The impact of the Malaysian minimum cigarette price law: findings from the ITC Malaysia Survey

Exploring the value in variations of the Relative Income Price (RIP) for calculating cigarette affordability: An illustration using Malaysia

The relationships between cigarette affordability, consumer income levels and distribution, and tax increases are complex and underexplored. This study investigates different ways of calculating the Relative Income Price (RIP) measure of affordability using Malaysia as a case study. We calculate cigarette affordability in Malaysia between 2009-2019 using government data, and multiple RIP variants. The conventional RIP calculation relies on 2,000 sticks and GDP (henceforth standard RIP). We explore that and other variants that use annual cigarette consumption estimates and/or proportions of various financial measures of wealth in both rural and urban areas. Our findings indicate broadly consistent trends in cigarette affordability across all methods. From 2009 to 2012, there was a slight decrease in the percentage of wealth required to purchase cigarettes, followed by an increase in 2015 and 2016, and then another decline, suggesting a recent trend toward increased affordability. Using the standard RIP method, 0.9 percentage points(pp) more of per capita GDP was required between 2009 and 2016, but, by 2019 it was 0.1pp less than in 2016. However, Household Income Per Capita (HIPC) and Household Expenditure Per Capita (HEPC) provide a more nuanced perspective on cigarette affordability compared to GDP per capita, as they reveal larger shifts in affordability. The conventional 2,000 sticks method using HIPC from 2009 to 2016 indicated 0.3pp more of income was required to purchase cigarettes, but by 2019, it was 1.0pp less than in 2016. Using HIPC with actual consumption estimates, smokers required approximately 0.9pp more of average income to purchase cigarettes between 2014 and 2016, but 2.5pp less from 2016 to 2019. Actual consumption estimates offer insight into smokers' ability to offset higher purchase costs by adjusting consumption patterns without quitting. We conclude that to address issues related to cigarette affordability, the Malaysian government should consider increasing tobacco tax vis-à-vis income growth.

Critical analysis of tobacco taxation policies in Pakistan after two decades of FCTC: Policy gaps and lessons for low- and middle-income countries

INTRODUCTION

Tobacco taxation remains a poorly used intervention to control tobacco use in many low- and middle-income countries (LMICs) including Pakistan even after two decades of FCTC adoption. This study identifies gaps and implementation challenges in the current Tobacco Taxation and Pricing Policies (TTPP) in Pakistan, and highlights key policy implications and lessons for LMICs to strengthen tobacco control measures.

METHODS

We used qualitative document analysis to examine the policy documents to assess the TTPP against the WHO Framework Convention on Tobacco Control (FCTC) guidelines for the implementation of Article 6 of the FCTC. In addition, we used secondary data on tobacco tax and prices to assess the impact of TTPP on tobacco affordability in the country.

RESULTS

Although Pakistan taxes raw tobacco, cigarettes and other tobacco products (cigarillos, cigars, cheroots), the existing TTPP falls below the WHO FCTC requirements of: uniform tax level, simple tax structure and 70% share of excise tax in the price of a product's pack; among others. There are also multiple issues in tobacco tax administration such as lack of monitoring. This is leading to the availability of highly affordable tobacco products in the country.

CONCLUSIONS

Pakistan does not have a clear strategy on using tobacco taxation and prices as a public health tool in the country. Existing TTPP face dual issues of flawed structure and poor administration translating into highly affordable tobacco products and low revenues in the country. There is a need to introduce multisectoral tobacco control policies in countries like Pakistan in the context of the tobacco sector political economy.

Methods of the 2020 (Wave 1) International Tobacco Control (ITC) Malaysia survey

The ITC Malaysia Project is part of the 31-country ITC Project, of which the central objective is to evaluate the impact of tobacco control policies of the WHO Framework Convention on Tobacco Control (FCTC). This article describes the methods used in the 2020 International Tobacco Control (ITC) Malaysia (MYS1) Survey. Adult smokers and non-smokers aged ≥18 years in Malaysia were recruited by a commercial survey firm from its online panel. Survey weights, accounting for smoking status, sex, age, education, and region of residence, were calibrated to the Malaysian 2019 National Health and Morbidity Survey. The survey questions were identical or functionally similar to those used in other ITC countries. Questions included demographic measures, patterns of use, quit history, intentions to quit, risk perceptions, beliefs and attitudes about cigarettes, e-cigarettes, and heated tobacco products. Questions also assessed measures assessing the impact of tobacco demand-reduction domains of the FCTC: price/tax (Article 6), smoke-free laws (Article 8), health warnings (Article 11), education, communication and public awareness (Article 12), advertising, promotion, and sponsorship restrictions (Article 13), and support for cessation (Article 14). The total sample size was 1253 (1047 cigarette smokers and 206 non-smokers). Response rate was 11.3%, but importantly, the cooperation rate was 95.3%. The 2020 ITC MYS1 Survey findings will provide evidence on current tobacco control policies and evidence needed by Malaysian government regulatory agencies to develop new or strengthen existing tobacco control efforts that could help achieve Malaysia’s endgame, i.e. a tobacco-free nation by 2040.

Addressing lower-priced cigarette products through three-pronged comprehensive regulation on excise taxes, minimum price policies and restrictions on price promotions

The prices that smokers pay out-of-pocket for their tobacco products ultimately influence their smoking behaviour. Although cigarette excise taxes are arguably the best and most used policy to increase cigarette prices, taxes are only one component of retail cigarette prices. The persistence of lower-priced products, disproportionately purchased by lower-income smokers, in jurisdictions with high excise taxes is an Achilles heel for tobacco tax policy. When governments raise excise taxes, the tobacco industry responds. The industry reduces tax pass-through to minimise the price increases for lower-priced brands and offers price discounts to retailers and coupons to consumers. In addition, smokers who do not quit after tax increases may downshift brands, purchase in bulk or substitute lower-priced tobacco product types. This may be particularly true for price-sensitive smokers, including those with lower incomes. We propose that raising excise taxes will be more effective in reducing the persistence of lower-priced products and income-based smoking disparities when taxes are designed to raise prices frequently and substantially for all products and are combined with (a) minimum price laws and (b) bans on coupons, discounts and other promotions. In combination, these three complementary policies restrict the tobacco industry's ability to undermine the impact of higher excise taxes upon consumer prices. Very few jurisdictions have implemented comprehensive three-pronged tobacco price regulation, but doing so would likely address many of the limitations that come with a sole focus on raising excise taxes.

Potential impact of eliminating illicit trade in cigarettes: a demand-side perspective

BACKGROUND

The Protocol to Eliminate Illicit Trade in Tobacco Products (the Protocol) entered into force in September 2018, and commits Parties to implement a package of measures to combat this global problem. The aim of this study is to assess the potential impact of eliminating illicit cigarettes on consumption, use and tax revenues.

METHODS

We identified 36 countries where an independent (non-industry sponsored) study of the illicit cigarette market was available. We developed a conceptual framework for describing how the elimination of illicit cigarettes might impact on demand (consumption and use) and applied this framework to our sample of countries to assess the impact of eliminating illicit cigarettes across different settings.

FINDINGS

Illicit cigarettes account on average for 11.2% of the market in these 36 countries. The elimination of illicit cigarettes would reduce total cigarette consumption by 1.9% across these countries. The decrease in 'group A' countries-where illicit cigarettes are >15% of the market-would average 4.1%. The smoking rate would decrease by 1.0% in relative terms including by 2.2% in group A countries. Tax revenues from the legal sale of cigarettes would increase by 11.2% including by 25.1% in group A countries.

CONCLUSIONS

The illicit cigarette market reflects a complex interplay between supply and demand, with an array of different country conditions. Regardless of the situation, our study highlights the contribution that the elimination of illicit trade can make to tobacco control through demand reduction while at the same time generating significant tax revenues.

Estimating illicit cigarette consumption using a tax-gap approach, India

Objective

To estimate the magnitude of illicit cigarette consumption in India using a tax-gap approach.

Methods

In the tax-gap analysis, illicit cigarette consumption in India was defined as the difference between total and legal consumption. Data on total cigarette consumption came from two national Global Adult Tobacco Surveys carried out from 2009 to 2010 and from 2016 to 2017. Legal consumption was derived from Government of India data on domestic cigarette production and trade.

Findings

Estimated total cigarette consumption was 104.8 billion sticks in 2009 to 2010 and 94.2 billion sticks in 2016 to 2017, a decrease of 10.6 billion sticks, or of 10%, over the time period. Legal cigarette consumption fell from 99.4 to 88.5 billion sticks over the same period, a drop of 11%. Estimated illicit cigarette consumption was, therefore, 5.4 billion sticks in 2009 to 2010 and 5.6 billion sticks in 2016 to 2017, and accounted for 5.1% and 6.0% of the market in these periods, respectively. Consequently, only about 1 in 20 cigarettes consumed in India was illicit. Between 2016 and 2017, the estimated equivalent retail sales value of illicit cigarettes was 49 billion Indian rupees (753 million United States dollars, US$) and the estimated tax revenue foregone was 25 billion Indian rupees (US$ 390 million).

Conclusion

Illicit cigarette consumption is relatively modest in India by global standards. Nonetheless, India should strengthen its capacity to control the illicit tobacco market as part of a comprehensive tobacco control strategy, while also continuing to implement traditional demand reduction measures, such as tobacco taxation.

Density of cigarette retailers near schools and sales to minors in Banyuwangi, Indonesia: A GIS mapping

INTRODUCTION

There are weak regulations and controls on tobacco sales to adolescents in Indonesia, and these may have contributed to the increase in smoking prevalence among adolescents in the country. Our study aims to calculate the density of cigarette retailers near schools and ascertain the factors associated with sales to minors.

METHODS

We conducted geographical mapping by recording the GPS position of cigarette retailers in 15 locations in Banyuwangi District, Indonesia, to assess the density and proximity of cigarette retailers to schools. We interviewed randomly selected retailers, from the geographical mapping, for information on sales to minors, the cheapest price cigarettes are sold and the most popular cigarette brand purchased by adolescents, as well as owners/keepers knowledge of the regulation regarding sales to minors.

RESULTS

We identified 770 retailers of consumer goods in the study location; 28.1% (216) sold cigarettes, with mean density of 1.1 cigarette retailers per 100 m. Of the cigarette retailers, 6.9% were located <25 m from schools and all schools had at least one retailer within a 250 m radius. Owners/keepers of 107 cigarette retailers agreed to be interviewed for information on sales to minors. Brands from Gudang Garam were the most popular among adolescents and the brand from Bentoel, part of British American Tobacco, was the cheapest. The median of the cheapest price sold was US$0.7 per pack. Only 43.6% of retailers ever refused to sell cigarettes to adolescents. Within a school complex, retailers’ refusal to sell cigarettes to adolescents was higher than in other locations.

CONCLUSIONS

Schools in Banyuwangi are surrounded by cigarette retailers. Half of the retailers sell cigarettes at a price affordable by adolescents, attracting adolescents to initiate smoking. There needs to be strict regulation to control cigarette sales to minors, through zoning and licensing in Indonesia.

Socioeconomic Differences in Smoking and Cessation Across a Period of Rapid Economic Growth in an Upper-Middle-Income Country

INTRODUCTION

Higher smoking rates and lower cessation rates among the poor compared to the rich are evident in high-income countries. In low and middle-income countries (LMICs), many of which are in the early stages of tackling the tobacco epidemic, more knowledge is required of the socioeconomic inequalities in smoking. This is especially the case for upper-middle-income countries, where smoking prevalence is highest. This study examines trends in the socioeconomic gradient in smoking and cessation among adults across a period of rapid economic development in Malaysia, an LMIC with an upper-middle-income economy.

METHODS

The socioeconomic trends in smoking were analyzed using data from cross-sectional National Health and Morbidity Surveys for the years 1996, 2006, and 2011. Household per capita income was used as a measure of socioeconomic position. As a measure of inequality, the concentration index that quantified the degree of socioeconomic inequality in a health outcome was computed. Smoking was assessed in current and former smokers. The study population was examined by gender, region, and age group.

RESULTS

This study found a trend of an increasingly higher smoking prevalence among the poor and higher cessation rates among the rich. With the exception of younger women in Peninsular Malaysia, the socioeconomic gradient in current smoking is concentrated among the poor. For former smokers, especially men, distributions across the years were mostly concentrated among the rich.

CONCLUSION

It is important to ensure that health policies, programs, and interventions consider the potential impact of the socioeconomic patterning in smoking on equity in health.

IMPLICATIONS

Findings on the socioeconomic gradient in smoking and cessation from Malaysia across a period of rapid economic development will contribute to addressing the paucity of knowledge on the socioeconomic gradient of smoking and cessation in other progressing LMICs. This study provides evidence from an upper-middle-income country, of an increasing trend of smoking among the poor and an increasing trend of cessation rates among the rich, particularly for men. We found opposing trends for younger adult women in the more developed, Peninsular Malaysia. More rich young women were found to have taken up smoking compared to socioeconomically less advantaged young women.

Analysis of tobacco industry pricing strategies in 23 European Union countries using commercial pricing data

Background

The tobacco industry (TI) can act to undermine the impact of tobacco tax increases by adopting various pricing strategies. Little is known about strategies used across the European Union (EU), except for the UK.

Aim

To examine pricing strategies adopted by the TI in the EU, and whether they differ by cigarette price segment, or between manufactured and roll-your-own (RYO) cigarettes.

Methods

This is a longitudinal analysis of commercial pricing data for manufactured and RYO cigarettes from 23 EU countries in 2006–2017. Price and revenue trends were explored. Linear regression estimated the average annual change in revenue, and linear fixed-effects panel regression models were used to explore the association between changes in median revenue (net of tax and adjusted for inflation) and tax increases in different price segments of manufactured cigarettes.

Results

Over the 11-year period price gaps were observed in all countries. The average annual adjusted median net revenue per pack increased in 19 of 23 countries for manufactured and RYO cigarettes. A tax increase was associated with a significant decrease of −€0.09 in adjusted median net revenue per pack (95% CI −0.16 to −0.03) in the cheap cigarette price segment, while no change was detected in the expensive cigarette price segment (−€0.05, 95% CI −0.11 to 0.01).

Conclusion

Across the EU, pricing strategies adopted by the TI maintained or increased price gaps and retained cheaper tobacco products in the market, diminishing the impact of tobacco tax increases. Further strengthening of tobacco taxation policy is needed to maximise public health impact.

How tobacco companies have used package quantity for consumer targeting

INTRODUCTION

Package quantity refers to the number of cigarettes or amount of other tobacco product in a package. Many countries restrict minimum cigarette package quantities to avoid low-cost packs that may lower barriers to youth smoking.

METHODS

We reviewed Truth Tobacco Industry Documents to understand tobacco companies' rationales for introducing new package quantities, including companies' expectations and research regarding how package quantity may influence consumer behaviour. A snowball sampling method (phase 1), a static search string (phase 2) and a follow-up snowball search (phase 3) identified 216 documents, mostly from the 1980s and 1990s, concerning cigarettes (200), roll-your-own tobacco (9), smokeless tobacco (6) and 'smokeless cigarettes' (1).

RESULTS

Companies introduced small and large packages to motivate brand-switching and continued use among current users when faced with low market share or threats such as tax-induced price increases or competitors' use of price promotions. Companies developed and evaluated package quantities for specific brands and consumer segments. Large packages offered value-for-money and matched long-term, heavy users' consumption rates. Small packages were cheaper, matched consumption rates of newer and lighter users, and increased products' novelty, ease of carrying and perceived freshness. Some users also preferred small packages as a way to try to limit consumption or quit.

CONCLUSION

Industry documents speculated about many potential effects of package quantity on appeal and use, depending on brand and consumer segment. The search was non-exhaustive, and we could not assess the quality of much of the research or other information on which the documents relied.

The impact of a federal cigarette minimum pack price policy on cigarette use in the USA

BACKGROUND

Increasing cigarette prices reduce cigarette use. The US Food and Drug Administration has the authority to regulate the sale and promotion-and therefore the price-of tobacco products.

OBJECTIVE

To examine the potential effect of federal minimum price regulation on the sales of cigarettes in the USA.

METHOD

We used yearly state-level data from the Tax Burden on Tobacco and other sources to model per capita cigarette sales as a function of price. We used the fitted model to compare the status quo sales with counterfactual scenarios in which a federal minimum price was set. The minimum price scenarios ranged from $0 to $12.

RESULTS

The estimated price effect in our model was comparable with that found in the literature. Our counterfactual analyses suggested that the impact of a minimum price requirement could range from a minimal effect at the $4 level to a reduction of 5.7 billion packs sold per year and 10 million smokers at the $10 level.

CONCLUSION

A federal minimum price policy has the potential to greatly benefit tobacco control and public health by uniformly increasing the price of cigarettes and by eliminating many price-reducing strategies currently available to both sellers and consumers.

Comparing projected impacts of cigarette floor price and excise tax policies on socioeconomic disparities in smoking

Background

About half of all US states have cigarette minimum price laws (MPLs) that require a per cent mark-up on prices, but research suggests they may not be very effective in raising prices. An alternative type of MPL sets a floor price below which packs cannot be sold, and may be more promising. This new type of MPL policy has only been implemented in 1 city, therefore its benefits relative to excise taxes is difficult to assess.

Methods

We constructed a set of possible state floor price MPL options, and matched them to possible state excise tax hikes designed to produce similar average price increases. Using self-reported price and cigarette consumption data from 23 521 participants in the 2010–2011 Tobacco Use Supplement of the Current Population Survey, we projected changes in pack prices and cigarette consumption following implementation of each paired MPL and tax option, for lower and higher income groups.

Results

We project that state MPLs set at the average reported pack price would raise prices by $0.33 and reduce cigarette consumption by about 4%; a tax with a similar average price effect would reduce consumption by 2.3%. MPLs and taxes that raise average prices by more than $2.00 would reduce consumption by 15.9% and 13.5%, respectively. In all models, we project that MPLs will reduce income-based smoking disparities more than their comparable excise taxes.

Conclusions

Floor price cigarette MPLs set at or above what consumers currently report paying could reduce both tobacco use and socioeconomic disparities in smoking.

An analysis of purchase price of legal and illicit cigarettes in urban retail environments in 14 low- and middle-income countries

BACKGROUND/AIMS

To estimate and compare price differences between legal and illicit cigarettes in 14 low- and middle-income countries (LMIC).

DESIGN

A cross-sectional census of all packs available on the market was purchased.

SETTING

Cigarette packs were purchased in formal retail settings in three major cities in each of 14 LMIC: Bangladesh, Brazil, China, Egypt, India, Indonesia, Mexico, Pakistan, the Philippines, Russia, Thailand, Turkey, Ukraine and Vietnam.

PARTICIPANTS

A total of 3240 packs were purchased (range = 58 packs in Egypt to 505 in Russia). Packs were categorized as 'legal' or 'illicit' based on the presence of a health warning label from the country of purchase and existence of a tax stamp; 2468 legal and 772 illicit packs were in the analysis.

MEASUREMENTS

Descriptive statistics stratified by country, city and neighborhood socio-economic status were used to explore the association between price and legal status of cigarettes.

FINDINGS

The number of illicit cigarettes in the sample setting was small (n < 5) in five countries (Brazil, Egypt, Indonesia, Mexico, Russia) and excluded from analysis. In the remaining nine countries, the median purchase price of legal cigarettes ranged from US$0.32 in Pakistan (n = 72) to US$3.24 in Turkey (n = 242); median purchase price of illicit cigarettes ranged from US$0.80 in Ukraine (n = 14) to US$3.08 in India (n = 41). The difference in median price between legal and illicit packs as a percentage of the price of legal packs ranged from 32% in Philippines to 455% in Bangladesh. Median purchase price of illicit cigarette packs was higher than that of legal cigarette packs in six countries (Bangladesh, India, Pakistan, Philippines, Thailand, Vietnam). Median purchase price of illicit packs was lower than that of legal packs in Turkey, Ukraine and China.

CONCLUSIONS

The median purchase price of illicit cigarettes is higher than that of legal cigarette packs in Bangladesh, India, Pakistan, Philippines, Thailand, and Vietnam, Brazil, Egypt, Indonesia, Mexico, Russia appear to have few or no illicit cigarettes for purchase from formal, urban retailers.