AG Watch

The last week of March 2006 could go down as a watershed in the states’ Attorneys General assault on the national economy. An independent arbiter from the Brattle Group affirmed an earlier ruling to the effect that Big Tobacco has lost market share owing to the MSA and can withhold some of its upcoming payment to the states.

As the AGs lose their grip on the tobacco industry, they tighten the stranglehold on medicine, taking a $14M bite out of GlaxoSmithKline by filing some papers with Paxil-related jibberishy legalese written on them.

In response to the presumably strongly-worded WhateverItWas that the AGs cooked up, GlaxoSmithKline said, “We made the decision that settling was appropriate to avoid the expense and distraction of protracted litigation.” Looks like the AGs really scored a good point: companies realize that the opportunity cost of a long lawsuit makes them an easy target!

Now, let’s compare that statement to one made by NAAG Tobacco Committee co-chair Lawrence Wasden. Noting that the impasse between Big Tobacco and Big AG has only two possible outcomes, he said, “One of them is litigation; the other possibility is a negotiated answer.”

In other words, the AGs figure that if they can cause enough “expense and distraction,” they’ll get money.

So, if the quick math suggests that the AGs had a bad week—they are down about $1.19B and haven’t even hit the craps table yet—the longer calculus may yet cut against Joe Consumer. And the anecdotal evidence shows that the AGs are focusing on increasingly larger portions of the national economy, moving from tobacco in 1998 to pharmaceuticals, insurance, securities, entertainment, food, and even international antitrust.

Meanwhile, AG Watch sits, bags packed, still searching for some place away from the expense and distraction.