Present & Future? Tobacco Control Policy in Ireland - Towards a future without Cancer - ASH Scotland
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Present & Future?
Tobacco Control Policy in Ireland
Towards a future without Cancer
Presentation Summary • 2014 where are we? • 2025 where do we want to be and how do we get there? • Irish Cancer Society role
Tobacco Free Ireland
“In Ireland a tobacco free society will
mean the achievement of a smoking
prevalence rate of less than 5% of
the Irish population by 2025”
Dr James Reilly, Minister for Children
Institute of Public Health in Ireland
www.publichealth.ie
4
Cancer Research UK 4
Endgame Thinking
Sweden and the World - 5 Stockholm- May13/14 2013
Is 2025 Smokefree Really Achievable?
Irish Adult Smoking Prevalence
(office of tobacco control/HSE)
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2003 2006 2009 2012 2015 2018 2021 2024 2027
Adult Smoking Prevelance 28.3% 27.9% 25.9% 21.9%
Positives
Irish Child Smoking Prevalence
(Health Behaviour in School-aged Children (HBSC)Study 2010)
20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2002 2006 2010 2014 2018
Current Smoking 10-17yrs 19.0% 15.3% 11.8%
Smokefree Ireland 2025
All that is missing is a plan !!!!
Due October 2014
Present Tobacco Control • Addressing demand - Plain Packaging • Addressing supply - Taxation & Policy
Plain Packaging
A proportionate response? • no logos, brand imagery, symbols, other images, colours or promotional text on tobacco products or tobacco product packaging; • brand and product name in a standard colour, position, font size and style; • packaging must be a standard drab dark brown colour in matt finish; • standardization of the packaging (material, size, shape)
But far from plain
Graphic health warnings required on 75% of
the front and 90% of the back of tobacco
packaging
• ‘standardised’ or ‘generic’ packaging might
be a better termQuit Victoria collection Marlboro packs from the late 1980s, late1990s, late 2000s and December 2012
Quit Victoria collection Winfield packs from the late 1980s, late1990s, late 2000s and December 2012
So the tobacco industry not happy with Ireland
FOI Assault Industry unleashes freedom of Information assault on government -tying up government resources -increasing the pressure on government and department -searching for ‘embarrassing’ material -legal resources retained
New retail organisations Australian Experience •Alliance of Australian Retailers established •BAT $2.2M •PMA $2.1M •ITA $1M •TV and radio advertisements saying plain packaging won’t work AND will damage their businesses
Assault Commences
Irish Times (July 2013)
American business warns Taoiseach over tobacco proposals
Any attempt to introduce plain packaging would infringe trademark protection
The six organisations involved are:-
– US Chamber of Commerce
– Emergency Committee for American Trade
– National Association of Manufacturers
– United States Council for International Business
– National Foreign Trade Council
– Transatlantic Business CouncilAssault Continues Terror campaign directed at smoking applies a faulty logic Scary images on boxes of cigarettes are unlikely to help anyone’s health Irish Times - 4th June 2013 Patrick Basham co-authored The Plain Truth: Does Packaging Influence Smoking? He directs the Democracy Institute (democracyinstitute.org) and is a Cato Institute (cato.org) adjunct scholar. Both institutes have been recipients of funding from the tobacco industry
And Continues
Irish Examiner (August 2014)
German brands turn up heat on plain cigarette packaging
• GERMAN advertisers and brands have written to the Irish ambassador in Berlin claiming plans for
tobacco plain packaging will have "devastating" economic implications for Irish companies.
• The chief advertising and brand associations in Germany have also warned that the tobacco
market would be “swamped” with counterfeit products and this would “endanger” people’s
health.
• Irish ambassador Michael Collins has received the written warnings from the German Brands
Association (Markenverband) and the German Advertising Federation.Main industry arguments • won’t work • will result in increased serving time • nanny state out of control • will result in increase in illicit trade • will violate the Constitution • will violate international obligations
Reality Revenue Commissioners, “Cigarette Consumption Survey 2013”, concludes “of the 12% of packs classified as illegal, 11% were classified as contraband and 1% as “illicit whites”. Irish Cancer Society – August 2014 “It’s time for the government to wake up to the double talk of the tobacco industry which on the one hand lobbies hard against price increases, claiming that it encourages smuggling, while at the same time allowing its own product into the illegal markets”
Beware Legal challenges • Bilateral investment treaties • Intellectual property rights • Trademark breaches • Transatlantic Trade and Investment Partnership (TTIP) and investor-to-state dispute settlement (ISDS)
Big Tobacco's plan to stub out plain packaging www.thesaturdaypaper.com.au/ 8th March 2014 A couple of weeks ago, they met in sub-freezing Toronto. The time before that, in steamy Singapore. The battle between Australia’s trade lawyers and those of the world’s biggest tobacco company, Philip Morris, involves a lot of air miles and clothing changes, untold millions of expense, and a lot of secrecy. No one is saying exactly what, if anything, was achieved in Toronto. Above all, the process involves lots and lots of delays. It’s now been well over two years since the tobacco company began action against this country, under the provisions of a 1993 free trade agreement between Australia and Hong Kong, in an attempt to thwart Australia’s cigarette plain-packaging laws. Chances are, the dispute will go for a long time yet. That suits Philip Morris just fine. Even though it is almost certainly going to lose the case, the company will have a victory of sorts: a victory of time. The longer these trade disputes take, the less likely other countries will take tough action to discourage smoking.
TTIP ISDS - Case Study: Achmea v Slovak Republic In 2012 the Slovak Republic was altering their health insurance market by restricting which insurance companies could repatriate or retain their profits. Achmea, a Dutch health insurer sued the state under a bilateral investment treaty. A tribunal awarded $22m in damages plus $3m in legal cost to Achmea. Slovakia was punished for reversing its health privatization policy.
Will Plain Packaging happen? • Political leadership • Whole of Government engagement • Sound research base • Strong legal capacity • Civil society leadership • 40+ years of tobacco control • Decades of tobacco industry denormalisation • Public support
Supporting Public Representatives • Health committee briefing papers & participation in hearings • Counteracting tobacco industry arguments • International Contacts
Cigarette Packaging Omnipoll Research
Market Research - Attitudes towards branding are
reflected in teens responses to cigarette packaging
Aspirational Brands
Acceptable brands
Rejected brands
(Vogue Range, Silk cut Super
Slims, John Player Blue,
(Amber leaf/Mayfair) Marlboro range)
Packaging appeal is low and none Brands teens would be proud
are their preferred choice, to be seen with - Sleek, stylish
however these brands remain in and fashionable - these brands
(Camel, Similar, Vogue menthol) acceptable territory primarily as a reflect the qualities that teens
(Super King/B&H – spontaneous result of price and being seen as are looking for and ultimately
mentions) an acceptable choice among peers aspire to purchase
Similar to brands that have fallen out of Distinct differences identified
fashion, cigarette brands in this across gender regarding what
category are immediately rejected qualifies as an aspirational
brand
None reflect an image teens would be
happy to portray
Aspirational brands were a combination of brand perceptions built up over time and
‘stylish/sleek’ packagingWhy packaging is important
Addressing Supply
Role of Irish Cancer Society
Tobacco in Ireland
RECOMMENDATIONS 1. Price cap regulation 2. Adjust taxation structure 3. Price escalator 4. Smuggling strategy
The need to regulate wholesale tobacco prices
Issues with the tobacco market
Extreme profitability:
Gives tobacco companies the incentive and ability to:
– (a) fight tobacco control measures;
– (b) oppose anything that could disrupt the cigarette dominated
tobacco market
– (c) do all they can to increase profitabilityMarket failure leads to excessive profits • Very few major tobacco companies (TTCs) • Significant barriers to market entry (i.e. almost impossible for a new co. to enter the market and compete) • No real substitutes/competitors to smoked tobacco • Lack of competition & substitutes gives them pricing power, which is helped by high taxes
What can be done?
Options
• Nationalisation - Ownership change costs
money we don’t have, moral hazard.
• Restore competition
– Don’t want this!
– Impractical – barriers to entry are too high &
increasing.
– Could perhaps increase competition by creating a
wider market in nicotine products.Regulation
• Only really viable option - Regulation
• Three Aims:
– Address market failure (for indirect health benefits)
– Direct benefit to public health
• NOT require weakening of TC policies
• Addresses other issues
– Increase government revenue (transfer rent)How?
• Adopt RPI-X price caps as used in the utilities sector.
• Set up regulatory agency
• Review maximum tobacco companies allowed to
charge and set max manufacturer prices based on:
– How prices changing generally (CPI in Ireland)
– Efficiency savings (X)
– Costs of production, could allow a normal profit margin, could
allow a R&D element
– Still have incentive to be efficient because it is the price not
the profit that is regulated
• Cost: they pay
• Taxes on top
RETAIL PRICES DO NOT DROPBenefits
• Prevents industry price fixing
• Prevents use of price as a marketing tool
• Reduces down-trading to cheaper brands/products
• Could help eliminate industry smuggling by monitoring
industry and ensuring only profit from legal sales
• If continue to advertise (e.g. to young people) could
cut promotional budgets
Reducing extreme profitability cuts the incentive and ability
to fight PH measuresTobacco in Ireland is very Profitable
Imperial JTI BAT
All data for 2011 (John Player & (Gallaher [Dublin] (P J Carroll & Co
Sons) Ltd) plc) Total
Market Share (%) 33.34 46.88 10.26 90.48
Revenue €79,777,706 €112,184,988 €34,538,000 €226,500,695
Profit actually
made €32,973,449 €62,280,000 €9,003,000 €104,256,449
Profit rate
actually
achieved 0.4133 0.5552 0.2607 0.4603Regulation Financial Beneficial
2011 2010
Optimistic Conservative Optimistic Conservative
Scenario Scenario Scenario Scenario
Reduction in profits
due to regulation
€77,076,366 €58,956,310 €82,071,232 €63,182,797
Implied reduction in
corporate taxes at
12.5% €9,634,546 €7,369,539 €10,258,904 €7,897,850
Cost of regulator €7,000,000 €10,000,000 €7,000,000 €10,000,000
Potential net
increase in taxes €60,441,820 €41,586,771 €64,812,328 €45,284,947An Attractive Policy • Irish market dominated by three large TTC • Very profitable: Revenues in 2011 estimated at €226m, with profits of €104m • If price cap regulation were employed it could generate the direct and indirect health benefits mentioned above • AND raise something in the region of €40m- €65m in extra taxes (even after allowing for the costs involved)
Adjust Taxation Structure
Our current
tobacco tax structure
enables smokers to down-
trade to cheaper brands
rather than quitting.
Increasing the
specific tax rate to the
maximum rate allowable
under EU law (76.5%) will
ensure that the cost of the
cheapest brand of cigarettes
increases in real terms.Price Escalator Commit to an annual price escalator for tobacco taxes on all tobacco products of at least 5% above the rate of inflation. An average inflation rate of 0.5% is reported for 2013. For 2015 this would result in a price increase of 5.5%, or approximately €0.50.5 This is estimated to yield €77 million per annum.
Smuggling Call for the publication and implementation of the next Revenue anti-smuggling strategy and for it to commit to reduce the rate of smuggled tobacco by 1% per annum. • Increased resources • Stricter/Consistent prosecution and sentencing • Public awareness and reporting
Tobacco Control in Ireland Expenditure 2012 Nicotine Replacement Therapy 11,910,384 Social Marketing Spend 861,275 Smoking Cessation Staff Costs 1,000,252 Quitline 110,585 Total 13,882,496
Tobacco Control in Ireland
Tobacco Cessation Quit Figures 2013
Location of Service Number of Number who set a Number of Percentage
new clients quit date clients quit one month
contacting @ 1 month Quit
service
HSE DML 3431 1400 727 51.9%
HSE DNE 3316 2019 984 48.7%
HSE SOUTH 52.3%
1316 567 297
HSE WEST 1727 909 562 61.8%
QUITline 747 325 125 38.4%
NATIONAL TOTALS 10,537 5220 2695 51.6%Quit Campaign & Quitline
ICS Tobacco Programmes
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