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The health, poverty and financial

consequences of a large tobacco price


increase among 0.5 billion male smokers in
13 low and middle income countries
Pt

Global Tobacco Economics Consortium:


Sujata Mishra, Valarie Ulep, Eduardo Banzon, Patricio Marquez and others
prabhat.jha@utoronto.ca
Twitter: @Countthedead

Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or
policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not
guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use.
Terminology used may not necessarily be consistent with ADB official terms.
CONCLUSIONS
Prolonged smokers lose a decade of life
Cessation by age 40 (and preferably earlier)
avoids 90% of the excess risk of continued
smoking
Tobacco is a big cause of poverty and tobacco
control reduces poverty
A tripling of the excise tax on cigarettes
worldwide would cut consumption by 1/3 and
avoid ~200 M deaths

Source: Jha and Peto, NEJM 2014


Three main messages
for the individual smoker
1. Risk is BIG: 1/2 are killed
(cancer & vascular & respiratory)

2. 1/4 are killed in MIDDLE age


(30-69), losing many years

3. STOPPING smoking works

Source: Peto et al, 1994, Jha and Peto, NEJM 2014


HIV Vodka War

Source: Norheim, Jha, Addis et al, Lancet 2014


Source: Lancet
27 June 2009
Russian male death rate ratios

~1 bottle of vodka/day
vs <0.5 bottles/week:
2 x any medical cause
4 x road traffic accident
6 x any other accident
8 x suicide
10 x murder
Source: Lancet 27 June 2009
HIV Vodka No War

Source: Norheim, Jha, Addis et al, Lancet 2014


Life expectancy loss of 3 years with moderate
obesity and 10 years with smoking
2 kg/m2 extra BMI (if overweight) or 10% smoking prevalence shortens life by ~1 yr

Prospective Studies Collaboration (males) Male British Doctors Study


100 100
% survival from age 35

Moderate
80 obesity 80
Severe Low-mortality BMI Cigarette Never-
obesity smokers smokers
60 60
Yearly Yearly
dots dots
40 40 10
years

BMI, kg/m2
20 22-25 (~24)
20
30-35 (~32)
40-50 (~43)
0 0
40 50 60 70 80 90 100 40 50 60 70 80 90 100

Age (years)
Source: Peto, Whitlock, Jha, NEJM, 2010
UK Million Women Study: contrast between the relevance of
happiness and of smoking to 10-year all-cause mortality
among women who do not already have a chronic disease

Lancet 2016 388: 27-8


21st century
hazards of
cigarette
smoking in 6
distinct
populations

Jha and Peto, NEJM 2014


Years gained by quitting smoking by age

55-64 4

45-54 6

35-44 9

25-34 10

Source: NEJM, Jan 24, 2013


CANADA: Risk of a 35-year-old MAN dying by age 69 from
smoking (shaded) or from any cause (shaded+white), 1950-2015

Mortality change:
1970 to 2015:
ANY CAUSE: 60%
SMOKING: 70%

Source: Peto et al, CTSU, 2016


CANADA: Smoking deaths and % of deaths from
smoking, age 35-69, M + F 1955-2015

Source: Peto et al, CTSU, 2016


Social inequalities in male mortality in 1996
from smoking (shaded) and any cause

Education level
Source: Jha et al, Lancet, July 2006
ONTARIO, CANADA and UNITED STATES: Risk of a 30-
year-old man dying by age 69 from smoking
(shaded) or from any cause (shaded+ white), 1995-2012
ONTARIO MEN US WHITE MEN

-40% -26% -40% -13%

Irving, CGHR Unpublished


CHINA and INDIA :
1 million tobacco
deaths each per year
during the 2010s

Source: Chen et al, Lancet 2014; Jha et al, NEJM 2008


China: Proportion of deaths among
middle-aged males from smoking

1990s 12%
2010 20%
(25% urban, 15% rural)
1998 Hong Kong + 33%
2030s China 33%
+ Hong Kong male smokers started smoking seriously 20 years before

Source: Chen, Peto, Lancet, 2015, Li, Peto et al, 1998, Lam et al, 2001, Peto 2001
INDIA: Years of life lost
among 30 year old smokers*
(MDS results)

Men who smoke bidis 6 years


Women who smoke bidis 8 years
Men who smoke cigarettes 10 years
* At current risks of death versus non-smokers, adjusted for age, alcohol use and education
(note that currently, few females smoke cigarettes)

Source: NEJM, Feb 2009


Risk of death by amount and type, men 30-69 in
India and Bangladesh: smoker vs. nonsmoker risk
ratio
0 1 2 3
Ratio

India cigarettes (mean no./day)


1-7 (4) 1.8

8+ (14) 2.9

Bangladesh cigarettes & bidis (mean no./day)


1-9 (6) 1.3

10-19
(12) 1.6
20-50
(23) 2.7

Excess risk from smoking Not caused by smoking


Source: BMJ 2017
June 1, 2017
Cough up
How to cut smoking in poor countries
The recipe to get people to quit is well-known. Why are
so many governments ignoring it?
Higher taxes help current
smokers to quit
Higher cigarette/bidi taxes: 100% higher price
means 20% of CURRENT SMOKERS WILL QUIT
Greater effects on the poor and in youth
A BIG single increase (e.g. 100%) has greater
impact than yearly smaller increases (e.g. 10%
per year for 10 years)
Price responsiveness does not fall even at higher
prices
Reduces consumption widely; no such thing as
hard core addicted smoker
Source: Curbing the Epidemic, Jha et al, 2015-DCP3;
IARC 2011
Cigarette price and consumption

UK: 2 biggest price rises (in 1947 & 1981)


yielded the 2 biggest drops in smoking

South Africa & France, 1990-2005:


Triple, halve, double
Real cigarette price tripled, smoking halved,
& real Government tobacco tax yield doubled

Source: Jha and Peto, NEJM 2014


Cigarette prices tripled, consumption halved,
tax revenue doubled: FRANCE
Cigarette prices tripled, consumption halved,
tax revenue doubled: SOUTH AFRICA
Low Specific Excise taxes
in LMICs

Tripling excise would:


1.Double street price
2. Raise $100 B more
in revenue

Source: Jha and Peto, NEJM 2014,


Peoples Republic of China
Distribution of marginal taxes and health benefits by SES group

Low SES group:


Pays 6.4% of increased taxes but receives 32.1% of
health benefits: hence, health/tax ratio: 5.02
% of income: Net gain for lowest 2 quintiles, net
loss for highest 3 quintiles
Source: ADB 2013, Verguet 2013
Study Question:
Does imposing a higher excise tax on cigarettes,
disproportionately impact poorer smokers? Is it
really regressive?
Explore the linkages between tobacco taxes and
poverty
Method:
We used ECEA framework to assess the
distributional consequences of 50% price increase
on cigarettes in 13 diverse countries which are at
various stages of economic growth
Background:
13 diverse low and middle income countries
o Lower middle income countries: India, Bangladesh,
Indonesia, Philippines, Vietnam and Armenia
o Upper middle income countries: China, Mexico, Turkey,
Brazil, Colombia, Thailand and Chile
About 2B males of which and consisting of 500M are
smokers
400M live below poverty line i.e. US$ 1.9/day (PPP adjusted)
Only 27% in LMICs and up to 97% in UMICs have UHC
Their average out of pocket is 45% of the total expenditure
o 60% in LMICs and 30% in UMICs
Table 1: Background
IND IND BGL PHL VNM ARM CHN MEX TUR BRA COL THA CHI
Male Population( M) 679 130 81 51 46 1 709 63 39 102 24 34 9
No. of poor (M) 268 21 28 13 3 0 25 4 0 8 3 0 1
THE/GDP (%) 5 3 3 5 7 4 6 6 5 8 7 4 8
OOP/THE (%) 62 47 67 54 37 54 32 44 18 25 15 12 32
Coverage Rate (%) 14 55 26 88 60 28 97 89 85 100 91 98 90
Financial Support 40 70 36 41 60 100 26 82 3 98 81 100 99 90
Male smoking
10 58 28 39 46 53 52 21 39 23 18 45 48
prevalence (%)
Average sticks/day 4 12 8 9 11 24 14 10 18 11 8 9 13
Price per pack of
cigarettes 9 5 3 2 3 3 3 6 10 3 2 7 6
(US PPP)
Excise tax increase
needed 5 3 2 1 1 2 1 3 5 2 1 4 3
(US PPP)
Share of tax to price
43 57 77 63 36 35 51 67 82 68 50 74 65
(%)
Price per pack after
50% price increase (US 14 8 5 3 4 5 4 9 15 5 3 11 9
PPP)
Note: THE=Total Health Expenditure; OOP= Out-of-Pocket Expenditure; GDP= Gross Domestic Product; PPP= Purchasing Power Parity
Health and financial outcomes estimated by
5 income quintiles:
We model a study to access the impact of a 50% increase in
cigarette prices through excise tax fully passed onto consumers.

1. Years of life gained,

2. Treatment costs averted,

3. Individuals prevented from getting impoverished

4. Individuals averting catastrophic treatment costs

5. the additional tax revenues raised


Sensitivity Analysis:
Part 1: Changing the study population
o Remove large countries which dwarf smaller ones i.e. China
& India
o including women in 3 countries in Latin America (Chile,
Colombia & Mexico)
Part 2: Changing parameters
o Varying price increase using same elasticity (25%, 100%
price increase)
o Using country specific price elasticity
Key results:
Figure 1: Health and financial outcome by poorest
and richest quintiles
Figure 2: Individuals averting impoverishments and
catastrophic healthcare expenditures
Table 2: Sensitivity analysis- Part 1
11 countries (excluding
13 countries China and India but
12 countries 11 countries (excluding
Indicators (main including females in
(excluding China) China and India)
analysis) Chile, Colombia and
Mexico)

Number of smokers (in


490 199 153 160
millions)
Number of life-years
449 208 164 171
gained (in millions)
Disease cost averted (in
billion USD) 157 43 39 44
PPP-adjusted
Marginal tax gained (in
billion USD) 122 55 45 47
PPP-adjusted
Number of individuals
averting catastrophic 182 185 222 190
expenditure (Q1/Q5)

Number of individuals 40 32 35 33
averting poverty (Q1/Q5)
Sensitivity analysis- Part 2
Discussion/ Findings:
Progressivity of tobacco taxes (pro-poor) in terms
of health and financial outcomes
Tobacco taxes as a policy tool to improve health
system goals:
Improvement of health outcomes
Expansion of fiscal space (breadth, depth and
financial support of public financing schemes)
Higher tobacco taxes prevents near poor families
from getting impoverishments or incurring
catastrophic healthcare expenditures
Figure 7: Share of marginal tax revenue to
resources per capita to fund SDG 2030

Turkey 16%

Chile 10%

Armenia 8%

Indonesia 7%

Thailand 6%

China 6%

Median 4%

Brazil 4%

Mexico 2%

Vietnam 2%

Colombia 1%

Philippines 1%

Bangladesh 1%

India 1%
Limitations:
Underestimating economic costs since we did not include
non-healthcare costs
Productivity loss, transportation costs, disruption of other regular
household expenditure
Used a medium PE for all countries. But our sensitivity
analysis provides similar results
Did not include the consumer utility or welfare derived
from smoking
No health benefits from reduced smoking is considered in
this analysis
Did not include bidis and other indigenous forms of
smoking tobacco in the analysis
Focused on only male smokers
Misconceptions (1)
Economist in 1997
The public-health rhetoric often implies that smoking must be
daft, because it is deadly. In fact, 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. [Then US President] Bill Clinton's mother, who died of
cancer at the age of 70 after smoking two packs a day for most of
her life, might, as Mr. Clinton notes, have extended her life by
not smoking; but she might also have extended it by eating
better or exercising more.
Economist in 2011
Smoking: Time to quit
Misconceptions (2)
Angus Deaton in 2013 (The Great Escape)
Although smokers are ten to twenty times more likely to die of
lung cancer than nonsmokers, the vast majority of smokers do
not die of the disease For example, a 50-year old man who has
smoked a pack a day for thirty years has a 1 percent chance of
developing lung cancer if he quits now and a 2 percent change if
he does not. (WRONG- ABOUT 16% LUNG CANCER DEATH RISK
IN CONTINUING SMOKERS BUT 6% IN QUTTERS BY AGE 50)

Cancer Moonshot (NCI, Joe Biden, 2016)


Goal: to double the rate of progress in cancer prevention,
diagnosis, and treatment, to do in five years what might
otherwise take a decade. (TRIPLING US FEDERAL TOBACCO
EXCISE WOULD SO ACHIEVE!)
Stopping works

Source: Jha Nature Cancer Reviews 2009


Next Steps
(Things to consider for future analysis)

Use ECEA method for high income countries


Canada
USA
UK
Region/province in a country
by US provinces
by Indian states
CONCLUSIONS
Prolonged smokers lose a decade of life
Cessation by age 40 (and preferably earlier)
avoids 90% of the excess risk of continued
smoking
Tobacco is a big cause of poverty and tobacco
control reduces poverty
A tripling of the excise tax on cigarettes
worldwide would cut consumption by 1/3 and
avoid ~200 M deaths

Source: Jha and Peto, NEJM 2014


www.cghr.org
(Dont buy my books)

@countthedead
Age standardized smoking rate among men by age group, product and
number of smokers (in millions): 1998-2010

Cigarettes have shown an overall increase for all ages.


Largest significant increase has been among 15-29 years cigarette
smokers which has a 4 fold increase since 1998
Mishra et al 2015
Age standardized rate of smoking among men by age group, product among
men by 2 education levels: 1998-2010

Cigarette smoking among illiterate men has seen a 3.6 fold increase.

Mishra et al 2015

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