The Costs of Tobacco Use in Canada, 2012.

The Evolution of Cost Estimation Studies in Canada

The first comprehensive study of the costs of substance abuse (including tobacco use) was released in 1996 by the Canadian Centre on Substance Abuse, in collaboration with several federal and provincial organizations. The authors estimated the costs of tobacco use at $9.5 billion in Canada for the year 1992.^{Footnote 4} An updated 2006 report estimated the costs of tobacco use at $17 billion in Canada for the year 2002.^{Footnote 5}

Why Do We Need a New Cost Study?

The 2006 report provided the last and most comprehensive estimate of the costs of tobacco use in Canada. It has been a decade since the release of that report, and during this time new research and scientific evidence of the effects of smoking has been published. For example, the United States Surgeon General (USSG) 2014 report The Health Consequences of Smoking—50 Years of Progress made updated relative risk (RR) estimates available for smoking-attributable diseases and established a causal relationship between smoking and five additional diseases: age-related macular degeneration, diabetes mellitus, tuberculosis, liver cancer, and colorectal cancer.^{Footnote 6} This is in addition to the 23 health conditions already linked to smoking by the USSG and included in the 2006 report.

The Costs of Tobacco Use in Canada, 2012 provides an update of the mortality and costs of smoking in Canada and in all provinces and territories using current reference information and data from 2012. Smoking-attributable mortality (SAM) was calculated as a function of the smoking-attributable fraction and overall mortality for each respective disease by age group and sex. This updated report summarizes the number of deaths and the direct and indirect economic costs due to smoking.

A Word of Caution on Comparing Studies

Although both this report and the 2006 report attempt to quantify the impact of smoking, direct comparisons of the results are not always feasible. The current report used updated RR aggregated by different age groups, which does not lead to a straightforward comparison of SAM. The advent of new medical care procedures and their associated costs drove part of the increase in direct health care costs, though the extent of this could not be accurately quantified. Finally, the methodology used to estimate indirect costs differed between the reports, so the costs are not directly comparable.

Estimating the Costs of Tobacco Use

The following cost components have been included in this report: health care (hospital care, prescription drug costs, and physician care), tobacco control and law enforcement, research and prevention, fire damage, and indirect costs (due to short- and long-term disability and premature mortality).

Health Care Costs

Direct health care costs are the sum of private and public expenditures resulting from the treatment of smoking-attributable diseases. The total direct health care costs attributable to smoking in Canada were estimated at more than $6.5 billion in 2012. These costs were divided into three components, with hospital care expenditures representing the largest proportion of health care costs at $3.8 billion, followed by prescription drugs expenditure at $1.7 billion and physician care expenditures at $1.0 billion.

This study used a prevalence-based epidemiological approach to estimate smoking-attributable health care costs.^{Footnote 7} The smoking-attributable fraction (i.e., the proportion of a disease that can be attributed to smoking) was multiplied by the national health care expenditure to obtain the disease-specific health care costs attributable to smoking.

The Economic Burden of Illness in Canada, 2005–2008 (EBIC 2005–2008) data from the Public Health Agency of Canada were used as the source for disease-specific national health care expenditures.^{Footnote 8} EBIC 2005–2008 is a comprehensive cost-of-illness data repository that provides a breakdown of the burden of illness and injury by cost type, diagnostic category, age group and sex, and province or territory. It is the only comprehensive Canadian cost-of-illness source that provides comparable costing information for all major illnesses, including those that were directly related to smoking.

Tobacco Control and Law Enforcement Costs

Direct tobacco control costs were those normally associated with the development and delivery of tobacco control policy and programming at the federal, provincial, and territorial levels. Meanwhile, law enforcement costs were defined as those expenditures associated with policing, court costs, and corrections, including law enforcement costs to curb tobacco smuggling.

Total expenditures associated with federal, provincial, and territorial tobacco control and law enforcement in Canada were estimated at $122.0 million in 2012. Core tobacco control program funding by federal, provincial, and territorial governments was estimated at $84.4 million (or 69.2 per cent of total tobacco control and law enforcement costs), with the remaining $37.6 million spent on law enforcement.

Research, Prevention, and Fire Damage Costs

Outside of direct expenditures on tobacco control programs by federal, provincial, and territorial governments, additional research and prevention costs were estimated to be $10.7 million in 2012, and fire damage costs were estimated to be $74.4 million.

Indirect Costs

Indirect costs refer to the value of lost production due to inability to work, either because of short- or long-term disability or premature mortality. This report uses the human capital approach to estimate the value of foregone earnings (or lost production) over the lifetime of an individual who is no longer able to work, presuming the loss of income is a permanent loss to the economy.^{Footnote 9} The 2006 report employed a “hybrid approach”, which combined the human capital and friction cost methods.^{Footnote 10} Hence, the indirect cost estimates are not comparable between the two reports.

Total indirect costs due to smoking in 2012 were $9.5 billion. Premature mortality accounted for $2.5 billion of indirect costs, while short- and long-term disability accounted for $7 billion.

Costs of Smoking by Province and Territory

A breakdown of SAM, potential years of life lost (PYLL), and direct and indirect costs by province and territory are provided in Table 2. Not surprisingly, the SAM, PYLL, and direct and indirect costs were highest in Ontario and Quebec due to population size.

What the Results Tell Us About the Health Burden of Smoking in Canada

Total tobacco-attributable costs in Canada were $16.2 billion in 2012. Behind the dollar figure, however, there were over 45,000 Canadian deaths attributable to smoking in 2012, and these premature deaths resulted in nearly 600,000 potential years of life lost. In terms of the epidemiological results, SAM increased from 37,209 in 2002 to 45,464 in 2012 (a 22.2 per cent increase) and PYLL increased from 515,607 in 2002 to 599,390 in 2012 (or 16.2 per cent).

There are numerous reasons for these increases. First, evidence on the effects of smoking has evolved over the past decade, which resulted in higher SAM and more PYLL. Indeed, the 2006 report reflected 23 health conditions caused by cigarette smoking, while this report includes those same conditions plus five additional ones: age-related macular degeneration, diabetes mellitus, tuberculosis, liver cancer and colorectal cancer. Second, smoking rates and daily consumption of cigarettes were higher 30 to 50 years ago, and as the young smokers from that period have aged, chronic conditions due to their smoking have surfaced. For example, the RR and SAM for lung cancer and chronic obstructive pulmonary disease were higher in the 65 years and older age group than other age groups. While it is uncommon for smokers to have lung cancer in their 20’s, as they age they become more susceptible to smoking-attributable conditions, which increases SAM.

Another possible explanation for the increase in PYLL is the increase in average life expectancy in Canada, from 79.6 years in 2002 to 81.2 years in 2012. Assuming average age at death due to SAM remains the same, the rise in life expectancy means PYLL has also gone up. Additionally, because SAM was higher in Canada in 2012, it led to an increased number of deaths, which in turn increased PYLL.

What This Study Means for the Future

Although much progress has been made in tobacco control across the country, millions of Canadians continue to smoke. Based on the latest survey results from the Canadian Tobacco, Alcohol and Drugs Survey, more than 3.9 million Canadians were current smokers in 2015, including 2.8 million who reported smoking daily. Youth continue to experiment with tobacco, as almost one-fifth of grade 6 to 12 students (grade 6 to secondary V in Quebec) had tried smoking a cigarette in 2014–15.^{Footnote 11}

Despite a steady decline in the number of smokers in Canada, SAM and direct health costs were higher in 2012, compared with a decade ago. Demographics are expected to play a key role going forward: with Canada’s rapidly aging population, there is a possibility that SAM may continue to rise as it is based primarily on people who began smoking 30 to 50 years ago. Even among adults who quit smoking decades ago, the lingering effects of smoking on specific health conditions may eventually manifest themselves in the older age cohorts. Additionally, if a causal relationship between smoking and additional diseases is discovered, smoking-attributable costs are likely to increase.

Research and evidence on the impact of smoking on health has evolved since the last SAM estimate for Canada was published more than a decade ago. Understanding Canadian trends in smoking is vital to the effective development, implementation, and evaluation of national, provincial, and territorial strategies, policies, and programs. This study provides an updated estimate of the burden of disease that might be avoided through prevention and cessation of smoking. The findings in this report will help build the evidence base considered relevant to the design and delivery of tobacco policy and programs under a renewed tobacco control strategy across Canada.

Acknowledgements

The authors would like to sincerely thank Dr. Alan Diener and Dr. Sameer Rajbhandary from the Public Health Agency of Canada for providing disaggregated Economic Burden of Illness in Canada (EBIC) 2008 health care costs at no additional cost to The Conference Board of Canada. We thank you for your patience, time, and effort. The authors would also like to thank Jenny Santos for her research assistance. Finally, the authors would like to thank Erin Rutherford and John Stevenson from The Tobacco Control Directorate at Health Canada for their guidance and thorough reviews and feedback on this publication.

The findings and conclusions of this document are entirely those of The Conference Board of Canada, not of funders or reviewers. Any errors or omissions in fact or interpretation remain the sole responsibility of The Conference Board of Canada.

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