Canada Secures Historic $23 Billion Tobacco Settlement – Advocates Urge Stronger Public Health Action

August 16, 2025

By Paul Webster (The Lancet, Volume 406, Issue 10504, 678 - 679)

The terms of the settlement have been roundly criticised by public health professionals. Paul Webster reports.

Lawyers involved in tobacco compensation lawsuits around the world are watching closely as three of the world's biggest tobacco companies prepare to pay approximately US$23 billion in compensation for smoking-related harms in Canada. Under the terms of a settlement finalised in March after 27 years of legal wrangling, in late August Canadian taxpayers are slated to begin receiving $18·5 billion as compensation for smoking-related health-care costs, with individual cigarette smokers and their families eligible to receive a share of $4·5 billion.

The settlement makes Canada only the second country, after the USA, where tobacco companies have been successfully sued for historical and ongoing tobacco harms from cigarettes. Smoking is estimated to kill 7·4 million people worldwide annually while generating an estimated $32 billion in annual profits for Japan-based Japan Tobacco Incorporated, US-based Philip Morris, and UK-based British American Tobacco, the three parent companies of those involved in the Canadian settlement. “This is being closely watched internationally”, said Andrew Higgins, Professor of Civil Procedure at Oxford University and Chair of WHO's Expert Group on legal liability for the purpose of tobacco control. Noting that similar litigation is currently ongoing in Brazil and Korea, Higgins says, “It's important to see non-US examples of successful litigation.” The international implications of the Canadian tobacco settlement are “far-reaching” and it clearly demonstrates that the tobacco industry can be held liable for their actions, said Adriana Blanco Marquizo, who heads WHO's tobacco control secretariat.

Originally launched by a small group of smokers who claimed the industry misled smokers about health risks, the lawsuits ultimately also involved many of Canada's provincial governments. Ontario Superior Court Chief Justice Geoffrey Morawetz approved the settlement in a lengthy written decision that confirmed that the three tobacco companies will be obliged at first to pay out 85%—declining in 5-year increments to 70%—of their Canadian after-tax income from cigarette sales over an estimated 40 years until the entire $23 billion settlement is disbursed. In exchange for these payments, the companies and their affiliates will “fully and finally settle” legal claims in Canada “which have been brought, or may be brought, against them”, Morawetz wrote.

All three companies involved in the settlement declined to discuss it with The Lancet, but, in a legal petition in early August, lawyers for one of the companies involved, JTI-Macdonald, said that the purpose of the deal “is to maintain the status quo” of the company's operations in Canada. Legal releases that protect the company from further litigation in future “were vigorously negotiated and carefully crafted as part of a broader compromise”, they added, in order to maximise the company's value.

Rothmans Benson and Hedges (RBH), which is based in Toronto, Canada, and owned by USA-based Philip Morris, said in a press release that the settlement excludes the income it now earns from “alternative products such as heat-not-burn, nicotine pouches, and e-vapor”. The company recently hired Pascal Michel, formerly the Chief Science Officer of the Public Health Agency of Canada, who said in a press release issued by RBH, “For adult Canadians who would otherwise continue smoking cigarettes and using nicotine, the adoption of those smoke-free alternatives may reduce the harm of continuing to use nicotine products.” Montreal-based Imperial Tobacco, a subsidiary of UK-based British American Tobacco, says it is now petitioning the Canadian Government to relax the rules governing nicotine products that it markets as alternatives to its cigarette products.

Canadian public health advocates acknowledged that the settlement will provide some financial comfort to smokers who were diagnosed with severe emphysema, chronic obstructive pulmonary diseases, or cancers of the throat or the lungs in a specific 4-year window, who were alive in March, 2019, and who smoked for 12 years before 1998, when the compensation litigation began. There is separate compensation for Quebec smokers and their heirs if these diseases were diagnosed before 2012. Public health advocates also say that the deal might help fund some government-operated health-care programmes.

But they warn that the deal offers a new lease on life for an industry that continues to sell large volumes of cigarettes in Canada while now also rapidly recruiting large numbers of consumers of its new alternative nicotine products, which, like cigarettes, are highly addictive, have been linked to serious health harms, and are attractive to young consumers. “Measures to reduce tobacco are not included in the settlement”, said Cynthia Callard, Executive Director of Ottawa-based Physicians for a Smoke-Free Canada, while noting that litigation conclusively established that the tobacco companies colluded among themselves and other tobacco manufacturers in order to impede the public from learning of health-related information about smoking. “The tobacco control system—governments and NGOs—failed to plan for a health-oriented outcome. If your objectives are health-related, you have to cut off the head of the snake and dismantle the industry.”

The Heart and Stroke Foundation of Canada (HSF), based in Toronto, is also critical of the settlement. In an unsuccessful legal petition calling for extensive revisions to the deal before it was finalised, HSF warned that the settlement does “not address appropriately, or at all, the legitimate interests of the millions of individuals who will suffer harm from the future use of tobacco products”, and is “less protective of the Canadian public than comparable agreements from the United States that were entered into over 26 years ago”. The settlement “overwhelmingly” aligns with the tobacco companies’ interests, HSF stated, while charging that it “is flatly inconsistent with how global settlements have been structured in cases where the irresponsible sale of dangerous products resulted in sweeping public harm”. HSF warned that Canadians “will continue to consume products that, when taken as instructed by the manufacturers, will significantly jeopardize their health” and that, because of the wording of the settlement, “many of those individuals will have their claims for compensation arising from that harm released” (from future litigation).

As part of the settlement, HSF notes that $700 million will be earmarked to establish a foundation mandated to support research into tobacco-related harms. “Fatally”, HSF charged in its petition for revisions to the settlement, this foundation “is expressly precluded from funding programs and initiatives aimed at reducing or preventing tobacco use in Canada.”

The $18·5 billion from the settlement that will be paid to Canadian provincial governments compensates for a small fraction of their historical health-care costs inflicted by tobacco consumption, notes Lesley James, Director of Health Policy and Systems at HSF, and the settlement does not fully ensure that the funds will actually be used for health care. “So far, the provinces of Alberta, Ontario, and Quebec, where almost two-thirds of Canadians live, have declined to commit the compensation funds to health care, let alone tobacco-related health care”, James says.

James notes that the protections for the tobacco companies offered in the settlement come as the companies are pivoting their marketing strategies from promoting cigarette smoking to promoting nicotine vaping. “Rates among young adults are five times higher than older adults, indicating this has become a generational problem”, James says about vaping. “Research shows that many young people report vape products are easy to access.”

New youth marketing tactics largely elude government regulations in Canada as well as in booming markets such as Indonesia, India, and China, says Nandita Murukutla, a marketing analyst with Vital Strategies (New York). “Historically, traditional media channels like TV, radio, and print were the primary drivers of youth tobacco uptake”, she explained. “However, rigorous, longitudinal studies demonstrate that this causal relationship has shifted toward digital platforms, with social media exposure significantly increasing e-cigarette use among adolescents.”

Like Callard and James, Rob Cunningham, Senior Policy Analyst for the Canadian Cancer Society, laments that policy measures to restrict the tobacco industry, such as banning remaining promotion, or public disclosure of millions of internal tobacco company documents, are not included in the Canadian settlement, in contrast with the US settlement. He notes that Canada's provincial governments will receive “pennies on the dollar” compared with the true costs inflicted on them by the tobacco industry. “This was a huge, historic opportunity to benefit tobacco control that was largely missed”, he says.

André Lespérance, a Montreal-based lawyer who has spearheaded much of the litigation in Canada against the tobacco companies since 1998, says the deal should be seen as the best possible outcome from the perspective of Canadian tobacco victims as well as taxpayers who fund health care for tobacco victims. “Unfortunately, the numerous Canadian provincial governments that fund healthcare seldom cooperated with each other with regard to the tobacco litigation”, he notes, while crediting the Quebec Government for strongly supporting the litigation. “To win against the tobacco industry in court you need to present a totally united front”, he says.