Six proposals to overcome the tobacco industry

Over the past decade, this journal has published four suggestions on how to better align the motivation of those who supply tobacco products with public health goals. These include proposals for new structures through which tobacco products would be supplied,9 ,10 profit controls on the industry11 and legislated market outcomes.12 A fifth related proposal has been published elsewhere,13 as has a sixth suggestion to abolish commercial tobacco sales.14

The first of these approaches, and arguably the groundwork for subsequent work on structural reform of tobacco supply, is the ‘Regulated Market Model’ (RMM) suggested by Ron Borland in 2003. He suggests the transfer of the marketing and distribution functions of tobacco suppliers to a monopoly that has a mandate to ‘service the existing market, but shape it to minimise harm’. This new agency would operate as a link in the supply chain between free-market tobacco manufacturers and retail outlets. It would use both new regulatory and purchasing–selling powers to exercise authority over those who make cigarettes and those who sell them. It does not set out to dismantle the industry so much as to ‘create a context whereby the forces of competition could be marshalled in the interests of reducing the harmfulness of tobacco products’.10

The second is our 2005 suggestion for the establishment of a ‘non-profit enterprise with public health mandate’ (NPE), which would remove profit-making from the entire tobacco supply system and replace duty to shareholders with an unencumbered responsibility to meet the public health goal of phasing out smoking. This model seeks to transform the market rather than to regulate it and would do so by changing the economic and legal conditions under which tobacco companies operate. In this analysis, a key source of the tobacco epidemic ‘lies in the political choice to allow business corporations to supply cigarettes’.9 ,15

A third proposal, offered in 2005 by Stephen Sugarman¹⁶ and described by him more fully in 2009, would redirect the efforts of tobacco companies without creating new administrative structures and without dismantling it, per se. He suggests that the use of performance-based regulations (PBRs) ‘attacks the issue in an altogether dif­ferent way. It rests on the simple proposition that the tobacco companies themselves should be required to achieve sharply improved public health outcomes’. He suggests that this can be done through the imposition of legal requirements on tobacco companies to reduce the number of people who smoke their products and to impose effective financial penalties on those who fail to do so.13 ,16 A law illustrating such an approach was proposed in US Senate.17

A fourth suggestion was made in 2010 by Anna Gilmore et al¹¹ and involves the creation of an independent regulatory agency, the Office for Smoked Tobacco Regulation (OFSMOKE). This agency would seek to correct the market failure, resulting from an oligopolistic cigarette market and to reduce the market power of tobacco manufacturers. It would do this primarily by imposing price controls at the manufacturers’ level, reducing the financial returns to suppliers. Under this model, the underlying structure of the tobacco market with respect to industry motivation and health regulation would not be changed.

A fifth suggestion, with elements common to Sugarman's, is the ‘Sinking Lid’ proposal made in 2010 by George Thomson et al¹². It seeks to end tobacco use through the imposition of progressive limits on the amount of commercial tobacco released for legal sale, and the use of auction to license suppliers for the remaining portion. Using a biannual  reduction of 5% of the initial volume, the authors foresee a phasing out of commercial tobacco within two decades. The capped market would be complemented by and would facilitate the expansion of demand-side measures, like plain packaging and increased consumer prices, but would be the ‘key overarching mechanism’ to prompt changed behaviour by suppliers.12

A sixth proposal is Robert Proctor's appeal for ‘Abolition’ of commercial tobacco. He proposes to ban the sale and manufacture of cigarettes, and to permit the smokers to grow their own tobacco. Instead of seeking to better regulate the market, transform it or impose performance requirements on it, Proctor seeks to collapse the organised supply. ‘This is the simplest way to approach disease prevention and would obviate the need for most other solutions commonly proposed’.14

Two dimensions of difference

These six models exhibit a number of conceptual differences. Although they mostly share a core rationale (the ‘why’), the proposed legal changes (the ‘how’) differ on at least two dimensions (Figure 1).

One difference is whether those who supply tobacco should be held accountable primarily for their achievement of financial or health goals. The OFSMOKE, Sinking Lid and PBRs would all retain tobacco suppliers as they are currently configured, including their obligations to the best interests of their shareholders. The RMM would impose a health-oriented intermediary in the tobacco supply system, which would be oriented towards health goals, but much of the supply system would rely on ‘free enterprise’ and competition for financial rewards. The NPE and Abolition approaches are conceptualised on removing tobacco supply from the profit sector.

The other dimension on which these proposals differ is the regulatory approach, either in favour of input-based requirements (which codify organisational behaviour) or outcome-based requirements (which codify objectives). Input-based strategies, ‘ordinarily assume that if enterprises make the ordered behavioural changes, then improved public health performances will follow’.13 In such regulatory systems, tobacco suppliers are responsible for adhering to the regulations, but not for the achievement of the goals of those regulations. By contrast, an outcome-based approach would put responsibility on tobacco suppliers to meet the regulatory objectives, such as a reduction in overall tobacco use. Current tobacco control strategies include both input-based regulations, such as advertising bans, and outcome-based regulations, such as ceilings on tar emissions.

Two of the proposed models are predominantly input based. OFSMOKE would impose a price ceiling in the expectation that this would improve public health, but would not make tobacco suppliers responsible for any such outcomes. The RMM expects a ‘more dynamic and trusting relationship with manufacturers’, but is described in ways that imply the continued use of behavioural regulation.10

The other four proposed approaches are focused on outcome-based improvements to tobacco control. The Sinking Lid and Performance-Based Regulations use performance outcomes as their organising principle, the NPE approach seeks to overcome the failures of input-based regulations by mandating and empowering tobacco suppliers towards health goals and the Abolition approach moves immediately to the performance end point .

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Figure 1

Conceptual differences in proposed tobacco supply models.

Related but distinct proposals

The ideas summarised earlier are qualitatively different from the proposals to prohibit the sale of some or all categories of tobacco products, such as those made by Hall and West18 and Daynard.19 Under their approach, the sale of less harmful forms of nicotine would be permitted and the industry would not be dismantled. The converse situation currently exists in Australia, where there is a ban on the sale of smokeless tobacco, but combustible cigarette sales are permitted.20

Other proposals to curtail the legal right of the individuals to smoke tobacco products21 ,22 have the effect of prohibition. They seek, however, to modify the behaviour of consumers and not the producers. As demand-side interventions they are qualitatively different concepts from the ideas summarised earlier which focus on changing the behaviour of producers.