← home page • Buzz@Bruss! Edition #2 • How a hardline precautionary stance on RRP can be counterproductive for public health and economics
In February, at the 10th session of the Conference of the Parties (COP10) to the Framework Convention on Tobacco Control (FCTC), the World Health Organization (WHO) underpinned their reserved attitude towards alternative tobacco and nicotine products, continuing their general advocacy that regulators should treat them as equivalent to conventional combustible tobacco products (e.g. cigarettes). The WHO’s hardline positions on the regulatory and fiscal treatment of potentially reduced-risk products (RRP) will likely further foster the global trend for stricter ‘precautionary’ policy making.
However, a recent study by the highly-respected Oxford Economics institute → concluded that pursuing a harsh stance towards heated tobacco products and e-cigarettes not only could limit policymakers’ options for mitigating health risks but also put at risk the positive economic footprint supported by the RRP industry.
Heated tobacco products and e-cigarettes, so-called ‘Reduced-Risk Products’ (RRP), have massively gained popularity with consumers over the past few years. Companies have invested heavily in the development of these novel tobacco and nicotine products, with more than 12,600 patent publications made in the decade to 2020. Over the past 15 years, the category has grown rapidly, with global sales exceeding $20 billion in 2023.
The WHO has taken a firm position in its guidance to policymakers over the regulation and fiscal treatment of these alternative products. The FCTC fundamentally advocates for RRP to be regulated analogously with conventional combustible tobacco products. Having confirmed their strict ‘precautionary’ approach to HTP and e-cigarette regulations at the recent COP10, these alternative products are expected to face growing government scrutiny and will likely move countries closer to adopting a harder line on RRP. At the time of the Study (October 2023), Oxford Economics’ researchers counted a total of 86 bills and 30 policies in the legislative pipeline globally.
A hardline policy stance on RRP could hinder the potential long-term public health benefits and could create negative economic consequences
While the long-term health implications of RRP are complex, , there is a growing body of evidence to suggest that these products offer users a potential reduction in health risks, relative to smoking.
In their Study, Oxford Economics (OE) highlight how governments who take the hardline position stated by the FCTC, could be undermining any potential tobacco harm reduction advantages of RRP, by stifling product innovation as well as causing economic damage to the associated industries and national economies.
Drawing extensively on national data sources and secondary research in academic and grey literature, OE provide impressive examples showing that restricting consumer choice or access to RRP’s will not only reduce the pathways to lower aggregate national health impact but could lead to an increase in i) the propensity to smoke conventional tobacco products, and ii) the sale of illicit products. The latter has severe negative health implications as illicit products are less likely to comply with existing safety and quality standards.
The RRP business of major tobacco companies supports a sizable and growing economic footprint: jobs, tax revenue for governments and value-added contribution to the GDPs of countries. New nicotine products contributed $20.2 billion to GDP and supported a total of 137,000 jobs paying wages across EU27 of $4.4 billion in 2021. Also, the RRP category represent the most innovative aspects of the tobacco and nicotine industry, hence generating a sizeable pool of investments into Research &Development, further expanding the economic footprint.
Hardline blanket regulations and fiscal treatment of RRP’s may diminish the economic contributions of the industry. Higher excise duties or bans can lead consumers to shift their purchase into the illicit market. Examples from around the world prove how this leads to enormous losses in tax revenue, causes additional ripple effects through the economy and requires the administering authorities to incur significant cost for law enforcement and prosecution.
Oxford Economics’ recommendations for optimal RRP policy design
In the light of these findings the authors of the Study propose a couple of high-level principles for pursuing long-term health objectives in a way that mitigates the risk of economic damage:
Oxford Economics →, with over 300 economists and analysts in 20+ offices around the globe, is a leader in economic forecasting and quantitative analysis. The study on the economics of reduced-risk products was commissioned by JTI.
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