Health Care System and Tobacco Epidemic Ayda Yurekli, Senior Economic Advisor, Tobacco Free Initiative, WHO, Geneva

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?

Deaths caused by tobacco use, by diseases Source: Mathers and Loncar, 2006

Developing countries Developed countries Total 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 Developing countries Developed countries Total 2005 3.8 (71%) 1.6 (29%) 5.4 2020 73.4 (74%) 25.7 (26%) 99.1 2030 135.1 (77%) 40.7 (23%) 175.8 Source: Lopez et al 2005 Health Care System and Tobacco Epidemic

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

High opportunity cost to Families Example 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

Double burden on non-smokers and families Health Risks and Medical Costs Source: Donald F. Behan, Michael P. Eriksen and Yijia Lin March 31, 2005,

Double burden on non-smokers and families Economic Costs Source: Donald F. Behan, Michael P. Eriksen and Yijia Lin March 31, 2005,

Costs to Society Taiwan Type of Cost Cost (Million) Excess Absenteeism US$ 184 Sick leave due to ETS US$ 81 Occupational injuries among smokers US$ 1,032 Scotland Absenteeism £ 40 Productivity loss £405 Loss due to fires £ 4 Sources: Tsai et al Tobacco Control 2005;14:33-37 Parrotta et al Tob Control 2000;9:187-192 ( Summer )

Should Serbia be worried about it?

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

Health Care System and Tobacco Epidemic 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 - Scollo M, Lal A, Hyland A, Glantz S. Review of the quality of studies on the economic effects of smoke-free policies on the hospitality industry. Tob Control 2003; 12: 13-20. New York City. The State of Smoke-Free New York City. A One-Year review, NY, March 2004. 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, Health Care System and Tobacco Epidemic

New York Bar and Restaurant Tax Receipts Continued Increase since SFAA Tax Receipts Collected Source: New York city, 2008 Health Care System and Tobacco Epidemic

Health Care System and Tobacco Epidemic Do Smoke Free Policies Hurt Hospitality Industry? Evidence says NO Sales rose after smoking banned in restaurants and bars in California A total ban on smoking in public places and workplaces protects people from the dangers of second-hand smoke and helps convince smokers to quit Research clearly shows that there is no safe level of exposure to second-hand smoke. Second-hand smoke increases the risk of coronary heart disease by 25–30% and the risk of lung cancer in non-smokers by 20–30% Smoke-free environments help smokers who want to quit. Smoke-free policies in workplaces in several industrialized nations have reduced total tobacco consumption among workers by an average of 29% Smoke-free public places also encourage families to make their homes smoke-free, which protects children and other family members from the dangers of second-hand smoke. Public opinion surveys show that smoke-free legislation is extremely popular wherever it is enacted. In 2006, Uruguay became the first country in the Americas to go 100% smoke-free. The ban won support from eight out of ten Uruguayans. In California, 75% of the population approve of smoke-free workplace laws that included restaurants and bars In China, which has few smoke-free public places, more than 80% support a smoking ban in workplaces, and about half support banning smoking in restaurants and bars The effectiveness of smoke-free laws is greatly weakened or completely eliminated when smoking is permitted in designated areas. The tobacco industry itself acknowledges the effectiveness of smoke-free environments, and always pushes for exceptions such as designated indoor smoking areas Health Care System and Tobacco Epidemic 16

WHO FCTC –Article 8 Protect 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

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)

WHO FCTC –Article 8 Protect 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 <<

Urinating permitted Urinating Prohibited

24-hour outdoor standard (.05 mg/m3) Serbian people deserves Clean Air Quality same as New Yorkers New York: Impact of smoking environments on air quality Ambient particulate matter, mg/m3 Before Smoke-Free Air Act (SFAA), Air Quality Was 50X Worse in Bars w/ Smoking than at the Holland Tunnel Proposed EPA 24-hour outdoor standard (.05 mg/m3) Source: New York city, 2008

Serbian people deserves Clean Air Quality same as New Yorkers New York: Air quality after smoking ban Air Quality in Bars Improved Significantly Post-SFAA Ambient particulate matter, mg/m3 Source: New York city, 2008

Bottom-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 Labour Canada's Regulatory Impact Analysis Statement. Prepared for the federal Non-smokers' Health Act. Ottawa, Minister of Supply and Services, Canada Gazette, 1989: 4540. Envirnomental Protection Agency (EPA), 1994, The Costs and Benefits of Smoking Restrictions: An Assessment of the Smoke-Free Environment Act of 1993 (H.R. 3434). Indoor Air Division, Office of Radiation and Indoor Air, Washington. Source: WHO-CHOICE. World Health Organization, 2002. Health Care System and Tobacco Epidemic

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.

Serbia should NOT be worried

Serbia 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

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 Egypt since 1999, Qatar 2002, Thailand 2001, Nepal 1995, Republic of Korea 2003, Mongolia 2006, Finland 1995, Iceland 2003, Serbia 2005, Switzerland 2004, Poland 1995, Bulgaria 2005, Health Care System and Tobacco Epidemic

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

Can Serbia do better. YES Can Serbia do better? YES. Assuming other than tax and producer's price, there is no change in other factors including per capita income 21% increase in excise from 54.5% increase in excise from Current 48 to 58 RSD 31 to 48 RSD 58 48 31 Excise Tax/pack 55% 47% 43.9% Excise as % of RP 105 90 70.6 Price/pack (RSD) RSD & ( percentage change from current level) Price elasticity=-0.4 44.4 (+33%) 40.7 (+22%) 33.3 Revenue (Bill. RSD) Price elasticity= -0.8 33.7 (+1%) 35.7 (+7%)

Conclusion 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.