Health Care System and Tobacco Epidemic

Health Care System and Tobacco Epidemic

Ayda Yurekli,

Senior Economic Advisor,

Tobacco Free Initiative, WHO, Geneva

28 April 20092 |

Outline Outline

The link between health system & tobacco epidemic– TA diseases– Who's burden is it anyway?

Should Serbia be worried about it?– Serbia's comprehensive on smoke-free legislation

• Do smoke free policies hurt hospitality industry?– Price, and taxes on cigarettes.

Can Serbia do better?

28 April 20093 |

Deaths caused by tobacco use, by diseases

Deaths caused by tobacco use, by diseases

0

200

400

600

800

1000

1200

1400

1600

1800

COPD Trachea, bronchus

and lung cancers

Ischemic hearth disease

Cerebro vascular

Lower respiratory

infections

Tuberculosis Other TAdiseases

Th

ou

san

d d

eath

s (2

005) 42%

71%12%

8%

4% 10%

(% of deaths from the disease caused by tobacco)

Source: Mathers and Loncar, 2006

28 April 20094 |

Tobacco will kill 176 million people worldwide between 2005 and 2010. The developing world's share will increase from 70% in 2005 to 77% in 2030

Tobacco will kill 176 million people worldwide between 2005 and 2010. The developing world's share will increase from 70% in 2005 to 77% in 2030

5.4

34

70% 30%

2274%

29%

72%

28%

99

72%

26%

77%

23%

176

0

20

40

60

80

100

120

140

160

180

200

Developing countries Developed countries TotalCu

mu

lati

ve t

ob

acco

rel

ated

dea

ths

(Mil

lio

n)

2005 2008 2010 2020 2030

Source: Lopez et al 2005

28 April 20095 |

Who's burden is it anyway?Who's burden is it anyway?

Smokers & their families– High opportunity costs of tobacco expenditures– Lost family income due to diseases and disability– Out of pocket expenditures for

• Tobacco products &• Cure for diseases

Society– Cost for covering health care costs and production lost

Government– Development issue- strong link between health & development

28 April 20096 |

High opportunity cost to FamiliesExample from Serbia

High opportunity cost to FamiliesExample from Serbia

On average Serbian daily smoker spend

35,804 Dinar / year on cigarettes.

Given 317,623 Dinar GDP/capita in 2007

Daily smokers spend 11.3% of their annual income on cigarettes

28 April 20097 |

Double burden on non-smokers and familiesHealth Risks and Medical Costs

Double burden on non-smokers and familiesHealth Risks and Medical Costs

Source: Donald F. Behan, Michael P. Eriksen and Yijia Lin March 31, 2005,

28 April 20098 |

Double burden on non-smokers and families Economic Costs

Double burden on non-smokers and families Economic Costs

Source: Donald F. Behan, Michael P. Eriksen and Yijia Lin March 31, 2005,

28 April 20099 |

28 April 200910 |

Costs to SocietyCosts to Society

Taiwan

Type of CostCost (Million)

Excess AbsenteeismUS$ 184

Sick leave due to ETSUS$ 81

Occupational injuries among smokersUS$ 1,032

Scotland

Absenteeism£ 40

Productivity loss£405

Loss due to fires£ 4

Sources: Tsai et al Tobacco Control 2005;14:33-37Parrotta et al Tob Control 2000;9:187-192 ( Summer )

28 April 200911 |

Should Serbia be worried about it?Should Serbia be worried about it?

Ten leading risk factors as causes of disease burden measured in DALYs in Serbia and Montenegro (2002), Males(%)

0 5 10 15 20 25

TobaccoHigh blood pressure

Alcohol High BMI

High cholesterol Low fruit and vegetable intake

Physical inactivity Il l icit drugs

LeadUrban outdoor air pollution

Ten leading factors of disease burden measured in DALYs in Serbia Montenegro (2002), Females (%)

0 5 10 15 20

High blood pressure High BMITobacco

High cholesterolPhysical inactivity

Low fruit and vegetable intake Unsafe sex

Alcohol Lead

Childhood sexual abuse

Deaths attributed to smoking, all cause (1000s) in 2002108.6100.1

79.2

69.1

33.029.0

18.6 18.0 17.713.8 11.0 8.1 8.0

4.7 4.2 2.8

SMOKING PREVALENCE RATE 2007

4843

41 40 3834

32 32 30 30 30 3027 27 25 25 23 22

20

0

10

20

30

40

50

60

Sm

ok

ing

pre

va

len

ce

- a

ge

sta

nd

ard

ize

d (

%)

28 April 200912 |

Should Serbia be worried about it?Should Serbia be worried about it?

Selected mortality as % of total mortality in Serbia and Montenegro, 2002

Digestive diseases

3%

Respiratory diseases

3%

Cardiovascular diseases

54%

Malignant neoplasms

17%

Other diseases 23%

28 April 200913 |

Should Serbia be worried about it?Should Serbia be worried about it?

NO, because Serbia has been drafting a new law on Comprehensive Ban on

Tobacco Smoking in (closed) public places to protect people from second hand smoke.

Smoke-free laws are popular & do not harm business– 16 countries in the world are covered by

comprehensive smoke-free comprehensive laws

28 April 200914 |

Political or economic argument?Do Smoke Free Policies Hurt Hospitality Industry?

Political or economic argument?Do Smoke Free Policies Hurt Hospitality Industry?

There is no evidence of negative impact on sales or employment in restaurant, bars and hotels found in 22 peer-reviewed studies

– negative effect found by TI sponsored not-peer reviewed studies

NY introduced the smoke-free law in July 2003. – In 2004 8.7% increase in business receipts for restaurants

and bars

– 10,600 new jobs -

Sources: Scollo , Lal, Hyland and Glantz. Tob Control 2003; 12: 13-20.March 2004 The State of Smoke-Free New York City. A One-Year review,

28 April 200915 |

New YorkBar and Restaurant Tax Receipts

Continued Increase since SFAA

New YorkBar and Restaurant Tax Receipts

Continued Increase since SFAA

$20,346,519 $21,295,278

$31,040,049

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

4/02-3/03 (pre-SFAA)

4/03-3/04 (post-SFAA)

4/06-3/07

Tax

Rec

eipt

s C

olle

cted

Source: New York city, 2008

28 April 200916 |

Sales rose after smoking banned in restaurants and bars in California

Sales rose after smoking banned in restaurants and bars in California

Do Smoke Free Policies Hurt Hospitality Industry? Evidence says NO

28 April 200917 |

WHO FCTC –Article 8Protect people from tobacco smoke

WHO FCTC –Article 8Protect people from tobacco smoke

No safe level of second-hand smoke

Smoke-free environments protect – non-smokers health,

• help smokers quit & – encourage smoke-free homes

28 April 200918 |

Effect of smoke-free public places on smoking behavior at home

Effect of smoke-free public places on smoking behavior at home

There is no evidence found that total ban on public places would increase smoking in the home

Evidence from UK show that total ban on public places has

A. Increased:

– Smoke-free homes –22% to 37% between 1996-2003

B. Saved

– £181m from prevention of fires and reduced cleaning costs, and

– £2.8bn from improved productivity of staff no longer taking smoking breaks

Source: Adrian O’Dowd, BMJ  2005;331:129 (16 July)

28 April 200919 |

WHO FCTC –Article 8Protect people from tobacco smoke

Practical Approach

WHO FCTC –Article 8Protect people from tobacco smoke

Practical Approach

Up to date, evidence show that there are no ventilation systems that prevent the exposure of SHS

Without substantial capacity, air cleaners will have little impact on SHS levels

Smoking area

Non smoking

area

28 April 200920 |

Urinating Prohibited

Urinating permitted

28 April 200921 |

Serbian people deserves Clean Air Quality same as New Yorkers

New York: Impact of smoking environments on air quality

Serbian people deserves Clean Air Quality same as New Yorkers

New York: Impact of smoking environments on air quality

0.006 0.017 0.021

0.4850.580

1.535

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Central Park HollandTunnel

Non-Smoking

Bar

SmokingBar #1

SmokingBar #2

SmokingBar #3

Am

bien

t pa

rtic

ulat

e m

atte

r, m

g/m

3

Proposed EPA 24-hour outdoor

standard (.05 mg/m3)

Before Smoke-Free Air Act (SFAA), Air Quality Was 50X Worse in Bars w/ Smoking than at the Holland Tunnel

Source: New York city, 2008

28 April 200922 |

Serbian people deserves Clean Air Quality same as New YorkersNew York: Air quality after smoking ban

Serbian people deserves Clean Air Quality same as New YorkersNew York: Air quality after smoking ban

0.021

0.4850.580

1.535

0.0420.174 0.146 0.093

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Non-SmokingBar

Smoking Bar #1 Smoking Bar #2 Smoking Bar #3

Pre-SFAA Post-SFAA

Am

bien

t pa

rtic

ulat

e m

atte

r, m

g/m

3 Air Quality in Bars Improved Significantly Post-SFAA

Source: New York city, 2008

28 April 200923 |

Bottom-Line with Comprehensive Smoke-Free LawsBottom-Line with Comprehensive Smoke-Free Laws

Smoke free policies are cost effective on reducing smoking behavior and consumption:

– WHO estimates that enforcement of smoke free policies would save one DALY for $358

• (US guidelines consider an cessation intervention costing $2,587 or less per life-year gained as cost effective)

Many countries would likely to save from non-smoking legislation:

– Evidence from:• Canada: $32.2 million, and • US: between $39 and $72 billion

28 April 200924 |

Costs to Government via Health Care System Economic Burden of Tobacco use

Costs to Government via Health Care System Economic Burden of Tobacco use

Direct Costs from the treatment of illness directly attributed to tobacco usage accounted for

– 0.46 to 1.15 percent of gross domestic product (GDP) for United States– 0.13 percent of GDP in the United Kingdom– 0.12 to 0.56 percent of GDP in Canada.– 0.43 percent of GDP in China

The social costs amount to 1.4% to 1.6% of GDP in the US; a similar estimate came from Canada. The China study showed that amount to be 1.7% of GDP (Jha and Chaloupka, 2000).

Social costs include costs due to indirect costs of morbidity and premature mortality, as well as direct medical costs.

28 April 200925 |

Serbia should NOT be worriedSerbia should NOT be worried

Consumption, Income and Price of Cigarettes in Serbia 1998-2009

0

50

100

150

200

250

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Pri

ce I

nd

ex/p

ack 2

005=

100 &

Cig

are

tte c

on

su

mp

tio

n/c

ap

ita/p

ack

0

20

40

60

80

100

120

140

160

180

GD

P I

nd

ex /

cap

ita,2

005=

100

Per capita consumption/pack

Price index January 99-09, 2005=100

GDP/capita Index at current prices 2005=100

28 April 200926 |

Serbia should NOT be worriedSerbia should NOT be worried

Serbia is among number of countries that ensures sustainable financing for Tobacco Control

– Earmarked 1 dinar per cigarette pack (annually harmonized with the rate of inflation) to fund tobacco control work,

• including smoking prevention, • diagnostics and treatment of tobacco related diseases

28 April 200927 |

Earmarking tobacco tax revenues for health: Examples

Earmarking tobacco tax revenues for health: Examples

Egypt: 10 piaster's per 20 cigarettes for the students health insurance

Qatar: 2% of tobacco import revenues for health awareness activities and tobacco control activities

Thailand: 2% of tobacco tax revenues for the Thai Health Promotion Foundation

Nepal: 2 paisa/ stick on cigars and cigarettes for cancer care hospital

Republic of Korea: 626 Korean Won/pack for the national Health Promotion Fund

Mongolia: 2% of tobacco excise tax revenues for Prevention and Control for tobacco and alcohol

Finland: 0.45 % of tobacco tax revenue goes to health promotion and anti-tobacco activities

Iceland: 0.9% of gross tobacco sales for Public Health Institute

Switzerland: 0.026 SFR per pack of cigarettes for tobacco control

Poland: 0,5% of the value of the tobacco excise tax for smoking cessation

Bulgaria: 1% of cigarette tax revenue for tobacco control and alcohol

28 April 200928 |

Can Serbia do better? YES.Serbia has the lowest excise tax and average retail price in the region

Can Serbia do better? YES.Serbia has the lowest excise tax and average retail price in the region

Average retail prices and excise tax share in Cigarettes 2007

44%

58%57%

66%

56%

69%64%

59%

43%

58%

$1.1

$1.9$2.0$2.0$2.1$2.1

$2.7$3.0

$3.2

$4.7

0

10

20

30

40

50

60

70

80

Excis

e t

ax s

hare a

s %

of

Reta

il P

ric

e

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5Price/pack US$

Excise tax Average Price

28 April 200929 |

Current 54.5% increase in excise from

21% increase in excise from

31 to 48 RSD48 to 58 RSD

Excise Tax/pack3148 58

Excise as % of RP 43.9%47% 55%

Price/pack (RSD) 70.690105

Price elasticity=-0.4RSD & ( percentage change from current level)

Revenue (Bill. RSD)33.3 40.7 (+22%)44.4 (+33%)

Price elasticity= -0.8

Revenue (Bill. RSD)33.3 35.7 (+7%)33.7 (+1%)

Can Serbia do better? YES.Assuming other than tax and producer's price, there is no change in other factors

including per capita income

28 April 200930 |

ConclusionConclusion

Serbia already moved forward with TC and showed its political commitment with strong TC measures.

Comprehensive smoke-free laws work and Serbians deserve clean air.

Comprehensive smoke-free laws DO NOT HARM hospitality sector.

Serbia has one of the lowest tax and price of cigarettes in the region and has room to increase its taxes to generate more revenues.