PharmExec Blog

Should Smokers Cough Up Money for Cancer Research?

This June, Californians will be asked whether cigarette smokers should subsidize research to treat diseases related to smoking cigarettes.

California’s Proposition 29, if passed, would levy an additional tax of $1 on every pack of smokes sold in the state beginning in October 2012. The tax would generate an estimated $615 million in 2012/2013, and $735 million in 2013/2014. Funds would be expected to decrease annually, in relation to declining cigarette consumption, but would remain substantial. Is this a good idea?

How is the money spent?

Revenues would be deposited into the California Cancer Research Life Sciences Innovation Trust Fund, and dedicated to “the support of research on cancer and tobacco-related diseases,” according to California’s Legislative Analyst’s Office (LAO). Money would be further divvied as follows:

  • 60% would be used for research grants and loans around prevention, diagnosis, treatment, and potential cures for cancer and other tobacco-related diseases.
  • 15% would be used for grants and loans for equipment and facilities
  • 20% would be used for tobacco prevention and cessation programs
  • 3% would be given to state agencies for law enforcement efforts to reduce illegal tobacco sales, cigarette smuggling and tobacco tax evasion
  • 2% would be used to administer the plan, most of which would go to the Board of Equalization for tax collection costs

The proposition would also create a nine-member governing board – the Cancer Research Citizen’s Oversight Committee – empowered to distribute the funds.

UPDATE 5/14/12: The Altria Group (Philip Morris, US Smokeless Tobacco, and John Middleton) has more than doubled its opposition funding since this article was first published in March, to nearly $27 million, according to MapLight.org. For its part, the Reynolds American Corp. (R.J. Reynolds Tobacco Company, American Snuff Company, Santa Fe Natural Tobacco Company) has upped its contribution to over $12 million in an effort to sway voters against the law. Proponents of Prop 29 have contributed roughly $5.5 million to date, of which the American Cancer Society and the Lance Armstrong Foundation together have contributed almost $4 million. With a total spend to date of $39.9 million, the opposition parties are outspending proponents of Prop 29 by nearly eight to one.

For and Against

It’s not a huge surprise that Big Tobacco is against this tax. As of February 29, the Altria Group (Philip Morris, US Smokeless Tobacco, and John Middleton) had contributed $10.8 million to oppose Proposition 29, and Reynolds American had added another $4 million. The California Taxpayers Assocation (CalTax) also opposes Proposition 29, arguing that additional cigarette taxes will cause an increase in tax evasion, an increase in “national security and public safety threats” related primarily to smuggling cigarettes. Cigarette smuggling is a key source of funding for active terrorist groups operating in the U.S., CalTax claims, citing the State Department. CalTax also argues that cigarettes disproportionately impact low-income families, who shouldn’t be made to shoulder an additional tax burden.

So far, the opposition is outspending proponents of the measure by roughly $10 million. Top proponents as of February 29, in terms of contributions, are the Lance Armstrong Foundation, at 1.5 million; The American Cancer Society, American Lung Association and the American Heart Association, at a combined $1.3 million, and the Voters Organized For Community Empowerment (VOICE), at $152,188.

Yesterday, Steven Burrill, CEO at Burrill & Company, and Duane Roth, CEO at Connect, sent a letter to colleagues asking for industry to support Proposition 29, which would make “all California-based research institutes as well as California-based companies eligible to apply for funding, which could provide much needed research funding as well as support for early product development.” With respect to intellectual property, Propostion 29 “follows the National Institute of Health process…there are no required direct paybacks to the state,” according to the letter. “We can think of no greater return on investment to California and our leading edge research institutes and industry than investing in winning this ballot initiative,” the letter says. Given the prevalence of life science companies in California, should industry trade associations pony up to equalize the campaign spending mismatch? As Burrill and Roth argue, a “one-time $10 million investment can return more than $500 million a year indefinitely to fund life saving research.”

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6 Comments

  1. Lori Garcia
    Posted March 30, 2012 at 2:11 pm | Permalink

    My Mother was a smoker since she was 16. I grew up in a house surrounded by yellow walls and breathing in 2nd hand smoke. My sisters and I have had brochitis more times than we can count. She stopped smoking ten years before her death but the damage had already been done.My Mother lived with my husband and I the last year of her life as she fought lung cancer. She would call me to sit by her bed at night until she fell asleep because she had such a hard time breathing and she was afraid she would suffocate. The daughter was now the Mother and I was the one holding her hand and comforting her. If charging $1 tax on cigarettes will educate our children and support cancer research AND possibly make someone think twice from buying that pack I will gladly support it. No one should ever have to see a person suffer like my Mother did due to something that could have been prevented.Vote YES on Prop 29 in June.

  2. Beverly SALDIVAR
    Posted March 30, 2012 at 3:29 pm | Permalink

    Prop 29 is our best chance to discourage smoking. I grew up in a family of smokers & it contributed to my constant battle with lung diseases including bronchitis, pneumonia, eventually pleural effusion at the age of 21. After I married & moved to another town I found that my lung health improved.

    Tobacco users need to contribute to the research & treatment of the eventual effect of tobacco use. I’ve never used tobacco but have paid through the impact on my health and through my medical insurance; so it seems only fair that they also help. The fact that the poor will be unjustly impacted by imposing the tax is bizarre since big tobacco has been making billions off of them as it impacts their health. How long are we going to allow Big Tobacco to take advantage of our people? I’ve lost too many loved ones because they wouldn’t give up their tobacco. Vote Yes on 29.

  3. Carol Baker
    Posted March 31, 2012 at 1:08 am | Permalink

    I am going to vote yes on proposition 29, I am going to vote yes on cancer research that might find ways to prevent cancer. I am going to vote yes on helping those who are already addicted. I am going to vote yes to discourage kids from starting to smoke. You betcha I am going to vote yes on proposition 29!

  4. Jose Ramos
    Posted March 31, 2012 at 11:58 am | Permalink

    “CalTax also argues that cigarettes disproportionately impact low-income families, who shouldn’t be made to shoulder an additional tax burden.”

    Perhaps this is an incentive for “low-income families” to quit a habit which costs them too much money, allowing them to spend more money on non-discretionary items like rent/house payments, food, child care and other more important items.

    I find it interesting that those opposed to Proposition 29 do not acknowledge that that non-smokers are being taxed already because of smoking, as non-smokers ultimately bear a share of the increased costs of treating smokers in higher insurance premiums. Bad habits like smoking increase the risk pool for everyone, and as a result, we all pay higher health insurance premiums.

    Proposition 29 aligns a revenue source (the tax) to those that engage in a habit which increases the costs (the smokers). Ultimately, the research and other benefits which come from this tax will benefit those who engage in the risky behavior. Hopefully, the increased costs reduce the number of smokers as more folks realize they need to quit.

    We need to all be educated about this tax – it is not a general fund revenue source which siphons off money for education or anything else. It is a tax designed to increase the costs of a behavior which has negative consequences for everyone, ultimately resulting in better health outcomes for all of us.

    The only people who stand to lose from this are those in the tobacco industry who will lose profits from helping to kill people. Just look who backs each side. This one is a no-brainer.

  5. Kelly
    Posted April 5, 2012 at 7:25 am | Permalink

    The funds received from the tobacco company lawsuits years ago was supposed to be for this. Why now go after taxpayers too?

  6. Anon
    Posted April 6, 2012 at 3:58 am | Permalink

    Why wouldn’t they force big tabacco to give up more of there profits in taxes, instead of making joe blow pay more of his hard earned money for a habit that he cant quit…

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