Health voices condemn the provincial tobacco settlements

Late in the day on Thursday, October 17th, a proposed settlement was made public. This settlement would resolve the lawsuits filed by provincial governments, the class action lawsuits filed on behalf of injured smokers and a few other small claims. 

This post reports on the response to the settlement by public health agencies and leaders. 

The terms of the settlement with the provincial government have been widely criticized for their failure to include measures to reduce smoking or to modify the tobacco trade. The portion of the settlement which resolves class action claims has received widespread support.

Representative extracts of media statements and press releases are shown below. 

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Action on Smoking & Health, Physicians for a Smoke-Free Canada, Quebec Coalition for Tobacco Control: Provincial governments have squandered a unique and historic opportunity to put an end to the tobacco industry
Press release, October 17, 2024.

Apart from the compensation to victims or their descendants in Québec and in the rest of Canada, which is the only positive component of this deal, there is little public health benefit to be found in this arrangement. The settlement provides no roadmap aimed at preventing these very same companies from causing more damage by recruiting new victims, including through new enticing nicotine gadgets.

Despite the tobacco industry having its back against the wall, the provinces choose to negotiate themselves a cash windfall without bothering to change the corporate behaviour at the core of the lawsuits. Provinces have deliberately agreed to allow Big Tobacco to maintain its business model extracting profits from addiction and harm in perpetuity. They have shamelessly turned a blind eye to the damage these very same companies will inflict on future generations.

Canadian Cancer Society criticizes proposed tobacco settlement as inadequate
Press release, October 18, 2024

"The approach in the proposed settlement falls massively short and fails to protect the future health of Canadians properly," says Rob Cunningham, lawyer for the Canadian Cancer Society. "How can such an approach possibly be justified when we continue to have millions of Canadians who smoke each year and while tobacco remains the leading cause of cancer death? This settlement fails to support public health efforts to reduce smoking."

The Canadian Lung Association responds to proposed settlement in tobacco lawsuits
Statement, October 18, 2024

We feel that the proposed settlement is not only monetarily insufficient but missing key measures that would prevent the tobacco industry from returning to business as usual.

We urge the government and all parties involved to reconsider this proposed settlement and seek a just outcome that truly addresses the devastating consequences of tobacco-related harm. Canadians have the right to expect a fair and equitable resolution that holds the tobacco industry accountable for its actions and provides adequate compensation for those affected while ensuring that the right supports are in place to protect generations to come.

Campaign for Justice on Tobacco Fraud: Tobacco Settlement Cave In
Press release, October 21, 2024

Tobacco lawyers would argue that the Companies Creditors Arrangement Act exists to ensure the long-term viability of companies that seek protection. We hold that governments ultimately hold all of the cards, legislation, and could have used their muscle in these talks if they had been committed to public health.

"This settlement is an embarrassment," said Mahood. "Other than providing payments to Quebec smokers harmed by the industry and due via a class action court award, the settlement has no redeeming value. It should be abandoned, not the kids who will be harmed by an industry restored to good health."

Michael Chaiton, Senior Scientist, CAMH
City News, October 18, 2024

“The lesson of these lawsuits is that cigarettes … should not be a profitable consumer product and that there are alternatives available, he said."

“Functionally, I think some of the settlement protects the companies to allow them to continue to sell those products in particular, rather than switching over.”

David Hammond, Professor, University of Waterloo
City News, October 18, 2024

"Their business practices essentially haven't changed and won't change," said Hammond.

"The industry still generates billions of profits from cigarettes, and so I think they will continue the practices that have been generating that revenue."

Rob Cunningham, Canadian Cancer Society
CBC News, October 18, 2024

Rob Cunningham, senior policy analyst for the Canadian Cancer Society, says the proposal does not go far enough. He's calling on the provinces to make changes before it's approved.

"This proposed settlement contains nothing to actually reduce smoking," Cunningham said Friday in an interview with CBC News Network.

Cynthia Callard, Physicians for a Smoke-Free Canada
National Post, October 18, 2024

Callard said the provinces could have taken a much different approach to this suit focused on winding down the industry.

“The government had the option to force the companies into bankruptcy and to find an orderly way to wind up down their business and to actually chase out smoking. Instead, they’ve given them carte blanche to operate,” she said.

Callard said she expects the proposed deal will go through. She said while the deal is a disappointment it is also an opportunity for governments to step up and do a better job regulating the industry, both cigarettes and vaping, because they have failed to do so in the past.

“Obviously, the industry did wrong, it hurt people, that’s what they’re settling about. But governments stood back in those years and let the company operate in that inadequately regulated way,” she said.

Provinces, class actions and tobacco companies reach a deal.

This evening a proposed settlement to resolve the many Canadian tobacco lawsuits was made public. The 1437 page draft agreement can be downloaded here. 

The litigation efforts behind this effort have spanned a generation. The first provincial lawsuit was filed by British Columbia in November 1998 and resubmitted in January 2001). During this time, tobacco companies continued to sell cigarettes, governments continued to collect taxes, and smokers continued to die. 

Over the past 66 months, there has been complete secrecy by the provincial governments in their handling of negotiations with tobacco companies. With the proposed settlement now made public, there is an opportunity for legislators and the public to engage in an assessment of the proposal and to offer guidance to government with respect to the next steps in this process.

In evaluating the proposal, Canadians might consider the following questions:

• Will this settlement change the behaviour of the tobacco companies? 
• Does this settlement provide justice to smokers?
• Are there important and relevant issues which are not resolved by this settlement?

Included in the plan

In brief, the plan proposes that the companies will pay a total of $32.5 billion, of which the amount that has been held in reserve during the insolvency process (about $12.5 billion) will be available after the agreement is approved by court. $20 billion will be provided to provincial governments in deferred payments.

* $24.8 billion will be paid to the provinces, including a deferred payment of about $18 billion. This will settle the claims of over $500 billion filed by the provinces since 2001.  Unlike the U.S. agreements, these payments will be made as a percentage of revenue from tobacco sales, starting with a remittance of 85% of net after tax income from tobacco sales. (The companies will keep all of their revenue from vaping or other products). 

* $6.75 billion will be paid to some smokers who have suffered from lung cancer, throat cancer or emphysema. Of this, $4.25 billion will be paid to smokers in Quebec whose claim was upheld by the Quebec courts following a class action suit. $2.5 billion will be paid to injured smokers in other parts of Canada, even though there were no lawsuits resolved for these cases.  Up to $100,000 will be paid to each Quebec victim, and up to $60,000 to each victim in other parts of Canada. Money for these payments will be made available soon after the agreement is approved by court.

* $1 billion will be used to establish a foundation focused on activities to support victims who do not direct compensation. $131 million from the Quebec Class Action will be directed to this fund. These payments will not be deferred.

* Lesser amounts to additional claimants (tobacco farmers, the "Knight" class action", etc). 

Not included in the plan

This agreement contains no admission of liability on the part of the companies. Nor does it include any concessions or undertakings by the industry with respect to the way they market tobacco, nicotine or other products. 

The next steps

Because this settlement is being negotiated through Canada's insolvency laws, the settlement is not final until the provincial government, class action and other "creditors" of the three companies vote to approve it. That vote is scheduled for December 12, 2024.  Court hearings to formally approve the agreement would be held at a later date.

A claims procedure has been established for injured Quebec smokers, who can submit their claim through the following portal: www.recourstabac.com

Financial Context:

Over the period of these lawsuits:

• 784,000 Canadians have died as a result of tobacco use.
  Under the settlement the companies will pay just over $40,000 for each Canadian killed by their products in the last 24 years. 
• Canadian governments have collected $166.6 billion in tobacco taxes ($98.7 billion by provincial and $68.9 by the federal government.) 
  Under the settlement, the companies will pay the equivalent of a 20% increase in the tobacco taxes they collected from smokers over the past 24 years. 
• Over 666 billion cigarettes (33 billion standard packages) have been legally sold 
  Under the agreement, the companies will pay the equivalent of $1 for each package of cigarettes sold over the past 24 years. 
• Industry revenue from cigarette sales has exceeded $72 billion.
  Under the agreement, the companies will pay about 40% of their cigarette revenue over the past 24 years.

Mistakes happen

The bad news is that the data from the Canadian Community Health Survey released by Statistics Canada earlier this week were incorrect. The good news is that the growth in vaping rates is lower than indicated by the data published on Wednesday.

Statistics Canada reached out earlier today to inform us that "the numbers cited in your message have actually been revised for the 2022 reference period. When we published yesterday, we had not known that there was an error in the coding of the indicator for past 30 day vaping/e-cigarette use. ... we have released the corrected numbers for 2022 (Health indicator statistics, annual estimates (statcan.gc.ca)), which show 1.7 million vapers or 5.7% of the adult population, rather than the numbers we had mistakenly published yesterday (1.3 million/4.8%)."

The corrected figures are shown below:

The growth in the vaping population as measured by this survey between 2022 and 2023 was thus 168,700. We still do not know whether these individuals are people who used vaping to quit smoking, or whether vaping products are their introduction to nicotine use, or whether they both smoke and vape. Such tabulations are not difficult, but they require access to the data files (not currently available to non-University-based researchers).

Information on smoking status was readily available to the public when the Canadian Tobacco and Nicotine Survey was in the field from late 2019 to early 2013. The last wave of that now-defunct survey found 240,100 more vapers in 2022-23 than in 2021-22. Of those, 206,900 (86%) were never smokers. 

Health Canada needs a new legislated purpose for tobacco

This post discusses the increasing importance of amending the Tobacco and Vaping Products Act to give Health Canada a broader scope for action and clearer instructions from Parliament. This reflection is prompted by two actions recently taken by Health Canada.

The first of these was the release of the department's proposed framework for cost recovery from tobacco companies.  As reported here earlier, the department's capacity to apply the polluter pay principle to this industry is severely limited by the narrowly-constructed purpose of the current law. Only those costs which are linked to the legislative objectives of the Tobacco and Vaping Products Act (TVPA) can be claimed from the industry.

The second action was the Ministerial Order made public and formally published in August which set specific rules for the marketing and distribution of nicotine pouches regulated under the Food and Drugs Act (FDA). The order is a reminder that as tobacco companies morph into other product categories, health authorities need flexible and wrap-around powers to manage this transformation. The 'belt' of this Ministerial Order would be more secure if the department had the 'suspenders' of integrating the use of these products in its tobacco strategy.

The TVPA's purpose is well past its best before date

The TVPA's purpose was conceived in the 1980s and reflects the priorities and limitations of that era. Despite two major legislative overhauls, the intent and purpose of the federal tobacco law has not substantially changed in almost 40 years. 

The evolution in the purpose of the Tobacco Products Control Act (1988), the Tobacco Act (1997) and the Tobacco and Vaping Products Act (2018) is shown below and can be downloaded here. The articulated purpose is limited to (a) preventing people from starting to use vaping or tobacco products and (b) providing information and countering disinformation on health risks of vaping or using tobacco products. 

The tobacco industry has gone through substantial re-invention since that mandate was conceptualized, and Canadian support for stronger laws has steadily grown. Nonetheless, Parliament has not returned to its vision of how to manage tobacco and has yet to give Health Canada stronger powers and clearer directions on how to manage the problems caused by this industry. 

The current law does not authorize Health Canada to adopt strategies to end tobacco use -- or even to promote smoking cessation. It sets no goals to reduce the number of people who smoke, or to reduce the injuries caused by these products. The vagueness of this legislated mandate is reflected in the minimalist documentation for "Canada's Tobacco Strategy". The narrowness of the legislative mandate means that Health Canada will have difficulty demanding that the industry pay for many of the costs that it causes.

Parliament has given Health Canada clear instructions in other laws

The Canadian Environmental Protection Act (CEPA) provides an example of an expanded and robust legislative purpose, and is a model for how the TVPA could re-invigorate the federal strategy. Like the tobacco law, CEPA was first passed by Parliament in 1988. It however, has been the subject of more detailed Parliamentary study. Parliament's instructions to CEPA are outlined in 3 mutually-reinforcing sections:

1) DECLARATION. A 35-word legislative objective that gives the law broad application: "It is hereby declared that the protection of the environment is essential to the well-being of Canadians and that the primary purpose of this Act is to contribute to sustainable development through pollution prevention."

2) PREAMBLE. An 800 word expansion of the values behind the law, with 24 clauses outlining specific values.

3) DIRECTION. CEPA gives a dozen or more specific instructions to the federal government in how the law should be administered. Examples of these obligations include a mandate to ... "apply the precautionary principle ....", "protect the right of every individual in Canada to a healthy environment...", "take the necessity of protecting the environment into account in making social and economic decisions."

The CEPA approach can be adapted for tobacco control

Adapting the CEPA approach to modify the federal tobacco law would provide a number of benefits and could help:

• clarify the goals that should guide Health Canada's strategy
• expand the scope of activities that can be charged to the tobacco and nicotine industry
• provide instructions, guidance and support to health ministers in managing this long-standing health problem
• authorize the department to engage in activities to discourage the use of nicotine products other than tobacco- and vaping products.
• provide the public with transparency about the mandate of Health Canada

An example of a revised purpose section is shown below (and can be downloaded here). This text adds only 200 more words to the law, but greatly expands and clarifies Health Canada's responsibilities. 

In this example, the core purpose of the federal tobacco law is simply stated: "The primary purpose of this Act is to contribute to the elimination of the harms to human and environmental health caused by commercial tobacco and nicotine products."

The suggested text instructs Health Canada on key aspects of addressing the harms caused by the tobacco industry. These include: 

• Developing a nicotine reduction strategy with measurable objectives 
• Fully implementing the Framework Convention on Tobacco Control
• Respecting and supporting traditional non-commercial tobacco use in First Nations
• Adopting measures to protect the environment with respect to tobacco and nicotine products
• Reducing health disparities with respect to the use of tobacco and nicotine products
• Appling the precautionary principle.

Filling a crucial gap

As it is currently written, the TVPA governs tobacco products (those made with tobacco) and vaping products (aerosolized nicotine) but has no power over novel nicotine products. Nicotine pouches are one example of tobacco industry products which are left unaddressed in the law, but there are others on the horizon. 

Over the last year Philip Morris began selling its zero-tobacco LEVIA heat sticks in Czechia, and  Romania and over the past month has launched them in the Netherlands. (They have signalled their intention to market them in Canada by registering the trademark). BAT also sells a tobacco-free heat stick. Both companies also have hybrid products (mixture of vaping and heated tobacco) in development or on the market.

It is not too early to anticipate that these products will be introduced to Canada, whether or not they are legal for sale under federal law. In its public documents (including the Departmental Plan) Health Canada has not made public whether or how it is analyzing the potential benefits or harms of these products being sold in Canada. 

Our organization is among those calling for a fulsome revision and modernization of the federal law, but Health Canada has largely responded to these recommendations by ignoring them. The proposed revisions to the purpose and direction sections would give the department the responsibility and authority to initiate this process.

Canada's Health Minister breaks new ground to regulate nicotine pouches

Physicians for a Smoke-Free Canada joined other health agencies and concerned Canadians in applauding the Health Minister for ordering Imperial Tobacco (British American Tobacco) to change the way it markets nicotine pouches in Canada

"The measures announced today will put these novel nicotine products where they belong: behind the pharmacist's counter," said executive director Cynthia Callard. "The new controls will protect kids by ending advertising, labelling and flavourings which are inappropriate for smoking cessation aids."

"By the time Canadian children are back in the classroom, these products will no longer be displayed and sold in the convenience stores where kids stop to buy snacks or candies."  The Ministerial Order will require Zonnic pouches to be removed from convenience stores and gas stations before Labour Day weekend. 

ZONNIC display at 
Giant Tiger, Wellington St,
Ottawa. Aug 2024

Nicotine pouches are small sachets containing plant fibre, nicotine,  flavourings and sweeteners. In Canada they are not permitted for sale as tobacco products. Instead they are regulated as Natural Health Products and are subject to the same rules as traditional nicotine replacement products like gum and patches. 

In July 2023, Imperial Tobacco became the first company to receive authorization from Health Canada to sell nicotine pouches as smoking cessation products. When the products entered the market in the early fall, Canadians were alarmed to see the company was using lifestyle imagery and marketing strategies similar to those they used to sell cigarettes, and at the absence of regulations which would prevent this from happening. 

"We are deeply appreciative of the urgency with which Minister Holland responded to these concerns, and of the measure he is taking to ensure that the marketing of nicotine pouches is appropriate for their authorized use," said Ms. Callard. 

"We also want to acknowledge the speedy contribution of departmental officials who designed flexible and tailored regulatory tools to protect vulnerable citizens, and to thank the parliamentarians who gave the Minister the authority to use these new powers in late June. We also value the initiative of governments like British Columbia which initiated some of these restrictions."

Ms. Callard noted that health departments in other countries are also grappling with the recent introduction of nicotine pouches and their growing popularity among youth. "By making Canada the first country where nicotine pouches are dispensed by pharmacists and where flavours are restricted,  Minister Holland is setting an important regulatory precedent." (Australia allows e-cigarettes (vaping products) to be sold only through pharmacies.)

"We can expect tobacco companies and their retail allies to use their their extensive legal and public relations resources to try to defeat these measures." cautioned Ms. Callard. "Canadians should apply the 'scream test' to their response: the more the industry objects to a measure, the more important it is to implement it."

"This fall Canadian children will be better protected from nicotine addiction, but much more needs to be done," said Ms. Callard. "Minister Saks has not finalized the federal regulations to restrict e-cigarette flavours. As a result, this back-to-school season will see even more kids experiment with and become addicted to these fun flavoured products." 

Nicotine pouches are regulated under the Food and Drugs Act (which is the responsibility of Health Minister Mark Holland) and tobacco and vaping products are regulated under the Tobacco and Vaping Products Act (which is the responsibility of Minister of Addictions Ya'ara Saks). 

Health Canada's Tobacco Cost Recovery Fee: no new money, but more administration

Responses to consultation on the
tobacco cost recovery
framework are
due by October 10

This week Health Canada formally articulated how it intends to collect and spend the tobacco cost-recovery fee which was mandated by the Prime Ministers office some 31 months ago.  The details are provided in the Consultation document: Proposed tobacco cost recovery framework, with public comments being invited until October 10th.

This document confirms that Health Canada's budget for tobacco control will not increase as a result of tobacco companies being charged for a sub-set of its tobacco control activities. 

What will significantly increase is the administrative burden on the tobacco control directorate. Some staff will be redirected from health-oriented activities to financial administration.

This post identifies eight concerns about the proposed framework. A subsequent post will suggest ways to overcome some of these challenges.

Health Canada's proposal in brief:

As described in the consultation document, the federal government proposes that:

1. The budget for Canada's Tobacco Strategy will be continued at the levels set in 2018, with $66.2 million allocated to cover the activities of the six federal departments involved. There has been no inflationary increase and none is forecast, meaning the budget is worth 17% less than when set in 2018 and continues to devalue.

2. Three of the departments involved (Health Canada, Public Health Agency and Indigenous Services) will monitor how much they spend in a given fiscal year on eligible expenses. Eligible expenses are for activities (a) connected to conventional tobacco products and (b) related to the purpose of the Tobacco and Vaping Products Act. 

4. Health Canada will require tobacco manufacturers to provide a statement at the end of each April saying how much revenue they received from sales in Canada in the previous fiscal period (April 1 to March 31).

5. On October 1st of each year, Health Canada will issue an invoice to each manufacturer (unless their market share is under 0.001%). The amount of each company's invoice will be the total eligible expenses times that company's share of tobacco revenues. The companies will be given one month to submit payment.

6. The costs of administering this program will be taken from the existing tobacco control budget.

Concern #1: The cost-recovery fee will recover only a fraction of the federal costs related to tobacco industry products

The cost-recovery fee will apply only to activities which are related to the use of traditional tobacco products and which are carried out by Health Canada, the Public Health Agency and Indigenous Services Canada. The current tobacco-control budget for those three agencies is $55.3 million - but much less than that will be recoverable. 

Even though the youth vaping and pouch-use crisis is arguably the most pressing issue facing the health department and even though tobacco companies contribute largely to this problem, none of the federal costs for nicotine use outside of conventional tobacco will be charged to the companies.

The activities of half of the federal departments involved will not be included in the program. These represent 15% of the budget for Canada's Tobacco Strategy. Similarly, federal costs by other departments which do not participate in the strategy will not be recovered. Examples of such activities include developing strategies to address plastic filter waste, managing smoking in federally-regulated workplaces, or addressing the tobacco-related health costs of prisoners, the military, etc.

Concern #2: The objectives of the Tobacco and Vaping Product Act are so narrow that the department will face challenges in assessing fees for many activities.

There are further restrictions in applying the fee to federal activities related to traditional tobacco products. As stipulated in the law that permits the fee, the department can only use the fee to recoup "costs incurred by His Majesty in right of Canada in relation to the carrying out of the purpose of this [Tobacco and Vaping Products] Act, including regulations." 

The purpose of the Tobacco and Vaping Products Act (TVPA) is narrow and arguably antiquated. This section of the law was drafted in the mid 1980s as part of the Canada's first efforts to impose regulatory controls on the industry and at a time when the priorities and challenges were very different than today. 

The law is silent about encouraging cessation, preventing addiction, protecting people from second-hand smoke, or reducing environmental and economic harm caused by this industry.

The TVPA has 4 specific objectives with respect to tobacco:

• "To protect young persons and others from inducements to use tobacco products and the consequent dependence on them"
• To protect the health of young persons by restricting access to tobacco products
• To prevent the public from being deceived or misled with respect to the health hazards of using tobacco products
• To enhance public awareness of the health hazards of using tobacco products."
  

Health Canada recognizes this limitation in the Consultation document, and provides a list of the costs which it considers can and cannot be recovered. 

However, many of the activities which the department says will be eligible are unlikely to be recovered without a fight from the companies. These are the activities which go beyond the explicit purpose of the Act and regulations - such as "resources to help people quit smoking" and providing "access to less harmful sources of nicotine."  

Given this industry's litigious past, such disputes are likely to land in court. The department's chariness about defending its policies in court will put pressure on staff to use a much narrower scope when recovering the costs than it is proposing in this consultation paper.

Concern #3: This framework creates an incentive for the department to de-fund non-eligible activities

Cost-cutting exercises are common place in Ottawa, especially following changes in governments. The proposed tobacco cost recovery framework provides a mechanism for ongoing reimbursement, but does not insure public health from decisions to 'de-prioritize' tobacco control. (The approaches used in other countries are better for this purpose, as discussed below). 

The limitations on which activities can be covered, combined with pressure to avoid disputes over eligible costs will create an incentive for departmental planners to focus expenditures on activities tightly aligned with the TVPA. 

The following hypothetical scenario describes this potential vulnerability: Health Canada focuses half its tobacco control activities on activities eligible for reimbursement, and recoups $23 million annually from tobacco companies. A government decision to cut programming costs by 15% across the board prompts the deputy minister to instruct that 80% of the work be on reimbursable activities in order that $13 million in departmental funding can be saved. Programs directed at researching and regulating vaping products are disproportionately cut.

Concern #4: The framework imposes a significant administrative burden 

The design of this cost recovery fee requires the department to calculate how much it spends on eligible activities before requesting reimbursement from manufacturers. 

Because only a subset of current activities are eligible, cost-accounting will be required to establish the eligible tobacco-share of all costs. This will impose a significant new burden on staff, and establishing criteria for eligibility will be a major management undertaking.

All of this will have to be done at an auditable standard. As the Consultation Document makes clear, the regulatory fee comes with requirements for transparency in recording costs. "There are also a number of legislative and government policy requirements to ensure proper accountability and transparency when fees and charges are introduced through ministerial regulations."

Concern #5: The transparency required by this framework may not be achievable for Indigenous Services, which will reduce the amount that can be recovered

Fifteen percent of the funds for Canada's Tobacco Strategy are transferred by Indigenous Services Canada to First Nations agencies. To date, that department has elected to not make the details of how --- or indeed if -- the money provided for tobacco control is spent as intended. 

When asked by parliamentarians for details on components of tobacco control funding, for example, Indigenous Services Canada has dodged giving any specific information and has instead said only that it was used "according to the priorities" of the recipient communities. (An example of such a response can be seen here and is pictured below).

There is little incentive for Indigenous Services Canada to force the issue with recipient agencies. Transparency is required to recover the costs, but cost recovery is not required for the department to receive its share of the CTS allocation. How Health Canada will address this issue is not spelled out in the Consultation Document.

Government reply to Order Paper Question
asked by Don Davies, MP, 2018

Concern #6: This framework does not borrow from good examples in other countries.

Health Canada has taken a different approach than that in the United States, France or other countries which have implemented regulatory fees on tobacco companies. These countries do not bill the industry for past expenses, but instead impose an up-front contribution based on sales revenue. This has had the effect of increasing their resources and expanding their range of activities.

United States: Since 2009, U.S. law has imposed a user fee on tobacco product manufacturers which is provided to the Food and Drug Authority for use at its discretion. Current revenues are USD $712 million (equivalent to CAD $985 million). No fee is imposed on the manufacturers of e-cigarettes. 

The FDA currently invests these fees in a wide range of activities, including in campaigns aimed at discouraging youth vaping.  If Canada adopted the U.S. approach, it could engage in additional work to reduce the onset of nicotine use as well as increasing cessation.

France: Since 2016, France has demanded a "social contribution" from tobacco companies, originally assessed at 5.6% of the wholesale revenues and providing about 120 million euros per year.  The revenue was assigned to a new tobacco control fund, whose purpose was later expanded to include all addictions. (Fonds de lutte contre les addictions). The funds are used to support a wide range of activities managed by government and non-government agencies. 

Unlike Canada, France chose to use a cost recovery system to expand the resources available. Instead of restricting activities to those by national government, it divides resources among regions and has appointed stakeholders to the oversight board which allocates funds.

Concern # 7: More efficient ways to recover costs are available

Unless the constraints identified above are addressed, the approach proposed by Health Canada is unlikely to generate more than $25 million in revenues. This estimate is calculated as the departmental tobacco control budget less 45% for expenses on vaping-related activities or other ineligible expenses.

While it is not possible at this point to quantify the cost of administering the cost recovery fee, it is likely to be non-trivial. Estimating the cost base, allocating the charge across different manufacturers, providing transparency about the process and defending the system in courts will take time and money. This time and money will be provided from the existing budget for federal tobacco control, which will impact other activities of the branch.

Other frameworks for cost recovery are available,  including options which generate more money with fewer strings and less administrative overhead.

Concern # 8: The recovery fee does not reflect the industry's capacity to pay 

The amount being proposed for recovery is less than a rounding error on any of these companies budgets. Because the companies are currently sheltered by insolvency protection, they have been required to provide semi-annual financial statements. From these, we know that a typical annual net revenue of the three large companies is about 2 billion per year.

The smallest of the three companies (JTI-Macdonald, whose revenues are about 17% of the industry total) reports that it spends $150 million a year on promotional activities. (Monitor's Report, page 12). Based on its recent revenue share, its contribution to a $30 million annual regulatory fee would only be $5 million.

Fact checking the "Swedish Experience"

This post responds to recurring efforts by tobacco companies and their allies to promote the "Swedish Experience" as template for harm reduction based on oral nicotine delivery. 

Data from reliable sources are used fact check the industry's claims. They show that for most indicators Sweden has not out-performed Canada with respect to reducing smoking prevalence or reducing tobacco-related disease. The Swedish experience is one where twice as many people use nicotine... and smoking is not being phased out more quickly.

Pouch promoters say Sweden is a tobacco control success story

Tobacco companies promote Sweden's permissive approach to snus as a way to keep smokers happy (with nicotine), keep investors happy (with high sales and profits) and keep health regulators happy (with low levels of disease).  

From BAT Presentation, 2024

Examples of this sales pitch can be found in investor presentations (such as those earlier this spring by British American Tobacco and Philip Morris International), in messaging from allied agencies (such as Smokefree Sweden), in industry-friendly media and on social media.

These pro-pouch arguments boil down to two claims:

* Widespread snus use in Sweden has led to lower smoking rates

* Widespread snus use in Sweden has led to low rates of tobacco-caused disease 

This is not the first time that the Swedish Experience has been trotted out by industry and others to encourage a permissive approach for oral nicotine. The current reprise is being delivered in the context of concerns in the US about the rapid increase in the sales of Zyn, and among European initiatives to regulate the introduction of nicotine pouches and Canada's Health Minister's plans to restrict how these products are marketed. 

(Nor is it the first time that tobacco control agencies have pushed back against these efforts. The data provided below is an update to our 2007 analysis.)

FACT CHECK: IN RECENT DECADES, THE "SWEDISH EXPERIENCE" HAS PRODUCED WORSE OUTCOMES THAN CANADIAN TOBACCO CONTROL. 

(Although the situation in Sweden was better in the last century).

As detailed below:

Widespread snus use in Sweden has NOT led to lower smoking rates

• Estimates of smoking rates in Sweden are generally not lower than those in Canada. 
• Smoking rates in Sweden have fallen, but not at a faster rate than in Canada 
• Twice as many Swedes use tobacco-industry nicotine products as do Canadians (30% vs 15%).

Widespread snus use in Sweden has NOT led to low rates of tobacco-caused disease 

• Lung cancer death rates among men are lower in Sweden than Canada, but the situation for other major tobacco-related diseases is not better.
• Tobacco-related deaths have fallen faster in Canada than in Sweden
• Sweden's lower lung cancer rates are rooted in lower tobacco use in the last century (not an outcome of current snus use)

Smoking rates in Sweden are not lower than in Canada

For decades, the OECD has tracked daily smoking rates among men and women in its high-income member states. The OCED provides access to this data, and also presents it in  data visualizations.  

OECD Countries identified as having lower daily cigarette smoking rates in 2021 than Sweden (9.7%) include New Zealand (9.4%), the United States (8.8%), Canada (8.7%), Mexico (8.6%), Norway (8%), Costa Rica (7.8%) and Iceland (7%). The World Health Organizations' report on tobacco smoking rates similarly shows Sweden behind Canada (12.6% vs 12%, Table A1.2), although rates of smoking manufactured cigarettes are slightly higher in Canada (where roll-your-own tobacco is no longer common).

Smoking rates in Sweden have fallen, but not at a faster rate than in Canada 

The Global Burden of Disease group and the Institute for Health Metrics and Evaluation provide historic smoking prevalence data which has been age-standardized to allow comparisons among countries and across time periods.(The data are available here). 

Their data shows that Sweden has done well (ranking 12th among 204 countries)  - but that other countries, including Canada (ranked 9th) and Australia (ranked 7th) have done better. The country with the greatest progress was Brazil, where the rate of oral tobacco use is very low and e-cigarettes are not legal for sale.  

Twice as many Swedes use tobacco-industry nicotine products as do Canadians 

There are 4 main categories of nicotine products sold by tobacco companies:  cigarettes and cigarette tobacco, electronic cigarettes/vaping products, heated tobacco products and nicotine pouches. 

There are currently  no global databases with information on the overall use of nicotine through these products, but national surveys can be used for this purpose. 

• Information for Sweden in 2022 can be found in a report on the use of cigarettes, snus and e-cigarettes among Swedes produced by the Swedish Council for Information on Alcohol and Other Drugs. The report uses a representative survey of 18,000 Swedes aged 17 to 84 and identifies past-month use of these products. Sweden's health authorities do not report on heated tobacco use, suggesting that its use is perceived to be very low.
• Information for Canada in 2022 can be found in the Canadian Tobacco and Nicotine Survey,(CTNS), which surveyed 12,000 Canadians who were older than 15. This survey asked about several forms of tobacco use, but did not inquire about heated tobacco products, suggesting that the use of this product category is perceived to be very low.

Results from these two surveys show similar rates for past month use of cigarettes (12% in Sweden, 11% in Canada), and not very different rates for vaping (4% in Sweden to 6% in Canada). One in 5 Swedes used either snus or non-tobacco nicotine pouches (20%) compared with fewer than 1% of Canadians. Because of snus use, twice as many Swedes use nicotine as do Canadians (30% vs. 15%).

(A data sheet with the information presented below as well as for men and women can be downloaded here).

Lung cancer rates among men are lower in Sweden than in Canada, but the situation for other major tobacco-related diseases is no better.

The World Health Organization provides information on the number and rate of deaths from specific diseases, and also provides data files which make age-adjustments to this data to allow for comparison between countries. 

Using only countries for which WHO signals the data is robust enough for comparison, Sweden is in the second-best quintile for overall deaths from lung cancer and Canada is in the worst. 

For lung cancer rates among men, Sweden is in the second-best quintile for men, but in the second-worst for women. Canada is in the middle quintile for men but the worst for women. 

The 20 countries for which comparable data is available and which have lower age-standardized lung-cancer rates than Sweden for the whole population are (in decreasing order):  Jamaica,  Venezuela, Kyrgyzstan, Philippines, Brazil, Chile, Trinidad-Tobacco, Belize, Grenada, Mauritius, Colombia, Saint Lucia, Barbados, Kuwait, Panama, Mexico, Antigua-Barbuda, Nicaragua, St Vincent and the Grenadines and Costa Rica.

(A data sheet with lung cancer rates extracted from WHO's files can be downloaded here). 

For deaths from other major tobacco-related diseases (e.g. Ischaemic Heart Disease and COPD), Sweden does worse or not much better than Canada. 

The same age-standardized World Health Organization data allow for comparisons with the number of deaths from other tobacco-caused diseases in Sweden and other countries.

With respect to heart disease, Swedish men and women both experience higher death rates than in Canada. In 2019, there were an estimated 6 more deaths from heart disease in Sweden for every 100,000 people than there were in Canada. For Chronic Obstructive Pulmonary Disease, Canada's rates for men are slightly higher than those for Sweden, and those for women are slightly lower: overall Canada had one more death from COPD for 100,000 people than Sweden. Public health agencies in Sweden have also pointed out that tobacco mortality in Sweden is not the lowest in Europe.

The data shown below is available on a downloadable data sheet; Data visualizations are available on Our World in Data. 

Tobacco-related deaths have fallen faster in Canada than in Sweden

The Global Burden of Disease Project has published estimates of the proportion of global deaths caused by tobacco use and other risk factors, and provided the data for individual countries in supplementary tables. 

Their estimates for Canada and Sweden (downloadable here) show similar results: 1 in 5.6 deaths in Canada is due tobacco, compared with 1 in 6.6 deaths in Sweden. When comparing progress in age-standardized deaths from tobacco between 1990 and 2021, Canada was in a somewhat better condition than Sweden:  the overall rate of deaths from tobacco-caused deaths fell by 15.6% in Canada, compared with 12.3% in Sweden. 

 

Sweden's lower lung cancer rates are rooted in lower tobacco use in the 20th century - not today's nicotine pouches

Lung cancer can occur many decades after tobacco use, and current lung-cancer rates are an indicator of tobacco use in previous periods. One likely reason that Sweden has lower rates of lung cancer now than Canada does is because much less tobacco was smoked in the last century.

Reports on historic tobacco sales produced by PN Lee and colleagues show that over the past century per capita tobacco sales (including cigarettes, cigars, pipe and snus) remained constant in Sweden. By contrasts, per capita consumption in Canada rose dramatically in the middle of the past century (to more than double the rate in Sweden) before falling.

Grams of tobacco consumed per day per adult.
From P.N. Lee, International Smoking Statistics
for Sweden and Canada 

In living memory, most of the tobacco consumed in Canada has been in the form of manufactured or roll-your-own cigarettes. By contrast, snus has been the predominant product in Sweden for 30 years. 

There are many reasons other than the presence of snus that may explain why cigarette smoking never emerged with the ferocity in Sweden as it did in Canada and other European countries. Among these are differing experiences with returning soldiers (Sweden was a neutral country during World War Two), control of the tobacco market by a government-owned company,  and the absence of television advertising in Sweden. Although Sweden is not now looked on as a leader in tobacco control, during the 1970s and 1980s it pioneered several tobacco control measures, including advertising restrictions (1979) and rotating health warnings (1987).