Per-pack price reductions available from different cigarette purchasing strategies: United States, 2009–2010

Preventive Medicine (Impact Factor: 3.09). 03/2014; 63c. DOI: 10.1016/j.ypmed.2014.02.017
Source: PubMed


Following cigarette excise tax increases, smokers may use cigarette price minimization strategies to continue their usual cigarette consumption rather than reducing consumption or quitting. This reduces the public health benefits of the tax increase. This paper estimates the price reductions for a wide-range of strategies, compensating for overlapping strategies.
We performed regression analysis on the 2009-2010 National Adult Tobacco Survey (N=13,394) to explore price reductions that smokers in the United States obtained from purchasing cigarettes. We examined five cigarette price minimization strategies: 1) purchasing discount brand cigarettes, 2) using price promotions, 3) purchasing cartons, 4) purchasing on Indian reservations, and 5) purchasing online. Price reductions from these strategies were estimated jointly to compensate for overlapping strategies.
Each strategy provided price reductions of between 26 to 99 cents per pack. Combined price reductions were possible. Additionally, price promotions were used with regular brands to obtain larger price reductions than when price promotions were used with generic brands.
Smokers can realize large price reductions from price minimization strategies, and there are many strategies available. Policymakers and public health officials should be aware of the extent that these strategies can reduce cigarette prices.

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    ABSTRACT: Aims To evaluate state cigarette excise tax pass-through rates for selected price-minimizing strategies. Design Multivariate regression analysis of current smokers from a stratified, national, dual-frame telephone survey. Setting United States. Participants A total of 16542 adult current smokers aged 18 years or older. Measurements Cigarette per pack prices paid with and without coupons were obtained for pack versus carton purchase, use of generic brands versus premium brands, and purchase from Indian reservations versus outside Indian reservations. Findings The average per pack prices paid differed substantially by price-minimizing strategy. Smokers who used any type of price-minimizing strategies paid substantially less than those who did not use these strategies (P<0.05). Premium brand users who purchased by pack in places outside Indian reservations paid the entire amount of the excise tax, together with an additional premium of 7-10 cents per pack for every $1 increase in excise tax (pass-through rate of 1.07-1.10, P<0.05). In contrast, carton purchasers, generic brand users or those who were likely to make their purchases on Indian reservations paid only 30-83 cents per pack for every $1 tax increase (pass-through rate of 0.30-0.83, P<0.05). Conclusions Many smokers in the United States are able to avoid the full impact of state excise tax on cost of smoking by buying cartons, using generic brands and buying from Indian reservations.
    No preview · Article · May 2014 · Addiction