Push the tobacco industry to change through economic incentives, researchers say

Posted on Tuesday, February 16, 2016

Public health measures to reduce smoking would be more successful if policy-makers took action to curb the high profits of the tobacco industry, say researchers from the University of Ottawa and the University of Bath.

The cigarette market is dominated by a small number of large, publically traded companies, which vigorously oppose any new public health measures that could disrupt their lucrative business.

The researchers say that governments should look to the success of previous policies that have transitioned other industries towards products that are less harmful to health, such as the switch from leaded to unleaded gasoline.

Professor David Sweanor from the uOttawa Faculty of Law and Centre for Health Law, Policy and Ethics, who spearheaded the development of world-leading tobacco control initiatives in Canada, says: “A proper tobacco/nicotine diversification and exit strategy for the shareholders of the profit- seeking tobacco industry would protect public health by addressing the current addiction to the continuation of the cigarette market.”

The researchers suggest a new approach to competition policy and a range of carrot-and-stick incentives, including tax differentials which place combustible products such as cigarettes at a marketplace disadvantage compared to less hazardous alternatives, such as e-cigarettes. They also recommend allocating tax credits to companies for the development of lower risk products, and more direct measures, such as price controls and product licensing that favours lower risk products.

Dr. Rob Branston, Deputy Director of the Centre for Governance & Regulation in the University of Bath’s School of Management, said: “An extremely profitable company that only operates in a cigarette-dominated tobacco market has the ultimate incentive to fight tooth and nail against cigarette control measures because they are fighting for corporate survival.”

“The current structure of the tobacco industry means each and every public health measure requires repeated and ongoing battles with the tobacco industry in individual countries. States often face massive legal battles if they are to successfully implement tobacco control measures and corporations fight long, hard and viciously.”

David Sweanor adds that “companies need to be given incentives to move away from their focus on extraordinarily deadly cigarettes so that they accept the winding down of combustion-based tobacco products, much like petrol companies transitioned from leaded to unleaded fuel. Intelligently designed industry incentives could lead to a viable and rapid endgame for cigarettes, ultimately achieving a public health breakthrough of historic proportions.”

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