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The per capita consumption of cigarettes has risen and fallen, depending on particular events (Figure 3)69. Deaths from smoking-related illnesses, however, have climbed, possibly reaching a peak or plateau in 19881. Studies70 have placed the costs of smoking for the United States as a whole at a staggering $65 billion in 1985 in terms of health care expenditures and lost productivity, a value that would surely exceed $100 billion in current dollars. The estimated average lifetime medical costs for a smoker exceed those for a nonsmoker by more than $6,00071. This excess is a weighted average of costs incurred by all smokers, whether or not smoking-related illnesses develop. For smokers in whom such illnesses do develop, the personal financial impact is much higher71. The economic effect of smoking has not been overlooked by the life-insurance companies. Time magazine reported72 that even three insurance firms owned by tobacco companies charge smokers nearly double for term life insurance, because smokers are about twice as likely as nonsmokers to die at a given age.
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Another economic consideration is the cost associated with employees who smoke. Cigarette smokers are absent from work approximately 6.5 days more per year than nonsmokers. They make about six visits more to health care facilities per year than nonsmokers, and dependents of smokers make about four visits more per year than nonsmokers74. The cost to employers of workers who smoke is considerable and reflects costs due to work absences, health care claims, benefits not related to health care, and decreased productivity75. The Office of Technology Assessment5 estimates the costs of lost productivity of persons disabled by diseases attributable to smoking and forfeited earnings of those dying prematurely of such diseases at $47 billion for 1990. With the use of 1985 figures, the costs of lost productivity due to passive smoking were estimated to be $8.6 billion annually76.
Fires related to cigarette smoking are the leading cause of civilian fire deaths in the United States. In 1983, the U.S. Fire Administration estimated that fires caused by cigarettes killed more than 2300 men, women, and children and burned more than 5000 others in the United States77. The health care costs related to the care of burn victims from such fires are also substantial. The most recent data (1991) from the National Fire Protection Association (unpublished data) list 187,100 fires caused by smoking materials, which caused an estimated $552 million in direct property damage.
The Tobacco Industry
Despite a 20-year trend of declining tobacco consumption in the United States, tobacco sales remain highly profitable. The U.S. tobacco industry is led by Philip Morris and RJR Nabisco, which together controlled 70 percent of the U.S. market in 198878. In 1992, Philip Morris was the seventh largest industrial corporation in the United States, with $50 billion in sales. When these corporations were ranked according to profits, however, Philip Morris made more money in 1992 -- $4.9 billion -- than any other company in the United States, reflecting the large profit margin of cigarette sales79. This economic success in the face of declining U.S. cigarette consumption involved pricing that more than compensated for both inflation and the decrease in domestic sales. Aggressive advertising and marketing, as well as expanding exportation of tobacco, were also important factors.
Tobacco Advertising and Marketing
Cigarette advertising and promotion, despite some government restrictions, have undergone unbridled expansion in the past 30 years. Three years after the publication of the 1964 Surgeon General's report on the ill effects of smoking, the Federal Communications Commission, according to the Fairness Doctrine, ruled that local television and radio stations that broadcast cigarette advertising must also broadcast a balance of tobacco counteradvertising. Cigarette consumption per capita subsequently declined (Figure 3)69,80. With the Public Health Cigarette Smoking Act of 1969, Congress banned all cigarette advertising on electronic media81. The outcome of this regulation has been the subject of great discussion. Advertising against smoking in the electronic media ceased, and cigarette advertising in magazines and newspapers and on billboards increased dramatically82. Warner and Goldenhar have reported in a study of 39 magazines that carried cigarette advertisements before and after the electronic-media ban was enforced in 1971 that advertising revenue from the tobacco industry increased by $5.5 million per magazine per year in constant 1983 dollars83. Moreover, the coverage of smoking and health issues decreased by 65 percent in magazines that carried cigarette advertisements, as compared with a decrease of 29 percent in magazines that did not83. For three years after the ban, per capita tobacco consumption in the United States, which had been declining before the ban, actually increased (Figure 3)69.
Since the electronic-media ban, advertising expenditures by the tobacco industry have risen dramatically. From 1975 to 1990, annual expenditures on cigarette advertising and promotional events grew from $500 million to $3.9 billion. In constant 1975 dollars this represents more than a threefold increase4,82. In 1989, Philip Morris had the largest advertising budget of any company in the United States, spending $2 billion to promote its products84. In 1988, cigarettes were the most advertised product on billboards and the second most advertised product in print media82. Promotional expenditures, which include the sponsorship of sporting events and the distribution of free cigarettes and coupons, have grown from one quarter of the marketing budget in 1975 to two thirds in 198882.
A large portion of the marketing budget allocated for promotion supports sponsorship of events such as the Virginia Slims tennis tournament, the Marlboro Grand Prix, and Camel Motocross. The appeal of motor racing to the tobacco industry is not surprising, since it ranks as the second largest spectator sport in the United States behind football81. The economics of this high visibility are not lost on RJR Nabisco, which has become the leading sponsor of automobile and motorcycle racing in the United States. Far more important than the audience attending any such event, however, is the audience watching the event on television. For example, during the 93-minute broadcast of the 1989 Marlboro Grand Prix, the Marlboro name was mentioned 11 times and the logo was shown 5922 times, for a total of 46 minutes of exposure. Eighteen minutes of this exposure consisted of "clear, in-focus air time" estimated to have a commercial value of over $1 million81.
At what audience are the advertising and promotion by tobacco companies aimed? Recent data on the Camel-cigarette advertising campaign suggest that a principal target group is children. In 1988, with Camel sales declining, RJR Nabisco launched a marketing campaign featuring Old Joe Camel, a "smooth character" presumably modeled after James Bond85. In the advertisements, Old Joe rides motorcycles, shoots pool, and associates with attractive women while smoking Camel cigarettes. Three years into the campaign, Pierce et al. showed that 14 percent of adults over the age of 18 identified Camel as the most advertised cigarette brand, whereas 29 percent of teenagers 12 to 17 years of age and 34 percent of 12- to 13-year-olds believed Camel was the most advertised brand86. Even more striking are the data from Fischer et al. showing that 30 percent of three-year-olds and over 80 percent of six-year-olds are able to associate a picture of Old Joe Camel with a pack of cigarettes. Among six-year-olds, the same percentage associated a package of cigarettes with Old Joe Camel as were able to associate a picture of the Disney Channel logo with Mickey Mouse87. Other evidence suggesting that children are a target market for cigarettes is RJR Nabisco's sponsorship of events such as the "Camel Mud and Monster Series," tobacco-company-sponsored promotion of brand-name cigarettes in movies aimed at teenage audiences,88 and the appearance of cigarette advertisements in teen magazines. Currently, a pack of Camel cigarettes comes with a "C-note" that can be used to purchase Camel products with great appeal to teenagers, such as Camel charm earrings, a tropical shower curtain, or a watch with Old Joe Camel on the face.
From a marketing standpoint, the Camel campaign has been very successful. DiFranza et al.85 compared brand preference in 1988 and 1990 and reported that the proportion of smokers under the age of 18 who smoked Camels had increased from 0.5 percent to 32 percent since the start of the Old Joe campaign. These authors estimated that sales of Camel cigarettes to smokers under the age of 18 had increased from $6 million to $476 million, accounting for one quarter of all Camel sales and one third of all illegal sales of cigarettes85.
Over the past two years, the decline in per capita cigarette consumption, which had been uninterrupted since 1973, has ended4. This dramatic change has occurred simultaneously with the rapid growth of generic brands and low-priced brand-name cigarettes, which now control 36 percent of the market share89. This trend has decreased the average price of cigarettes and forced a landmark price cut in the spring of 1993, first by Philip Morris (Marlboro) and subsequently by its leading competitors. These events may have a lasting impact not only on industry profits but also on smoking prevalence rates, especially among populations that are sensitive to changes in prices, such as teenagers.
Tobacco Exportation
The U.S. tobacco industry, which is second only to China in tobacco production, has recently expanded its activity in foreign markets. Cigarette exportation has increased dramatically in the past eight years and has offset declining consumption in the United States such that domestic cigarette production has been maintained90. In 1984, the United States exported 56 billion cigarettes, or 8 percent of its total production. In 1991, however, the United States exported 194 billion cigarettes, which accounted for over 25 percent of total production. The United States exports more than three times as many cigarettes as does any other country in the world91.
In some developing countries, little emphasis is placed on the hazards of smoking, and hence there is no legislation governing warning labels, advertising restrictions, or tar content. This has provided the powerful transnational tobacco companies with an opportunity to penetrate foreign markets rapidly. The U.S. government has not thwarted this expansion, and there are several possible reasons for its inaction. First of all, the United States realized a $3.5 billion trade surplus from tobacco exports in 1988, up from $2.5 billion in 198792. The effect of this surplus on the trade deficit may have foiled any political efforts to limit the exportation or regulate the packaging (i.e., warning labels) of tobacco products. Furthermore, U.S. trade representatives, at the request of the tobacco industry (under section 301 of the 1974 Trade Act), have pressured foreign governments to open their markets to the transnational tobacco companies and to lift restrictions on cigarette advertising on television and in print92. Some have asked whether it is any less morally offensive for the United States to export cigarettes in the 1990s to lessen the trade deficit than it was for England to export opium to China in the 1830s to balance imports of silk and tea93.
With respect to the exportation of tobacco, Dr. James Mason, former assistant secretary for health in the Department of Health and Human Services, was quoted as saying:
Cigarettes become a health problem only when you combine addiction with greed -- greed on the part of the tobacco industry and the advertising industry, who are willing to exchange dollars for the lives of others. Our country has been known for its humanitarian and health-related projects worldwide. This is a hundred and eighty degrees opposite. We're talking about millions of lives -- and that totally outweighs and overwhelms what we've accomplished in the humanitarian field. It's outrageous for the United States to allow this misery and suffering to occur94.
The Tobacco Lobby
Cigarettes remain the only consumer product sold legally in the United States that is unequivocally carcinogenic when used as directed. Despite mountains of evidence on the health hazards of smoking cigarettes, the American public and government have tolerated the relatively unregulated advertisement, promotion, and sale of such a product. This passive tolerance is fueled in part by one of the most powerful political lobbies in government.
During the 1992 presidential campaign, the tobacco industry gave $2.5 million to the political parties, which represents a fivefold increase in funds contributed in 1988. In addition, contributions to House and Senate candidates during the 1992 campaign by tobacco political action committees exceeded $2.2 million, nearly twice the amount contributed from 1989 through 199095,96 (and Samuels B, et al.: personal communication).
Working at the level of the local, state, and federal governments, tobacco-company lobbyists are described by Representative Mike Synar (D-Okla.) as "the most pervasive group in politics today"96. Their activities include the formation and financial support of so-called grass-roots smokers' rights groups and local business coalitions designed to fight local tobacco-control legislation97. The Tobacco Institute and the Council for Tobacco Research, which are funded by the tobacco industry, ostensibly support the study of questions about tobacco use and health and "remain committed to advancing scientific inquiry into the gaps of knowledge in the smoking controversy"98. As late as 1986, however, a Tobacco Institute publication stated that "eminent scientists believe that questions relating to smoking and health are unresolved"98. These statements raise doubt in the minds of the public and their government representatives over a scientific debate that has been settled for nearly 30 years -- namely, that cigarettes cause lethal disease in humans.
The Campaign to Prevent Tobacco Use
Although cigarette smoking is the number-one preventable cause of premature death in our society, nearly 50 million Americans still smoke. There are several reasons for this tragic situation. First, the American public is reluctant to change a habit that is both culturally ingrained in their society and powerfully addictive, perhaps as addictive as the use of heroin and cocaine99. Second, recognition of the magnitude of this health hazard by U.S. citizens and their government has been hindered by the tobacco industry's expenditure of $4 billion per year for advertising and promotion. Third, the efforts of the tobacco industry to fight legislation on tobacco taxes have resulted in a lower excise tax on tobacco products, as a percentage of the retail price, in this country than in any of the other industrialized nations listed in Figure 4A (Non-smokers Rights Association of Canada: unpublished data); the United States also has among the least restrictive advertising regulations in the industrialized world (Figure 4B)95. Furthermore, tobacco products are not subject to regulation by the Food and Drug Administration100 or by the Consumer Product Safety Commission,101 which would, given current standards of product safety, undeniably prevent the sale of a similar product were it introduced today. Thus, the obstacles facing the campaign against tobacco use are formidable. To be effective, this campaign must operate on many different levels, from community education programs to support for increases in federal excise taxes (Table 3).
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Over the past 10 years, public recognition of the dangers of passive smoking (i.e., environmental tobacco smoke) has steadily increased. From 1980 to 1989, the number of no-smoking laws passed by various cities increased 10-fold, and by 1989, 44 states had passed some form of smoking-control legislation102. There is great variability, however, among no-smoking laws. Among 902 cities and all 50 states surveyed in a recent study, only 17 percent of the cities and 20 percent of the states had comprehensive laws restricting smoking in government buildings, public places, restaurants, and private workplaces102. Nevertheless, it has been shown that local efforts to initiate tobacco-control legislation as a means of protecting citizens against the ill effects of environmental tobacco smoke can overcome tobacco-industry efforts if supported by a strong coalition of community members, local businesses, and sympathetic political leadership97.
Bans on Advertising and Sponsorship by Tobacco Companies
As discussed, cigarettes remain the second most heavily advertised product in the United States, behind automobiles10. The American Medical Association is among the many institutions that have recommended a ban on all cigarette advertisements and promotional activities. Several bills have been proposed in Congress either to restrict further cigarette advertising or to ban it totally, though none have passed103. A strong tobacco lobby has argued that a ban on advertising would violate the industry's constitutional rights of free expression. A close examination of modern case law and the Supreme Court interpretation of the commercial free-speech doctrine, however, reveals that there are precedents for imposing restrictions on the advertisement of legal products when consumer safety is threatened100.
Restrictions on Sales of Tobacco to Minors
As stated earlier, approximately 80 to 90 percent of regular smokers start smoking by the age of 18. To influence smoking-related public health outcomes, efforts must be made to limit the availability of cigarettes to minors. An increasing number of states have appropriately supported such legislation. Currently, 46 states have laws prohibiting the sale of tobacco products to minors104. Compliance with these laws, however, has been repeatedly shown to be poor105,106,107,108. Attempts by minors to purchase cigarettes in eight communities in four separate studies had a success rate of 46 to 88 percent. Furthermore, only 22 states have laws prohibiting the free distribution of tobacco products to minors, and only 9 states ban the sale of tobacco products in vending machines or restrict the placement of such vending machines104. These data suggest that our society is remarkably passive about the illegal sale of addictive and dangerous tobacco products to children.
Tobacco Subsidies
On the one hand, the Department of Health and Human Services discourages tobacco use among U.S. citizens, whereas on the other hand the Department of Agriculture uses taxpayers' dollars to subsidize the tobacco industry,109 and the Internal Revenue Service allows the tobacco industry to deduct 100 percent of its advertising and promotional expenditures110. Although this tax deduction is not unique to the tobacco industry, given the health consequences of the product and the focus of the advertisements on women, children, and minorities, the U.S. public should be outraged by the mixed messages from our government. Substantial government subsidies to allow conversion from tobacco to other profitable and needed crops would seem indicated.
Tobacco Taxes
The federal excise tax on cigarettes has increased from 8 cents per pack in 1951 to the current 24 cents per pack111. With the addition of state cigarette taxes, the average total tax on a pack of cigarettes in the United States is 56 cents, or approximately 30 percent of the retail price. This percentage is dramatically lower than that in all the other industrialized countries listed in Figure 4A (Non-smokers Rights Association of Canada: unpublished data). Switzerland, which taxes cigarettes at 50 percent of the retail price, has the next lowest tax. An increase in the federal tobacco tax of $2 per pack of cigarettes has been recommended by the American Heart Association, the American Lung Association, and the American Cancer Society. Such an increase would still place the United States behind many countries (Figure 4A). In March 1993, Senator Bill Bradley (D-N.J.) and Representative Mike Andrews (D-Tex.) introduced the Tobacco Health Tax Act of 1993, which would raise the federal excise tax to $1 per pack of cigarettes. Unfortunately, the Clinton Health Care Security Act proposes an increase of only 75 cents per pack.
There are many potential benefits of increased tobacco taxes. First and most important, it is estimated that for every 10 percent increase in price, there will be a 4 percent reduction in tobacco consumption69. This figure is likely to be even higher in populations, such as teenagers, that are most sensitive to changes in prices. The effect of user fees has been clearly demonstrated by the small (25 cent) increase in the state cigarette tax in California approved in 1989, which resulted in a substantial acceleration in the decline of tobacco consumption as compared with the rates of decline in the rest of the United States112. Similarly, Canada increased federal and provincial cigarette taxes from an average of 46 cents in 1980 to $3.72 in 1991. During this time, cigarette sales fell 39 percent,113 tobacco consumption decreased 30 percent faster than in the United States,114 and smoking by teenagers was cut by two thirds111. With the recent fall in the prices of Marlboro, Camel, and other brand-name cigarettes, an increase in the cigarette tax becomes particularly important to counteract a potential increase in consumption among teenagers.
Second, with an increase in the cigarette tax, the resultant decline in consumption will lead to a decline in health care costs as former smokers and their children require less medical care. Third, since the Health Security Act estimates that $105 billion in revenues will be generated over a five-year period by a 75-cent increase in the tax on a pack of cigarettes, a $2 increase could yield as much as $250 billion over the same period. This not only would allow the tobacco industry to pay more equitably for the excess economic burden placed by its products on the health care system, but also could provide important funds for universal access to health care. Revenue generated by an increase in the tobacco tax could also be used to pay for community education and advertising against tobacco. Opponents of the increase in the tobacco tax argue that it is a regressive tax, like that on gasoline or food. Cigarettes are, however, lethal consumer products and cannot be considered in the same class as gasoline and food.
Tobacco use has exacted a tragic toll on the U.S. population. Every segment of our society suffers the consequences of these addictive products, including disproportionate effects on children, women, and minorities. The human and economic costs of tobacco use to our society are overwhelming. A uniform ban on tobacco advertisements, an increase in the number of laws against smoking in public places, more aggressive public education, and a higher tax on cigarettes would diminish some of the human tragedies of tobacco use.
Source Information
From the Department of Medicine, University of Colorado School of Medicine (T.D.M., C.E.B., R.W.S.), and Denver Health and Hospitals (T.D.M.), Denver.
Address reprint requests to Dr. Schrier at C281, University of Colorado School of Medicine, 4200 E. 9th Ave., Denver, CO 80262.
References
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