Journal of the New Zealand Medical Association, 15-April-2005, Vol 118 No 1213
Rethinking the regulatory framework for tobacco control in New Zealand
George Thomson, Nick Wilson, Julian Crane
The Ministry of Health has recently started a process for enhancing tobacco product regulation, and has invited public submissions to this Review.1 While this is a very positive development, it is part of a pattern of narrowly focusing on particular tobacco control interventions—smokefree policies, marketing restrictions, tobacco taxation, media campaigns, and cessation.2,3 Little thought has been given to the overall policy, regulatory, and organisational framework in which these interventions might occur. This article suggests a new approach to the regulation of tobacco in New Zealand.
The current Review provides us with an opportunity to consider the setting in which new labelling, disclosure, and product control regulations might be most effective. Given that reducing tobacco-related harm is one of the most important means of improving health status and reducing health inequalities in New Zealand,4 the suitability of the regulatory framework and organisations for tobacco control is a significant health sector issue. There is the potential to prevent thousands of cases per year of unnecessary premature death and disability amongst New Zealanders. A disproportionate number of these cases are amongst Maori, Pacific peoples, and low-income New Zealanders.
Tobacco control in New Zealand has had some effect in reducing smoking prevalence and raising awareness of the associated health issues. However, since 1991, there has been little change in overall smoking prevalence, and little improvement for Maori or the most disadvantaged.
The problem of an insufficiently regulated industry
The importance of the current Review can be seen by the present situation, where neither the government nor the public know what is in particular tobacco products, how the products are constructed, or what the consequences are of any design change. Nor do they have any mechanism for finding much of this information. Government also does not have the power to make tobacco companies disclose their marketing tactics, or the companies’ research and planning for evading regulations on packaging, warning labels, branding, product descriptors, and product measurement. This situation is for companies making products that kill at least half the people that use them long-term, when used as the makers intend.5
A particularly strong, independent and effective regulatory framework is necessary for tobacco, given the size and nature of the tobacco companies, the effectiveness of their marketing, the addictiveness of the product and the danger of tobacco smoke to smokers and others. Of the companies operating in New Zealand, in 2002, British American Tobacco was credited with over $US 25 billion of assets worldwide, and Philip Morris with almost $US 85 billion of assets.6
Furthermore, a recent Cochrane systematic review found that ‘tobacco advertising and promotion increases the likelihood that adolescents will start to smoke’.7 Marketing occurs wherever tobacco companies are able to make branded products available to customers, or when the companies can interact with distributors and retailers.
Tobacco companies have a history of combining to contest health measures in New Zealand and elsewhere.8,9 They have used undisclosed front groups,10 the destruction of documents11,12 and the evasion of legislation.13 The tobacco industry has demonstrated great skill in many countries and in international organisations in resisting regulation, by exerting pressure on national and international political processes.14–16
In 2001, the World Health Assembly of the World Health Organization (WHO) passed a resolution that recognised the subversive nature of the tobacco industry. The Assembly expressed ‘great concern [about] the findings of the Committee of Experts on Tobacco Industry Documents, namely, that the tobacco industry has operated for years with the expressed intention of subverting the role of governments and of WHO in implementing public health policies to combat the tobacco epidemic’.17 The Committee of Experts on Tobacco Industry Documents reported in July 2000 that the attempted subversion had been ‘elaborate, well financed, sophisticated, and usually invisible’.18
A possible model: marketing control
We suggest that the regulatory frameworks suggested by Borland19 and Liberman20 are required for the effective regulation of tobacco. These frameworks would enable the Government to make tobacco companies only sell products in New Zealand to a Tobacco Authority, would give government the ability to specify the constituents in the products, and could remove the ability of companies to sell branded products to retailers or customers. Essentially, such frameworks place a non-profit organisation between tobacco manufacturers and retailers, removing the profit motive from the marketing of tobacco to consumers (but not from retailing). We suggest that, to cover any costs to Government, the costs of such an Authority be fully recovered by a levy on the suppliers of tobacco to the Authority.
Such an authority would have at least five ways of reducing or removing tobacco-related harm. They are: modifying tobacco products; changing the way that the products are marketed; offering substitutes (e.g. nicotine replacement therapy); controlling tobacco prices; and changing the political, social, and economic arena in which the tobacco industry operates.
An example of such a change to that arena would be ensuring greater transparency for tobacco industry activities. New Zealand is relatively suitable for the running of such non-profit marketing system, due to its well-organised border control organisations and its geographic isolation, which minimise the smuggling that could reduce the effect of controls on tobacco products. Elsewhere, involvement in smuggling is a standard tobacco company strategy to lower prices and increase sales.21,22 Another favourable factor for the success of bold tobacco control innovations in New Zealand is the Government’s commitment to reducing smoking prevalence and reducing health inequalities,23,24 demonstrated by the Smoke-free Environments Amendment Act 2003.
If tobacco manufacturing companies were required to sell only to an official or non-profit agency, that Authority would be able to control both the nature of the product, and the nature of the distribution and retail structure for tobacco. The Authority could supply current retailers with unbranded products, could restrict the number of retailing outlets, and could require conditions for retailing that were more appropriate to the sale of an addictive, dangerous drug. One eventual option would be the supply of tobacco in relatively clinical settings, where health promotion and the treatment of nicotine dependence could be the dominant imperative.
A Tobacco Authority, such as suggested by Borland and Liberman, could also appropriately control nicotine delivery devices or alternative tobacco products posing less hazard than tobacco. Suitable regulatory frameworks for such devices are urgently needed.25 The control of modified ‘safer’ cigarettes is also an urgent matter,26 with very large financial incentives pushing their introduction.27
Legislative foundations for a tobacco authority
The model would require legislative arrangements to ensure that before the tobacco companies exited the New Zealand market in any way, they would be required to be bonded to cover their liabilities. Otherwise, the companies could escape their liabilities by disolvement or bankruptcy proceedings. In New Zealand, a bond has been required for mining operations, to cover the possibility of bankrupt companies escaping their environmental and social responsibilities.28
In the previous 2 years, there have been at least two threats by very large tobacco companies to either exit a market, or to go bankrupt. Currently, Japan Tobacco’s Canadian branch has protection through federal bankruptcy laws to avoid a court order to pay $C 1.36 billion in fraudulently unpaid taxes.29 In September 2003, Philip Morris used the threat of bankruptcy in asking for a smaller court bond in a USA court.30
A further regulatory framework option: possible disclosure powers
A further regulatory approach would be to minimise the industry’s planning and executive abilities. One avenue towards this strategy would be to increase the ability of government and the public to monitor the records and planning of tobacco companies.
This approach has precedents, in that the New Zealand Government has provided powers to the Commerce Commission, under the Commerce Act, to call for documents and to obtain evidence from witnesses, so as to be able to better control the financial markets.31 The Commission can also apply to a court under the Fair Trading Act (s.42), in circumstances where the Act had been transgressed, to get information from those contravening the Act.32
If our society is willing to institute controls over financial markets, should we not equally consider similar control over market processes that seriously affect our health? Comparable powers could be given to the Tobacco Authority, or to the Ministry of Health. Powers similar to that given to the Commerce Commission under the Commerce Act (ss.98-100) would more likely be simpler and more effective to use, compared to a court-ordered process as under the Fair Trading Act. The practical effect of such powers is that tobacco companies could be required to disclose all of the research and planning that they, their parent and associated companies do on marketing and product design.
Policies to increase the Government and public’s knowledge about the industry could have a number of benefits. Greater knowledge about the industry’s behaviour could provide an increased public and political willingness to control or prevent any such behaviour adverse to health.
Such increased powers of inquiry for government would need to be accompanied by an increased government ability to analyse material about the industry. The New Zealand public health sector has little apparent capacity to use even the available court-released tobacco industry documents that are relevant to this country, and no government reports have been published that use them. Any Government programme to understand and control the industry would need a greater investment in making accessible the presently available industry document material. It would also need to ensure a better use of the present documentary material, for instance in getting analyses of the material published and publicised.
Such a policy direction—increasing the information about and analysis of the industry—might help change the reactive nature of tobacco control in New Zealand. For instance, at present, there appears to be no active efforts by Government agencies to establish the extent of, let alone counter, sophisticated new marketing techniques such as Internet sales, Internet-accessed video games, and the use of mobile phones and dance parties.33 This is in contrast to the monitoring of the industry efforts in such jurisdictions as California34 and the development of such programmes by the Victoria State Government-funded VicHealth Centre for Tobacco Control. The tobacco industry plans well ahead, often for decades or more. Effective tobacco control would benefit from this strategic attitude, of ‘looking upstream’, both in terms of the causes of tobacco harm, and in terms of looking ahead in time.
However, these disclosure powers would be less necessary if the Tobacco Authority marketing structure was adopted, as marketing and product design could be controlled by the Authority. Manufacturers would have to fully disclose product designs when tendering for supply to the Authority. The disclosure powers would be only necessary to establish the tobacco companies’ accountability for previous activity.
Creating a sustainable and effective tobacco authority
Any effective tobacco control agency will be attacked by the tobacco industry and its allies, with skilful and well resourced attempts at eroding its powers and effectiveness.35 The structure of any Tobacco Authority would need to be able to withstand such attacks, and would need independence from political interference, a stable funding flow, and the ability to focus on achieving health and equity gains.36 PHARMAC, as an agency which has successfully and consistently taken on another large and aggressive industry (pharmaceuticals), may serve as a model for aspects of a Tobacco Authority structure. Some of the credit for PHARMAC’s success could be ascribed to the clear focus of the agency, and its relatively independent decision making structure.37,38
To further protect the health of New Zealanders, the Government’s tobacco control efforts need a comprehensive regulatory framework in order to acquire much greater control over the tobacco industry. Because it is structural, laying down the long-term foundations for the removal of a major cause of disease, such a step would arguably be one of the single most important contributions to the health of New Zealanders that any government could make. And it could cost the taxpayer nothing.
Author information: George Thomson, Research Fellow, Department of Public Health; Nick Wilson, Senior Lecturer; Department of Public Health; Julian Crane, Professor, Department of Medicine, Wellington School of Medicine and Health Sciences, University of Otago, Wellington South
Acknowledgements: The authors thank an anonymous reviewer for helpful comments.
Correspondence: George Thomson, Wellington School of Medicine and Health Sciences, University of Otago, PO Box 7343, Wellington South. Fax: (04) 389 5319; email: email@example.com
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