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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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