Tobacco Industry Promotions and Pricing After Tax Increases: An Analysis of Internal Industry Documents

Background: Increasing tobacco taxes, and through them, prices, is an effective public health strategy to decrease tobacco use. The tobacco industry has developed multiple promotional strategies to undercut these effects; this study assessed promotions directed to wholesalers and retailers and manufacturer price changes that blunt the effects of tax and price increases. Methods: We reviewed tobacco industry documents and contemporaneous research literature dated 1987 to 2016 to identify the nature, extent, and effectiveness of tobacco industry promotions and price changes used after state-level tobacco tax increases. Results: Tobacco companies have created promotions to reduce the effectiveness of tobacco tax increases by encouraging established users to purchase tobacco in lower-tax jurisdictions and sometimes lowering manufacturer pricing to "undershift" smaller tax increases, so that tobacco prices increased by less than the amount of the tax. Conclusions: Policymakers should address industry efforts to undercut an effective public health intervention through regulating minimum prices, limiting tobacco industry promotions, and by enacting tax increases that are large, immediate, and result in price increases.