.8 billion under the MSA to date.

The dispute centered on whether Philip Morris USA was entitled to downward payment adjustments because Washington allegedly failed to diligently enforce escrow requirements for non-participating manufacturers — companies not part of the MSA that must make escrow payments tied to cigarette sales in the state.

Under the new settlement, the state will withdraw its appeal of an earlier arbitration ruling regarding 2005–2007, and both parties agreed on an arbitration framework for potential disputes from 2016 onward.

Washington Attorney General Nick Brown called the MSA “a shining example of holding companies accountable when they put profits ahead of people’s health,” and praised the outcome as a win for state residents.

Altria, the parent company of Philip Morris USA, has not commented.