Economics Of Tobacco Control In Developing Countries

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  • Delete – but could you add in here a couple of examples of the effect of tax increases on sales? Again, David/Francis may be able to help you here.
  • This is the single most important message for us to communicate the policy makers. High taxes work from a public health point of view and from a revenue point of view. What is your view on the reasons the industry forego the opportunity that this elasticicty characteristic affords them. Is it purely to ensure the product is affordable for new entrants (children) ? If so can it be said that the industries priceing policy is determined by their desire to recruit children? Perhaps they have a different take on the elasticity question?
  • Keep
  • Ireland has had a partial ban on advertising (electronic media) for many years during that time smoking prevelance was static or rising slightly We recently introduced a further ban on all forms of print media advertising and our current legislation now being chllenged in the courts provides for a complete ban on point of sale advertising. It is helpful to dwell on the requirement that the ban should be comprehensive.
  • Economics Of Tobacco Control In Developing Countries

    1. 1. Economics of Tobacco Control in Developing Countries Syed Aljunid MD (UKM) MSc Public Health (Singapore) PhD (Health Econs and Financing) (London) FAMM Professor of Health Economics and Senior Research Fellow UNU-International Institute For Global Health Kuala Lumpur UNU- International Institute For Global Health (UNU-IIGH)
    2. 2. OUTLINE <ul><li>Introduction </li></ul><ul><li>Smoking in Developing Countries </li></ul><ul><li>Healthcare Cost of Smoking </li></ul><ul><li>Smoking and Poverty </li></ul><ul><li>Tobacco Control Price Measures </li></ul><ul><li>Non-price measures </li></ul><ul><li>Conclusions </li></ul>
    3. 3. Introduction <ul><li>Health Systems of developing countries is facing major crisis due to internal and external factors. </li></ul><ul><li>World Health Report (2008) identified Five Shortcomings of Health Systems </li></ul><ul><ul><li>Inverse Care </li></ul></ul><ul><ul><li>Impoverishing Care </li></ul></ul><ul><ul><li>Fragmented and Fragmenting Care </li></ul></ul><ul><ul><li>Unsafe Care </li></ul></ul><ul><ul><li>Misdirected Care </li></ul></ul>
    4. 4. Introduction <ul><li>Health System is excessively burdened by increasing prevalence of Chronic and Non-communicable Diseases </li></ul><ul><ul><li>Most are linked to unhealthy lifestyles including Smoking </li></ul></ul><ul><ul><li>The poor living in low and middle income countries are the main victims </li></ul></ul><ul><li>Some economist argued that smokers contribute to economy by paying high taxes </li></ul>
    5. 5. Shift towards Non-communicable Diseases/Accidents as Cause of Deaths
    6. 6. Projected Deaths (Millions) and DALYS in 23 Selected Countries Source: Abegunde et all (2007) Lancet 370:1929-38
    7. 7. Leading Cause of Deaths in Malaysian Hospitals (2008)
    8. 8. Healthcare Costs from Smoking <ul><li>Annual (gross) healthcare costs: </li></ul><ul><ul><li>0.1-1.1% of GDP, or 6 -15% of total health costs in high-income countries </li></ul></ul><ul><ul><li>proportionally similar in lower-income countries </li></ul></ul><ul><li>Annual Global Net Loss due to smoking </li></ul><ul><ul><li>USD 200,000 million </li></ul></ul><ul><ul><li>One third of loss is in developing countries </li></ul></ul>
    9. 9. Annual Cost of Selected Chronic Illness in Malaysia (2005) Chronic Diseases Annual Cost (Millions, RM) Ischemic Heart Diseases 1,432 Chronic Obstructive Airway Diseases 2,919 Cervical Cancer 247 Lung Cancer 146
    10. 10. In-Patient Utilisation For Smoking Related Diseases in Malaysia, 2004 IHD CA LUNG COPD Average Average Number of Admissions 1.6 2.4 1.3 1.8 Average Annual Fees (RM) 151.51 213.47 47.50 137.49 Average Length Of Stay (ALOS) 5.32 6.73 5.67 5.88 Minimum Length Of Stay (LOS) 1 1 1 1 Maximum LOS 19 43 25 43
    11. 11. Total Cost Per Year for Malaysia IHD CA Lung COPD Annual Cost per patient 21,676 42,287 32,172 Nos. of new cases 32,816 2,881 12,776 Nos. of old cases 99,852 1,701 233,857 Total Cost per Year (Nation)(Mill) 630.4 116.6 2,306.0
    12. 12. Annual Cost per Patient (RM) Patients’ Cost Providers’ Cost Total Annual cost IHD 1,362 20,134 21,676 CA Lung 7,758 34,529 42,287 COPD 12,757 19,415 32,172
    13. 13. HealthCare Cost of Smoking for IHD (RM Millions)
    14. 14. HealthCare Cost of Smoking for Lung CA (RM Millions)
    15. 15. HealthCare Cost of Smoking for COPD (RM Millions)
    16. 16. Age Start Smoking Among Secondary School Children in Selangor, Malaysia (2006
    17. 17. Students Exposed to Tobacco Smoke at Home and Outside Home Global Youths Tobacco Survey: 1999-2005
    18. 18. Health and Poverty: The incidence of catastrophic out-of-pocket payments in 59 countries
    19. 19. Risk of Distress Borrowing and Selling During Hospitalisation in India, 1995-1996 Source: Bonu et al (2005) Health Policy and Planning 20 :41-49
    20. 20. Prevalence of Daily Smokers: Poorest vs Richest Quintiles in Low and Middle Income Countries
    21. 21. Ratio of Expenditure on Tobacco vs Education in Bangladesh, 1995-96 Efroymson et al (2001): Tobacco Control 10:212-17
    22. 22. Which interventions are effective? Measures to reduce demand <ul><li>Higher cigarette taxes </li></ul><ul><li>Non-price measures: consumer information, research, cigarette advertising and promotion bans, warning labels and restrictions on public smoking </li></ul><ul><li>Increased access to nicotine replacement (NRT) and other cessation therapies </li></ul>
    23. 23. Taxation is the Most Effective Tobacco Control Measure <ul><li>Higher taxes induce quitting, reduce consumption and prevent starting </li></ul><ul><li>A 10% price increase reduces demand by: </li></ul><ul><ul><li>4% in high-income countries </li></ul></ul><ul><ul><li>8% in low or middle-income countries </li></ul></ul><ul><ul><li>long-run effects may be greater </li></ul></ul><ul><li>Young people and the poor are the most price responsive </li></ul>Source: Chaloupka et al. , 2000
    24. 24. Tobacco Tax and Economic Impact <ul><li>Empirical evidence shows that higher tobacco taxes: </li></ul><ul><ul><li>improve public health </li></ul></ul><ul><ul><li>increase tax collection (even in the presence of smuggling) </li></ul></ul><ul><ul><li>do not have negative impact on employment </li></ul></ul><ul><ul><li>do not have negative impact on the poor </li></ul></ul>
    25. 25. Industry clearly understands the impact of tobacco taxation <ul><li>&quot;With regard to taxation, it is clear that in the US, and in most countries in which we operate, tax is becoming a major threat to our existence.&quot; </li></ul><ul><li>&quot;Of all the concerns, there is one - taxation - that alarms us the most. While marketing restrictions and public and passive smoking (restrictions) do depress volume, in our experience taxation depresses it much more severely. Our concern for taxation is, therefore, central to our thinking....&quot; </li></ul>Philip Morris, “Smoking and Health Initiatives”, 1985
    26. 26. 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
    27. 27. Cigarette price and consumption show opposite trends (2) Source: ImpacTeen, 2003
    28. 28. Youth and the Poor Most Responsive to Tax Increases <ul><li>Effects on youth up to three times as large as effects on adults </li></ul><ul><ul><li>low incomes, less addicted, greater effect of peer influences, importance of current costs </li></ul></ul><ul><li>Large reductions in lowest income populations compared to small reductions in highest income populations </li></ul><ul><ul><li>Consistent with economic theory </li></ul></ul><ul><ul><li>Implies tax increases can be progressive </li></ul></ul>Source: Chaloupka et al. , 2000
    29. 29. Cigarette price and youth smoking show opposite trends Real price of cigarettes and youth smoking prevalence, US, 1975-2002 Source: ImpacTeen, 2003
    30. 30. SEA and Australian Region Source: Judith Mackay, Michael Eriksen : Tobacco Atlas
    31. 31. Price of a 20 Cigarettes Pack (International Dollars, 2006)
    32. 32. Non-price measures to reduce demand <ul><li>Increase consumer information: dissemination of research findings, warning labels, counter-advertising </li></ul><ul><li>Comprehensive ban on advertising and promotion </li></ul><ul><li>Restrictions on smoking in public and work places </li></ul><ul><li>Increase access to nicotine-replacement therapies (NRT) </li></ul>
    33. 33. Health information reduces the demand for cigarettes Source: Kenkel and Chen, 2000
    34. 34. Comprehensive advertising bans reduce cigarette consumption Consumption trends in countries with such bans vs. those with no bans (n=102 countries) Source: Saffer, 2000
    35. 35. Effect of advertising bans and counter-advertising <ul><li>A comprehensive set of tobacco advertising bans can reduce consumption by 6.3% </li></ul><ul><li>Counter-advertising messages (set at 15% of the total number of advertising messages) can reduce smoking by about 2% a year </li></ul>Source: Saffer and Chaloupka, 2000
    36. 36. Effectiveness of Smoking Cessation Clinic in Malaysia (2006) KLINIK KESIHATAN % Quiters KK Bandar Alor Setar 11.8 KK Merbok 17.6 KK Kg Simee 21.9 KK Setiawan 16.1 KK Bakri 24.2 KK Segamat 12.0 KK Selingsing 18.8 KK Pulai Chondong 15.2 All Klinik Kesihatan 17.3
    37. 37. Conclusions <ul><li>Chronic non-communicable diseases linked to smoking pose major challenges to health systems </li></ul><ul><li>Smoking is an effective agent causing negative economic impact to individuals, families and nations especially to the poor living in low income countries </li></ul><ul><li>Cigarette tax is the single most effective measure to control smoking through price increase </li></ul><ul><li>Non-price measures should be systematically implemented to potentiate the effect of cigarette tax in tobacco control </li></ul>
    38. 38. THANK YOU [email_address] [email_address]

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