On March 27, the Brattle Group, the economic firm designated by the Parties, determined that the MSA was a significant
factor contributing to the Market Share Loss of the Participating Manufacturers.
On April 17, 2006, the Participating Manufacturers are obligated to make payments totaling approximately $6.5 billion
based on their sales in 2005. The Settling States believe that the Participating Manufacturers should make the April 17
payments in full.
Although the MSA does contain a mechanism, known as a Non-Participating Manufacturer (NPM) adjustment, that could
reduce these payments, the requirements of that mechanism have not been met. As a result, the Settling States believe that
it would not be appropriate to withhold any portion of the April 17 payment.
In order to obtain the NPM Adjustment, the Participating Manufacturers must still prove to a court that the states have not
diligently enforced their statutes providing for NPM escrow payments. The Settling States believe that every State will be
found to have diligently enforced its Model Statute in 2003 and thus that no NPM Adjustment should be applied.
The Settling States are engaged in discussions with the major manufacturers to ensure that the Participating Manufacturers
make full payment of the amounts due on April 17, and we expect those negotiations to be successful.
[End of statement.]
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