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Page 1: TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE ... · Belarus World High Income Upper Middle Lower Middle Low Income Tobacco deaths per 100,000 0% 5% 10% 15% 20% 25% Ukraine Moldova

| Page 1

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Page 2: TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE ... · Belarus World High Income Upper Middle Lower Middle Low Income Tobacco deaths per 100,000 0% 5% 10% 15% 20% 25% Ukraine Moldova

| Page 2

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

1. Smoking prevalence

The rate of smoking tends to increase with development reflecting higher prevalence of cigarette

use among women as incomes increase.

The rate of smoking is relatively high across Eurasia especially among adult males, adult females in

Russia and the Ukraine, and young females in Belarus.

There are currently 66 million adult smokers and 735,000 youth smokers across Eurasia.

More than 8 million of Eurasia’s current youth population could take up smoking by 2020.

2. Tobacco attributable mortality

Smoking is currently responsible for 500,000 deaths per year across Eurasia, representing 16% of all

adult deaths in the region compared to 12% of all adult deaths globally.

Smoking attributable mortality is disproportionately high among Eurasian males at 28% of all male

deaths compared to 16% of all male deaths globally.

In the absence of further intervention, some 25 million people in the current population of Eurasia

will die early from diseases caused by continued smoking.

3. The economic cost of tobacco attributable diseases

The proportion of health care costs attributable to smoking ranges between 6-15% in high income

countries representing an otherwise preventable drain on public health resources.

Eurasian loses 295,000 workers per year due to early mortality from smoking attributable diseases.

The output loss for Eurasia due to early mortality from smoking is estimated at 200 billion of GDP in

Purchasing Power Parity (PPP) terms, or as much as 6.5% of annual GDP for the region.

4. The impact of tobacco control measures

The MPOWER measures for tobacco control are highly effective and such policies implemented by

countries since 2007 are expected to prevent 7.4 million early deaths globally by 2050.

Turkey is the first country to reach the highest level of achievement in all six MPOWER measures

and has recorded a 13% relative decrease in smoking prevalence in five years.

Another sixteen countries have fully implemented at least three MPOWER measures and per capita

cigarette consumption in these countries has collectively fallen by 20% over 2007-2012.

5. The health impact of tobacco taxation

The impact of higher tobacco taxes on public health is assessed in relation to the three Customs

Union of Belarus, Kazakhstan and Russia.

If the Customs Union countries raise excise to the equivalent of 90 euro per 1000 by 2020, then the

price of cigarettes would increase from less than 1.1 euro/pack today to 3.5 euro/pack in 2020.

These higher cigarette prices would ultimately reduce the prevalence rate of smoking in these three

countries from 37% today to 26% after 2020.

Some 19 million smokers would quit smoking in response to higher prices including 3 million young

people who would otherwise take up smoking.

More than 4 million early deaths due to continued smoking would be averted in the future.

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| Page 3

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Rate of smoking in adult males, 2011 Rate of smoking in adult females, 2011

Number of adult smokers, 2011

Population (000s)

Prevalence rate (current smoker)

Number of smokers (000s)

Male Female Both Male Female Both Male Female Both

Belarus 3,776 4,652 8,429 51% 10% 28% 1,930 456 2,386 Kazakhstan 5,751 6,602 12,353 40% 9% 23% 2,314 566 2,881 Moldova 1,405 1,631 3,036 43% 5% 23% 605 85 690 Russia 55,882 69,366 125,249 60% 22% 39% 33,641 15,053 48,694 Ukraine 17,851 22,405 40,256 50% 11% 28% 8,926 2,532 11,457

Eurasia 84,666 104,657 189,323 56% 10% 35% 47,415 18,692 66,107 World 2,554,168 2,630,769 5,184,937 33% 7% 20% 845,688 185,489 1,031,176

Source: TCE calculations using population data from UN (2013) and prevalence data from WHO (2011).

Source: TCE calculations. Source: TCE calculations.

0% 10% 20% 30% 40% 50% 60%

Ukraine

Russia

Moldova

Kazakhstan

Belarus

World

High Income

Upper Middle

Lower Middle

Low Income

% of adult male population

0% 10% 20% 30% 40% 50% 60%

Ukraine

Russia

Moldova

Kazakhstan

Belarus

World

High Income

Upper Middle

Lower Middle

Low Income

% of adult female population

1. Smoking prevalence

The rate of smoking tends to increase with development reflecting higher prevalence of cigarette

use among women as incomes increase.1

The rate of smoking is relatively high across Eurasia especially among adult males, adult females in

Russia and the Ukraine, and young females in Belarus.

There are currently 66 million adult smokers and 735,000 youth smokers across Eurasia.

More than 8 million of Eurasia’s current youth population could take up smoking by 2020.

1The World Bank categorizes Moldova and the Ukraine as Lower Middle Income Countries, and Belarus, Kazakhstan and

Russia as Upper Middle Income Countries.

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TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Combined rate of adult smoking, 2011

Number of youth smokers, 2011

13-15 population (000s)

Prevalence rate (current smoking)

Number of youth smokers (000s)

Male Female Both Male Female Both Male Female Both

Belarus 97 92 189 32% 22% 27% 31 20 51 Kazakhstan 223 213 435 12% 8% 10% 27 17 44 Moldova 41 40 82 21% 7% 14% 9 3 11 Russia 1,306 1,252 2,558 19% 15% 17% 251 192 442 Ukraine 433 412 844 31% 13% 22% 133 53 186

Eurasia 2,100 2,008 4,108 21% 14% 18% 450 284 735

Source: TCE calculations using population data from UN (2013) and prevalence data from WHO (2013).

Today’s youth as smokers in 2020

Source: TCE calculations using data from UN (2013) and WHO (2013).

Source: TCE calculations.

0% 10% 20% 30% 40% 50%

Ukraine

Russia

Moldova

Kazakhstan

Belarus

World

High Income

Upper Middle

Lower Middle

Low Income

% of combined adult population

5-14 age population

Adult Smoking

Potential new smokers in 2020

(000s, 5-14) (%) (000s, 5-14) Belarus 1,017 28% 288 Kazakhstan 2,624 23% 612 Moldova 407 23% 92 Russia 15,175 39% 5,900 Ukraine 4,487 28% 1,277

Eurasia 23,710 35% 8,169

The rate of smoking tends to increase

with development reflecting higher

prevalence of cigarette use among

women as incomes increase.

A major public health risk is that more

women in low and middle income

countries will take up smoking as

incomes increase over time.

Cigarette use among adult women is

still relatively low in Belarus and

Kazakhstan compared to other upper

middle income countries.

A second public health risk is that when

today’s youth become adults, they will take

up smoking at a similar rate to their parents.

Thus, more than 8 million of Eurasia’s youth

population could take up smoking by 2020.

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| Page 5

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Death rate due to tobacco, 2004 Share of deaths due to tobacco, 2004

Source: TCE calculations. Source: TCE calculations.

0 100 200 300 400 500 600

Ukraine

Russia

Moldova

Kazakhstan

Belarus

World

High Income

Upper Middle

Lower Middle

Low Income

Tobacco deaths per 100,000

0% 5% 10% 15% 20% 25%

Ukraine

Russia

Moldova

Kazakhstan

Belarus

World

High Income

Upper Middle

Lower Middle

Low Income

% of all adult deaths

Tobacco is the leading behavioral risk factor causing more than 5 million deaths each year globally.

Although many people associate smoking with non-communicable diseases such as cancers and heart

disease, it is also a major cause of death from communicable diseases such as TB (WHO, 2012).

Tobacco is responsible for a greater share of deaths in high income countries due to a range of factors

such as generally higher rates of cigarette smoking, the older-age profile of high income countries, as

well as the high mortality rate from communicable diseases in low income countries.

2. Tobacco attributable mortality

Globally, tobacco causes 7% of all deaths from TB, 10% of all deaths from cardiovascular diseases,

22% of all cancer deaths and 36% of all deaths from lower respiratory infections.

Smoking attributable mortality rates tend to be higher in middle and high income countries due to a

range of factors, primarily the relatively high prevalence rates of smoking.

Smoking is responsible for more than 500,000 deaths per year across Eurasia, representing 16% of

all adult deaths in the region compared to 12% of all deaths globally.

Smoking attributable mortality is disproportionately high among Eurasian males at 28% of all male

deaths compared to 16% of all male deaths globally.

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| Page 6

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Adult mortality attributed to tobacco, 2004 Male

deaths Female deaths

Total deaths

Tobacco death rate

% male deaths

% female deaths

% of all deaths

(Number) (Number) (Number) (Rate) (% all) (% all) (% all) Belarus 20,090 281 20,371 344 28% 0% 15% Kazakhstan 30,692 9,334 40,026 555 35% 12% 24% Moldova 4,520 1,133 5,653 273 19% 5% 12% Russia 298,145 47,281 345,427 398 28% 4% 16% Ukraine 87,924 8,864 96,788 331 24% 2% 13%

Eurasia 441,371 66,893 508,264 394 28% 4% 16% World 3,573,921 1,529,456 5,103,377 174 16% 7% 12%

Source: TCE calculations using statistics from WHO (2012).

Death rate due to tobacco, 2004 Share of deaths due to tobacco, 2004

Source: WHO (2012) Source: WHO (2012)

0

200

400

600

800

1,000

Bel

arus

Ka

zakh

sta

n

Mo

ldo

va

Ru

ssia

Ukr

ain

e

Wo

rld

Tob

acc

o d

ea

ths

pe

r 1

00

,00

0

Males Females

0%

10%

20%

30%

40%

Bel

arus

Ka

zakh

sta

n

Mo

ldo

va

Ru

ssia

Ukr

ain

e

Wo

rld

% o

f d

eath

s at

trib

ute

d t

o t

ob

acco

Males Females

Smoking is responsible for over 500,000 deaths per year in Eurasia, representing 16% of all adult deaths

in the region. The Eurasia region accounts for 10% of all smoking-attributable deaths worldwide with

Russia alone accounting for 7% of all smoking-attributable deaths .

Smoking-attributable mortality is disproportionately high for Eurasian males, while Kazakhstan also

exhibits a high rate of smoking-attributable mortality in females.

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| Page 7

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Share of all deaths by disease condition attributed to tobacco, 2004

Mortality rates from second-hand smoke, 2004

Source: WHO (2012)

22%

10%

36%

5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Malignant neoplasms Cardiovascular

diseases

Respiratory diseases Communicable

diseases (e.g. TB)

% o

f d

eath

s at

trib

ute

d t

o t

ob

acco

Belarus Kazakhstan Moldova Russia Ukraine World

Source: TCE calculations using WHO (2009) and Oberg et al (2011).

0

10

20

30

40

50

US

Fran

ce

Jap

an

Ital

y

Ger

man

y

Ka

zah

sta

n

Ru

ssia

Mol

dova

Be

laru

s

Ukr

ain

e

SHS

deat

hs p

er 1

00,0

00

In addition to deaths from direct tobacco

use, it is estimated that second-hand

smoke (SHS) causes 600,000 deaths each

year globally (Oberg et al, 2011). Death

rates from SHS are higher in countries

where people are regularly exposed to

smoking at home and public places.

Surveys of youth in Moldova and the

Ukraine report that 57% of children are

exposed to SHS in public places. In 2004,

the situation was as even worse in Russia

with 89% of children reporting SHS

exposure (CDC, 2013).

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| Page 8

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Public health spending due to smoking, 2012

Source: GHK (2009) estimates updated by TCE.

0 25 50 75 100 125 150

Germany

UnitedKingdom

France

Italy

Other EU

EU27

Euro per capita in 2012 prices

A recent study commissioned by the EC

found that public spending on diseases

caused by smoking in 27 EU countries

accounted for 6% of total public health

expenditures. This ranged from 4% in

Bulgaria to 12% in Hungary (GHK, 2009).

When the findings were updated by TCE to

reflect 2012 prices, public spending on

smoking attributable diseases in these 27

countries amounts to 53 billion euro or an

average of 110 euro per capita.

The term direct costs refer to the use of government and household resources to treat diseases

attributable to tobacco. In terms of fiscal impact, the proportion of health care expenditures attributable

to smoking in developed countries tends to range from 6-15% (World Bank, 1999).

The evidence suggests that direct costs are lower in low and middle income countries (WHO, 2011b).

This may be because the tobacco epidemic is at an earlier stage, or due to limited availability of medical

care in low and middle income countries (Ross et al, 2007).

3. The economic cost of tobacco attributable diseases

The proportion of health care costs attributable to smoking ranges from 6-15% in high income

countries representing an unnecessary and preventable drain on public health resources.

Smokers exhibit higher rates of absenteeism and can lose several months of work each year due to

more chronic conditions.

Eurasia loses 295,000 workers each year due to early mortality from smoking attributable diseases.

The output loss for Eurasia due to early mortality from smoking is estimated at 200 billion of GDP in

Purchasing Power Parity (PPP) prices, or as much as 6.5% of annual GDP for the region.

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| Page 9

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Annual loss in workforce due to early mortality

Source: TCE calculations.

The term indirect cost refers to the loss in output and overall welfare of society from tobacco attributable

diseases. Some indirect costs such as the loss in output due to mortality and morbidity can be quantified

in monetary terms, while others such as pain and suffering often remain intangible.

Morbidity has a subtle effect on output with smokers registering excess rates of absenteeism in the order

of 2-3 days each year (Berman et al, 2013). However, absenteeism is not evenly distributed. The average

EU smoker suffering from cancer, COPD or cardiovascular disease losses 92, 122 and 136 workforce days

respectively to ill health (Suhrcke et al, 2008). Such rates of absenteeism surely impact on the earning

potential of those suffering from such chronic diseases.

Early mortality is responsible for the largest share of the indirect costs because it includes the permanent

reduction in the number of working-age persons (Guindon, 2007). This cost is commonly measured using

the Human Capital Approach which quantifies the net present value of all current and future years of

output lost for workers who die early from smoking.

TCE has used the Human Capital Approach to calculate the indirect cost of early mortality due to smoking

attributable diseases in Eurasia.

TCEs calculations first translate the annual

number of deaths from smoking into an

equivalent loss in the number of workers using

World Bank data on the employment-to-

population ratio for each country.

Thus, the Eurasian region is estimated to lose

295,000 workers each year due to early

mortality from smoking attributable diseases.

WHO Life Tables show that adults who die

early from smoking in Eurasia lose on average

17 years of life. This translates into a total of

4.8 million workforce years lost due to smoking

attributable deaths each year.

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| Page 10

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Output loss due to early mortality, 2011 Tobacco

deaths Employment

ratio(1)

Workforce loss

Average years lost

Total years lost

GDP per

worker(2)

NPV of

output loss(3)

(Adults) (% 15+) (Workers) (Years) (Years) (GDP) (Million GDP)

Belarus 20,371 50.6% 10,308 15 156,124 34,008 8,441

Kazakhstan 40,026 67.7% 27,097 15 401,767 28,176 16,823 Moldova 5,653 38.7% 2,188 16 34,915 10,008 482 Russia 345,427 58.8% 203,111 17 3,480,839 33,220 160,183 Ukraine 96,788 54.5% 52,749 15 804,826 15,034 14,086

Eurasia 508,264 58.1% 295,493 17 4,878,472 29,233 200,015

(1) Source: World Bank (2013). (2) TCE estimates using country GDP for 2011 in Purchasing Power Parity (PPP) terms from the World Economic Outlook (IMF, 2012) divided by adult employment. Note the future value of GDP/worker is increased annually based on IMF forecasts of GDP/capita in PPP terms (IMF, 2012). (3) The output loss in future years converted into Net Present Value (NPV) terms using a 3% discount rate.

Output loss due to early mortality, % GDP

Source: TCE calculations.

TCEs calculations divide IMF data on country GDP in Purchasing Power Parity (PPP) terms for 2011 by

adult employment to arrive at the value of GDP/worker. Note the value of GDP/worker in future years is

calculated using IMF growth forecasts of GDP/capita in PPP terms.

The value of future workforce years lost is adjusted by a discount rate of 3% to arrive at the Net Present

Value (NPV) of all current and future output losses due to early mortality from smoking.

The loss in output due to smoking attributable

mortality in the Eurasian region per year is

estimated by TCE at 200 billion of GDP in

Purchasing Power Parity (PPP) terms for 2011.

The loss in output for Russia alone is estimated

at more than 160 billion GDP in PPP prices.

The loss in output for the Eurasia is equivalent

to as much as 6.5% of annual GDP for the

Eurasia region compared to 2% globally.

Kazakhstan shows the greatest relative loss at

7.8% of GDP followed by Russia at 6.7%.

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| Page 11

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Impact of MPOWER, 2007-2010

Source: Levy et al (2013).

Smokers covered

Fewer smokers

Fewer deaths

(000s) (000s) (000s)

Protect air 85,445 5,033 2,516 Offer cessation 29,847 759 380 Warnings 100,633 1,340 681 Enforce bans 9,334 613 306 Raise taxes 62,416 7,056 3,528

Total 287,675 14,840 7,420

4. The impact of tobacco control measures

The WHO Framework Convention on Tobacco Control (FCTC) has been widely adopted with 177

Parties to the treaty including Belarus, Kazakhstan, Moldova, Russia and the Ukraine.

The MPOWER measures for tobacco control are highly effective and such policies implemented by

countries since 2007 are expected to prevent 7.4 million early deaths globally by 2050.

Turkey is the first country to reach the highest level of achievement in all six MPOWER measures

and has recorded a 13% relative decrease in smoking prevalence in five years.

Another sixteen countries have fully implemented at least three MPOWER measures and per capita

cigarette consumption in these countries has collectively fallen by 20% over 2007-2012.

.

The WHO Framework Convention on Tobacco

Control (FCTC) is the first international treaty

negotiated under the auspices of WHO. Parties to

the FCTC commit to protecting their population

by implementing demand reduction measures.

To help countries implement the treaty, WHO has

introduced MPOWER - a package of six technical

measures. Each measure relates to at least one

demand-side provision of the FCTC.

Monitor tobacco use and prevention policies.

Protect people from tobacco smoke.

Offer help to quit tobacco use.

Warn about the dangers of tobacco.

Enforce bans on tobacco advertising,

promotion and sponsorship.

Raise taxes on tobacco.

These measures are supported by substantial

evidence of their impact on smoking behavior

including experiences in low and middle income

countries (refer to WHO, 2008).

Research in the WHO Bulletin has assessed the

global impact of tobacco control in countries that

have fully implemented at least one MPOWER

measure over 2007-2010 (Levy et al, 2013). They

find these policies will result in 14.8 million fewer

smokers and avert 7.4 million deaths by 2050.

This research demonstrates the measureable

impact of actions already undertaken by many

countries and underscores the potential for

millions of additional lives to be saved with

continued adoption of MPOWER polices.

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TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Adult smoking rate in Turkey, 2008-2012

Source: WHO (2013).

Turkey is the first country to fully implement

all six MPOWER measures and has recorded

a 13% relative decline in smoking prevalence

in five years over 2008-2012 (WHO, 2013).

Another sixteen countries have fully

implemented at least three MPOWER

measures.2 Per capita cigarette consumption

in these countries has collectively fallen by

20% over 2007-2012 compared to a decline

of less than 1% in countries with lower levels

of implementation (Source: TCE).

2Australia, Brazil, Brunei, Canada, El Salvador, Iran,

Kuwait, Madagascar, Mauritius, NZ, Panama,

Seychelles, Spain, Thailand, the UK and Uruguay.

Newly published research has assessed the potential long-term effects of implementing MPOWER

policies in Russia (Maslennikova et al, 2013). This research used the SimSmoke model to assess the

impact of implementing seven tobacco control policies consistent with the WHO FCTC.

The SimSmoke model forecasts the impact of these seven polices on smoking prevalence and smoking

attributable deaths for Russia. These seven policies combined would decrease smoking prevalence by

37% in 2025 and by 49% in 2055. The impact of raising tobacco taxes alone is assessed by the SimSmoke

model to decrease prevalence by 13% in 2025 and by 23% in 2055.

The authors note that Russia has already begun to implement some policies (such as higher taxes, media

campaigns and health warnings). They estimate that these policies will have already reduced smoking

rates and will lead to the prevention of some 1.5 million smoking attributable deaths in the future.

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| Page 13

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Number of early deaths in the future due to smoking

Population at risk (000s)

Number of early deaths(2) (000s)

Current smokers

Future smokers

(1)

Total smokers

Current smokers

Future smokers

Total smokers

Belarus 2,386 288 2,673 795 96 891 Kazakhstan 2,881 612 3,492 960 204 1,164 Moldova 690 92 782 230 31 261 Russia 48,694 5,900 54,593 16,231 1,967 18,198 Ukraine 11,457 1,277 12,735 3,819 426 4,245

Eurasia 66,107 8,169 74,276 22,036 2,723 24,759

(1) Calculated on the basis that today’s youth population will take-up smoking at the same rate as adults. (2) Conservatively assumes that 33% of cigarette smokers are risk of early death in the future from continued smoking.

Source: TCE calculations.

5. The health impact of tobacco taxation

Raising tobacco taxes has proven to be one of the most effective interventions for reducing tobacco

consumption, particularly among the young and the poor (WHO, 2011c).

In the absence of further interventions, some 25 million people in the current population of Eurasia

will die early from diseases caused by continued smoking.

The impact of higher tobacco taxes on public health is assessed in relation to the three Customs

Union of Belarus, Kazakhstan and Russia.

If the Customs Union countries raise excise to the equivalent of 90 euro per 1000 by 2020, then the

price of cigarettes would increase from less than 1.1 euro/pack today to 3.5 euro/pack in 2020.

These higher cigarette prices would ultimately reduce the prevalence rate of smoking in these three

countries from 37% today to 26% after 2020.

Some 19 million smokers would quit smoking in response to these higher prices including 3 million

young people who would otherwise take up smoking.

More than 4 million early deaths due to continued smoking would be averted in the future.

Studies have found that tobacco kills a third to a half of all people who use it (Peto, 1996) and that half

of all regular cigarette smokers will die early from tobacco attributable diseases (Doll, 2004, and DHHS,

2004). In the absence of further interventions to reduce the demand for cigarettes in Eurasia, TCEs

calculations conservatively show that 25 million people in the current population will die early from

diseases caused by smoking. This includes 3 million deaths from among the current youth population

who can be expected to take up smoking in the future.

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| Page 14

TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Cigarette tax simulations for the Customs Union

National currency terms Euro currency terms Excise per pack Price per pack FX rate Excise per pack Price per pack 2013 2020 2013 2020 % Real

(1) 2013 2013 2020 2013 2020

Belarus 2,196 21,798 7,076 37,912 223% 11,306 0.19 1.93 0.63 3.35 Kazakhstan 31 360 142 689 222% 198.9 0.16 1.81 0.72 3.46 Russia 15 102 44 190 203% 40.5 0.38 1.98 1.09 3.69

EU average 2.88 4.76

Source: TCE Tobacco Tax Simulations of excise rates that approximate 90 euro per 1000 sticks by 2020. (1) Percentage increase in cigarette prices after adjusting for inflation.

Average excise per cigarette pack Average price per cigarette pack

Source: TCE calculations Source: TCE calculations

0.0

1.0

2.0

3.0

4.0

5.0

Bel

arus

Kaz

akh

sta

n

Ru

ssia

EU a

vera

gein

201

2

(eu

ro p

er p

ack)

2013 2020

0.0

1.0

2.0

3.0

4.0

5.0

Bel

arus

Kaz

akh

sta

n

Ru

ssia

EU a

vera

gein

201

2

(eu

ro p

er p

ack)

2013 2020

TCE worked with Ministry of Finance officials from the three Customs Union countries to develop

Tobacco Tax Simulation (TaXSiM) models that quantify the impact of tobacco tax policies on excise

revenue and public health outcomes in their countries.

If the Customs Union countries raise excise to the equivalent of 90 euro per 1000 by 2020, then the

price of cigarettes in these three countries would increase by around 200% in inflation-adjusted terms

thus creating a sustained incentive for people to reduce cigarette consumption and quit smoking.

Cigarette prices in the Customs Union would increase from less than 1.1 euro/pack today to around 3.5

euro/pack by 2020. However, note these prices would still be lower than the current EU average of 4.76

euro/pack in 2012 (WHO,2013).

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TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

Health impact of reaching 90 euro/1000 by 2020

Adult prevalence rate of smoking (%)(1)

Reduction in number of smokers (000s)

Reduction in number of early deaths (000s)(2)

Current 2011

After 2020

% change

Current smokers

Future smokers

Total smokers

Current smokers

Future smokers

Total smokers

Belarus 28% 19% -33% 798 96 894 177 21 199 Kazakhstan 23% 16% -33% 959 204 1,162 213 45 258 Russia 39% 27% -30% 14,828 1,797 16,625 3,295 399 3,694

Union 37% 26% -31% 16,584 2,096 18,681 3,685 466 4,151

(1) The rate after 2020 is calculated using a prevalence elasticity of -0.15 on the real or inflation-adjusted price. (2) Calculated assuming a survival rate of 67% on average for regular adult smokers who quit smoking. Source: TCE WHO Tobacco Tax Simulations.

Predicted decrease in smoking rates

Source: TCE calculations and WHO (2013).

Global evidence suggests that half of the

impact of price on smoking comes from a

reduction in prevalence (IARC, 2011).

Consistent with this evidence and other

estimations, TCE calculations conservatively

assume a prevalence elasticity of -0.15 on the

inflation-adjusted change in cigarette prices.

Higher cigarette prices from raising excise in

the Customs Union as proposed above would

ultimately lead the prevalence rate of adult

smoking in these three countries to decline

from 37% today to 26% after 2020.

In absolute terms, some 19 million smokers would quit smoking in response to higher cigarette prices

including 3 million young people who would otherwise take up smoking.

The impact in terms of deaths avoided depends on the survival rate of adults who quit smoking. Health

studies show that at least 67% of those who would have otherwise died early from diseases caused by

smoking can avoid early death by quitting (IARC, 2011).

Overall, more than 4 million early deaths due to smoking would be averted in the future through higher

cigarette taxes and prices in the Customs Union countries.

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TOBACCO CONTROL ECONOMICS TOBACCO FREE INITIATIVE PREVENTION OF NONCOMMUNICABLE DISEASES

6. References

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