Sunday, April 29, 2007

Mass killing machine making lots of money

Hopes that Big Tobacco might be in retreat are looking pretty forlorn. I came across BAT's share price data showing a huge gain over the last seven years, including a sharp and sustained rise following agreement of the WHO Framework Convention on Tobacco Control (FCTC) - an attempt by 146 governments (so far) to establish a common approach to regulating this industry and pushing a public health agenda. The FCTC text cover advertising, product labelling, smuggling, smoke-free environments, taxation and so on - much more useful information at the Framework Convention Alliance.

I remember having lunch with an analyst from one of the City of London investment banks in 2000, and asking why he had such a strong 'buy' recommendation on the BAT stock when there was so much litigation and regulation in the air. He replied "it's in the fundamentals: they sell so much of this stuff, it's really profitable, their customers are addicted, and worldwide the only way the pack price and customer base are heading is upwards".

The massive increase in BAT's stock price arises from gradual move to a valuation that reflects those fundamentals - the price was heavily discounted before. Investors now believe that the risks of damaging litigation are falling and that the FCTC wont slow the spread of tobacco use in developing countries - especially to women. Smoking kills about 5 million per year (and rising fast) worldwide, there are about 1.3 billion users, also increasing. On current trends about 1 billion will die early from tobacco use in the 21st Century - it is amongst the worst and most avoidable of public health problems.

I still find it incredible that many public health professionals can look at this situation and conclude there is no place for a market-based strategy aiming to switch as many tobacco users as possible from smoking cigarettes to using smokeless tobacco in its many forms (with much lower risk than smoking)... In fact, many in public health are determined to block attempts to make the market for smokeless tobacco products take off. Yet we know this has yielded large public health gains in at least one country, Sweden [research] and there is a strong case in consumer rights to be able to choose products that are vastly less hazardous, especially when you are addicted. Lynn Kozlowsky [here] invites us to imagine we were trying to help someone in our own family - would we really try to stop them trying something 100 times less hazardous? There's a compelling body of evidence supporting this strategy [eg. see International Harm Reduction Association library] and arguments have raged for years without the opponents of this approach ever once making a convincing case, or even any case. The truth is that they don't like the idea of tobacco companies making money or conceding there is any place for a tobacco product as part of the solution.

But make money they will, and lots of it. I'm all for banning smoking in public places and stopping the advertising etc - that can only help. But one of the big public health questions of the 21st Century is whether Big Tobacco can be manoeuvred into making money by selling smokeless tobacco products instead of cigarettes, which are perhaps around 100 times as hazardous. One danger is that fussy, insular and instinctively authoritarian public health people will continue down the evidence-free path of blocking these developments and insist that for smokers it has to be 'quit or die'. On the other hand, and more positively, tobacco companies may see smokeless products as a way of doing business with less death and disease and persuade regulators that they needs some regulatory tweaks to make it work - for example it is still impossible to tell smokers the truth about relative risks, and much public effort go in to obscuring it. In Europe, the much safer products are banned, while cigarettes are on open sale. It would be a pity if public health people continued to get in the way - that's the real scandal.


Anonymous said...

Clive, how exactly would you move a population with absolutely no history of anything other than "smoked" tobacco onto a non-combustible product like snus? And, how would you get the public to know it was on the market, when in NZ anyway, the marketing on any tobacco product is unlawful? Would you suggest a change to our legislation to allow for certain products to be marketed and others not?

Clive Bates said...

Hi there Leigh

First you have to decide that is something you actually want to do it - perhaps for reasons in this post... I think it basically is wrong to deny the option to a single individual, and I think it is likely it could have an overall beneficial population effect as an alternative to smoking at much lower risk.

Then there is a 'first do no harm' approach. The possible slow rate of uptake in a population isn't a reason for denying it to a single individual who might improve their prognosis as a result. So the first step is to remove any bans (EU) or disinformation (US).

Then there is the small matter of telling the truth. This can be done by meaningful risk communication on the product pack - that gives smokers a realistic message.

Then there is pricing and tax - this can create incentives to switch.

There are many ways other than advertising that things are communicated - for example in the UK most pharma products cannot be advertised.

Finally, if you think (as I do) that this could be an important public health measure at both individual and population level, and if you think some carefully controlled marketing might help, then you shouldn't let a broad prohibition stop you realising the health gains. But there are safeguards possible... the advertising can be permissive (requires permission); the government can withdraw the right if perverse consequences appear; the companies can be fined or otherwise penalised if the effect appears to be to introduce new users.

I wouldn't be so pessimistic about uptake - tastes and fashions can change very rapidly in the right circumstances, but this would not be possible if smokeless tobacco was not an adequate substitute for smoking for nicotine users, physiologically. We know it is because it works for some human beings, and we don't think there are dramatic genetic reasons for that.

It's interesting the way the objections to smokeless tobacco move their ground - is it a terrible idea, no safer than cigs, that will addict millions of children? Or is it a good idea, but one that will not work because of the slow uptake. That's why my first point is key - where there's a will, there's a way. But there has to be a will...

Anonymous said...

cheers for that. I'm not working in tobacco control anymore, but I did enjoy your response.

John Cowan said...

Subject: The Canadian Conservative Government DOES NOT EQUAL other countries in human rights policy for Tobacco Farmers.

Hello; I have a legal international question I am hoping that you can research and provide some insight on. If not perhaps you know a anti-smoking tobacco lawyer, articling student or a emeritus that could offer some encouraging advice for me. I am looking for a possible means to launch a class action lawsuit against the Canadian Federal and Provincial governments. Why has the Canadian Conservative Federal government failed to put in place an Implementation Act to enact within Canada the WHO-FCTC Treaty for all Canadians affected.
The Indian government announced plans to halve tobacco cultivation in 10 years (Feb 19, 2008: The Indian Tobacco Board is doing the groundwork for reduction of tobacco cultivation while a detailed package is being worked out to provide compensation to farmers in line with steps taken by the USA, EU and Australia. Why is the Canadian Conservative Government two-faced with its own citizens when it comes to tobacco farmers under attack from its own globally patented tobacco control policies. Are a Canadian tobacco farmers civil rights less valuable because Canada Government developed the tobacco control dehumanization process also.

The question I would like to get answered is on the World Health Organization Framework Convention on Tobacco Control Text (WHO-FCTC) ( ). Part V1: Questions Related To Liability, Article 19:1. This states in part "including compensation where appropriate" would this include redress to the tobacco farming community and by whom? Under 19:2.b would "pertinent jurisprudence" include the civil rights of the tobacco farming community for redress for the affect of high draconian tobacco taxation spawning a tremendously profitable illicit trade which is against Part 1V: Article 15 (3). This also undermines Article 16: Sales to and by minors. Why has the government(s) created a new bankable profit source for the tobacco manufactures. Should the governments not be liable for their actions and inactions for manufacturing the access of a whole new generation of children smoking. A new generation of smokers now have access to historically very low priced cigarettes. Sold for/at their convenience everywhere cannot be to overstated, even delivered to your front door. This is not factored into the Canadian governments youth smoking rate drop statistics data released in the press. An estimated 30 million pounds of raw tobacco can not possibly be supplied out the back door by Canadian tobacco farmers, but by the manufacturers. Also why would an attorney not hold the government(s) responsible when someone gets injured or killed during the thief of tobacco products, are they not culpable by the high tobacco taxes they cherish.

Article 19:3. "afford one another assistance in legal proceedings relating to civil and criminal liability". Does this mean that a civilian can ask the WHO-FCTC to help out with legal advice and financial assistance with class action litigation.

I have rambled on and made more that one statement and asked more than one question that I need answers for. Again I am hopeful you can help me in some capacity for the time being.

Kind Regards,

John E. Cowan,

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Ontario, Canada N0E 1W0

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Outdated proposal by PSC not being supported by health groups to make it effective to put in place an Implementation Act to enact within Canada the WHO-FCTC Treaty for all Canadians affected.