Plain Packaging: First Tobacco, Then Food?
Americans are overweight. Our obesity leads to common and serious
health problems, not to mention various other environmental and animal health
damage caused by the industrial food system, which impose externalized costs on
society. The market failures of our food system call for corrective government
regulation, similar to how government regulation counterbalanced unregulated
tobacco sales in the 20th century. In particular, governments should
adopt modified ‘plain packaging’ rules for high density foods.
I.
Lifestyle profoundly influences a person’s chances of encountering
particular health problems. Cigarette smokers are more likely to contract lung
cancer than non-smokers.[1]
Pilots have higher rates of skin cancer than the general population.[2]
Obesity is positively correlated with high calorie intake and low physical
activity, among other things.[3]
When our social systems cause widespread public health crises, we often
ask government to regulate the market and protect us from ourselves. People
skeptical of government intervention might label such regulation as ‘paternalistic,’
but the arguments in favor of the correction of market failures are strong. A
cogent discussion in favor of paternalistic ‘nudging’ was recently made by the
Nobel Prize winning behavioral economist Richard Thaler in Nudge: Improving
Decisions about Health, Wealth, and Happiness.
A widely accepted example of when government intervention is appropriate
comes from the tobacco-induced lung cancer crisis of the 20th
century. “In the last 100 years, lung cancer went from being a medical rarity
to the main cause of death from cancer in the world. This increase was achieved
by the introduction of smoking into our society during the first half of the 20th
century, when the proportion of male smokers was as high as 60%.”[4]
Smokers’ assessment of the benefits of smoking, e.g. short-term psychological,
is far outweighed by the costs of smoking, e.g. long-term health problems. The
tremendous size of the tobacco market failure is represented both by trillions
of dollars transferred from smokers to tobacco-company investors and by smokers’
associated medical costs, which, combined, externalize the health effects of smoking
on family, friends, and society.
Similarly, today, we are in the midst of an overweight and obesity
crisis. According to the Centers for Disease Control and Prevention 70% of
adults aged 20 and older are overweight and almost 40% are obese.[5]
Meanwhile, 10% of children aged 2-5 are obese, as are about 20% of children
aged 6-19.[6]
And the crisis is a relatively recent development. “Since 1980, the prevalence
of obesity has doubled in more than 70 countries and has continuously increased
in most other countries. Although the prevalence of obesity among children has
been lower than that among adults, the rate of increase in childhood obesity in
many countries has been greater than the rate of increase in adult obesity.”[7]
Due to obesity’s relatively recent appearance on the public health radar,
medical research is still grappling with its causes and effects, but a couple
things are clear.
First, overweight people have higher rates of cardiovascular disease
and are often killed by cardiovascular disease.[8]
At the same time, treatment of cardiovascular disease has improved greatly in
the past couple decades.[9]
This implies that obese people will live longer because of effective medical
treatment, and will incur higher costs associated with the longevity of their
cardiovascular problems. Medical costs and deaths from overweight and obese people
are analogous to the same costs suffered in relation to smokers’ lung cancer.
Once again, trillions of dollars are transferred from consumers to certain investors
and the health, environmental, and other social costs are externalized onto
society.
Second, “[i]ncreased availability, accessibility, and affordability of
energy-dense foods, along with intense marketing of such foods, could explain excess
energy intake and weight gain.”[10]
Stated more damningly, the “passive overconsumption of energy leading to
obesity is a predictable outcome of market economies predicated on
consumption-based growth.”[11]
At the same time, the “reduced opportunities for physical activity that have
followed urbanization and other changes in the built environment have also been
considered as potential drivers; however, these changes generally preceded the
global increase in obesity and are less likely to be major contributors.”[12]
While we might search for solutions on either side of the classic energy intake
and output balance, the remainder of this piece focuses on the energy intake
side, exploring ‘plain packaging’ as an option to quickly and directly reduce demand
for certain products in the food system. My assumption is that we can more
fruitfully search for solutions that change the food marketing system, with
almost immediate and visible consumption impacts, than we can change the built
environment’s influence peoples’ levels of physical activity.
II.
Government has many tools available to regulate market behavior. One
common tool is the Pigovian tax, named after English economist Arthur Pigou. Such
a tax is levied on any market activity that generates negative externalities.
Common examples include taxes on activities that create environmental pollution
and, relevant here, on products that increase public healthcare costs like
tobacco and sugary drinks.[13]
Another option is to impose advertising restrictions on economic activity. Both
regulatory tools have been applied to cigarette sales.[14]
Admittedly, some research finds that taxes have a larger short term effect on consumption
and reduces consumption directly, as opposed to advertising restrictions, which
only reduce consumption indirectly.[15]
However, both higher taxes and advertising restrictions have been found to be
effective and neither ‘nudge’ should be discarded as tools to combat the widespread
and growing obesity public health crisis.
In fact, advertising has a profound effect on people’s behavior. Many companies’
businesses are built on advertising’s ability to create perceived brand value
that exceeds the price surplus charged compared to competing products. “Longitudinal
studies consistently suggest that exposure to tobacco advertising and promotion
is associated with the likelihood that adolescents will start to smoke.”[16]
Food advertising has been found to “prime automatic eating behaviors,”[17]
as well as influence food choice.[18]
Advertising can be so effective as to differentiate products that are otherwise
exactly the same.[19]
Companies are acutely aware of these facts and spend hundreds of billions of
dollars every year to influence our behavior.[20]
The profound importance of advertising advanced to the forefront of
legal debate after Australia’s enactment of a ‘plain packaging’ law for tobacco
in 2012. Plain tobacco packaging looks like this:
Unsurprisingly, tobacco companies fought back. Philip Morris brought
cases against Australia in domestic court and under the Hong Kong-Australia
bilateral investment treaty. In the investment treaty case, the arbitrators
held that Philip Morris “was ‘abusing’ the investor-state arbitration process,”
and declined to hear the dispute.[21]
Philip Morris also lost its case in Australian courts.[22]
At the same time, tobacco companies also exerted influence on several countries,[23]
prompting those countries to bring a dispute to the World Trade Organization
claiming that Australia’s law is an illegal barrier to trade. “Although the WTO’s
final ruling [is not yet released], a confidential draft said Australia’s laws
were a legitimate public health measure.”[24]
The legal disputes centered on one question: what is the scope of a
company’s trademark rights? The key argument is presented in (very) brief.
Tobacco companies claim that trademarks for their branding (name, images,
colors, etc.) come with an implied ‘right to use’ those trademarks, and that
this right to use is infringed by the draconian Australian measures.[25]
The Australian government, and others, contend that there is no implied right
to use trademarks. To one author, what is most “surprising is that [assertions
of a positive right to use trademarks] are made despite the fact that internal
tobacco company documentation reveals that its private legal advice clearly
indicated 18 years ago that TRIPS provides no obstacle to plain packaging.”[26]
Obviously tobacco companies have, so far, failed to present their arguments
persuasively.
The important takeaway for our purposes is that, facing a public health
crisis with demonstrable causal links to specific consumptive behavior,
governments are permitted to rectify the market failure and ‘nudge’ us towards
healthier behavior. Plain packaging laws can, therefore, and should be enacted
for high density junk food. Plain packaging for high calorie foods can be
government’s response to the proven effectiveness of catchy food branding. Much
the same way that food branding reminds consumers of the enjoyable taste and
experience of eating the food packed inside, plain packaging prompts
prospective buyers to weigh the future costs, body fat and health issues, more
heavily.[27]
As advocated by Professor Wolfram Schultz, a University of Cambridge professor
who won the most lucrative prize in neuroscience for his work on the brain’s
reward system, “We should not advertise, propagate or encourage the unnecessary
ingestion of calories. There should be some way of regulating the desire to get
more calories. We don’t need these calories.”[28]
This is not to argue that fast food plain packaging need be as gruesome
as Australia’s tobacco plain packaging. If junk foods’ psychological addictive
effects are less than those of tobacco, the health consequences are less
severe, or there are other steps that the government might take to encourage
healthier lifestyles, then plain packaging requirements can be adjusted
accordingly. Any particular government must strike its own balance, but
companies’ freedom to propagate highly effective advertising for patently
unhealthy food must be balanced against the protection of public health.
[1] What Are the Risk Factors for Lung Cancer?
Centers for Disease Control and
Prevention, May 31, 2017.
[2]
Zack Lenox, Health Impacts of
Professional Flight, on file with the author (2009).
[3] A.M.
Prentice & S.A. Jebb, Fast foods,
energy density and obesity: a possible mechanistic link, World Obesity (Nov.
5, 2003).
[4]
Oscar Arrieta et al., Medical care costs
incurred by patients with smoking-related non-small cell lung cancer treated at
the National Cancer Institute of Mexico, 12(25) Tobacco Induced Diseases (2015).
[6]
Id.
[7] Health Effects of Overweight and Obesity in
195 Countries over 25 Years, 377 N Engl J Med 13–27 (Jul. 6, 2017).
[8]
Id.
[9]
Id.
[10]
Id.
[11]
Swinburn et al., The global obesity
pandemic: shaped by global drivers and local environments, 378 Lancet 804–14
(Aug. 27, 2011).
[12]
Id.
[13]
W.J. Baumol, On Taxation and the Control
of Externalities, 62(3) American Economic Review 307–22 (1972).
[14]
Wei Tan, The Effects of Taxes and
Advertising Restrictions on the Market Structure of the U.S. Cigarette Market,
28(3) Review of Industrial Organization 231–51 (2006).
[15]
Id.
[16]
Lovato, C. et al., Impact of tobacco
advertising and promotion on increasing adolescent smoking behaviours, US
National Library of Medicine, available at https://www.ncbi.nlm.nih.gov/pubmed/14583977.
[17]
Jennifer Harris et al., Priming Effects
of Television Food Advertising on Eating Behavior, 28(4) Health Psychol.
404–13 (2009).
[18]
Pimbucha Rusmevichientong et al., The
impact of food advertisements on changing eating behaviors: An experimental
study, 44 Food Policy 59–67 (Feb. 2014).
[19] Is There Really A Difference Between
Expensive Vodka And Cheap Vodka? Planet
Money. Aired Mar. 1, 2018.
[20] Media
advertising spending in the United States from 2015 to 2021 (in billion U.S.
dollars), Statista. Last visited
Mar. 22, 2018.
[21]
Australia-Hong Kong Investment Ruling Released in Plain Packaging Case, International Centre for Trade and Sustainable
Development, May 25, 2016.
[22]
Adam Gartrell, Philip Morris ordered to
pay Australia millions in costs for plain packaging case, The Sydney Morning Herald (Jul. 10,
2017).
[23]
Cuba, Honduras, Dominican Republic, and Indonesia.
[24]
Tom Miles & Martinne Geller, Australia wins landmark WTO tobacco packaging
case - Bloomberg, Reuters (May 4,
2017).
[25] See, e.g.,
Gervais & Frankel, Plain Packaging
and the Interpretation of the TRIPS Agreement, Vanderbilt J. of
Transnational Law (2013).
[26]
Davison, Plain Packaging of Tobacco and
the ‘Right’ to Use a Trade Mark (2012). See
also, Davison, The Legitimacy of
Plain Packaging under International Intellectual Property Law: Why there is no
Right to Use a Trademark under either the Paris Convention or the TRIPS
Agreement, in Mitchell A, Voon T and Liberman J (eds), Public Health and
Plain Packaging of Cigarettes: Legal Issues (Edward Elgar, Cheltenham, UK,
2012).
[27]
Sarah Danckert, Alcohol, junk food next plain packaging targets, lawyer warns, The Sydney Morning Herald (Jul. 26,
2015) (stating “the British Medical Journal published the results of 14
separate studies on the impact of plain packaging on the public indicating the
laws were producing positive public health outcomes”).
[28]
Ian Sample, Sell high calorie foods in plain packaging to beat obesity, says
Brain Prize winner, The Guardian
(Mar 6, 2017).
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