Illegal market would dampen effects of menthol cigarette ban

ITHACA, N.Y. - Banning menthol cigarettes would spark a robust demand for illegal sales, likely blunting the U.S. Food and Drug Administration’s stated public health goal of getting people to quit smoking or transition to electronic cigarettes, Cornell University economists report in newly published research.

Experts in regulatory and consumer cigarette policy, Donald Kenkel and Alan Mathios, are the lead authors of the study, published in Health Economics. They previously submitted preliminary findings to the FDA in public comment about its proposed menthol prohibition.

“From a public health standpoint, our evidence suggests the benefits of the proposed prohibition of menthol cigarettes may not be as good as you think if the illegal market arises,” Kenkel said. “But an illegal market may have additional unintended consequences, such as the potential for police violence in Black communities.”

Black Americans use menthols at higher rates (85% of Black smokers compared to 30% of white smokers). The 2014 police killing of Eric Garner is one high-profile incident that originated with an alleged sale of illegal cigarettes.

In a scenario with limited access to menthol e-cigarettes and cheap under-the-counter access to menthol cigarettes, demand would remain nearly as high as current levels, according to the research. In a best-case scenario, illegal demand would approach 60% of the status quo, with many smokers willing to buy them illegally from street sellers, contrary to the FDA’s expectations.

To investigate the potential for illegal markets, the scholars conducted an online survey known as a discrete choice experiment, commonly used in economics and marketing research, that asked participants to make hypothetical choices based on a realistic, market-like environment. Differing from prior work, choice sets included illegal market options.

Each of nearly 640 survey participants, all adult menthol smokers, made 12 choices conveying their intentions today and in six months, based on varying levels of menthol cigarette and e-cigarette legality and price.

Survey results and predictive models showed that under the proposed menthol ban:

• The fraction of smokers who attempted to quit would range from the existing rate of 8.8%, according to the Centers for Disease Control and Prevention, to nearly double that, depending on how prices and illegal markets evolved. Quitting would increase if prices rose and access was limited to street dealers, and fall slightly if prices dropped and illegal access expanded to retailers.
• Demand for illegal menthol cigarettes would be substantial and well above previous estimates reviewed by the FDA – as high as 69% to 100% of current levels if menthol e-cigarettes were also illegal or denied FDA authorization. The ranges would drop by about 10 percentage points if menthol e-cigarettes were legal and available. The FDA to date has authorized only one manufacturer to sell menthol e-cigarettes, out of concern about youth uptake.

“We believe strongly that there would be a large illegal market in menthol cigarettes,” Mathios said. “The larger that market is, the more it would blunt the intended public health benefit of having people quit or move to e-cigarettes.”

The research was funded by a grant from the nonprofit Global Action to End Smoking, which was not involved in the research.

For additional information, read this Cornell Chronicle story.

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