Vinayak M Prasad (World Health Organization) – #BigTobacco should be taxed more to pay for the health costs of smoking

| July 18, 2019

There are more than a 1.1 billion smokers in the world, and it’s estimated that 8 million people die every year as a result of their addiction to cigarettes. By any reasonable metric, smoking is perhaps the greatest and most salient public health emergency of our time. The scale of this crisis is magnified even more by the pervasive influence of tobacco companies, which have stopped at nothing to derail regulations, confuse policymakers and obscure the plight of their products.

Which is why only through continuous efforts spearheaded by the World Health Organisation have major breakthroughs in the fight against smoking been achieved. Ever since the entry into force of the Framework Convention on Tobacco Control (FCTC) in 2005 and its first Protocol to Eliminate Illicit Trade in Tobacco Products in September of 2018, the fight against Big Tobacco’s influence and underhand tactics has managed to score some much-needed wins for public health. The election in 2017 of Dr. Tedros Adhanom Ghebreyesus to the post of Director General of the WHO was pivotal in this regard. As the first DG from Africa, a continent seen as key for Big Tobacco’s profits, Dr. Tedros has made tobacco control a top priority of his term.

For World No Tobacco Day, EuReporter caught up with Dr. Vinayak M Prasad, who leads the WHO’s Tobacco Free Initiative (TFI). Dr. Prasad, one of the architects of the FCTC Protocol, has been involved in tobacco control policies, with a focus on illicit trade since the early 2000s.

1/ On ‘World No Tobacco Day’, you said that the prevalence of smoking has gone down from 27% to 20% in 2016. But the number of tobacco users worldwide has remained stable at 1.1 billion because of population growth. You said also that the global economic cost of using tobacco is $1.4 trillion. At the same time, the total profit of the 4 tobacco majors continued to increase, reaching €18 billion at the end of 2018. Can it be said that tobacco companies make money through smokers, but also through non-smokers who finance the social cost of tobacco?

Tobacco companies do not pay the social and economic costs of selling their harmful products—smokers do, but only partially. In most countries, tobacco excise revenues are lower than the social and economic costs of producing and consuming tobacco products. For this reason, non-smokers finance part of the health costs of tobacco-related diseases and premature mortality.

Social and economic costs of tobacco have impacts on social welfare and potential medium-term growth.  Costs of tobacco consumption are normally higher than benefits, the welfare loss is being paid by smokers and non-smokers. Additionally, dynamic welfare loss related to premature mortality and productivity reduction is paid by societies in terms of lower potential economic growth.

2/ Is it possible to oblige tobacco manufacturers to pay part of the health costs of tobacco in the countries where they are present? Some countries/health systems in the Americas (after the US and Canada, Brazil just launched a lawsuit) are going this way but it does not seem to be possible in all jurisdictions. Shouldn’t there be a united international front against that such as under the FCTC? Moreover, shouldn’t the stock market value of the 4 tobacco companies become an indicator of the effectiveness of anti-tobacco policies: if the value rises, it is because anti-tobacco policies are not efficient enough, if it plummets, it is because they are becoming effective?

One way to oblige tobacco manufacturers to pay part of the present and future health costs would be through a special rate of corporate income tax. However, obliging tobacco manufacturers to pay part of the health care costs of tobacco is not likely to work in all jurisdictions.

Stock prices reflect a number of variables other than the prevalence of tobacco use. With population growth, declines in prevalence of tobacco use does not necessarily reflect a decline in total use. Additionally, tobacco companies have many strategies for increasing their profitability and avoiding the restrictions of tobacco control policies. As global holdings, their profits depend on the balance of countries with well implemented and poorly implemented tobacco control policies.

The industry responds to tobacco control restrictions and tax policy by increasing the profit margin per pack. At the national level, companies could be increasing their profitability through exports to less controlled countries or, alternatively, high profit margins per pack of cigarettes. In this case, a country may have strict tobacco control policies, but tobacco products may be highly profitable with a high stock market value.

The WHO report on tobacco and its environmental impact highlights industry accountability the potential for the producer to cover part or all of the expenses for the collection, recycling or final disposal of products manufactured as part of producer responsibility.

The best way to address this is by continuing to implement the tobacco control policies outlined in the WHO FCTC to reduce the demand for tobacco, as well as its negative impacts on individuals and societies.

Article 19 of the WHO FCTC on liability gives Parties the possibility to recover health care costs, provided that they have the necessary national legislation in their own legal systems. That means that in some Parties it is possible to start litigation proceedings on this ground, but in others it is not.

3/ What is the status of implementation of the Protocol “to Eliminate the Illicit Trade in Tobacco”

The Protocol to Eliminate Illicit Trade in Tobacco Products, came into force in 2018. Any further update on the implementation of Protocol may be obtained from the FCTC Secretariat. (EU Reporter emails to the FCTC Secretariat were not answered).

4/ How does WHO protect itself from direct or indirect lobbying by the tobacco industry? are the funding from the Gates Foundation as well as Bloomberg philanthropies sufficient to ensure the process is immune from indirect industrial influence?

At the Sixty-Ninth World Health Assembly, WHO adopted the Framework of Engagement with Non-State Actors (FENSA), where a specific provision was established prohibiting engagement between WHO and tobacco companies, as well as their supporters. When an engagement with non-State actors is being considered, standard due diligence and risk assessment is initiated by the technical unit to establish whether such an engagement would be in the interest of the Organization and in line with the principles of WHO’s engagement with non-State actors. Prior to the adoption of FENSA, WHO had established a complete firewall against the tobacco industry built on the strong foundation of Article 5.3 of the Framework Convention on Tobacco Control and its guidelines.

5/ The WHO is doing an incredible job in tobacco control regulation, but is environment protection also included in this work? We are aware of the massive environmental issues associated with tobacco companies. Shouldn’t the UN perhaps consider enlarging the WHO scope to environmental issues (ie, the World Health and Environment Organization)?

The UN Environment Programme (UNEP) is the leading global environmental authority setting the global environmental agenda. Within WHO, there is work being done to reduce environmental and social risk factors, and some work has been done to address the environmental concerns of tobacco. WHO has supported the elimination of single-use plastic, found in tobacco products with filters like cigarette butts, and drawn attention to the serious environmental consequences of deforestation for growing tobacco[1].

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