Countervailing Effects: What the FDA Would Have to Know to Evaluate Tobacco Regulations

Abstract

The Family Smoking Prevention and Tobacco Control Act [P.L. 111-31] gives the US Food and Drug Administration (FDA) the authority to regulate tobacco products, including placing restrictions on product composition, sale, and distribution. A complete accounting of the costs and benefits of any tobacco regulation includes harms from possible illicit trade in tobacco products (ITTP): costs of enforcement, violence, incarceration, etc. Indeed, the law instructs the FDA to take into account the "countervailing effects" of regulation on public health, "such as the creation of a significant demand for contraband or other tobacco products that do not meet the requirements." While the law's narrow focus on public health may limit the scope of an inquiry by the FDA compared to a full benefit-cost analysis, aspects of ITTP such as violence and incarceration have substantial health impacts. Illicit markets in drugs such as cocaine, heroin, and methamphetamine, not to mention the grand experiment of alcohol Prohibition in the early 20 th century, illustrate the substantial risks of unwanted side effects of drug prohibition. But taxes, product limitations, access restrictions, and narrowly defined product bans constitute

Unintended consequences of cigarette prohibition, regulation, and taxation

“…34 Many of the valuations required for optimization are largely unknown, given how little is known about the expected scale of illicit trade and violence under different levels of regulation and enforcement. Elsewhere, the present authors issue a more extensive call for research on these topics (Kleiman et al, 2015).…”