Session 5: Risk and regulation – The impact of excessive legislation on consumer behavior

While intended to protect public health, increasingly strict legislation of tobacco products often brings about a range of unintended consequences in consumer behavior.

The United Kingdom, one of the most heavily regulated tobacco markets in the world, may serve as an inglorious example. Starting in 2002 with the Tobacco Advertising and Promotion Act, which banned most sponsorship and adverts, the country saw new anti-tobacco laws on an almost annual basis. Among other restrictions, the U.K. introduced new and eventually larger pictorial health warnings, a tobacco products display ban, restrictions on indoor smoking and, locally, in outdoor places, as well as, most recently, standardized packaging of cigarettes.

Enforcement of the European Union’s revised Tobacco Products Directive in May 2016 brought a ban on packs with fewer than 20 cigarettes, which until then had made up 75 percent of the U.K. market. In addition, excise accounts for around 80 percent of the price of a pack, making the U.K. the market with the highest taxes on tobacco products in Europe.

Instead of prompting more smokers to quit, however, these measures have contributed to an increase of the already rampant illicit tobacco trade in the U.K., noted one panelist. According to a survey by the U.K.’s Tobacco Manufacturers Association, 73 percent of smokers purchased non-U.K. duty-paid cigarettes over the past year. Among them, 40 percent bought cigarettes on the black market. The majority claimed that excessive pricing and recent changes, such as pack sizes or generic packaging, would push them to buy non-U.K. duty-paid products. As a further unwanted side effect of excessive regulation, children now have easier access to illicit products.

In the U.S., where the Food and Drug Administration (FDA) in July 2017 announced a change of its tobacco and nicotine strategy, opinions are divided about the potential effects of the new approach on consumer behavior.

While the deadline extensions of certain compliance requirements have been welcomed by the manufacturers, consumer groups have been less happy with the FDA plan, arguing that the announced reduction of the nicotine content in cigarettes to lower addiction potential was a form of prohibition.

Meanwhile, the differing and often high taxes on e-cigarettes in the U.S. prevent smokers from switching to less hazardous alternatives. Consumer representatives claim that in states like California, where vapor devices are taxed at a rate equivalent to that on combustible cigarettes, the harm reduction aspect is completely ignored.

In the past, New York City often served as a blueprint for U.S. states with regard to the introduction of new and stricter legislation, as well as high taxation on tobacco products. Experience, however, has shown that neither indoor nor outdoor smoking bans have been effective in the city, according to a panelist.

Consumer groups criticize the tobacco industry as being ignorant about what’s going on in the world of consumers and for not coming to their aid. Instead, consumers feel they are being lectured not only by tobacco control but also by tobacco companies, some of which have expressed their commitment to a smoke-free future. According to an online survey by British consumer organization Forest, there will always remain a sizeable group of people who want to continue using combustible cigarettes. Legislating tobacco products out of existence, the consumer advocacy group concluded, is next to impossible.