The Economic Impact of Smoking and of Reducing Smoking Prevalence: Review of Evidence

Victor Ekpu*, Abraham Brown

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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Tobacco smoking is the cause of many preventable diseases and premature deaths in the UK and around the world. It poses enormous health- and non-health-related costs to the affected individuals, employers, and the society at large. The World Health Organization (WHO) estimates that, globally, smoking causes over US$500 billion in economic damage each year.

This paper examines global and UK evidence on the economic impact of smoking prevalence and evaluates the effectiveness and cost effectiveness of smoking cessation measures.

Search methods
We used two major health care/economic research databases, namely PubMed and the National Institute for Health Research (NIHR) database that contains the British National Health Service (NHS) Economic Evaluation Database; Cochrane Library of systematic reviews in health care and health policy; and other health-care-related bibliographic sources. We also performed hand searching of relevant articles, health reports, and white papers issued by government bodies, international health organizations, and health intervention campaign agencies.

Selection criteria
The paper includes cost-effectiveness studies from medical journals, health reports, and white papers published between 1992 and July 2014, but included only eight relevant studies before 1992. Most of the papers reviewed reported outcomes on smoking prevalence, as well as the direct and indirect costs of smoking and the costs and benefits of smoking cessation interventions. We excluded papers that merely described the effectiveness of an intervention without including economic or cost considerations. We also excluded papers that combine smoking cessation with the reduction in the risk of other diseases.

Data collection and analysis
The included studies were assessed against criteria indicated in the Cochrane Reviewers Handbook version 5.0.0.

Outcomes assessed in the review
Primary outcomes of the selected studies are smoking prevalence, direct and indirect costs of smoking, and the costs and benefits of smoking cessation interventions (eg, “cost per quitter”, “cost per life year saved”, “cost per quality-adjusted life year gained,” “present value” or “net benefits” from smoking cessation, and “cost savings” from personal health care expenditure).

The main findings of this study are as follows:

The costs of smoking can be classified into direct, indirect, and intangible costs. About 15% of the aggregate health care expenditure in high-income countries can be attributed to smoking. In the US, the proportion of health care expenditure attributable to smoking ranges between 6% and 18% across different states. In the UK, the direct costs of smoking to the NHS have been estimated at between £2.7 billion and £5.2 billion, which is equivalent to around 5% of the total NHS budget each year. The economic burden of smoking estimated in terms of GDP reveals that smoking accounts for approximately 0.7% of China’s GDP and approximately 1% of US GDP. As part of the indirect (non-health-related) costs of smoking, the total productivity losses caused by smoking each year in the US have been estimated at US$151 billion.

The costs of smoking notwithstanding, it produces some potential economic benefits. The economic activities generated from the production and consumption of tobacco provides economic stimulus. It also produces huge tax revenues for most governments, especially in high-income countries, as well as employment in the tobacco industry. Income from the tobacco industry accounts for up to 7.4% of centrally collected government revenue in China. Smoking also yields cost savings in pension payments from the premature death of smokers.

Smoking cessation measures could range from pharmacological treatment interventions to policy-based measures, community-based interventions, telecoms, media, and technology (TMT)-based interventions, school-based interventions, and workplace interventions.

The cost per life year saved from the use of pharmacological treatment interventions ranged between US$128 and US$1,450 and up to US$4,400 per quality-adjusted life years (QALYs) saved. The use of pharmacotherapies such as varenicline, NRT, and Bupropion, when combined with GP counseling or other behavioral treatment interventions (such as proactive telephone counseling and Web-based delivery), is both clinically effective and cost effective to primary health care providers.

Price-based policy measures such as increase in tobacco taxes are unarguably the most effective means of reducing the consumption of tobacco. A 10% tax-induced cigarette price increase anywhere in the world reduces smoking prevalence by between 4% and 8%. Net public benefits from tobacco tax, however, remain positive only when tax rates are between 42.9% and 91.1%. The cost effectiveness ratio of implementing non-price-based smoking cessation legislations (such as smoking restrictions in work places, public places, bans on tobacco advertisement, and raising the legal age of smokers) range from US$2 to US$112 per life year gained (LYG) while reducing smoking prevalence by up to 30%–82% in the long term (over a 50-year period).

Smoking cessation classes are known to be most effective among community-based measures, as they could lead to a quit rate of up to 35%, but they usually incur higher costs than other measures such as self-help quit-smoking kits. On average, community pharmacist-based smoking cessation programs yield cost savings to the health system of between US$500 and US$614 per LYG.

Advertising media, telecommunications, and other technology-based interventions (such as TV, radio, print, telephone, the Internet, PC, and other electronic media) usually have positive synergistic effects in reducing smoking prevalence especially when combined to deliver smoking cessation messages and counseling support. However, the outcomes on the cost effectiveness of TMT-based measures have been inconsistent, and this made it difficult to attribute results to specific media. The differences in reported cost effectiveness may be partly attributed to varying methodological approaches including varying parametric inputs, differences in national contexts, differences in advertising campaigns tested on different media, and disparate levels of resourcing between campaigns. Due to its universal reach and low implementation costs, online campaign appears to be substantially more cost effective than other media, though it may not be as effective in reducing smoking prevalence.

School-based smoking prevalence programs tend to reduce short-term smoking prevalence by between 30% and 70%. Total intervention costs could range from US$16,400 to US$580,000 depending on the scale and scope of intervention. The cost effectiveness of school-based programs show that one could expect a saving of approximately between US$2,000 and US$20,000 per QALY saved due to averted smoking after 2–4 years of follow-up.

Workplace-based interventions could represent a sound economic investment to both employers and the society at large, achieving a benefit–cost ratio of up to 8.75 and generating 12-month employer cost savings of between $150 and $540 per nonsmoking employee. Implementing smoke-free workplaces would also produce myriads of new quitters and reduce the amount of cigarette consumption, leading to cost savings in direct medical costs to primary health care providers. Workplace interventions are, however, likely to yield far greater economic benefits over the long term, as reduced prevalence will lead to a healthier and more productive workforce.

We conclude that the direct costs and externalities to society of smoking far outweigh any benefits that might be accruable at least when considered from the perspective of socially desirable outcomes (ie, in terms of a healthy population and a productive workforce). There are enormous differences in the application and economic measurement of smoking cessation measures across various types of interventions, methodologies, countries, economic settings, and health care systems, and these may have affected the comparability of the results of the studies reviewed. However, on the balance of probabilities, most of the cessation measures reviewed have not only proved effective but also cost effective in delivering the much desired cost savings and net gains to individuals and primary health care providers.
Original languageEnglish
Pages (from-to)1-35
Number of pages35
JournalTobacco Use Insights
Publication statusPublished - 14 Jul 2015
Externally publishedYes


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