1. Investment Case for Tobacco Control in Georgia
The case for investing in FCTC implementation
February 2018

2. Outline
Summary Findings Methodology Current Tobacco Burden Savings from Investments Moving forward – New tobacco control law Recommendations 1 2 3 4 5 6

3. Outline
Summary Findings Methodology Current Tobacco Burden Savings from Investments Moving forward – New tobacco control law Recommendations 1 2 3 4 5 6

4. Summary findings – Base scenario (1/2)
11,400 Georgian citizens die annually because of tobacco-related diseases, out of which
9,300 annual deaths due to smoking
2,100 annual deaths due to second hand smoke exposure
Total annual direct and indirect costs associated with tobacco-use: GEL million
This is equivalent to an annual loss of 2.43% of GDP

5. Summary findings – Base scenario (2/2)
Of the GEL million total economic cost of tobacco use…
Annual direct healthcare expenditures: GEL million
Annual indirect costs: GEL million
Annual economic losses/indirect costs associated with tobacco-related premature mortality: GEL million
Workplace costs of smoking: GEL million*
Excess absenteeism – GEL 76.3 million
Excess presenteeism – GEL 73.9 million
Smoking breaks – GEL million
* Variance isn’t available for workplace costs

6. Summary findings – Intervention scenario (1/2)
Without implementing four priority FCTC interventions/measures*, over 15-year period:
171,300 Georgian citizens will die prematurely from tobacco-attributable diseases
Tobacco-attributable healthcare costs will reach a cumulative GEL 4.9 billion
Total economic costs from tobacco will reach GEL 12.4 billion
*(i) increasing taxes, (ii) complete ban on indoor smoking, (iii) banning advertising, sponsorship & promotion, (iv) labeling and packaging

7. Summary findings – Intervention scenario (2/2)
Investments in four FCTC measures/interventions* now:
will save 53,100 lives and have positive impact for future well-being of Georgian citizens
will result in GEL 3.6 billion total economic gains over 15 years
For every GEL 1 invested in key FCTC interventions now:
Georgia receives total economic gain of GEL 161 over the first 5 years and GEL 357 after 15 years
*(i) increasing taxes, (ii) complete ban on indoor smoking, (iii) banning advertising, sponsorship & promotion, (iv) labeling and packaging

8. Outline
Summary Findings Methodology Current Tobacco Burden Savings from Investments Moving forward – New tobacco control law Recommendations 1 2 3 4 5 6

9. Two major components of the investment case
Modeling of direct and indirect costs
Institutional context analysis
National FCTC investment case

10. FCTC Investment Case model – Component one: Base scenario
Estimate mortality and morbidity from tobacco-related diseases.
Estimate the total economic costs (direct and indirect costs) associated with tobacco-related diseases
STEP 
STEP 

11. Tobacco Investment Case model – Component two: Intervention/policy scenario
Estimate the effects of various tobacco control policies and interventions on the mortality, morbidity, and total economic costs (direct and indirect) associated with tobacco-related diseases
Estimate the financial costs of implementing the tobacco control policies and interventions modeled, both individually and collectively.
Quantify the Return on Investment (ROI) for the various tobacco control policies and interventions modeled, both individually and collectively.
STEP 
STEP 
STEP

12. Estimated Impacts for Tobacco Interventions and Policies in Georgia
FCTC Intervention/Policy
Relative Change in Smoking Prevalence: First 5 Years
Relative Change in Smoking Prevalence: Years
Relative Change in Smoking Prevalence: 15 Years
Raise cigarette taxes (FCTC Art.6)
-18.2%
-9.1%
-27.3%
Smoke free policies (FCTC Art.8)
-5.4%
-0.8%
-6.2%
Advertisement ban (FCTC Art. 11)
-10.0%
-2.0%
-12.0%
Packaging and labeling (FCTC Art.13)
-6.0%
-3.0%
-9.0%
All Interventions Combined
-33.0%
-12.4%
-45.4%

13. Outline
Summary Findings Methodology Current Tobacco Burden Savings from Investments Moving forward – New tobacco control law Recommendations 1 2 3 4 5 6

14. Total annual economic cost of tobacco use in Georgia
Total annual economic burden of tobacco use in Georgia is almost GEL million* which is equivalent to 2.43 % of GDP
*health expenditures + economic losses due to premature mortality and disability + costs to employee

15. Annual Direct Costs (more apparent) and indirect costs (less apparent)
Total tobacco –attributable healthcare expenditures: GEL million
Visible part: 40% of total burden
Total economic burden of tobacco use is GEL million = healthcare costs + economic losses due to premature mortality + costs at workplace
Total tobacco-attributable indirect economic losses (premature mortality and workplace costs) GEL million
Hidden part: 60% of total burden

16. Economic cost of tobacco: healthcare expenditures
Tobacco is responsible for 13% of Georgia’s GEL 2.5 billion total healthcare expenditure
GEL million total tobacco-attributable healthcare expenditures
GEL million tobacco-attributable government healthcare expenditures

17. Workplace Costs of Smoking to employees and employers
Total workplace costs of smoking: GEL million
Absenteeism
GEL 76.3 million
Presenteeism
GEL 73.9 million
Smoking breaks
GEL million

18. Current burden of tobacco: annual premature deaths and disability in productive age (30+) in Georgia
Tobacco imposes a significant impact on workforce in productive age
Tobacco-related mortality
Life years lost
Years lived with disability
11,400 total annual deaths from tobacco use
2,100 annual deaths from second hand smoke
Annual tobacco-related premature deaths result in 189,000 years of life lost
19,600 years lived with disability each year

19. Debunking tobacco industry myth of ‘smokers helping country’s economy’
Total tax revenue from excise taxes on cigarettes compared to manufacturer/retailer revenue from cigarette sales and consumer spending on tobacco products, 2014
750 million
359 million
1.1 billion
Total amount spent by the consumer
Manufacturer/retail revenue from cigarette sales
Excise tax Government revenue from cigarette sales
The million GEL in 2014 represents an estimate of the total amount of cigarette revenue that tobacco manufacturers and retailers collected from cigarette sales.
Considering that cigarettes are manufactured and packaged outside of Georgia, most of this money left the country and went to multinational corporations, we can estimate about million GEL would be "leaking" out of the economy
The total amount spent by consumers on cigarettes in 2014 was about 1.1 billion GEL.
If no one in Georgia smoked, or purchased cigarettes, it is possible that Georgian consumers could spend approximately 1.1 billion GEL on other products, goods, and services what can result in a larger share of the sales revenue remaining in the Georgian economy.

20. Outline
Summary Findings Methodology Current Tobacco Burden Savings from Investments Moving forward – New tobacco control law Recommendations 1 2 3 4 5 6

21. Cost of inaction: Tobacco-attributable direct healthcare expenditures
Without implementing the four priority FCTC interventions, in 15 years tobacco-attributable healthcare costs will reach ~ GEL 4.9 billion
Type of healthcare expenditure
Current Tobacco-attributable healthcare expenditure
Cost of inaction over 5 and 15 years of period
GEL spent now (millions)
Cumulative Amount Spent Over 5 Years (millions)
Cumulative Amount Spent Over 15 Years (millions)
Government healthcare expenditures
GEL 118.7
GEL 593.4
GEL 1,780
Out-of-pocket healthcare expenditures
GEL 187.6
GEL 937.9
GEL 2,813
Other healthcare expenditures
GEL 21
GEL 105.3
GEL 315.9
Total
GEL 327.3
GEL 1,637
GEL 4,910

22. Impact of investment: Tobacco-attributable direct healthcare expenditures

23. Cost of inaction: Tobacco-attributable total economic losses
Without implementing four priority FCTC interventions, in 15 years tobacco-attributable total economic costs will reach ~ GEL 12.4 billion
Cost per type of losses
Current Tobacco-attributable economic losses
Cost of inaction over 5 and 15 years of period
GEL spent now (millions)
Cumulative Amount Spent over 5 Years (millions)
Cumulative Amount Spent Over 15 Years (millions)
Total Healthcare expenditures
GEL 327.3
GEL 1,637
GEL 4,910
Premature mortality due to tobacco use
GEL 104.1
GEL 528
GEL 1,625
Economic loss to employers and employees
GEL 393.5
GEL 1,967
GEL 5,902
Total
GEL 824.9
GEL 4,132
GEL 12,437

24. Impact of investment: Costs saved from individual FCTC measure over 15 year-period

25. Impact of investment: ~GEL 3
Impact of investment: ~GEL 3.6 billion total economic gain through FCTC implementation

26. Impact of Investment: Implementing FCTC will save up to 53,100 lives
Four FCTC priority Intervention package
Over 15 Years of Period
Cumulative number of lives saved
Lives saved per GEL 1000
Raise cigarette taxes (FCTC Art.6)
35,000
13.3
Smoke free policies (FCTC Art.8)
14,000
3.9
Advertisement ban (FCTC Art. 11)
21,000
10.8
Packaging and labeling (FCTC Art.13)
16,000
8.5
All interventions combined
53,100
5.3
Investments in comprehensive tobacco control measures now, would have positive impact for future well-being of citizens of Georgia

27. Outline
Summary Findings Methodology Current Tobacco Burden Savings from Investments Moving forward – New tobacco control law Recommendations 1 2 3 4 5 6

28. Current State of implementation and new tobacco control legislation
WHO FCTC Interventions*
Status of Tobacco Control Measures in Georgia
New Tobacco Control Legislation  
Article. 6 Increasing taxes on tobacco products**
Excise taxes is equal to 54% of the retail price of the most sold brand of tobacco
12% annual excise tax increase regulated by the Tax Code of Georgia.
Article. 8 Complete bans on smoking in indoor public places
Smoking is banned in all public places, but is not well enforced in cafes, bars, and pubs.
Starting May 2018, smoking will be prohibited in all closed areas other than residential areas, penitentiaries and mental health institutions.
Article. 11 Labeling and packaging
Plain packaging is not mandated for tobacco products. Health warnings occupy 30% of the pack and there are no pictograms.
Starting May 2021, the size of health warnings will increase, pictograms introduced and plain packaging will be required.
Article. 13 Bans on tobacco advertising, sponsorship and promotion
Banned advertising on TV & radio, but not on other form/s of direct and indirect advertising and promotion.
Starting May 2018, all forms of tobacco promotion will be banned.
*Provisions listed in this table cover measures amended in the new tobacco control legislation and interventions used in the investment case model
** taxes are regulated by the Tax Code and aren’t included in the new tobacco control legislation. This provision was used in the investment case model

29. Avoid losses and strengthen economy
The new tobacco control legislation will increase Georgia’s GDP and revenues and sustainably save lives
Adopt
Georgia made a leap in WHO FCTC implementation by adopting new tobacco control legislation
Normative acts and regulations to be adopted
Implement
From May 2018 the law enters into force (plain packaging )
To address challenges and accelerate WHO FCTC implementation, multisectoral action – engagement of sectors beyond health – is required
Avoid losses and strengthen economy
Cost of inaction is far greater. By 2032 tobacco attributable healthcare costs alone will be more than GEL 4.9 billion
Fully implementing four FCTC interventions between now and 2032 will have substantial economic growth and will encourage sustainable development of Georgia

30. Increasing taxes on tobacco products: argument against illicit trade
Cigarettes cost more per pack in neighboring countries Azerbaijan, Armenia, and Turkey.
EU AA - Article 283 The Parties shall develop their cooperation and harmonise policies in counteracting and fighting fraud and smuggling of excisable products. This cooperation will include, inter alia, the gradual approximation of excise rates on tobacco products, as far as possible, taking into account the constraints of the regional context, and in line with the World Health Organisation Framework Convention on Tobacco Control. To that end, the Parties will look to strengthen their cooperation within the regional context
 Increased tobacco taxes may not lead to cross-border smuggling of cigarettes into Georgia

31. New tobacco control legislation is a step towards greater EU integration
The Georgia-EU Association Agreement obliges Georgia to harmonize legislation with European regulatory frameworks by 2020
Promote equity
Strengthen economic growth
Reduce healthcare costs
Full implementation of the new tobacco control legislative package will

32. Full enforcement of new law can accelerate sustainable economic growth in Georgia (i)
Multisectoral tobacco control policies will contribute to reducing out-of-pocket healthcare expenditures.
Household spending on tobacco products and expenditures due to tobacco-related ill-health, is money not used to support children’s education.
Strengthened tobacco control can help close gaps in gender-related policy, programmes and research, while countering the tobacco industry’s self serving appropriation of female empowerment and masculinity.
Source: UNDP and FCTC secretariat, Discussion Paper ‘the WHO Framework Convention on Tobacco Control an accelerator for sustainable development’

33. Full implementation of new law can accelerate sustainable economic growth in Georgia (ii)
Tobacco control can help avoid the economic losses due to tobacco-use while ensuring smoke-free workplaces. Tobacco control can also support tobacco growers in shifting to more sustainable, safe and lucrative economic activities.
Improved health from tobacco control can confer important opportunities in education, labour and other domains which can reduce inequalities.
Tobacco control policies will strengthen trade and business relationships with strategic partner countries, especially in the context of Georgia-EU association agreement.
Source: UNDP and FCTC secretariat, Discussion Paper ‘the WHO Framework Convention on Tobacco Control an accelerator for sustainable development’

34. Outline
Summary Findings Methodology Current Tobacco Burden Savings from Investments Moving forward – New tobacco control law Recommendations 1 2 3 4 5 6

35. Recommended priority tobacco control measures for improved implementation of the new tobacco control law (i)   
Increase tobacco taxation to reduce the affordability of tobacco products (FCTC Art. 6).
Consistent enforcement of the complete ban on smoking in indoor public places (FCTC Art. 8).
Enforcement of the new tobacco control legislation and all provisions (normative acts and Government orders) by all parts of the Government to meet obligations under the WHO FCTC
Art. 71 (e) cooperate in preventing and combating illicit cross-border traffic in goods, including in tobacco products;
Article 283 The Parties shall develop their cooperation and harmonise policies in counteracting and fighting fraud and smuggling of excisable products. This cooperation will include, inter alia, the gradual approximation of excise rates on tobacco products, as far as possible, taking into account the constraints of the regional context, and in line with the World Health Organisation Framework Convention on Tobacco Control. To that end, the Parties will look to strengthen their cooperation within the regional context.

36. Recommended priority tobacco control measures for improved implementation of the new tobacco control law (ii)   
Strengthen policies on labeling tobacco packaging with effective health warnings (FCTC Art. 11).
Improve availability and accessibility to comprehensive smoking cessation services (FCTC Art. 14).
Implement a complete ban on tobacco advertising, sponsorship and promotion (FCTC Art.13).

37. Thank you!