Estimating the public economic consequences of introducing varenicline smoking cessation therapy in South Korea using a fiscal analytic framework.
BACKGROUND AND AIMS
Smoking gives rise to many cross-sectorial public costs and benefits for government. Costs arise from increased healthcare spending and work-related social benefits, while smoking itself provides significant revenue for government from tobacco taxes. To better understand the public economic impact of smoking and smoking cessation therapies, this study developed a government perspective framework for assessing smoking-attributable morbidity and mortality and associated public costs. This framework includes changes in lifetime tax revenue and health costs, as well as changes in tobacco tax revenue, from fewer smokers.


METHODS
A modified generational accounting framework was developed to assess relationships between smoking-attributable morbidity and mortality and public economic consequences of smoking, including lifetime tax revenue gains/losses, government social transfers, and health spending. Based on the current prevalence of smoking in South Korean males, a cohort model was developed for smokers, former-smokers, and never-smokers. The model simulated the lifetime discounted fiscal transfers for different age cohorts in 5 year age bands, and the return on investment (ROI) from smoking cessation therapy.


RESULTS
Former smokers are estimated to generate higher lifetime earnings and direct tax revenues and lower lifetime healthcare costs due to the reduction of smoking-attributable mortality and morbidity compared to smokers, even after accounting for reduced tobacco taxes paid. Based on the costs of public investments in varenicline, this study estimated a ROI from 1.4-1.7, depending on treatment age, with higher ROI in younger cohorts, with an average ROI of 1.6 for those aged less than 65.


CONCLUSIONS
This analysis suggests that reductions in smoking can generate positive public economic benefits for government, even after accounting for lost tobacco tax revenues. The results described here are likely applicable to countries having similar underlying smoking prevalence, comparable taxation rates, and social benefit protection provided to individuals with smoking-related conditions.
['Connolly|Mark P|MP|', 'Baker|Christine L|CL|', 'Kotsopoulos|Nikolaos|N|']
D000328:Adult D000368:Aged D015897:Comorbidity D004526:Efficiency D005102:Health Expenditures D006801:Humans D008297:Male D008875:Middle Aged D017059:Models, Econometric D061213:Mortality, Premature D018722:Nicotinic Agonists D056910:Republic of Korea D012456:Salaries and Fringe Benefits D000074285:Smokers D012907:Smoking D016540:Smoking Cessation D013660:Taxes D000068580:Varenicline
Public economics smoking cessation tax smoking-attributable mortality smoking policy