Health Committee on Feb. 12th, 2018

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Absolutely.

[Anne Kothawala]

I ask because you're suggesting that we only care about the business interest, and that's it.

Well, we actually care about the health and safety of young people particularly, which is why we have a very solid track record, and you rightly point that out. I think the fundamental issue here is that we have not seen one piece of research other than what people think about the attractiveness of the packaging. I really fail to see how a 75% health warning package that is kept behind a flap in a convenience store is something that is driving young people to take up smoking. That's the first issue.

Secondly, we are not here today to say, “We only care about the business interests of the convenience store industry. We just want to sell more cigarettes.” That's not what we've said. We have said that based on everything we have seen about plain packaging, there is no research to support the view that plain packaging will actually achieve the government's objective, which is to reduce smoking.

[The Chair, Liberal, Bill Casey]

The time is up. Thanks very much.

Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

I'll pick up on that last point. I beg to differ, Ms. Kothawala. There's compelling evidence, including extensive studies supporting implementation of plain packaging. An updated March 2014 evidentiary overview reviewed 75 empirical studies. That was prepared by University of Waterloo Professor David Hammond for the Irish government.

In the United Kingdom, the Chantler review and the University of Stirling review provided extensive evidence to the same effect. A special issue of the journal Tobacco Control was published in April 2015, with a series of studies on the Australian experience providing yet further evidence. I'm going to quote. This is maybe for you and for Mr. Davidson. I did some research while I was listening. It says, and this is from Australia:

The Department commenced a Post-Implementation Review...of tobacco plain packaging in December 2014 in accordance with the Australian Government’s best practice regulation process. The purpose of a PIR is to assess whether a regulation remains appropriate, and how effective and efficient the regulation has been in meeting its objectives.

The PIR was published on the Office of Best Practice Regulation website on 26 February 2016. The PIR concludes that the tobacco plain packaging measure has begun to achieve its public health objectives of reducing smoking and exposure to tobacco smoke in Australia and it is expected to continue to do so into the future.

The body of studies considered for the PIR show that the tobacco plain packaging measure is having an impact by reducing the appeal of tobacco products, increasing the effectiveness of health warnings, and reducing the ability of the pack to mislead. The studies also provide early evidence of positive changes to actual smoking and quitting behaviours.

The available studies are diverse, peer reviewed and published in leading medical journals.

I could go on. Do you still say, Ms. Kothawala, that there's no empirical evidence to show that plain packaging is effective?

[Anne Kothawala]

Anything that we have seen has talked about how it has not led to a decrease in smoking, but to an increase in contraband. Those are the two fundamental issues that we're looking at and we're asking if in fact plain packaging achieves the objectives.

[Prof. Sinclair Davidson]

Can I respond?

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Davidson, give me one second and I'll come right back to you.

Mr. Chera, you said you had an estimate of the amount of tax dollars that were saved. Do you have any idea how much money the consumption of tobacco costs the Canadian health care system?

[Satinder Chera]

No.

[Don Davies, NDP, Vancouver Kingsway, BC]

That number you don't know. Some 50% of tobacco consumers in this country will die of a tobacco-related illness. We heard that earlier.You have no idea how much that costs our public taxpayer?

[Satinder Chera]

I don't know about that.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Davidson, you wanted to respond to what I quoted from the Australian review.

[Prof. Sinclair Davidson]

Yes. First of all, on the study in the tobacco control issue of 2016, my colleague and I did an extensive analysis of those papers, and the Cancer Council Victoria, which undertook the original research, responded with a press release saying that the survey was “quite explicitly not designed to assess quitting success or change in smoking prevalence but rather focussed on the immediate impact of the legislation...”. So all of those studies on tobacco control don't do what you just quoted them to have done, and the authors of the studies actually said that.

Turning to the PIR—which is a very, very impressive econometric technique that was undertaken—it found that there is a 0.55% decline in smoking prevalence as a result of the plain packaging policy. What the PIR did not report was that the sample error in their study was bigger than the policy effect size they found.

The other thing that is not clear from the study is that the smoker they built their model on was an unmarried Australian-born 14- to 17-year-old male with a tertiary qualification, employed full-time, but with an income of less than $6,000, and living in Victoria. Now, no such person exists, so it is unsurprising, when you model whether a person who does not exist gave up smoking, and your effect is smaller than the sample error in your data, that you would want to keep that a bit quiet.

The other thing is that the pseudo-R squareds were less than 10%, so while the analysis was very clever, it excluded price. It's entirely, utterly unconvincing.

[The Chair, Liberal, Bill Casey]

Thanks very much, Dr. Davidson.

That completes our normal round, but by popular demand we're going to go into overtime again, as we did this morning. We're going to have one round of questions of four minutes each. I would ask you to keep them to four minutes. It will be the same order as this morning, but we're going to start with Mr. McKinnon, for four minutes.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Thank you, Chair.

My question is for Mr. Luongo.

You said that your corporation shares the goal of reducing cigarette use in Canada and that your ultimate objective is to stop selling cigarettes. You anticipated the obvious question there—why don't you stop?—by saying that people would just switch to a competitor.

My question is, why do you care? If this is a market you're willing to get out of, why do you care if you're losing market share to somebody else? Why don't you take the corporate resources that you're currently investing in the manufacture, sale, and whatnot of cigarettes and put them towards a product you feel is a safer product, such as IQOS?

[Peter Luongo]

That's exactly what we're doing. We are shifting our resources. We're massively shifting all of our activities over to these new products, but it takes a lot of money. It took a ton of money for these products to be developed, to do the research and development on them, and we had the discussion in terms of the scientific evidence on these products earlier. All of that takes hundreds of millions of dollars a year at the PMI level to do.

If we stopped selling, we would actually lose all of the resources and all of our people, because we wouldn't be able to afford them without selling cigarettes. We need to make this transition. We need to do it as quickly as possible, but it's not something that can happen overnight, and it's a place where policy plays a role. That's why we're looking for your help.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

I guess what I'm hearing from your answer, then, is that the reason you don't stop now is not that your competition will take over the market but that you're using that market to fund your transition. Would that be fair?

[Peter Luongo]

It's a combination. It would have no positive impact on public health if we were to just stop selling unilaterally. People would go to our competitors, or they would go to the black market. At the same time, we wouldn't have the infrastructure and the resources in order to commercialize these products.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

I guess it does go to credibility to say that you believe you should stop selling cigarettes but you're going to keep doing it because you need to. I think it undermines credibility, but I'll leave that for now.

One of the concerns that one of our earlier panellists had was that the regulatory framework around vaping that we're putting into Bill S-5 will basically mean that the tobacco industry will invade that market and take it over.

Do you see vaping as a growth market for you?

[Peter Luongo]

I think vaping is a market we would certainly look at competing in if it were legalized. I don't think it's a question of its being a growth market per se. I believe that the more people we can switch from cigarettes to an alternative product, the better, whether it's heated tobacco, vaping, or whatever. There's no reason why we wouldn't compete in that industry once it's legalized.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

With respect to plain packaging, you say it doesn't work, yet you're investing money in packaging for IQOS. If packaging has no effect, why would you be investing all this money in packaging and developing a new brand? I'm sure there's a great amount of money involved in developing the packaging—what it looks like and the impression it makes on the marketplace. If plain packaging has no effect on the market, why would you be spending money on non-plain packaging?

[Peter Luongo]

With combustible cigarettes, it has to do with what was discussed earlier about brand preference. Once people decide to smoke, you want them choose your brand rather than your competitor's. You want the products to be differentiated from a consumer standpoint so that people know a legal product from an illegal one.

As for IQOS specifically, the packaging there is relatively simple. There is a colour on the top, but the rest of the pack is essentially black and white. We were much more focused on explaining what this product is and what it is not than we were on calling attention to things that might have been done in the past.

[The Chair, Liberal, Bill Casey]

Thanks very much.

Now we'll go to Ms. Gladu.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you, Chair, and I'm going to split my time with Ms. Finley.

Professor Davidson, I'm trying to get to the heart of the issue. We've heard testimony that plain packaging works and other testimony that it doesn't—there are reports on all sides. We did see data from Australia, which is where plain packaging was tried the longest. We know that France, Japan, and the U.K. haven't been in the business long enough to have many years of data. In Australia, we've seen data going back to 2002. I'm interested in the timeline of when graphic warnings were put in place, whether or not packages were stored behind the counter so customers couldn't see them, and exactly when plain packaging was implemented in Australia.

[Prof. Sinclair Davidson]

Plain packaging was implemented in December, 2010. There was a phase-in period in September. If I recall correctly, it was about a three-month phase-in period.

The national household drug strategy survey is conducted every three years. The data came out in 2013, and then most recently for 2016. There was a big drop between 2010 and 2013, which in public debates was very much associated with the introduction of plain packaging. There was a one-month overlap between those periods.

Certainly the 2016 decline in smoking prevalence fell, moving from 12.8% to 12.2%, which is not statistically significant. Given population growth, the number of smokers in Australia had actually increased.

In terms of policies that have been introduced, graphic health warnings were introduced in Australia in 2006. As a public health exercise and a public information exercise, it was quite valuable. Packets are stored behind the counter and in a case. You can't see them ever. They must be transported from the storeroom to the counter in a bag, so you also can't see them being transported through the store. That was introduced in 2011, if I recall correctly.

There was a 25% increase in the excise on tobacco in 2010. That probably drove the change that we saw between 2010 and 2013. Certainly the decline in prevalence, which is a long-running thing from the early 1990s, stalled. At the same time, if you look at the U.K. over the same time period, vaping became quite popular there, and the prevalence of tobacco cigarettes declined quite precipitously.

There are all sorts of things going on here. Certainly, my critique of the evidence, the data from the national drug strategy survey, and the data from the Australian Criminal Intelligence Commission survey kind of indicates that plain packaging in and of itself is not having the desired effect. The plain packaging concept itself, the idea of enhancing the noticeability of the graphic warnings, in my opinion, has failed.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Ms. Finley.