Tobacco Control in Developing Countries andCurbing the Epidemic

Tobacco Control in Developing Countries andCurbing the Epidemic

The World Bank WHO

P Jha, FJ Chaloupka on behalf of the report team

Why this book?Why this book?Economic arguments around tobacco control are unclear and Economic arguments around tobacco control are unclear and

often debatedoften debated

In 1996In 1996, an Asian Health Minister stated “cigarette producers are , an Asian Health Minister stated “cigarette producers are making large contributions to our economy... we have to think making large contributions to our economy... we have to think about workers and tobacco farmers”about workers and tobacco farmers”

In 1997, In 1997, The EconomistThe Economist commented "most smokers (two-thirds commented "most smokers (two-thirds or more) do not die of smoking-related disease. They gamble and or more) do not die of smoking-related disease. They gamble and win. Moreover, the years lost to smoking come from the end of win. Moreover, the years lost to smoking come from the end of life, when people are most likely to die of something else anyway”life, when people are most likely to die of something else anyway”

Source: Tobacco Control 1996, The Economist 1997

MethodologyMethodology Consultation workshopsConsultation workshops: : Washington D.C. 1996, Beijing Washington D.C. 1996, Beijing

1997, Cape Town 1998 1997, Cape Town 1998 Cape Town Proceedings published in 1998Cape Town Proceedings published in 1998

19 Background papers 19 Background papers 40 economists, epidemiologists, and control experts from 13 40 economists, epidemiologists, and control experts from 13

countries.countries. Reviews of literatureReviews of literature New analysesNew analyses 2 rounds of peer review2 rounds of peer review

Synthesized in “Curbing the EpidemicSynthesized in “Curbing the Epidemic”, ”, Jha and Chaloupka, 1999Jha and Chaloupka, 1999

Outline of bookOutline of book

Tobacco use and its consequencesTobacco use and its consequences Analytics of tobacco useAnalytics of tobacco use Demand for tobaccoDemand for tobacco Supply of tobaccoSupply of tobacco Policy directionsPolicy directions

Most smokers live in developing countriesMost smokers live in developing countries

Source: Jha et al, 2002, AJPH

Current smokers in 1995 (in millions)

Region NumberLow/Middle income 933High Income 209World 1,142

Quit rates low in low income countries 5-10% in China and India15-21% in Hungary and Poland 30-40% in UK

Large and growing number of deaths from smoking

Large and growing number of deaths from smoking

Source: Peto and Lopez, 2001

Past and future tobacco deaths (in billions)

Time Billions of deaths1901-2000 0.1 (mostly in developed

countries)

2001-2100 1.0 (mostly in developingcountries)

0.5 B among people alive today 1 in 2 of long-term smokers killed by their addiction1/2 of deaths in middle age (35-69)

Trends in smoking in Norwegian males by Income Group

Trends in smoking in Norwegian males by Income Group

25%

35%

45%

55%

65%

75%

85%

1955 1960 1965 1970 1975 1980 1985 1990Year

Mal

e sm

oki

ng

pre

vale

nce

High income

Low income

Source: Lund et al., 1995

Smoking is more common among the less educated

Smoking prevalence among men in Chennai, India, by education levels

Smoking is more common among the less educated

Smoking prevalence among men in Chennai, India, by education levels

Source: Gajalakshmi and Peto 1997

64%58%

42%

21%

0%

20%

40%

60%

Illiterate <6 years 6-12years

>12years

Length of schooling

Sm

okin

g p

revale

nce

Nicotine addition and the poor:Plasma cotinine in adult smokers by socioeconomic status

Nicotine addition and the poor:Plasma cotinine in adult smokers by socioeconomic status

Source: Health Survey, England, 1999; Bobak et al, 2000

0 1 2 3 4

200

250

300

350

Pla

sma

coti

nin

e (n

g/m

l)

Socio-economic status

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

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

5% 9%19%1%

1%

5%

21%

22%

28%

0%

10%

20%

30%

40%

50%

60%

Higher Secondary Primary

Other causes

Attributed to SMOKINGbut would have diedanyway at ages 35-69

Attributed to SMOKING

Why should governments intervene?Economic rationale or “market failures”

Why should governments intervene?Economic rationale or “market failures”

Smokers do not know their risksSmokers do not know their risks Addiction and youth onset of smokingAddiction and youth onset of smoking

Lack of information and unwillingness to Lack of information and unwillingness to act on informationact on information

Regret habit later, but many addictedRegret habit later, but many addicted

Costs imposed on othersCosts imposed on others Costs of environmental tobacco smoke Costs of environmental tobacco smoke

and health costsand health costs

Source: Jha et al., 2000

Underestimated risks of smokingUnderestimated risks of smoking 7 in 10 of Chinese smokers thought smoking does 7 in 10 of Chinese smokers thought smoking does

them “little or no harm”them “little or no harm” Risks not internalized: personal risks perceived Risks not internalized: personal risks perceived

lower than average riskslower than average risks Risks of addiction downplayed: only 2 in 5 of US Risks of addiction downplayed: only 2 in 5 of US

adolescents intending to quit actually doadolescents intending to quit actually do in high-income countries, 7 in 10 smokers wish they in high-income countries, 7 in 10 smokers wish they

had not startedhad not started

Source: Kenkel and Chen, 2000; Weinstein, 1998; SGR, 1989 and 1994

Tobacco addiction starts early in lifeTobacco addiction starts early in life

Source: Chinese Academy of Preventive Medicine 1997, Gupta 1996, US Surgeon General Reports, 1989

Every day 80,000 to 100,000 youths Every day 80,000 to 100,000 youths become regular smokersbecome regular smokers

China

(males,1996)

India

(males, 1995)

US

(both sexes,

born 1952-61)

US

(both sexes,

born 1910-14)

0

20

40

60

80

100

15 20 25

Age

Cu

mu

lati

ve u

pta

ke in

per

cen

t

Healthcare costs from smokingHealthcare costs from smoking

Annual (gross) healthcare costs:Annual (gross) healthcare costs: 0.1-1.1% of GDP, or 0.1-1.1% of GDP, or 6 -15% of total health costs 6 -15% of total health costs in high-in high-

income countriesincome countries proportionally similar in lower-income countries proportionally similar in lower-income countries

Net (lifetime) healthcare costs: Net (lifetime) healthcare costs: Differences in lifetime costs are smaller than annual costsDifferences in lifetime costs are smaller than annual costs Best studies do suggest there are net lifetime costsBest studies do suggest there are net lifetime costs Pension or “smokers pay their way” arguments are complexPension or “smokers pay their way” arguments are complex

Source: Lightwood et al., 2000

Government roles in interveningGovernment roles in intervening

To deter children from smokingTo deter children from smoking To protect non-smokers from others’ smokeTo protect non-smokers from others’ smoke To provide adults with necessary information to make an To provide adults with necessary information to make an

informed choiceinformed choice

First-best instrument, such as youth restrictions, are usually First-best instrument, such as youth restrictions, are usually ineffective. Thus, tax increases are justified, and are effective.ineffective. Thus, tax increases are justified, and are effective.

Tax increases are blunt instruments.Tax increases are blunt instruments.

Source: Jha et al., 2000

Unless current smokers quit, smoking deaths will rise dramatically over the next 50 years

Unless current smokers quit, smoking deaths will rise dramatically over the next 50 years

0

340

520

70

500

220

190

0

100

200

300

400

500

1950 2000 2025 2050

Year

Toba

cco

deat

hs (m

illio

n)

Baseline

If proportion ofyoung adultstaking up smokinghalves by 2020

If adultconsumptionhalves by 2020

Source: Peto and Lopez, 2001

Which interventions are effective?Measures to reduce demand

Which interventions are effective?Measures to reduce demand

Higher cigarette taxesHigher cigarette taxes Non-price measuresNon-price measures: consumer : consumer

information, research, cigarette advertising information, research, cigarette advertising and promotion bans, warning labels and and promotion bans, warning labels and restrictions on public smokingrestrictions on public smoking

Increased access to nicotine replacement Increased access to nicotine replacement (NRT) and other cessation therapies (NRT) and other cessation therapies

Taxation is the most effective measure

Taxation is the most effective measure Higher taxes induce quitting, reduce consumption and Higher taxes induce quitting, reduce consumption and

prevent startingprevent starting A 10% price increase reduces demand by:A 10% price increase reduces demand by:

4% in high-income countries4% in high-income countries 8% in low or middle-income countries8% in low or middle-income countries About half of the effect is on amount and half on initiationAbout half of the effect is on amount and half on initiation Long-run effects may be greaterLong-run effects may be greater

Young people and the poor are the most price Young people and the poor are the most price responsiveresponsive

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 1970-1989

Cigarette price and consumption show opposite trends (1)

Real price of cigarettes and annual per adult cigarette consumption in

South Africa 1970-1989

Source: Saloojee 1995

0.05

0.06

0.07

0.08

0.09

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988

Year

Cig

aret

te c

on

sum

pti

on

per

ad

ult

(in

pac

ks)

0.7

0.8

0.9

1

1.1

1.2

1.3

Rea

l P

rice

Real price

Consumptionper adult

Cigarette price and consumption show opposite trends (2)

Real price of cigarettes and cigarette consumption in the UK, 1971-96

Cigarette price and consumption show opposite trends (2)

Real price of cigarettes and cigarette consumption in the UK, 1971-96

Source: Townsend 1998

Real price and consumption of cigarettes in the UK1971-1996

9000

10000

11000

12000

13000

14000

15000

16000

17000

1971 1974 1977 1980 1983 1986 1989 1992 1995

Year

Cig

aret

te C

on

sum

pti

on

1

99

4 p

rice

s (£

m)

£ 1.25

£ 1.45

£ 1.65

£ 1.85

£ 2.05

£ 2.25

£ 2.45

£ 2.65

Pri

ce (

£)

19

94

val

ue

PRICE

CONSUMPTION

There is still ample room, especially in lower-income countries, to raise cigarette taxes

There is still ample room, especially in lower-income countries, to raise cigarette taxes

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

High Income Upper MiddleIncome

Lower MiddleIncome

Low Income

Countries by income

Ave

rage

pric

e or

tax

per p

ack

(US$

)

0

10

20

30

40

50

60

70

80

Tax

as a

per

cent

age

of p

rice

Average price in US$Average tax in US$Tax as a percentage of price

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 1960-95

Cigarette tax increases result in higher tax revenues (1)

Real cigarette tax rate and real cigarette tax revenue in

the US 1960-95

Source: Sunley et al., 2000

Non-price measures to reduce demandNon-price measures to reduce demand Increase consumer informationIncrease consumer information: dissemination of : dissemination of

research findings, warning labels, counter-research findings, warning labels, counter-advertisingadvertising

Comprehensive ban on advertising and Comprehensive ban on advertising and promotionpromotion

Restrictions on smoking in public and work Restrictions on smoking in public and work places places

Increase access to nicotine-replacement Increase access to nicotine-replacement therapies (NRT)therapies (NRT)

Health information reduces the demand for cigarettes

Health information reduces the demand for cigarettes

Country Time Event Immediate reduction incigarette consumption

The US 1964 Surgeon GeneralReport

1-2%

UK 1962 1st report of the RoyalCollege of Physicians

5%

Switzerland 1966 An anti-smokingcampaign

11%

Turkey 1982 Implementation ofhealth warning labels

8%

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)

Comprehensive advertising bans reduce cigarette consumption Consumption trends in countries with such bans vs. those with no bans

(n=102 countries)

No Ban

Ban

1450

1500

1550

1600

1650

1700

1750

1981 1991

Year

Cig

aret

te c

on

sum

pti

on

per

cap

ita

Source: Saffer, 2000

Effect of advertising bans and counter-advertising

Effect of advertising bans and counter-advertising

A comprehensive set of tobacco A comprehensive set of tobacco advertising bans can reduce consumption advertising bans can reduce consumption by 6.3%by 6.3%

Counter-advertising messages (set at 15% Counter-advertising messages (set at 15% of the total number of advertising of the total number of advertising messages) can reduce smoking by about messages) can reduce smoking by about 2% a year2% a year

Source: Saffer, 2000

Clean indoor-air laws and youth access restrictions Clean indoor-air laws and youth access restrictions

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

Effectiveness of cessationEffectiveness of cessation

Increase in 6 month Intervention quit rates (%)

Brief advice to stop by clinician 2 to 3

Adding NRT to brief advice 6

Intensive support plus NRT 8

Source: Raw et al., 1999; AHCPR, 1999

NRT and cessation therapiesNRT and cessation therapies

Adherence rates still low (<40%), and time Adherence rates still low (<40%), and time dependentdependent

Role of anti depressants, intensive efforts, Role of anti depressants, intensive efforts, combination agents still not clearcombination agents still not clear

Price and access issues remain barriersPrice and access issues remain barriers

Source: Novotny et al., 2000

NRT and cessation therapiesNRT and cessation therapies NRTs double the effectiveness of cessation NRTs double the effectiveness of cessation

efforts and reduce individuals’ withdrawal costsefforts and reduce individuals’ withdrawal costs Governments may widen access to NRT and Governments may widen access to NRT and

other cessation therapies by:other cessation therapies by: Reducing regulation (like cigarette markets Reducing regulation (like cigarette markets

today)today) Conducting more studies on cost-effectiveness Conducting more studies on cost-effectiveness

(especially in low/middle income countries)(especially in low/middle income countries) Considering NRT subsidies for poorest smokersConsidering NRT subsidies for poorest smokers

Source: Novotny et al., 2000

Impact of interventions on initiation and cessation

Impact of interventions on initiation and cessation

Intervention Initiation Cessation

Price increases 10% increase=3-10% decrease

10% increase=11-13% shorter duration, 3% higher cessation

Anti-smoking media

Weak evidence Increased number of attempts and success

Advertising and promotion bans

Reduces experimenting and initiation, higher effects on female

Complete ban reduces consumption by about 6%

Youth access Weak evidence No evidence

Smoking restrictions

Some evidence of lower initiation

Work and household restrictions most effective

NRT No evidence More decisions to quit and higher number of attempts

Source: Ross et al, 2001

Source: Ranson et al., 2002

Income group Price increases of

10%

Non-price measures

with effectiveness of 2 to 10%

NRT (publicly provided) with effectiveness of 0.5 to 2.5%

Low / middle 4 to 14 4 to 21 1 to 5

High 0.5 to 2 1 to 5 0.2 to 1

World 5 to 16 5 to 26 1 to 6

Potential reductions in deaths (millions) from a price and non-price measures

Potential reductions in deaths (millions) from a price and non-price measures

Documenting changes in response to control policies

Documenting changes in response to control policies

CALIFORNIACALIFORNIA: versus rest of the US: versus rest of the US 14% vs. 3% decline in lung cancer rates14% vs. 3% decline in lung cancer rates

MONICA analyses of 36 countries: MONICA analyses of 36 countries: control has been partially effectivecontrol has been partially effective male never smokers rosemale never smokers rose female ex-smokers rose, but new smokers female ex-smokers rose, but new smokers

roserose

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, 1998-2020

Cumulative deaths avoided (millions) before age 60 with interventions in low and middle-income

countries, 1998-2020

12483

4213 3220114

2005 2010 2015 2020

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

Which interventions are ineffective at reducing consumption?

Most measures to reduce supply

ProhibitionProhibition Youth access restrictionsYouth access restrictions Crop substitutionCrop substitution Trade restrictions Trade restrictions Control of smuggling is the only exception Control of smuggling is the only exception

and it is the key supply-side measureand it is the key supply-side measureSource: Jacobs et al., 2000; Woolery et al., 2000; Taylor et al., 2000

What are the costs of tobacco control?

What are the costs of tobacco control?

Revenue lossRevenue loss: : likely to have revenue gainslikely to have revenue gains a 10% tax increase would raise revenue by 7%a 10% tax increase would raise revenue by 7%

Job lossJob loss: : temporary, minimal, and gradualtemporary, minimal, and gradual Possible smugglingPossible smuggling: : crack down on criminal crack down on criminal

activity, not lower taxesactivity, not lower taxes Cost to individuals, especially the poor:Cost to individuals, especially the poor:

partially offset by lower consumptionpartially offset by lower consumption

Studies on the employment effects of dramatically reduced or eliminated tobacco consumption

Studies on the employment effects of dramatically reduced or eliminated tobacco consumption

Type of country Name and year Net change as % ofeconomy in base

year givenNet Exporters US (1993) 0%

UK (1990) +0.5%

Zimbabwe (1980) -12.4%

Balanced TobaccoEconomies

South Africa (1995) +0.4%

Scotland (1989) +0.3%

Net Importers Bangladesh (1994) +18.7%

Source:Buck et al, 1995; Irvine and Sims, 1997; McNicoll and Boyle 1992, Jacobs et al, 2000; Warner et al , 1996

Smuggling of cigarettesSmuggling of cigarettes

Industry has economic incentive to smuggleIndustry has economic incentive to smuggle Increase market share and decrease tax ratesIncrease market share and decrease tax rates

Best estimate: 6 to 8.5% of total consumptionBest estimate: 6 to 8.5% of total consumption Non-price variables importantNon-price variables important

Perceived level of corruption more important than cigarette Perceived level of corruption more important than cigarette pricesprices

Tax increase will lead to revenue increase, even in the Tax increase will lead to revenue increase, even in the event of increased smugglingevent of increased smuggling

Source: Merrriman et al. 2000; Joosens, 2000; BAT,1998

Estimated smuggling in 1995 in selected European countries

Estimated smuggling in 1995 in selected European countries

Country

Price per

pack in US$ 1995

Estimate of

smuggling as a percentage of 1995 domestic sales by expert

sources Austria

2.96

15%

Spain 1.38 15%

Germany 3.38 10%

Italy 2.19 12%

Greece 1.90 8%

Sweden 4.58 2%

UK 4.16 2%

Source: Merriman et al., 2000

Tobacco smuggling tends to rise in line with the degree of corruption

Smuggling as a function of transparency index

Tobacco smuggling tends to rise in line with the degree of corruption

Smuggling as a function of transparency index

Brazil

Pakistan

Cambodia

Indonesia

Sw eden

Austria

y = - 0.02x + 0.2174

R2 = 0.2723

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0 2 4 6 8 10

Transparency index for country

Sm

ug

glin

g a

s a

sh

are

of

con

sum

ptio

n (

%)

Source: Merriman et al., 2000

Control of smuggling Control of smuggling Countries need not make a choice between higher cigarette Countries need not make a choice between higher cigarette

tax revenues and lower cigarette consumptiontax revenues and lower cigarette consumption Higher tax rates can achieve bothHigher tax rates can achieve both

Effective control measures of smuggling existEffective control measures of smuggling exist Focus on large container smugglingFocus on large container smuggling Prominent local language warnings and tax stampsProminent local language warnings and tax stamps Increase penaltiesIncrease penalties Licensing and tracking of containersLicensing and tracking of containers Increase export duties or bondsIncrease export duties or bonds

Multilateral tax increases help combat smugglingMultilateral tax increases help combat smuggling

Source: Merrriman Source: Merrriman et al.et al. 2000; Joosens, 2000; BAT, 1998 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, 1989-1995

Lower tax rates in Canada in response to smuggling

Real price of cigarettes and annual cigarette

consumption per capita, Canada, 1989-1995 Tax reduced in an attempt to counter

smugglingI

V

0

1

2

3

4

5

6

719

89

1990

1991

1992

1993

1994

1995

Rea

l pri

ce p

er p

ack

(US

D)

0

10

20

30

40

50

60

70

80

90

Ann

ual c

igar

ette

con

sum

ptio

n pe

r ca

pita

(in

pack

s)

Real Price Consumption

Source: Jha and Chaloupka, 1999

Smuggling and tax revenue (1)Smuggling and tax revenue (1)SOUTH AFRICA, 1990sSOUTH AFRICA, 1990s Increased excise tax from 38 to 50% of retail priceIncreased excise tax from 38 to 50% of retail price

Smuggling rose from 0 to 6%Smuggling rose from 0 to 6% Sales fell 20%Sales fell 20% Revenue went up 2 foldRevenue went up 2 fold

CANADA, 1993-94CANADA, 1993-94 Lowered tax in response to organized smugglingLowered tax in response to organized smuggling

Retail price fell by halfRetail price fell by half Total consumption rose 30%, more so in youngTotal consumption rose 30%, more so in young Average revenue per capita fell by 35%Average revenue per capita fell by 35%

Source: Abedian, 1998; Sweanor, 1998Source: Abedian, 1998; Sweanor, 1998

Distribution of control policies scores by income group

Distribution of control policies scores by income group

Source: Chaloupka et al., 2001

Incomegroup

ETS A and P ProductRegula-

tion

Tax Total score

Low(n=51)

3.9 3.2 2.0 1.3 9.1

Middle(n=52)

6.0 3.7 1.3 2.6 13.7

Uppermiddle(n=30)

6.3 3.7 1.7 3.2 15.3

SummarySummary Tobacco deaths worldwide are large and growing, and have higher Tobacco deaths worldwide are large and growing, and have higher

burdens among the poorburdens among the poor

Specific market failures support government interventionSpecific market failures support government intervention

Demand measures, chiefly tax increases, information, and Demand measures, chiefly tax increases, information, and regulation are most effective to reduce consumption, and are also regulation are most effective to reduce consumption, and are also cost-effectivecost-effective

Helping adults quit is as important as preventing kids from startingHelping adults quit is as important as preventing kids from starting

Control of smuggling is the major supply-side interventionControl of smuggling is the major supply-side intervention

Poor coverage of known effective interventions in lower income Poor coverage of known effective interventions in lower income countriescountries

An agenda for cessation in EuropeAn agenda for cessation in EuropeGoal: raise ex-smoking rates to 50% by 2010 in Eastern and Central Europe European Tobacco Intervention Program (modelled after regional HIV/AIDS programming in Africa and Latin

America or ASSIST program by CDC); Major EU/World Bank support of 1 billion Euro/year for 7-10 years (1E/capita); 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;

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;

NGOs selected for advocacy and uncovering industry practices; Negotiated future price guarantees for better cessation products; and Only major supply-side focus is on smuggling, including industry involvement and impact on price (take little

action on the tobacco subsidy);

www.tobaccoevidence.orgwww.tobaccoevidence.org

Source: Jha, Ross, Chaloupka

International Tobacco Evidence Network (ITEN)

International Tobacco Evidence Network (ITEN)

internet-based information sharing enhancing research capacity in 5 regional technical

centres; providing a peer review function and dissemination

vehicle for primary research fostering interdisciplinary research using peer-reviewed

research protocols on priority topics

www.tobaccoevidence.orgwww.tobaccoevidence.org