Philip Morris Claims Smokers Help Economy

British Medical Journal 323:126 21jul01

[ Interesting responses below and Philip Morris apologizes... yah right! ]

Zosia Kmietowicz, London

Smokers are doing their country a huge favour by boosting tax revenue, dying early, and not drawing a pension, according to a report by the tobacco giant Philip Morris.

Officials in the Czech Republic have been given an analysis, commissioned by the cigarette manufacturer, which suggests that the economic benefits of smoking to the country far outweigh the harmful effects. Rather than being a drain on healthcare resources, smoking actually saves the country more than £100m ($140m) a year because of the premature death of smokers, concluded the Massachusetts based consulting firm Arthur D Little International, which carried out the analysis.

It worked out that the early death of smokers saved the government up to £21.5m on health care, pensions, and housing for elderly people in 1999. The auditors also calculated how much the country spent on caring for people with smoking related diseases and the income tax lost when smokers die. Overall the net profit made by the government, including the revenues from tobacco tax, in 1999 came to £102.3m.

Philip Morris moved into the Czech Republic almost a decade ago and now owns nearly 80% of the former state tobacco company, Tabak, selling its flagship Marlboro cigarettes alongside local brands. The company said that it received the report at the end of last year and made it available to officials in the Czech Republic after they complained about the enormous burden that smoking was placing on their healthcare resources.

"This is an economic impact study, no more, no less," said Robert Kaplan, a spokesman for Philip Morris's international tobacco unit in Rye Brook, New York.

Its attitude was criticised by the Campaign for Tobacco-Free Kids, a US antismoking lobby group. "Philip Morris's only interest is its own bottom line, not the protection of our children or the public health, and this report shows the lengths to which it is willing to go to get its way when it thinks no one is watching," said its president, Matthew Myers.

He added: "It is the same Philip Morris that has been invited by the Bush administration to negotiate a settlement to the federal tobacco lawsuit. A company that goes out of its way to rationalise as a good thing the fact that its products kill people does not deserve such a seat at the table."

Study actually shows smoking costs 13x more than it saves 20jul01

Clive Bates,
Director
Action on Smoking and Health
clive.bates@dial.pipex.com

Many media reports have claimed that the Philip Morris report shows that smoking saves the economy more than it costs. A closer look shows the exact opposite: the report gives costs associated with smokers while still alive amount to 15.7 billion CZK (on health care, absenteeism, fires etc). These are some 13 times greater than 1.2 billion CZK 'benefits' due to the early death of smokers (from savings on pensions, health care, housing etc).

However, the study concludes that smoking is a net benefit, but only because it counts tobacco tax revenue of 20.3 billion CZK as a benefit.

This is flawed economics: taxes are just a recycling of money in the economy. If there was no smoking in the Czech Republic, consumers would be spending their money on other things (which would also be taxed) and the government would be raising the budget it needs through other taxes – with no change in the total tax burden. The main difference would be a huge reduction in the burden of health care costs. Taxes just cannot be counted as a benefit in the same way that health care costs or savings can be counted.

Most criticism of the report has focussed on the repellent concept of regarding early death as an economic benefit. However, the report itself shows that even using its inhuman economic approach, smoking costs many times as much as any savings it might generate from killing off the recently retired.

[CZK = Czech Koruny, US$1 = 36.7 CZK]

Should we not promote Suicide and high risk behaviour too? 21jul01

Prof. K.R. Sethuraman. MD, PGDHE.,
Professor of Medicine
Jawaharlal Institute of PG medical education & research, Pondicherry, India.
sethuramankr@hotmail.com

Sir,

It is regrettable that such cost-benefit studies have become value- free and ethics-free. Using the same logic as the tobacco giants, we can justify suicide, homicide and other high risk behaviours in our society by showing that there are cost savings associated with them. We may also be able to "scientifically" prove that deadly epidemics that eliminate the elderly and the poor in a population is a great economic blessing! When will we accept that the "means" is more important than the "ends" or else the slippery slope will consume the society or take us back to the cave man days.

Yours truly,

Dr K.R. Sethuraman. MD, PGDHE. Founder President - Society of EQUIP < http://www.geocities.com/equip_india/ >

Moronic view 21jul01

Dr.B.C.Rao,
General Practitioner
Aoorva Diagnostic Centre, Indiranagar, Bangalore, India
badakere@mantraonline.com

I have never come across a more stupid defence of smoking habit than this. If smoking were to kill people and save expenditure of looking after them in old age and therefore encourage this habit, then why not devise ways to kill all persons after they reach an age when the society considers them an economic burdon! Surely they have not done their home work right. Do they have any idea of the morbidity let alone the mortality and the huge cost of care and the suffering?. Let them visit any hospice for the terminally ill cancer patients and see for them selves.

Philip Morris Apologizes for Report Touting Benefits of Smokers' Deaths 

Gordon Fairclough / Wall Street Journal 26jul01

Trying to defuse a widening public-relations crisis, a top executive at Philip Morris Cos. apologized for a company-funded report calling cost savings from smokers' early deaths one of the "positive effects" of cigarette consumption.

"We understand that this was not only a terrible mistake, but that it was wrong," Steven C. Parrish, a senior vice president, said in an interview Wednesday. "To say it's totally inappropriate is an understatement."

Philip Morris officials in the Czech Republic last month distributed an economic analysis concluding that cigarettes aren't a drain on the country's budget, in part because the government saves money on health care, pensions and housing when smokers die prematurely.

Sen. Dianne Feinstein, a California Democrat, last week wrote a letter to Philip Morris chief executive Geoffrey C. Bible after reading about the Czech report. Mr. Bible answered in a letter dated Tuesday, saying that the funding and release of the study "exhibited terrible judgment as well as a complete and unacceptable disregard of basic human values."

"All of us at Philip Morris, no matter where we work, are extremely sorry for this," he added.

The Czech study, commissioned by Philip Morris and produced by consulting firm Arthur D. Little International, weighs the costs of tobacco use, such as medical care for sick smokers, against benefits, including revenue from excise taxes on cigarettes. The study found that in 1999 the Czech government had a net gain of $147.1 million from smoking.

The study's conclusions were reported last week in The Wall Street Journal and since then have sparked blistering commentary. "Tobacco companies used to deny that cigarettes killed people. Now they brag about it," columnist Ellen Goodman wrote in the Boston Globe. On ABC's "Politically Incorrect," host Bill Maher endorsed the study's conclusion that cigarette smokers aren't a drag on public finances, but called Philip Morris "industrial scum" and said that "smoking is a drug" and "cigarette companies are the pushers."

The report and the outcry have dealt a serious blow to Philip Morris's efforts to rehabilitate its reputation. The company has been reaching out to its critics and pouring $100 million a year into feel-good ads promoting corporate good deeds, such as donations to food banks and shelters for battered women. The goal has been to persuade politicians, potential jurors and the public that Philip Morris has changed.

The company also has been lobbying to have Congress give the Food and Drug Administration limited authority to regulate tobacco. The company wants to persuade doubting lawmakers that it has reformed its business practices and is credible enough to have its views on regulation taken seriously. The Czech report threatens to undo some of the progress.

"This is just more evidence that they haven't changed," an aide to a senior Democratic senator said of the study. "It reinforces the notion that everything they say has to be taken with a great deal of skepticism."

The publicity surrounding the report "is obviously a big setback," said Mr. Parrish, who has played a high-profile role in efforts to repair the company's image. "Hopefully we'll be able to get beyond it."

For antitobacco groups, blunting Philip Morris's image-polishing campaign is a top priority, and the Czech study has given them powerful new ammunition. Thursday, the American Legacy Foundation, a Washington, D.C., antismoking group, is running an ad in major newspapers across the country that makes reference to the report. The ad shows the foot and leg of a cadaver in a morgue. A toe tag reads: "$1,227. That's how much a study by Philip Morris said the Czech Republic saves on health care, pensions and housing every time a smoker dies."

(American Legacy said The Wall Street Journal refused to run the ad. A spokesman for Dow Jones & Co., publisher of the Journal, said the paper "has standards, which include rules against running ads that have morbid or ghoulish images for shock value.")

Mr. Parrish said Philip Morris has canceled plans for similar studies in Poland, Slovakia, Hungary, and Slovenia. The Czech report was prepared without the knowledge of officials at Philip Morris's New York headquarters, he said, and was done in anticipation of a debate over excise-tax increases on cigarettes in the Czech Republic. A Philip Morris spokesman said the company remains "concerned" about a tax increase, which public-health experts advocate because demand for cigarettes falls as prices rise.

In a letter sent Friday to employees of Philip Morris's international tobacco business, John R. Nelson, the unit's CEO, said: "It is clear that we made a mistake in funding and publishing this study. I regret this mistake, and I ask our entire management team to be more vigilant on these issues in the future."