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Critics Assail Philip Morris Report on Smoking
Lee Dembart
International Herald Tribune Wednesday, July 18, 2001
Tobacco Giant's Analysis Says Premature Deaths Cut Costs in Pensions and Health Care
The tobacco giant Philip Morris was flayed Tuesday for an economic analysis concluding
that smoking is good for government coffers because it causes people to die
prematurely, thereby saving pension and health care costs.
In a report to the government of the Czech Republic that was made public Monday, the
tobacco company estimated that the net economic benefit of smoking there was about
5.82 billion koruna ($147.1 million) in 1999.
The report put the company's argument starkly: "Our principal finding is that the
negative financial effects of smoking - such as increased health care costs - are more
than offset by positive effects such as excise tax and value-added taxes collected on
tobacco products."
The monetary estimate of benefits was based on the fact that the average smoker dies
4.3 years to 5.23 years earlier than a nonsmoker and is therefore less of an economic
drain.
The report, which was prepared by the consulting firm Arthur D. Little International,
appeared to be one of the first direct acknowledgments by a tobacco company that
smoking kills. The industry has previously recognized that cigarettes cause serious
diseases, including cancer, but this report accepted without argument that smokers die
prematurely. The report also acknowledged that second-hand smoke can be a health
threat to nonsmokers.
The British-based group Action on Smoking and Health said the study was "a sort of
extermination program for the newly retired."
"The whole exercise is repellent and should be dismissed," said John Connolly, its
public affairs manager. "Philip Morris is whispering in the ear of the Czech
government, saying: 'Look, we can help you deal with those expensive old people, so
why don't you go easy on controlling smoking?'"
Philip Morris, which makes 80 percent of the cigarettes sold in the Czech Republic,
said it received the report in November and gave it to the Czech government recently
in response to Health Ministry claims that smoking constitutes an economic drain.
The company said that the report was only intended as economic data.
"We deeply regret any impression that premature death of smokers could represent a
benefit for society," Remi Calvet, communications director for Philip Morris at
European headquarters in Lausanne, Switzerland, said in a statement. "Tobacco is a
controversial industry, but we are still an industry and sometimes we need some
economic data on our industry."
Ales Janku, head of public relations at Philip Morris, Czech Republic, said the
company thought Parliament was going to raise taxes on cigarettes in an effort to
harmonize taxes with the European Union. Czech cigarette taxes are 42 percent compared
with EU recommendations of 59 percent.
Otakar Cerny, a spokesman for the Czech Health Ministry, dismissed such arguments. "No
government can calculate with reports like that," he said. "The health minister leads
an irreconcilable struggle with smoking so that Czech citizens live long and healthy
lives."
In a statement released in Washington, Matthew Myers, president of the Campaign for
Tobacco-Free Kids, said, "Philip Morris's cost-benefit analysis of the consequence of
smoking represents not only bad economics but a callous disregard for life."
Michelle Di Leo of the British Lung Foundation asked, "What will Philip Morris argue
next, that we should put people down at 50 because it would save us all a lot of money
on health care?"
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