Nicotine tax – to reduce the addictiveness of cigarettes

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					Three policy options to reduce nicotine in
combustible tobacco sold in NZ by 2020:
 with special focus on Nicotine tax

 Murray Laugesen, End Smoking NZ trust

Nick Wilson, University of Otago, Wellington

 Paper presented at APACT Conference,
        Sydney, 8 October 2010

                        October 2010
HN = high nicotine = most cigarettes sold today.
MN = medium nicotine
LN = low nicotine
VLN = very low nicotine.
RNC = Reduced nicotine cigarette, nicotine yield
  proportional to nicotine content.
Yield =smoke-machine-measured nicotine.
Content =nicotine in an unlit cigarette
                        October 2010
   Three policy options to reduce nicotine
1) Mandated sinking nicotine content, all brands
   Lower nicotine content -20% p.a. Little effect until 80%
   reduced. (USA FDA could do this in future)

2) Mandate increase in VLN share of sales by 20% p.a.
   However there is no economic incentive to buy these
    VLN cigarettes.

3) Nicotine tax makes VLN cigarettes a smart way for
    smokers to avoid paying more for their smoking.
    Similar to a tax on tobacco content.
                           October 2010
  Justification for taxing nicotine in
   combustible tobacco products
Smoking is highly
     - NZ Health warning.

85% of NZ smokers want cigarettes to be less
    - Thomson G, Wilson N, Edwards R.
    Letter, NZ Med J. 2010;123(1308).

                           October 2010
                           Nicotine content of leading brands, NZ 1997
                                 per 0.7 g moist tobacco cigarette
                            Nicotine content of all cigarettes is at least five times the
                            2 mg content (0.2 mg yield) per cigarette needed, at 25
                            cigarettes daily, to equal the addiction threshold.
Nicotine content mg



                      FM regular     FM regular    FM regular     FM Mild     RYO regular RYO regular

Blakely, Laugesen, Symons, Fellows, NZ Health Report 1997; 4:33-34,85
                                                        October 2010
  Nicotine content, yield and tax
                   Nicotine        Nicotine        Nicotine tax
                   content         yield           $ / cigarette
                   mg*             mg*             proposed
High HN            12 **           0.8             1.00
Medium MN           8              0.6             0.75
Low LN               4             0.4             0.50
Very low VLN         2             0.2             0.00
  *Benowitz 2007   **most NZ brands 1997

                               October 2010
The concept of a nicotine threshold
A threshold implies that addiction only begins to
  decline markedly below the threshold.
• Nicotine threshold = total of nicotine absorbed
  needed to sustain addiction.
• Estimated at 5 mg per day (Benowitz and Henningfield 1994)

• 5 mg = up to 25 VLN of (0.2 mg machine yield), or 6 HN
  of 0.8 mg machine yield.

• Further research needed on the actual threshold so as to
  include 90-95% of smokers. A range may be needed.

                            October 2010
  Testing and labeling for nicotine
• Government publishes a list of government
  approved laboratories, independent of
  industry, whereby manufacturers can arrange
  nicotine content and yield testing at their own

• Government requires all brands sold to be
  labeled for nicotine content in mg per
  cigarette, from 6 months before the nicotine tax
  takes effect.

                       October 2010
  Tax nicotine content, not yield
• Tobacco excise is levied on tobacco content.
• Nicotine tax is extra, and levied on nicotine
• Tax is levied per milligram of nicotine content
  per average unburnt cigarette. eg $1 per HN
• VLN cigarettes are much less addictive and
  would attract zero nicotine tax.
• As nicotine content rises above threshold, tax
  rises steeply at first and less steeply thereafter.

                        October 2010
                          Nicotine yield and price choices
                          for smokers paying nicotine tax

      Nicotine threshold for maintaining addiction 5 mg/day


       $ price per pack

                                                                              20 HN
                          30                               20 MN

                          20                            20 LN

                          10       1-2 HN + 18 VLN

                               0            5            10                   15                   20
                                   mg nicotine yield per pack
                                                            Price of 20 cigarettes, all HN, 2010

Estimated from pervious slides
                                                October 2010
            Research evidence
• Reduced nicotine content cigarette studies –
  Benowitz 2007. Lowers smokers’ addiction.
• Review Hatsukami Tob Control 2010;19 e1-e10.
  Nicotine reduction is an important area for research
• Denicotinised cigarettes – can reduce motivation to
  continue smoking by 30% but not by 100%. (Brody
• Clinical simulations of policy eg Johnson 2004 needed
  to ensure accurate national statistical modeling of
  addiction policy (Cavana 2008)

                         October 2010
                     More questions
Major immediate and permanent reduction in sales?
 As tax increases price of HN, nicotine consumption should fall.

Could Industry pricing soften nicotine tax effect?
  Board game simulations needed.

Will the tax over the long term enhance quitting?
Yes, if at every quitting attempt the smoker is less addicted..

Risk of blackmarket? HN cigarettes though expensive, will be legally
   on sale in all shops.

End game role? More useful as a component of a more
  comprehensive policy? - as End Smoking NZ has proposed

                                October 2010
   Expected industry response
• Nicotine tax pressures manufacturers to
  sell less nicotine in the average cigarette.
• Government may wish to ban composite
  packets of high and low nicotine, which
  would otherwise allow manufacturers to
  control the smoker’s nicotine choices.

                      October 2010
 Tax forces change at the factory -
     Commercial Cigarettes become RNCs

• Today’s Commercial Cigarette contains far
  more nicotine than needed for maintaining
• After nicotine tax, all cigarettes except HN
  will contain much less nicotine, and
  function like Reduced Nicotine Content
  cigarettes (RNCs).
• RNCs minimise compensatory smoking
                     October 2010
Expected industry pricing response

• Manufacturers if permitted, might wish to
  discount the price of high nicotine
  cigarettes to offset the effect of nicotine
  tax, and so keep smokers addicted.
• SFE Act could be amended to outlaw this
• Or, the nicotine tax might be increased.

                     October 2010
   Expected smoker responses
• Most smokers will inhale less nicotine.
• Smokers could smoke 1-2 HN cigarettes to start the day
  and use 18-19 VLNs over the rest of the day to minimise
  their nicotine tax and still obtain nicotine satisfaction.

• More quit attempts, more success in quitting.

• Nicotine becomes a luxury, to be savoured. Wealthy
  smokers could pay up to $20 per day for nicotine.

                           October 2010
Biological effect on smokers who, not
       wishing to quit, switch to very low
           nicotine (VLN) cigarettes
•   Cigarettes smoked per day:                                 halved
•   Addiction score (FTND):                                    halved
•   Self efficacy in quitting                                  doubled
•   Nicotine inhaled per day:                                  halved
•   CO exhaled (toxicity indicator):                           - 66%
•   NNAL in urine (carcinogen indicator):                       halved
based on Benowitz 2007 10 week study of reduced nicotine cigarettes, smokers
   not intending to quit.

                                  October 2010
     Appendix - Check list for
 government before taxing nicotine
Commission nicotine tax simulation studies.
Publish a discussion of proposed changes.
Consult with stakeholders and experts
Require annual testing of all brands for nicotine
  content as well as nicotine yield.
Regulate for nicotine content labels on all packets
Ban import and sale of liquid nicotine.
Allow manufacturers 6 months to re-tool.

                       October 2010

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