The failure of plain packaging: Australian evidence 2018 Sinclair Davidson

National Drug Strategy Household Survey (2013 data) Adapted from Australian Government: Department of Health, Tobacco key facts and figures RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing Take home message Adapted from Australian Government: Department of Health, Tobacco key facts and figures RMIT University © 2018 Economics, Finance and Marketing

Lets look at a comparison with the UK ff RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing The Policy objectives Plain packaging objectives To improve public health by: discouraging people from taking up smoking, or using tobacco products. encouraging people to give up smoking, and to stop using tobacco products. discouraging people who have given up smoking, or who have stopped using tobacco products, from relapsing. reducing people’s exposure to smoke from tobacco products. Mechanisms to achieve those objectives: reduce the appeal of tobacco products to consumers. increase the effectiveness of health warnings on the retail packaging of tobacco products. reduce the ability of the retail packaging of tobacco products to mislead consumers about the harmful effects of smoking or using tobacco products. RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing Some actual evidence State based evidence RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing Some actual evidence Youth smoking rates But don’t take my word for it – here are the authors of the paper (emphasis added): In 2013, different patterns emerged for the dual-frame and landline samples: current smoking increased back to 16% in the dual-frame sample, and remained at 12% in the landline sample. RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing Some actual evidence Youth smoking rates The results of the logistic regression analysis show a clear, though not statistically significant, reduction in smoking prevalence following the introduction of plain packaging … (emphasis added) RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing Some actual evidence National Drug Strategy Household Survey 2016 RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing Some actual evidence “the Australian Criminal Intelligence Commission’s annual national wastewater survey, in which household waste is tested for the presence of various drugs, tells a different story. Law-enforcement agencies consider it more reliable because it’s hard to hide what’s in your urine. The commission’s 2017 report issued in July, from testing conducted between October and December last year and February this year, shows tobacco use nationally going up, not down.” Source: The Saturday Paper https://www.thesaturdaypaper.com.au/news/health/2017/09/23/curbing-the-illicit-tobacco-trade/15060888005254 RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing The 3.4% lie and France The 3.4% lie began in 2014 with a story in the Sydney morning Herald: The federal Treasury has entered the debate over cigarette sales, publishing previously secret information [tobacco tax data] that shows sales falling since the introduction of graphic health warnings and plain packaging. … the Treasury data shows 3.4 per cent fewer cigarettes were sold last year than 2012. But when you read the story: No Treasury official named. No Treasury official quoted. No Treasury document cited. Questions were asked in the Parliament by Senator David Leyonhjelm and the evasions began. Not the mention the freedom of information requests. RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing The 3.4% lie and France Treasury was required to release the “previously secret information”. An analysis of that information showed: When you adjust the timing of the analysis from a calendar year to when the policy was actually implemented, the 3.4% decline becomes a 0.8% decline. When you adjust for tax refunds that were paid for non-compliant tobacco products, the 3.4% decline becomes a 0.5% increase. The current state of play: Treasury have abandoned the 3.4% claim but are sticking with 0.8%. The Health Department told the Parliament: “We have no intention of suggesting that clearance rates are a direct measure of tobacco plain packaging effects”. RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing The 3.4% lie and France Compare the Australian 3.4% lie to the French experience: France will have to cough up €100 million to pay tobacconists for all the unsold branded cigarette packets after the new law about plain packaging came into play. When France made the switch to neutral cigarette packages in January this year, the government was forced to buy out all the branded cigarette packages that tobacconists had not sold. The Local, France to blow €100 million on lighting up unsellable cigarettes Since France introduced a ban on branded cigarettes in January 2017, more packets of cigarettes have been sold compared to last year when branding was allowed, according to the country's Customs Office (L'administration des Douanes). Blyth Brentnall, Smoking on the rise in France despite rollout of plain packaging RMIT University © 2018 Economics, Finance and Marketing

What the French Health Minister told the Assemblée Nationale Mme Agnès Buzyn When I wrote the 2014-2019 cancer plan, I had difficulty getting a chapter dedicated to the fight against smoking. After arbitrations at the highest level, I obtained what was later called a national smoking reduction program, supported by Marisol Touraine and in which it was clearly chosen to introduce the neutral package rather than increase the price of tobacco. However, this one, we know, does not allow smokers to stop smoking. Its only interest is to “demarketise” the image of tobacco among young people who would start to smoke, the latter being very sensitive to brands and the image they convey. Unfortunately, in 2016, official sales of cigarettes increased in France: the neutral package did not reduce the official sale of tobacco. We do not have a typology of those who continue to smoke and therefore do not know if the neutral package has been effective in keeping young people out of smoking – I am waiting for the data from the observatories. At the time, I advocated, desperately I would say, the rise in the price of tobacco against the introduction of the neutral package. The choices and arbitrations had been different. Now that I am a minister, I am pleased to defend a proposal that I fundamentally believe. RMIT University © 2018 Economics, Finance and Marketing

Economics, Finance and Marketing Recent consultations Canada (traditional policy objectives) [T]o protect Canadians from the devastating health, economic and social costs of tobacco use; [T]o protect young people and others from inducements to use tobacco products and the consequent dependence on them, and to help users quit. Singapore (technical policy objectives) Reduce the attractiveness of tobacco products; Eliminate the effects of tobacco packaging as a form of advertising and promotion; Reduce the ability of tobacco packaging to mislead about the harmful effects of smoking (including on the relative harmful effects between products); Increase the noticeability and effectiveness of graphic health warnings; and Better inform smokers and non-smokers of the risks associated with tobacco use. RMIT University © 2018 Economics, Finance and Marketing

Specific responses to Singapore See Table 4 of Brennan et.al 2015 RMIT University © 2018 Economics, Finance and Marketing

Specific responses to Singapore RMIT University © 2018 Economics, Finance and Marketing

Specific responses to Singapore Source: Davidson and de Silva (2017) RMIT University © 2018 Economics, Finance and Marketing

Some specific responses to Singapore Cancer Council Victoria response to Davidson and de Silva (emphasis original): The NTPPS was quite explicitly not designed to assess quitting success or change in smoking prevalence but rather focussed on the immediate impact of the legislation on perceptions of the pack, effects of health warnings and understanding of product harmfulness. Even the Ministry of Health does not want to accept the results in Davidson and de Silva (2017) it remains the case that the Brennan et.al results demonstrate that the Australian experiences does not meet the policy objectives that Singapore expects from adopting plain packaging. RMIT University © 2018 Economics, Finance and Marketing

The Post-Implementation Review The government must have known their survey evidence was weak, because the commission more original research for the post-implementation review. According to Mike Daube: “… it is especially rewarding that this meticulous independent analysis attributes part of that decline to plain packaging alone …” According to the actual post-implementation review: “… it is not possible to identify separately the effects of tobacco plain packaging and enlarged and updated graphic health warnings on smoking prevalence …”. RMIT University © 2018 Economics, Finance and Marketing

The grass is greener on the other side RMIT University © 2018 Economics, Finance and Marketing

The grass is greener on the other side After a freedom of information request the summary data was made available. RMIT University © 2018 Economics, Finance and Marketing

The grass is greener on the other side The post-implementation review also contained another modelling exercise. Model has 800,000 observations and 52 explanatory variables – but not price. Lindley’s paradox (large N makes it easier to find statistically significant variables at conventional levels). Unusual model base: an unmarried, Australian born, 14 – 17 year old, male, with a tertiary qualification, employed full time, but with an income less than $6000, and living in Victoria. 0.55% decline in tobacco consumption can be attributed to plain packaging. Sample error is 0.6%. Pseudo-R2 are all very small. Data not publicly available for replication. RMIT University © 2018 Economics, Finance and Marketing