Article Text

Global economic cost of smoking-attributable diseases
1. Mark Goodchild1,
2. Nigar Nargis2,
3. Edouard Tursan d'Espaignet1
1. 1 World Health Organization, Geneva, Switzerland
2. 2 American Cancer Society, Washington, District of Columbia, USA
1. Correspondence to Mark Goodchild, World Health Organization, 20 avenue Appia, 1211 Geneva 27, Switzerland; goodchildm{at}who.int

## Abstract

Background The detrimental impact of smoking on health has been widely documented since the 1960s. Numerous studies have also quantified the economic cost that smoking imposes on society. However, these studies have mostly been in high income countries, with limited documentation from developing countries. The aim of this paper is to measure the economic cost of smoking-attributable diseases in countries throughout the world, including in low- and middle-income settings.

Methods The Cost of Illness approach is used to estimate the economic cost of smoking attributable-diseases in 2012. Under this approach, economic costs are defined as either ‘direct costs' such as hospital fees or ‘indirect costs’ representing the productivity loss from morbidity and mortality. The same method was applied to 152 countries, which had all the necessary data, representing 97% of the world's smokers.

Findings The amount of healthcare expenditure due to smoking-attributable diseases totalled purchasing power parity (PPP) $467 billion (US$422 billion) in 2012, or 5.7% of global health expenditure. The total economic cost of smoking (from health expenditures and productivity losses together) totalled PPP $1852 billion (US$1436 billion) in 2012, equivalent in magnitude to 1.8% of the world's annual gross domestic product (GDP). Almost 40% of this cost occurred in developing countries, highlighting the substantial burden these countries suffer.

Conclusions Smoking imposes a heavy economic burden throughout the world, particularly in Europe and North America, where the tobacco epidemic is most advanced. These findings highlight the urgent need for countries to implement stronger tobacco control measures to address these costs.

• Economics
• Smoking Caused Disease
• Global health

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## Introduction

The detrimental impact of smoking on physical health and well-being has been widely documented throughout the world since the early 1960s.1 ,2 Numerous studies have also quantified the economic cost that smoking imposes on society. However, these studies have mostly been in high-income countries, with less documentation available from developing countries.3 Today, the growing burden of non-communicable diseases (NCDs) in developing countries has further heightened interest in monitoring the economic cost of associated risk factors such as tobacco use.

Global concern about the impact of NCDs resulted in the 2012 Political Declaration of the High-Level Meeting of the United Nations General Assembly on the Prevention and Control of Non-communicable Diseases.4 This Declaration notes with grave concern the ‘increased burden that NCDs impose through impoverishment from long-term treatment costs, and from productivity losses that threaten household incomes and the economies of Member States’. In 2015, the UN General Assembly also adopted the 2030 Agenda for Sustainable Development.5 It includes 17 Goals (sustainable development goals (SDGs)) that all Member States have agreed to achieve by 2030. SDG 3 to ‘ensure healthy lives and promoting well-being for all ages’ includes target 3.4 to reduce by one-third premature mortality from NCDs, and target 3.a to strengthen country implementation of the WHO Framework Convention on Tobacco Control (WHO FCTC).5–7

The WHO has previously noted that—despite some good progress—many countries have yet to introduce tobacco control measures at their highest level of implementation. This has left their populations at increased risk from tobacco use and secondhand smoke exposure, with the illness, disability and death they cause.8 All countries have the ability to implement proven cost-effective tobacco control policies to protect the health of their citzens.9 ,10 Tobacco control can potentially make a significant contribution towards the achievement of development priorities such as the SDGs.

The aim of this study is to measure the global economic cost of smoking-attributable diseases (ie, those caused by direct exposure to smoking). These findings will highlight the need for countries to implement more comprehensive tobacco control measures to address these economic costs, while also helping to achieve global development priorities under the SDGs.

## Methods

This study adopts a classic Cost of Illness approach to modelling the economic impact of an illness as developed by Rice and colleagues in the 1960s.3 Under this approach, the gross economic impact of an illness is divided into ‘direct costs’ incurred in a given year (eg, hospitalisation and medications) and ‘indirect costs’ representing the value of lost productivity in current and future years due to disability and mortality. Direct and indirect costs are then summed to provide the overall economic cost to society, often expressed as a percentage of annual gross domestic product (GDP).11 This approach has been used in the vast majority of studies on the economic costs of smoking, particularly in developing countries.3 ,12 Some variations of this approach have been developed over time, for example, the life cycle approach to direct cost estimation. We compare these developments with the classic approach in our discussion section.

We were able to collect the necessary data to complete our calculations for 152 countries, representing 97% of the world's smokers. The countries were grouped according to World Bank income status and WHO region. Key results for all countries are contained in the online supplementary material file. The findings are reported in international dollars using International Monetary Fund (IMF) purchasing power parity (PPP) exchange rates for 2012. The use of international dollars (PPP$s) is common practice to ensure that the estimation of economic costs in different countries are comparable, and properly reflect underlying differences in the cost of living for people in countries at different levels of development.13 However, we also report the key findings in US dollar (US$) terms.

### Estimation of direct costs

Cost of Illness studies often categorise direct costs into either healthcare or non-healthcare expenditures. Healthcare expenditures are those incurred from the diagnosis and treatment of smoking-attributable diseases (hospitalisation, physician services, medications, etc), while non-healthcare expenditures are incurred outside of the health system (eg, property loss from fires caused by cigarettes). For the purpose of this study, we limit our investigation of direct costs to healthcare expenditure.

A literature search was undertaken to gather data on smoking-attributable healthcare expenditures in different countries. We searched four bibliographic databases (EconLit, EMBASE, PubMed and Cochrane), checked the reference list of recent systematic reviews and searched Google for grey literature.12 Studies were included if they were published in the past 25 years, calculated health costs on an annual basis and included at least three major smoking-attributable diseases. The reasoning behind these search criteria was to assess the finding of studies that were comparable in scale and scope. Titles and abstracts were screened before potentially eligible studies were assessed by two reviewers. Studies were then excluded if they were funded by the tobacco industry, or were for areas that are not UN Member States (we lack the background data for provinces or special administrative regions). Overall, the literature search found 33 studies covering 44 countries.14–46

These 44 countries are shown in table 1 alongside background information such as the World Bank income status and smoking-attributable death (SAD) rate for each population as reported by WHO.47 Based on the 2012 WHO Global Health Expenditure database, these 44 countries accounted for 86% of total health expenditure (THE) worldwide in international dollar terms.48

Table 1

Health cost studies of smoking-attributable diseases, 1990–2015

The final column of table 1 shows the proportion of health expenditure that each of these studies found to be attributable to smoking. These smoking-attributable fractions (SAFs) were reported by the authors, with the exception of the studies for Australia, Bangladesh, Brazil and Thailand. We calculated the SAF for these four countries by dividing the authors' estimate of the absolute amount of smoking-attributable health expenditure (SAHE) by THE for the relevant year.

### Methodological considerations

The healthcare costs associated with smoking have traditionally been measured on an annual basis. However, there is a growing body of literature that uses longitudinal information to measure these costs on a life cycle basis.55 This life cycle approach yields a richer source of evidence including for cost-effectiveness analyses. Nonetheless, the annual approach remains a valid form of analysis in its own right, and our contribution is to highlight the risk of ‘cost escalation’ particularly for countries that are still at the early stage of the tobacco epidemic (refer figure 1).

Several alternatives to the Human Capital Method (HCM) have been proposed in recent years. For example, the Friction Cost Method (FCM) aims to provide a more realistic description of the loss in economic output by measuring the time it takes employers to replace workers.56 Under the FCM, long-term absentees are replaced and production levels are restored after a period of adjustment. The length of adjustment depends on the availability of labour (eg, unemployment). The FCM has been criticised for lacking theoretical underpinnings, and has not been taken-up widely to date.

The Willingness To Pay (WTP) approach uses different techniques to quantify peoples willingness to pay to avoid death.57 This includes intangible factors like the value of leisure time or the absence of pain and suffering. The WTP approach has gained traction due to its grounding in welfare economics. The FCM yields the lowest estimate of indirect economic loss, while WTP yields the highest. The HCM yields estimates that are in-between. The HCM can also be applied relatively easily and consistently across countries, and arguably continues to be the most widely accepted approach. Nonetheless, future updates of this study might usefully include one or more of these alternative approaches together with the HCM.

## Conclusion

We found that diseases caused by smoking accounted for 5.7% of global health expenditures in 2012, while the total economic cost of smoking was equivalent to 1.8% of global GDP. Smoking imposes a heavy economic burden throughout the world, particularly in Europe and North America where the tobacco epidemic is most advanced. These findings highlight the urgent need for all countries to implement comprehensive tobacco control measures to address these economic costs, while also helping to achieve the Sustainable Development Goals of Member States.

• The detrimental impact of smoking on physical health and well-being has been widely documented throughout the world since the early 1960s. Numerous studies have also quantified the economic burden that smoking imposes on society through avoidable healthcare expenditures and via indirect losses associated with morbidity and mortality.

• These economic studies have mostly been undertaken in high-income countries, with less documentation available in developing countries. The rapidly rising burden of non-communicable diseases in developing countries has further heightened interest in measuring and monitoring the economic cost of associated risk factors such as tobacco use.

• This paper measures the economic cost of smoking-attributable diseases throughout the world, including in low- income and middle-income countries. To the best of our knowledge, there has previously been no peer reviewed study published on this subject. The same Cost of Illness method was applied to 152 countries, representing 97% of the world's smokers. We found that diseases caused by smoking accounted for 5.7% of global health expenditure in 2012, while the total economic cost of smoking was equivalent to 1.8% of global gross domestic product (GDP).

## Acknowledgments

We thank Sameer Pujari, Avdyl Ramaj and Stephanie Kandasami for their assistance in the literature search and data collection.

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## Footnotes

• Contributors MG led the study design, the literature search, the modelling and the drafting of the manuscript. NN and ET contributed to the study design, the model testing and drafting of the manuscript.

• Disclaimer The authors alone are responsible for the views expressed in this article, and they do not necessarily represent the views, decisions or policies of the institutions with which they are affiliated.

• Competing interests None declared.

• Provenance and peer review Not commissioned; externally peer reviewed.

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