Tobacco Control in Developing Countries and Curbing the Epidemic The World Bank WHO P Jha, FJ Chaloupka on behalf of the report team

Why this book? Economic arguments around tobacco control are unclear and often debated n In 1996, an Asian Health Minister stated “cigarette producers are making large contributions to our economy... we have to think about workers and tobacco farmers” n In 1997, The Economist commented "most smokers (two- thirds or more) do not die of smoking-related disease. They gamble and win. Moreover, the years lost to smoking come from the end of life, when people are most likely to die of something else anyway” Source: Tobacco Control 1996, The Economist 1997

Methodology n Consultation workshops: Washington D.C. 1996, Beijing 1997, Cape Town 1998 u Cape Town Proceedings published in 1998 n 19 Background papers u 40 economists, epidemiologists, and control experts from 13 countries. u Reviews of literature u New analyses u 2 rounds of peer review n Synthesized in “Curbing the Epidemic ”, Jha and Chaloupka, 1999

Outline of book n Tobacco use and its consequences n Analytics of tobacco use n Demand for tobacco n Supply of tobacco n Policy directions

Most smokers live in developing countries Source: Jha et al, 2002, AJPH Current smokers in 1995 (in millions) RegionNumber Low/Middle income 933 High Income 209 World 1,142 Quit rates low in low income countries u 5-10% in China and India u 15-21% in Hungary and Poland u 30-40% in UK

Large and growing number of deaths from smoking Source: Peto and Lopez, 2001 Past and future tobacco deaths (in billions) TimeBillions of deaths (mostly in developed countries) (mostly in developing countries) u 0.5 B among people alive today u 1 in 2 of long-term smokers killed by their addiction u 1/2 of deaths in middle age (35-69)

Trends in smoking in Norwegian males by Income Group Source: Lund et al., 1995

Smoking is more common among the less educated Smoking prevalence among men in Chennai, India, by education levels Source: Gajalakshmi and Peto 1997

Nicotine addition and the poor: Plasma cotinine in adult smokers by socioeconomic status Source: Health Survey, England, 1999; Bobak et al, 2000

Smoking accounts for much of the mortality gap between rich and poor Risk of death of a 35 year old male before age 70, by education levels in Poland, 1996 Source: Bobak et al., 2000

Why should governments intervene? Economic rationale or “market failures” n Smokers do not know their risks n Addiction and youth onset of smoking u Lack of information and unwillingness to act on information u Regret habit later, but many addicted n Costs imposed on others u Costs of environmental tobacco smoke and health costs Source: Jha et al., 2000

Underestimated risks of smoking u 7 in 10 of Chinese smokers thought smoking does them “little or no harm” u Risks not internalized: personal risks perceived lower than average risks u Risks of addiction downplayed: only 2 in 5 of US adolescents intending to quit actually do u in high-income countries, 7 in 10 smokers wish they had not started Source: Kenkel and Chen, 2000; Weinstein, 1998; SGR, 1989 and 1994

Tobacco addiction starts early in life Source: Chinese Academy of Preventive Medicine 1997, Gupta 1996, US Surgeon General Reports, 1989 n Every day 80,000 to 100,000 youths become regular smokers

Healthcare costs from smoking n Annual (gross) healthcare costs: u % of GDP, or 6 -15% of total health costs in high- income countries u proportionally similar in lower-income countries n Net (lifetime) healthcare costs: u Differences in lifetime costs are smaller than annual costs u Best studies do suggest there are net lifetime costs u Pension or “smokers pay their way” arguments are complex Source: Lightwood et al., 2000

Government roles in intervening n To deter children from smoking n To protect non-smokers from others’ smoke n To provide adults with necessary information to make an informed choice u First-best instrument, such as youth restrictions, are usually ineffective. Thus, tax increases are justified, and are effective. u Tax increases are blunt instruments. Source: Jha et al., 2000

Unless current smokers quit, smoking deaths will rise dramatically over the next 50 years Source: Peto and Lopez, 2001

Which interventions are effective? Measures to reduce demand n Higher cigarette taxes n Non-price measures: consumer information, research, cigarette advertising and promotion bans, warning labels and restrictions on public smoking n Increased access to nicotine replacement (NRT) and other cessation therapies

Taxation is the most effective measure n Higher taxes induce quitting, reduce consumption and prevent starting n A 10% price increase reduces demand by: u 4% in high-income countries u 8% in low or middle-income countries u About half of the effect is on amount and half on initiation u Long-run effects may be greater n Young people and the poor are the most price responsive Source: Chaloupka et al., 2000

Cigarette price and consumption show opposite trends (1) Real price of cigarettes and annual per adult cigarette consumption in South Africa Source: Saloojee 1995

Cigarette price and consumption show opposite trends (2) Real price of cigarettes and cigarette consumption in the UK, Source: Townsend 1998

There is still ample room, especially in lower- income countries, to raise cigarette taxes Source: Chaloupka et al., 2000

Cigarette tax increases result in higher tax revenues (1) Real cigarette tax rate and real cigarette tax revenue in the US Source: Sunley et al., 2000

Non-price measures to reduce demand n Increase consumer information: dissemination of research findings, warning labels, counter-advertising n Comprehensive ban on advertising and promotion n Restrictions on smoking in public and work places n Increase access to nicotine-replacement therapies (NRT)

Health information reduces the demand for cigarettes Source: Kenkel and Chen, 2000

Comprehensive advertising bans reduce cigarette consumption Consumption trends in countries with such bans vs. those with no bans (n=102 countries) Source: Saffer, 2000

Effect of advertising bans and counter-advertising n A comprehensive set of tobacco advertising bans can reduce consumption by 6.3% n Counter-advertising messages (set at 15% of the total number of advertising messages) can reduce smoking by about 2% a year Source: Saffer, 2000

Clean indoor-air laws and youth access restrictions n Clean indoor-air laws: u can reduce cigarette consumption u can be self-enforcing u work best with social consensus against smoking n Youth access restrictions: u mixed evidence of effectiveness u require aggressive reinforcement

Effectiveness of cessation Increase in 6 month Intervention quit rates (%) n n Brief advice to stop by clinician 2 to 3 n n Adding NRT to brief advice 6 n n Intensive support plus NRT 8 Source: Raw et al., 1999; AHCPR, 1999

NRT and cessation therapies n Adherence rates still low (<40%), and time dependent n Role of anti depressants, intensive efforts, combination agents still not clear n Price and access issues remain barriers Source: Novotny et al., 2000

NRT and cessation therapies n NRTs double the effectiveness of cessation efforts and reduce individuals’ withdrawal costs n Governments may widen access to NRT and other cessation therapies by: u Reducing regulation (like cigarette markets today) u Conducting more studies on cost-effectiveness (especially in low/middle income countries) u Considering NRT subsidies for poorest smokers Source: Novotny et al., 2000

Impact of interventions on initiation and cessation Source: Ross et al, 2001

Source: Ranson et al., 2002 Potential reductions in deaths (millions) from a price and non-price measures

Documenting changes in response to control policies n CALIFORNIA: versus rest of the US u 14% vs. 3% decline in lung cancer rates n MONICA analyses of 36 countries: control has been partially effective u male never smokers rose u female ex-smokers rose, but new smokers rose Source: CDC, 2000; Molirus et al., 2000

Source: CMH, 2001 Cumulative deaths avoided (millions) before age 60 with interventions in low and middle-income countries, Infectious and maternal conditions ($26-46 billion/year) Adult smoking cessation (self- financing) Year

Which interventions are ineffective at reducing consumption? Most measures to reduce supply n Prohibition n Youth access restrictions n Crop substitution n Trade restrictions n Control of smuggling is the only exception and it is the key supply-side measure Source: Jacobs et al., 2000; Woolery et al., 2000; Taylor et al., 2000

What are the costs of tobacco control? n Revenue loss: likely to have revenue gains u a 10% tax increase would raise revenue by 7% n Job loss: temporary, minimal, and gradual n Possible smuggling: crack down on criminal activity, not lower taxes n Cost to individuals, especially the poor: partially offset by lower consumption

Studies on the employment effects of dramatically reduced or eliminated tobacco consumption Source:Buck et al, 1995; Irvine and Sims, 1997; McNicoll and Boyle 1992, Jacobs et al, 2000; Warner et al, 1996

Smuggling of cigarettes n Industry has economic incentive to smuggle u Increase market share and decrease tax rates n Best estimate: 6 to 8.5% of total consumption n Non-price variables important u Perceived level of corruption more important than cigarette prices n Tax increase will lead to revenue increase, even in the event of increased smuggling Source: Merrriman et al. 2000; Joosens, 2000; BAT,1998

Estimated smuggling in 1995 in selected European countries Source: Merriman et al., 2000

Tobacco smuggling tends to rise in line with the degree of corruption Smuggling as a function of transparency index Source: Merriman et al., 2000

Control of smuggling n Countries need not make a choice between higher cigarette tax revenues and lower cigarette consumption u Higher tax rates can achieve both n Effective control measures of smuggling exist u Focus on large container smuggling u Prominent local language warnings and tax stamps u Increase penalties u Licensing and tracking of containers u Increase export duties or bonds n Multilateral tax increases help combat smuggling Source: Merrriman et al. 2000; Joosens, 2000; BAT, 1998

Lower tax rates in Canada in response to smuggling Real price of cigarettes and annual cigarette consumption per capita, Canada, Source: Jha and Chaloupka, 1999

Smuggling and tax revenue (1) SOUTH AFRICA, 1990s n Increased excise tax from 38 to 50% of retail price u Smuggling rose from 0 to 6% u Sales fell 20% u Revenue went up 2 fold CANADA, n Lowered tax in response to organized smuggling u Retail price fell by half u Total consumption rose 30%, more so in young u Average revenue per capita fell by 35% Source: Abedian, 1998; Sweanor, 1998

Distribution of control policies scores by income group Source: Chaloupka et al., 2001

Summary n Tobacco deaths worldwide are large and growing, and have higher burdens among the poor n Specific market failures support government intervention n Demand measures, chiefly tax increases, information, and regulation are most effective to reduce consumption, and are also cost-effective n Helping adults quit is as important as preventing kids from starting n Control of smuggling is the major supply-side intervention n Poor coverage of known effective interventions in lower income countries

An agenda for cessation in Europe Goal: raise ex-smoking rates to 50% by 2010 in Eastern and Central Europe n n European Tobacco Intervention Program (modelled after regional HIV/AIDS programming in Africa and Latin America or ASSIST program by CDC); n n Major EU/World Bank support of 1 billion Euro/year for 7-10 years (1E/capita); n n WHO as accountable nodal agency (with separate governance board) with tasks as: research networks on surveillance (inc. smoking on all death certificates), quit campaigns, cessation advice standards and warning label research, policy work on standardising EU entry, partnership with Big Pharma; n n Regional centres for local publicity and clinical research (MONICA or EPIC as models or as a base), including regional training network on tobacco policy at 5-10 universities; n n NGOs selected for advocacy and uncovering industry practices; n n Negotiated future price guarantees for better cessation products; and n n Only major supply-side focus is on smuggling, including industry involvement and impact on price (take little action on the tobacco subsidy); Source: Jha, Ross, Chaloupka

International Tobacco Evidence Network (ITEN) n n internet-based information sharing n n enhancing research capacity in 5 regional technical centres; n n providing a peer review function and dissemination vehicle for primary research n n fostering interdisciplinary research using peer- reviewed research protocols on priority topicswww.tobaccoevidence.org