Research Firm Report Estimates that Graphic Warning Labels Will Reduce Cigarette Consumption by No More than 1%

A report by the research firm IBISWorld estimates that the graphic warning labels to be placed on cigarettes staring next year will reduce cigarette consumption by no more than 1%, according to an Associated Press article.

According to the article: "The nation's top tobacco companies' sales aren't expected to go up in smoke despite new grisly warning labels that are set to appear on U.S. cigarettes packs next year. The graphic labels, which were released in June by the Food and Drug Administration and include an image of rotting teeth and gums, will cause a decline of less than one percent in overall U.S. tobacco revenues in 2013, according to a recent analysis by research firm IBISWorld. An average person smokes fifteen cigarettes a day at a cost of about $1,500 per year, which translates to about $300 million in lost revenue. That's only a fraction of the estimated $43.8 billion in revenue for the tobacco industry in 2013, the firm's calculation show."

The IBISWorld analyst predicted that "in the near term, it won't have much of an impact."

The Rest of the Story

This analysis comports with my own evaluation of the likely impact of the warning labels, which I opined last week would be minimal. However, politicians (like Senator Lautenberg) and anti-smoking organizations (like the Campaign for Tobacco-Free Kids and World Health Organization) have been boasting about how much of an impact these warning labels will have.

Sadly, the warning labels are the strongest aspect, and only real public health benefit of the FDA Tobacco Act. There is nothing else in the legislation which will have any substantial positive public health impact. And the positive effect of the warning labels is estimated to be quite minimal.

The one substantial effect which these warning labels will have, however, is to completely immunize the tobacco industry against litigation. No jury is going to find the tobacco companies responsible, or even partly responsible, for damage caused by their products when these companies can argue that consumers are adequately warned of the product's dangers by virtue of these large warning labels.

I believe that for the industry, the benefits of virtual immunity against future litigation will outweigh the one percent or so decline in cigarette sales.

The FDA Tobacco Act remains, in my opinion, one of the worst deals ever agreed to by a public health organization.