1. www.endsmoking.org.nz October 2010 1 Three policy options to reduce nicotine in combustible tobacco sold in NZ by 2020: with special focus on Nicotine tax Murray Laugesen, End Smoking NZ trust Nick Wilson, University of Otago, Wellington Paper presented at APACT Conference, Sydney, 8 October 2010

2. www.endsmoking.org.nz October 2010 2 Glossary HN = high nicotine = most cigarettes sold today. MN = medium nicotine LN = low nicotine VLN = very low nicotine. RNC = Reduced nicotine cigarette, nicotine yield proportional to nicotine content. Yield =smoke-machine-measured nicotine. Content =nicotine in an unlit cigarette

3. www.endsmoking.org.nz October 2010 3 Three policy options to reduce nicotine 1)Mandated sinking nicotine content, all brands together. Lower nicotine content -20% p.a. Little effect until 80% reduced. (USA FDA could do this in future) 2) Mandate increase in VLN share of sales by 20% p.a. However there is no economic incentive to buy these VLN cigarettes. 3) Nicotine tax makes VLN cigarettes a smart way for smokers to avoid paying more for their smoking. Similar to a tax on tobacco content.

4. www.endsmoking.org.nz October 2010 4 Justification for taxing nicotine in combustible tobacco products Smoking is highly addictive. - NZ Health warning. 85% of NZ smokers want cigarettes to be less addictive - Thomson G, Wilson N, Edwards R. Letter, NZ Med J. 2010;123(1308 ).

5. www.endsmoking.org.nz October 2010 5 Nicotine content of leading brands, NZ 1997 per 0.7 g moist tobacco cigarette Blakely, Laugesen, Symons, Fellows, NZ Health Report 1997; 4:33-34,85 Nicotine content of all cigarettes is at least five times the 2 mg content (0.2 mg yield) per cigarette needed, at 25 cigarettes daily, to equal the addiction threshold.

6. www.endsmoking.org.nz October 2010 6 Nicotine content, yield and tax Nicotine content mg* Nicotine yield mg* Nicotine tax $ / cigarette proposed High HN120.81.00 Medium MN 80.60.75 Low LN 40.40.50 Very low VLN 20.20.00 *Benowitz 2007 **most NZ brands 1997 **

7. www.endsmoking.org.nz October 2010 7 The concept of a nicotine threshold A threshold implies that addiction only begins to decline markedly below the threshold. Nicotine threshold = total of nicotine absorbed needed to sustain addiction. Estimated at 5 mg per day ( Benowitz and Henningfield 1994) 5 mg = up to 25 VLN of (0.2 mg machine yield), or 6 HN of 0.8 mg machine yield. Further research needed on the actual threshold so as to include 90-95% of smokers. A range may be needed.

8. www.endsmoking.org.nz October 2010 8 Tapering Nicotine tax would enable smokers to successfully reduce their nicotine intake Tapering based on packet-printed yield data seldom succeeds. This can now be remedied: If smokers can see the nicotine content in mg printed on the packet, or banded (HN, MN, LN, VLN). If manufacturers are forced by a tax on nicotine content, to now sell brands with both low and high nicotine content.. NOTE: Tapering is a free quit method for smokers (unlike medicinal nicotine products), which could assist smokers in all countries rich or poor.

9. www.endsmoking.org.nz October 2010 9 Testing and labeling for nicotine content Government publishes a list of government approved laboratories, independent of industry, whereby manufacturers can arrange nicotine content and yield testing at their own expense. Government requires all brands sold to be labeled for nicotine content in mg per cigarette, from 6 months before the nicotine tax takes effect.

10. www.endsmoking.org.nz October 2010 10 Tax nicotine content, not yield Tobacco excise is levied on tobacco content. Nicotine tax is extra, and levied on nicotine content. Tax is levied per milligram of nicotine content per average unburnt cigarette. eg $1 per HN cigarette VLN cigarettes are much less addictive and would attract zero nicotine tax. As nicotine content rises above threshold, tax rises steeply at first and less steeply thereafter.

11. www.endsmoking.org.nz October 2010 11 Nicotine yield and price choices for smokers paying nicotine tax Estimated from pervious slides

12. www.endsmoking.org.nz October 2010 12 Research evidence Reduced nicotine content cigarette studies – Benowitz 2007. Lowers smokers’ addiction. Review Hatsukami Tob Control 2010;19 e1-e10. Nicotine reduction is an important area for research Denicotinised cigarettes – can reduce motivation to continue smoking by 30% but not by 100%. (Brody 2009) Clinical simulations of policy eg Johnson 2004 needed to ensure accurate national statistical modeling of addiction policy (Cavana 2008)

13. www.endsmoking.org.nz October 2010 13 More questions Major immediate and permanent reduction in sales? As tax increases price of HN, nicotine consumption should fall. Could Industry pricing soften nicotine tax effect? Board game simulations needed. Will the tax over the long term enhance quitting? Yes, if at every quitting attempt the smoker is less addicted.. Risk of blackmarket? HN cigarettes though expensive, will be legally on sale in all shops. End game role? More useful as a component of a more comprehensive policy? - as End Smoking NZ has proposed www.endsmoking.org.nz/Fourpolicies14May2010.pdf www.endsmoking.org.nz/Fourpolicies14May2010.pdf

14. www.endsmoking.org.nz October 2010 14 Expected industry response Nicotine tax pressures manufacturers to sell less nicotine in the average cigarette. Government may wish to ban composite packets of high and low nicotine, which would otherwise allow manufacturers to control the smoker’s nicotine choices.

15. www.endsmoking.org.nz October 2010 15 Tax forces change at the factory - Commercial Cigarettes become RNCs Today’s Commercial Cigarette contains far more nicotine than needed for maintaining addiction. After nicotine tax, all cigarettes except HN will contain much less nicotine, and function like Reduced Nicotine Content cigarettes (RNCs). RNCs minimise compensatory smoking

16. www.endsmoking.org.nz October 2010 16 Expected industry pricing response Manufacturers if permitted, might wish to discount the price of high nicotine cigarettes to offset the effect of nicotine tax, and so keep smokers addicted. SFE Act could be amended to outlaw this practice. Or, the nicotine tax might be increased.

17. www.endsmoking.org.nz October 2010 17 Expected smoker responses Most smokers will inhale less nicotine. Smokers could smoke 1-2 HN cigarettes to start the day and use 18-19 VLNs over the rest of the day to minimise their nicotine tax and still obtain nicotine satisfaction. More quit attempts, more success in quitting. Nicotine becomes a luxury, to be savoured. Wealthy smokers could pay up to $20 per day for nicotine.

18. www.endsmoking.org.nz October 2010 18 Biological effect on smokers who, not wishing to quit, switch to very low nicotine (VLN) cigarettes Cigarettes smoked per day: halved Addiction score (FTND): halved Self efficacy in quitting doubled Nicotine inhaled per day: halved CO exhaled (toxicity indicator): - 66% NNAL in urine (carcinogen indicator): halved based on Benowitz 2007 10 week study of reduced nicotine cigarettes, smokers not intending to quit.

19. www.endsmoking.org.nz October 2010 19 Appendix - Check list for government before taxing nicotine Commission nicotine tax simulation studies. Publish a discussion of proposed changes. Consult with stakeholders and experts Require annual testing of all brands for nicotine content as well as nicotine yield. Regulate for nicotine content labels on all packets Ban import and sale of liquid nicotine. Allow manufacturers 6 months to re-tool.