Money

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Funding overview

Governments are the biggest players in the tobacco market. In the US, for example, as Doctor Gio Gori has noted, various areas of government at the turn of the twenty-first century received around $40 billion annually from tobacco, against less than $9 billion in profits received by the tobacco industry itself. "It is governments that benefit from and control the tobacco trade far more than the tobacco industry, which has been virtually nationalized by taxation and the US Master Settlement Agreement with the states," says Gori. The Master Settlement Agreement is a price-fixing scheme which makes manufacturers, in effect, surrogate tax collectors, even as direct government-collected taxes also continue to grow exponentially. The situation is similar worldwide, where total taxes on cigarettes typically outstrip the actual price of cigarettes, several times to one.

As the political power of the Big Tobacco Industry, shrunken, regulated into submission, and gagged against protest, has declined despite their growth in world product, the Tobacco Control Industry, supported by governments and by a Pharmaceutical Industry which profits from “smoking cessation” products, has become a financial colossus. The losers are the people. Their losses come in the form of suffering a divisive victimization campaign aimed at smokers, of wealth wasted on Tobacco Control bureaucracy and junk science rather than productive research, of the tarnishing of the good name of science and a loss of trust in the medical establishment, of blocking of the development of effective reduced risk cigarettes, and of ever-increasing oppression in the form of restrictions on personal choice and individual freedom. All industries, in great part and essentially, are about money. The Pharmaceutical and Tobacco Control industries are about very big money. A general illustration of the major economic forces in play is provided below.

Money Flow (graphical)

Explanation

• Smokers' market: A worldwide market, worth billions of dollars, where two main industries – the Tobacco Industry and the Pharmaceutical Industry (marketers of smoking cessation and Nicotine Replacement Therapy (NRT) products) – are competing for smokers' money and sympathy. The overall functioning of this market is controlled by a third interested party which has basically sided with the Pharmaceutical Industry: government. For government, smokers are an easy cash cow.

The fourth interest group, the Tobacco Control industry, is working closely together with the Pharmaceutical Industry and government to get their own share of the market, selling advice to government bodies and creating public sympathy for increased taxes and smoking bans which benefit the government and the Pharmaceutical Industries respectively.

Smokers are crushed between these interests, eventually paying the bill.

• NGOs/Charities: Although many TC organizations are also "Non-Governmental Organizations" (NGOs), many other NGOs sponsor TC: Cancer, Asthma, Heart charities and even patient organizations give Tobacco Control forces money out of both idealistic and public-relations motivations. They are funded by governments but also by the general public who still consider these charities as simple well-doers, with that perception reinforced every time they perform an act or make a contribution in favor of "saving the children" and against "Big Tobacco." These charities also often have financial or other ties with, or are facilitated by, the Pharmaceutical Industry.
• NRT sales: NRT products only include nicotine patches and gum but also, in common usage, extend to anti-depressants and brain-chemistry pharmaceuticals like Zyban and Chantix/Champix, as well as the developing field of anti-smoking vaccines. These products are developed to prevent smoking in the first place or to make it easier for smokers to quit, but they do not always have the desired effect. Side effects reported for some of these "pharmaceutical interventions" include mood swings, anger, violence and suicide attempts. As a whole the effectiveness of these NRT and stop-smoking products Patches and gums don't appear, in formal double-blind placebo-control studies to have the nearly the success rate touted by their producers and the Tobacco Control Industry in general. A personal decision by the smoker to quit "cold turkey" because they themselves desire to do so still seems to be the most successful method of smoking cessation.
• The Tobacco Control industry not only includes anti-tobacco lobby organizations but also many scientists in universities and in government funded knowledge institutes worldwide. Most of these organizations and individuals are members of Globalink, an international communications and planning network open and accessible only to approved tobacco control activists and researchers. As discussed elsewhere on this site, Globalink keeps strict watch over its membership and has been known to expel scientists who begin to deviate from its core doctrines..

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Pharmaceutical industry funding of the Tobacco Control industry

Through their funding of the university medical facilities and faculties that teach and guide our doctors, their funding of scientific studies, their affiliations with public health organizations such as the WHO, the CDC and the FDA, their intense lobbying of politicians to influence public health policy, and their direct or indirect funding of political campaigns, the tentacles of the Pharmaceutical Industry are everywhere. There are billions of dollars being directly donated or funneled through foundations and non-profits into anti-smoking campaigns, smoking bans, and the increase of tobacco taxation worldwide with the intention of improving the bottom line of the Pharmaceutical Industry as it competes with the Tobacco Industry for the smoker's market.

RWJF sponsoring of anti-tobacco research and activities, 1992-2003 (Overall:$218,368,343, calculated from their on-line database). Note that after 1998, the anti-smoking industry got access to the additional sponsoring facilities provided by the MSA.

The following are just a few examples of the pharmaceutical money trail:

• WHO launches partnership with the pharmaceutical industry to help smokers quit

Excerpt:

The strength of the Partnership Project lies in the fact that it has brought together three major pharmaceutical companies, Glaxo Wellcome, Novartis Consumer Health and Pharmacia & Upjohn, all manufacturers of treatment products for tobacco dependence, to support a common goal that will have a significant impact on public health. The Project provides a model which can provide a basis for future partnerships with the private sector in other important health areas.

• Smoking bans: good public policy? Or simply a great pharmaceutical marketing plan?

Excerpt:

(...) upon some preliminary investigation it is clear that these NGOs are backed by $446,000,000 from the Robert Wood Johnson Foundation (RWJF) which has direct ties to the Johnson & Johnson Company – the manufacturer of Nicoderm & Nicoderm CQ via its wholly owned subsidiary ALZA. Recently, the buyout of Pfizer Consumer Health (see pgs 4 and 61)means J & J profits even more from the passage of smoking bans thru additional sales of Nicotrol, Nicorette, Commit, (see pgs 32,33,56) and any other over the counter smoking cessation drugs once manufactured by Pfizer Consumer Health division. Global Health Partnerships

To read about the RWJF tobacco control strategy click here: Taking on Tobacco

Examples of grants by the RWJF

• Tobacco control grantees of a $47,000,000 grant from Pfizer to combat cancer and tobacco use included:

Alliance for Control of Tobacco Use (Brazil), Hellenic Thoracic Society (Greece), SAMBA (Sweden), and Umberto Veronesi Foundation (Italy)

• Developing Tobacco Control Capacity: Action on Smoking and Health (ASH) International/Framework Convention Alliance (FCA) (Brazil, Argentina, Venezuela, Mexico, Colombia, Chile and Costa Rica; Morocco, Algeria, Tunisia, Egypt, Saudi Arabia, Kuwait, UAE and Lebanon), and Mexican Council on Tobacco • Protecting Nonsmokers from Secondhand Smoke: American Cancer Society (Algeria and Tunisia) and Chinese Association on Tobacco Control

• Helping Smokers Quit: Comprehensive Cancer Center at Freiburg University Medical Center (Germany), Health Promotional Foundation (Poland), Heart and Stroke Foundation of Ontario (Canada), Hungarian Academy of Teaching Family Physicians, Japan Medical-Dental Association for Tobacco Control, Partnership for Prevention (U.S.), Philippine Business for Social Progress, QUIT UK/European Network of Quitlines (Central and Eastern Europe)

The following link leads to a letter from ASH, UK to Glaxo Smith Kline about how disgusted they are that Derek Bonham, Chairman of Imperial Tobacco, sits on the board of GSK.

• Links between ASH, UK and Glaxo Smith Kline (GSK)

Excerpts:

ASH has worked closely with both Glaxo and SmithKline Beecham staff and always welcomed the active collaboration. (...) We have worked with GSK under the auspices of the WHO-Europe Partnership Project on tobacco dependence and at various one-off opportunities. ASH was instrumental in securing greater government commitment to smoking cessation products in the NHS National Plan and we have helped with PR for both Zyban and Niquitin CQ. Our involvement with GSK staff has, I believe, been mutually beneficial, and we have gained from exposure to the company's arguments and insights (...)

This experience is replicated in many organisations, many countries and in business areas beyond the smoking cessation category. (...)

There are clear conflicts of interest - every time someone successfully uses a GSK smoking cessation product the market for tobacco declines. Every time a smoker switches to 'lights' as an alternative to quitting the market for smoking cessation is diminished.

Most of the measures that drive people to want to quit smoking and use GSK products are exactly those that are opposed by tobacco companies. Such measures include:

Restrictions on smoking in public places and workplaces

Marketing restrictions on tobacco companies

Higher tobacco taxation

Greater NHS involvement in smoking cessation

Regulatory measures to be applied to tobacco products

(...)

ASH has a small shareholding in GSK and I will be attending with others to question you and the Chairman on this situation.... More than anything, I would like to resume normal and constructive relations with GlaxoSmithKline....

The following excerpts come from the Novartis website which explains the lobbying and political contribution policy of the corporation:

• Public policy and advocacy :

The Novartis Global Public Affairs department is responsible for managing political lobbying and contributions. Our aim is to monitor and assess regulatory and political decisions that may affect our business, to make timely and substantive contributions to the policy process and to ensure consistency of action across all policy fronts.(...)

Novartis is campaigning to encourage policies to complement non-smoking environments with smoking cessation, with nicotine replacement therapy (NRT) as an important component of an EU strategy on tobacco control.

Together with various NGOs, we helped to foster a 'Smoke Free Partnership.' Our aim is to foster a policy and legislative environment which leads to better public health through strong tobacco control measures and increased availability of NRT in line with the WHO Framework Convention on Tobacco Control.

Some examples of financial conflicts of interest between the Tobacco Control Industry and Big Pharma:

• Drug companies among biggest funders of stop-smoking charities

• New Study Shows that Nicotine Replacement Therapy is Ineffective for Gradual Smoking Cessation, But Concludes the Opposite

• Chantix Lawsuits Piling Up; Dangers from Severe Financial Conflicts of Interests of Tobacco Control Researchers and Institutions Revealed

• HOW LONG WILL THIS BILLION DOLLAR CHARADE CONTINUE? - John R. Polito

• FDA Guidelines for Determining Eligibility for Advisory Committees are Ridiculous and Ensure that Conflicts of Interest Will Continue to Plague Agency

• Pharmaceutical interests who funded smoking ban laws expect pharmaceutical nicotine sales to reach $4.6 billion annually by 2016

• Wall Street Journal Article Highlights Financial Conflicts of Interest of Chair of Federal Smoking Cessation Guidelines Panel

• ONTARIO LUNG ASSOCIATION - CHARITY ORGANIZATION OR BIG PHARMA FRONT GROUP?

• What is the Ottawa Model for Smoking Cessation?

• Stop-smoking pill sparks debate over physician-drug company relationship

• Does Money talk? Controlling unwanted influences on tobacco cessation research

Governments are senior partners of the tobacco industry

In some countries, taxes, qualified by many as regressive because they mostly affect the poor, amount to over 75% of the retail price of cigarettes. While these taxes and the hidden taxes from the Master Settlement Agreement (US) were supposed to help pay for the alleged additional health care costs of smoking, and to educate individuals, particularly children, on the health hazards of smoking, they are mostly used for other purposes such as infrastructure, social programs, education and general state funding. Of course the tobacco control organizations also get generous pieces of the money pie that help sustain the careers of their directors and staff. But as governments are increasingly struggling to balance budgets, they are now slashing tobacco control funding despite vociferous protests by Tobacco Control Industry groups and individuals who have long benefited from such funding. Those protests obviously make no reference to the payrolls for those aforementioned careers but generally focus on such TC Tactics as imagined projections about the number of children who'll "die from smoking" as a result of the dastardly cuts.

Additionally, pushed by greedy tobacco control lobbyists, governments – such as some of the provincial ones in Canada – are salivating at the prospect of striking gold like their U.S. state counterparts did through the Master Settlement Agreement. These governments are now taking legal actions against the Tobacco Industry supposedly to seek damages for the costs of treating smoking-related illnesses but actually just to raise money for themselves and their own branches of the Tobacco Control Industry. If the Canadian provinces are successful, expect a global pandemic of government lawsuits against Big Tobacco in country after country – allowing them to raise their incomes from the sale of tobacco products without the political fallout of directly raising taxes on smokers. Of course the smokers will be the ones paying the money, but the MSA style of misdirection will make many smokers simply blame the price rises on the tobacco companies themselves.