TCORS: Enhancing the Economic Impact Evaluation Used in FDA’s Rules for Tobacco Products

Abstract

This study is Project 1 of the Tobacco Center of Regulatory Science (TCORS) based at Georgia State University, which works to produce new evidence to inform the U.S. Food and Drug Administration's economic impact assessments of future proposed rules concerning use of tobacco products.

As part of its rulemaking process, the U.S. Food and Drug Administration (FDA) is required to conduct an economic impact analysis that assesses the costs and benefits of proposed regulations and to select the option that maximizes the net economic benefit. There are numerous challenges inherent in conducting this type of analysis; in particular, we were concerned with the incompleteness of the data used to assess the various costs and benefits of proposed rules. The comments provided to FDA on the economic impact analysis contained in its proposed rule on required warnings for cigarette packages and advertisements highlighted these challenges. Economists and other tobacco control expert commentators raised significant concerns about the overall underestimation of benefits on the public health. These included specifically: offsetting a considerable share of the health and economic benefits from reductions in smoking with lost "consumer surplus" (the "pleasure" smokers lose when smoking falls); the estimated impact of graphic warning labels on cigarette smoking prevalence based on the comparison of recent prevalence trends in Canada and the U.S.; the exclusion of benefits resulting from reduced exposure to tobacco smoke pollution among nonsmokers and lower infant and child mortality resulting from maternal smoking during and after pregnancy; an under-appreciation of the short-term benefits from smoking cessation, including an immediate drop in heart attacks and low birth weight birth infants; and the time horizon used and discounting done in accounting for future benefits. While the final rule for the cigarette warning attempted to address some of these issues, prominent economists and tobacco control researchers continue to be concerned about the FDA's approach, arguing that continued use of this approach in the economic analysis of future proposed rules will lead to a dramatic underestimation of the net benefits of future proposed rules. Moreover, widespread adoption of a similar approach would have potentially serious implications for the economic analysis of other public policies aimed at reducing the health, economic, and social consequences of addictive behaviors.

The overarching aim of this project is to produce new evidence to inform the FDA's economic impact assessments of future proposed rules concerning use of tobacco products. This will be done through a combination of behavioral economics experiments with original data collection, acquisition of existing archival, survey, and commercial databases, and merged data analyses that address the issues discussed above, as well as others that emerge in coming years. We pursue three specific aims that together address most of the FDA's research priorities around understanding the role of economics and policies on tobacco use and perceptions providing complementary new information that will be integrated with Research Projects 2 and 3 of the Georgia State TCORS:

  1. Assess the impact of FDA regulatory actions and other tobacco control policies on tobacco use and related outcomes.
  2. Assess the impact of FDA regulatory actions and other tobacco control policies on the consumer surplus obtained by tobacco users. 
  3. Extend the range of costs and benefits including in assessing the economic impact of FDA regulatory actions.

Affiliated Center/Program

Principal investigator
Funding Agency

National Institute on Drug Abuse (to Georgia State University, Grant No. P50DA036128) and the U.S. Food and Drug Administration as one of the Tobacco Centers of Regulatory Science

 

Co-investigators
Richard M. Peck, PhD
Ce Shang, PhD
John A. Tauras, PhD

Start date
09/30/2013
End date
08/31/2018
Total award
$4,175,008
About this grant

This funding is subcontracted by Georgia State University.

PI of Parent Study
Michael P. Eriksen, SCD
Georgia State University

News releases


Researchers Get $19 Million Tobacco Grant (Georgia State press release, 9/19/2013)

FDA and NIH create first-of-kind Tobacco Centers of Regulatory Science (NIH press release, 9/19/2013)