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Ontario sues Big Tobacco

Province seeks to recover $50 billion in health care costs


 

Ontario is taking tobacco companies to court for $50 billion in an attempt to recoup money it claims it has had to spend treating smoking-related illnesses since 1955. The province will sue under the Tobacco Damages and Health Care Costs Recovery Act, which allows governments to file a claim for the recovery of past, present and continuing smoking-related healthcare costs. The tobacco companies have not yet responded to the claim.

CBC News


 
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Ontario sues Big Tobacco

  1. Maybe if they banned tobacco, there would not be related health care costs.

    I seriously do not understand how governments can win these type of cases. Tobacco is a legal product. Why doesn't the government sue automakers? Thousands of people are killed and injured every year in vehicles.

    • hahaa good point ..but the government cant really ban it…once u take somethin away from someone…that specific thing will be wanted even more….u alwayz want what you cant have and dont want what you have..i think thats just another way for the government to make money ..but not only that..it kinda put a dent in tobacco companies bank accounts so maybe they can gerate less..wich means itl be more expensive…so maybe the public will want it less bcuz they cant afford it..plus its not cars that are killing people..its the people driving the cars that are killing

  2. Can we sue government for aiding in the sale of Tobacco? What if the government offers financial aid to tobacco farmers?

  3. No one *forced* these people to use tobacco. No one forces these people to eat donuts, to become obese, to drink and drive – with the related health costs.

  4. Does this mean that we as taxpayers, have the right to sue the various political parties for all the damages they have caused over the years when forming government? I'm quite sue that it would outweigh the damage done by the tobacco companies by at least 1,000 to 1. Gross incompetence, negligence and collusion would be the easiest to prove. Better still, why don't we make the true culprits financially accountable for their gross mismanagement and incompetence…the senior civil servants…the true ongoing government of thieving, incompetent and inept mandarins that fly "under the radar". Regarding the tabacco industry, I agree with jolyon & TedTylerEzro, in that the product IS legal and at the very least, the government is an equal partner and therefore should be held equally liable.

  5. bw…sorry for the typos in my preceeding comment….

  6. I think there might be a case for suing for the time period when tobacco companies knowingly lied about the health dangers and addictiveness of their product. I can't see there being any legitimacy beyond that period, however.

  7. Well, that's one deficit-reduction strategy…

  8. It is basic economics…. additional health care costs are an externality of tobacco product sales/consumption…. the additional health care costs are not absorbed by either party to the transaction and thus external costs or are placed on a third party stakeholder – in this case tax payers – who are not directly party to the economic transaction. the benefits that tobacco companies have accrued have not taken into account the burden they placed on the system…. this lawsuit just looks to recoup that cost on all of our behalf as is being done in BC and has been done in the US with the master settlement.

  9. This makes absolutely no sense. Tobacco's legal and the tobacco companies are required to advertise, quite graphically, the impacts of using their product on a person's health.

    If the Ontario government really wants to make tobacco companies pay for the societal costs of their product, slap an industry-specific tax on them. Otherwise, they're not breaking any laws (and making tobacco illegal just brings back memories of prohibition or the current black market of marijuana), so there's no valid justification in suing them.

  10. of course no person is half as addicted to cigarettes, as the government is to the taxes it derives from their sale…

  11. Costs?!? Smokers subsidise non-smokers via the outrageously high cigarette taxes.

    • The taxes on cigarettes, while rather high, still don't cover the societal costs of smoking. Health care, lost productivity and even fires attributable to cigarette smoking all add up to costs higher than the current tax revenue from smoking.

      • Actually, they do ($1.2 billion in Ontario last year alone). Moreover, smokers die both younger (no pensions) and more abruptly (far lower end-of-life costs).

        • "Moreover, smokers die both younger (no pensions) and more abruptly (far lower end-of-life costs)."

          That's what I was thinking as well. No pensions, die of lung cancer (which is not expensive way to go apparently) and smokers normally start to die their 50s and 60s which means economy has already benefited from their fruits of labour. If governments are looking to cut costs they should be encouraging everyone to take up smoking.

          • I don't see how it would be worse than the massive support of mindless gambling that our provincial governments all support. Unless the idea is to keep the poor gambling addicts alive long enough to rake back everyone's entire CPP.

          • That's true. Gambling ruins people financially which leaves the state with dependents. Smokers can be tossed in the ground when we are done with them.

          • At, TedTylerEzro, always good for a joke.

            VLT gambling disproportionately targets people who are already dependent on the State, stripping them of the pittance that they are already given simply to survive.

        • Three seconds on Google found a study, from 1991, pegging the costs of smoking at $15 billion a year for all of Canada. Imagine what the costs would be now, after 18 years of inflation. It even lists overall revenue from smoking higher than you do, at $7.8 billion a year, but still well bellow the cost of smoking.

          http://www.phac-aspc.gc.ca/publicat/cdic-mcc/18-1

          Yes, the average smoker dies earlier, but that alone doesn't mean they die cheaply. Smokers don't just keel over and die, they get treated for the various illnesses the accumulate from smoking up to their deaths, many of which are quite expensive to treat, especially if the treatments work and the patient lives. There are also many non-terminal medical issues associated with smoking, including numerous respiratory tract complications.

          Furthermore, if a smoker dies before retirement, they wind up losing the years during which people tend to earn the most money (and thus contribute the most in taxes – and let's face it, we rely on those earning more to fill government coffers), and fill leadership positions in their various corporations. Combine that with the, on average, lowered productivity and missed work hours, any paid leave associated with smoking-related problems, and the overall costs of smoking skyrocket.

          • That study, which I merely glanced at, estimates (in 1991 dollars) "smoking absenteeism" (i.e. lost hours) for women aged 18-24 at $10 million / year. I just don't find that credible at all. I mean, seriously, not at all.

          • Increased effects of asthma and respiratory illnesses are all well linked to smoking and would all affect women aged 18-24. Not to mention smoke breaks, which are often well above what non-smokers get and add up to a significant number of working hours lost.

            The report concluded $2 billion lost per year in worker absenteeism – $10 million is only 0.5% of that, from a segment of the population that was at that time no less than 3% of the total population and a far greater proportion of the working population.

            If you're going to dismiss this study's legitimacy, mind providing some reasoning why, above "I just don't believe it"?

          • No, Craig, I can't be bothered to explain why, and don't feel obliged to.

          • What do I look like, a social scientist?

            For starters, it's by "Murray J Kaiserman, Office of Tobacco Control, Health Protection Branch, Health Canada." That's like quoting a study of smoking by a tobacco company.

          • It's also published in a peer-reviewed journal. Studies of smoking don't make it into scientific journals and get the green light from other experts in the field if they're complete propaganda.

          • OK, you've convinced me to read it.

            " Was this excess payment a worthwhile investment for smokers? Raynauld and Vidal claim that smokers are aware that smoking is detrimental to their health and are willing to accept this risk. If this is true and if the $5.4 billion extra paid to government by smokers represents their total investment in their future health care costs, then smokers paid in an individual average of $800 in 1991 to help defray their future health care costs. This represents less than two nights in a hospital or about 26 visits to the doctor or about 34 prescriptions for medication. In contrast, it was estimated that the median cost per life saved from cancer was about $750,000 (US) in 1994."

            This is from the part where he's reckoning up, rather loosely, the money saved by smokers' dying prematurely. What he does not mention is that everybody's end-of-life costs are exceedingly expensive.

            There's a nice myth out there that if we all just exercise properly, don't smoke, avoid bungee-jumping, eat right, etc., we're all going to live to the ripe old age of 90 and peacefully slip off into that good night, unexpectedly. Actually we're almost all going to cost the system a small fortune in multiple hospital trips, treatments, care, drugs, equipment, and time. Not to mention the productivity lost from people visiting us, etc. The end will not be pretty.

            But we tell ourselves it will be stress-free, pretty, and above all cheap because cheapness is Virtue Number One in a society obsessed with money and absolutely terrified of death. What else but the absolute terror of death drives the anti-smoking zealots? Every report ends with those terrifying words, "if we don't cut back on smoking in our society, people will die." Well, news flash! Those people are going to die anyway! We are all going to die, each and every blessed one of us! And it is not a race to see who can live longest!

          • Actually, that's all addressed towards the end of the study –

            "Nevertheless, had there been a tobacco-free society, the smokers who had died in 1991 would have lived longer, on average, and ultimately would have cost society for such services as pensions, medical care and residential care. Except for pensions, these "avoided" costs were estimated to be about $1.5 billion. Thus, overall, smokers cost Canadian society just under $15 billion in 1991."

            Once again, there's a kicker for the numbers and that's in lost pensions. However, if we really consider knocking someone off before they can recoup their retirement benefits that they paid for with lost wages and what is essentially a tax in the form of CPP contributions as a valid financial win, I think we've lost our way as a society.

            Bottom line –
            a) There are greater health care costs associated with dying from smoking than living longer and dying from something else.
            b) Currently, the tax on smoking covers the differential in health care costs and then some.
            c) But, the economic cost of lost productivity is not covered in any meaningful way.
            d) There is a significant recoup in costs from unpaid retirement benefits – in this study, this is unspecified, but likely large, possible as great or greater than the ~$8 billion per year gap caused by a), b) and c).

            All I'm trying to get at here is that your claim that smokers, because of tobacco taxes, are contributing more than non-smokers is an unsubstantiated claim. If you've got a credible study that details the money saved by pensions after a smoker's death and indicates that it's money lost to smoking before a smoker's death, I'll concede the point. But, as it stands, you're not backing up your opinion with information, only loose personal observations (I'd be interested to know if you smoke, given your usual tact on these type of issues).

          • Here's a notorious Philips Morris study on the economic benefits of smoking in the Czech Republic. I have not read it as I find the subject of reckoning social beneifts on the basis of early cancer deaths rather distasteful; I believe the study was widely denounced for that reason. It seems to be fully sourced, however, and I leave it to you to peruse it if you will. I gather it concludes that we save money by killing people off with cigarettes.

            I concede, however, that you may be right, as I am even less inclined to trust Philip Morris on this subject than I am to trust the guy whose job it was to eradicate smoking.

            My real complaint is with your premise, however:

            "if we really consider knocking someone off before they can recoup their retirement benefits that they paid for with lost wages and what is essentially a tax in the form of CPP contributions as a valid financial win, I think we've lost our way as a society."

            And I think we've lost our way as a society if we reckon the costs and benefits of a deadly social ill in terms of a plus/minus financial loss or gain to the government. Which is precisely what the Ontario government is doing here. It is apparently putting a cash value on its citizens' lives. That seems to me to represent consumerism run absolutely amock, and I think the moral danger of that utilitarian attitude is far greater than the danger of (inevitable) death.

            I do, for the record, smoke (as of September 2009, anyway).

          • I agree, I don't think the cost-benefit analysis of a social ill should be in terms of financial loss/gain to the government (at least not exclusively), or even as I've implied, to the economy in general. My support for the rather overreaching tobacco tax is based mostly on a belief that it happens to be one of the most effective ways of reducing tobacco usage with the fewest reprecussions (compared to say, making tobacco illegal, which has many adverse side-effects). I just get nit-picky about details, so I took objection to your original statement, even though looking at the data now, is true, if only in a somewhat strict sense.

          • I dunno, I have to admit that I think banning the sales of tobacco would seriously cut down on the number of smokers. It would cost a bit in terms of law enforcement, and I suppose it would have the some of the same negative effects of the ban on marijuana (accustoming people to lawbreaking, for instance), but if the government really wanted to solve the problem of tobacco a few years of banning it would make all the difference: many (80%? 90%?) of the habitual smokers would stop, and a whole generation of teens would have serious trouble procuring smokes. After all, unlike marijuana, tobacco does not grow naturally in Canada and it would actually be far more expensive, I expect, if legal methods of distribution were blocked. But — and here's the reason things like this Ontario measure bug me so much — the government does not want tobacco sales to decline: it wants to hit the Laffer curve highpoint at which tax revenue is maximised: the max tax before smuggling and quitting reduce their take. And apparently they also want to sue, though I imagine this is just Premier Dad's way of appealing to the yoga fans and they don't expect to win. Well, it will be interesting to follow it.

          • There was a study done on this very topic. I don't have a link. But the study concluded that cigarette tax revenue exceeds health costs.

          • Actually, the study I've linked makes largely the same conclusion. The kicker, however, is the negative effect of lost productivity and increased worker absenteeism, which has a rather large economic cost.

            Again, I don't agree with this lawsuit – it has no legal precedent or justification, and if it succeeds, it opens a very dangerous door. That said, as every study I've come across indicates, the act of smoking leads, on average, to a greater detriment to the government's balance sheet and the economy in general than is compensated for by tax revenue and the existence of a tobacco industry, so I fully reject the claim that non-smokers are being subsidized by the tax revenue of smokers. Not to mention that a tobacco tax serves a public health function by financially discouraging smoking…

          • "The kicker, however, is the negative effect of lost productivity and increased worker absenteeism, which has a rather large economic cost."

            By that logic, if we would only just cut lunch hours in half, forbid coffee breaks, and have everyone work to 6pm, our society would be much better off.

            Your argument here reminds me that the anti-smoking campaign is, above all, a middle-class campaign. By far the largest proportion of smokers are found in the working class. They do not mind their smoke breaks, I can tell you — not only as smokers but as workers. From his glass-tower cubicle, the middle-class non-smoker may look down on the hoi polloi frolicing about in their tar-stained irresponsibility; but the time he wastes — sorry, "costs us all" — in worrying about his mortgage and checking his portfolio is rather analogous to the time his working class comrades spend in poisoning themselves, and has much the same effect.

          • Don't make this a class issue when it's not… I refused to be lectured to by a Standford PhD grad about the persecution of the working class after spending my summer making pizzas…

            There are plenty of working-class non-smokers who do not get the breaks their smoking coworkers do, just as there are many middle class smokers who take extra time away from their jobs to smoke. There is a great difference between a smoke break and a break where people happen to smoke. I am speaking only about average time lost working by smokers above and beyond what the average non-smoker does not work.

            Nicotine's effect on the nervous system is a short-term injection of endorphins, but it creates a reliance to maintain normal stimulation levels. In other words, smokers need to smoke just to keep up with the mental activity that everyone else has naturally. That means smoke breaks become like an extra maintenance in order to maintain productivity, in addition to the periods of rest everyone needs to function. Rest is essential to productivity – smoke breaks are not and smokers often get both.

  12. Craig is correct, if we factor in the absurd pensions for politicians, bureaucrats and civil servants……not to mention all the government waste and general screwups that have to be paid for. Ohh…and let's not forget all the funds needed for aboriginal negotiations…can't leave out the poor bottom feeding lawyers and chiefs.

  13. So, if the government can sue for money they are spending on health, can I sue for money they are not spending? Can they sue people who fall off their bikes? Can they sue people who take up high-risk activities like mountain climbing?
    And can we all sue for the damages done by the government's gambling operations, which is no different than what tobacco companies do?

  14. i always find it fascinating that people smoke…. it could be that when they read the horror stories of what tobacco does they think it can't happen to them or that they don't really care ..or perhaps they are hopelessly addicted

  15. and of course if you bother to notice, the study you quote was paid for by the government…..to reflect what they desired it to. Better the government should sue Macdonalds' et al for the obesity problem that plagues this country and is far more costly in the long run…and it's legal too. As a precurser to the upcoming comments…no one forced obese people to eat either…..and unlike cancer, they can see the oncoming result and do something about it before it becomes terminal. So, no false or politically correct empathy here.

    • Most studies are paid for, in one way or another, by the government. That's how research is done in this and most countries. Furthermore, the study indicates that the health care costs of smoking are entirely covered by tobacco taxes – if this was pure number-fudging to get a desired result, why would they openly and quickly concede that major point? My only reason for showing that study is to demonstrate that the economic costs of smoking to the entire economy (government and otherwise) are not fully compensated by smoking taxes or other benefits of smoking to the economy, so the idea that smokers are somehow subsidizing the rest of the population is an unsubstantiated claim.

      Either way, the suit makes little legal sense and I'm hoping they don't win – it opens up a lot of bad doors for future lawsuits and serves public interest only in a very arbitrary, rather hypocritical fashion.

  16. How do you know when a government wants to look like its doing something but hasn't got the slightest clue what its doing?

    See above.

  17. So will this set precident that now the Governments can sue the alcohol and other industries for their contributions as well? I don't think so it's always been picking on the little guy. The government does it all the time. They collect a large percentage in taxes from the sale of tobacco, and for the most part smokers have paid their dues it's not the smokers fault the Ontario and other Provincial Governments are not fiscally responsible with the taxes collected, maybe a salary cut for the MPP's, as well in the Federal Gov't do away with the Senate, they are pretty much defunct, as well lower the salary of the MP's. Make the Gov't Departments more accountable for the tax payers monies they are spending. It's time people get their heads out of the sand, it's not just smoking that causes cancer, remember that next time your filling up your SUV that you drive to work alone day after day, Maybe it's time you trade it in for a hybrid, the novelty of a status symbol is gone, and it's time to think of the enviroment.

  18. Well, sorry for the personalized comments, I just get a bit defensive when it's implied I'm somehow of higher status than others (elitist), coming from a largely rural family of farmers and housebuilders.

    Anyway, I think I see where you're coming from and I largely agree, though I hope my comments haven't come across as directly contradictory to what you're saying – they certainly weren't meant that way.

    Now, about getting some of those licorice breaks going…

    • Oh no, we're basically on the same page, and I thank you for educating me on productivity etc.

      Yeah, licorice. Why can't human ingenuity, not to mention the legion of pure chemistry graduates out there, invent some beguiling way of passing the time that would be a) non-addictive, b) non-fatal, c) sexy, d) fun, and e) non-hallucinogenic? Surely to God there's some way, and you'd expect the Invisible Hand, pointing to the billions in dollars tobacco brings in, would spur them on. I find it hard to believe that, with all the herbs and whatnot out there, we could find something. Ah well.

      • The biggest part of the lost productivity issue is not the extra breaks. It is the cost of individuals being off sick and associated costs of temporary help, training, lost (other) tax revenues, etc. and cost of losing what would be otherwise productive 'workers' from the economy (consider implications in the context of a considerably smaller workforce attempting to support the retiring baby boomers pensions and health needs going forward). Jack, you are no doubt right that there are all manners of ways to examine both the issue and how it is analysed, and I am not endorsing any in particular, except to say that when only the financial aspects are considered, Craig is correct. Like I said earlier, smoking is a bigger cost to the system than the tax revenue it generates.

        As for whether this is without precedent or not Craig. Again, with out endorsing the tact taken or dismissing it, I believe you are incorrect. BC and NB have both launched suits previously. the (legal) legitimacy of BC doing so was upheld by the SCC (see http://en.wikipedia.org/wiki/Imperial_Tobacco_v._… and the Master Settlement Agreement in US predates all of that (see http://en.wikipedia.org/wiki/Tobacco_Master_Settl

      • The biggest part of the lost productivity issue is not the extra breaks. It is the cost of individuals being off sick and associated costs of temporary help, training, lost (other) tax revenues, etc. and cost of losing what would be otherwise productive 'workers' from the economy (consider implications in the context of a considerably smaller workforce attempting to support the retiring baby boomers pensions and health needs going forward). Jack, you are no doubt right that there are all manners of ways to examine both the issue and how it is analysed, and I am not endorsing any in particular, except to say that when only the financial aspects are considered, Craig is correct. Like I said earlier, smoking is a bigger cost to the system than the tax revenue it generates.

        As for whether this is without precedent or not Craig. Again, with out endorsing the tact taken or dismissing it, I believe you are incorrect. BC and NB have both launched suits previously. the (legal) legitimacy of BC doing so was upheld by the SCC (see <a href="http://en.wikipedia.org/wiki/Imperial_Tobacco_v._…” target=”_blank”>http://en.wikipedia.org/wiki/Imperial_Tobacco_v._… and the Master Settlement Agreement in US predates all of that (see <a href="http://en.wikipedia.org/wiki/Tobacco_Master_Settl…” target=”_blank”>http://en.wikipedia.org/wiki/Tobacco_Master_Settl

  19. I agree that smokers, at least smokers who have become addicted since the majority of information on addiction and the dangers of smoking have made the choice to harm themselves. But what about the other smokers, many who became addicted back when smoking was cool and hip? What about the smokers who become addicted as kids/teens and then find themselves without any help or recourse?
    What about the families that have a single family member who smokes and then the rest of the family gets sick?
    I have never smoked a day in my life, but my parents did. I have spent thousands over the years dealing with my asthma, never having taken a puff myself. My mother died from heart disease. Yes, she chose to smoke, but does that mean that the tobacco companies are blameless? Does that mean that despite the fact that they blatantly lied for decades about the 'health benefits' of smoking and ruthlessly targeted young kids and teens before they knew better, that they should not be held accountable?

    Yes, the government certainly has issues, huge ones, but every government around right now does. Should we be ignoring the other contributors to our downfall simply because the guys in charge aren't rocket scientists? I think not! That is another fight altogether, a valid one, but one argument has nothing to do with the other. It's like saying your kindergarten teacher can't teach you to share because she cheats on her taxes. Yes, she shouldn't do that, but does that mean she can't teach or enforce a basic rule elsewhere in her life, no. The two issues are unrelated.

    So let's focus on the tobacco industry and start another discussion on government incompetency on another message board.

    • One of the most disgusting arguements today is the "I am addicted" one. There is no such thing as addiction, people do what they want because they like it and choose so. Regarding the advertising by the tobacco companies, do you believe what any interest tells you about their product whether it be a specific vehicle, food, toys etc. Companies taint their advertising in their favour, is this a surprise? Further more, the medical community has warned about the dangers of smoking for decades and anyone who claims they didn't know is full of crap, plain and simple. Governments suing big tobacco has to be the grandest form of hypocrisy ever since they could have outlawed the product at any time they so chose. If governments can sue tobacco companies then people should be able to sue the government for not only allowing the product to be sold but also from profiting from the sale.

  20. PLEASE STOP with the second hand smoke rhetoric and BS. Read the proper studies..ie: WHO 22 country, 30 year study that determined that 2nd hand smoke damage was almost non exsistent…dismissed because it was not politically correct. Now, another grop of useless "social engineers" are lining their pckets doing studies on 3rd hand smoke damage. GIVE ME A BREAK… it's just another makework project for the terminally incompetent and other assorted "hacks".

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