The Benefits of Switching Smoking Cessation Drugs to Over-the-Counter Status

Keeler TE, Hu T, Keith A, Manning R, Marciniak MD, Ong M, Sung H-Y

This paper analyzes how society benefits from the 1996 US conversion of nicotine replacement drugs (nicotine patches and gum) from sale by prescription only to over-the-counter (OTC) availability. Benefits are estimated through interpretation of statistical demand functions for nicotine replacement drugs, effects of OTC conversion on sales of nicotine replacement drugs, effects of nicotine replacement drugs on total quits of cigarette smoking, effects of quits achieved on expected lifespan, and the estimated monetary value of longer lives from smoking cessation. All of this evidence is used to calculate the social benefits of the OTC conversion, with results provided in the framework of a benefit-cost analysis. To determine the demand for nicotine replacement drugs, the researchers used a multivariate analysis based on the economic demand model. Two separate demand models were used for nicotine gum and nicotine patches due to the difference in price between the two. This model required the formation of a demand equation and a price equation, both containing more than one variable that does not appear in the other equation. Data sources for this information include Pfizer, Inc., the Retail and Provider Perspective Audits of IMS Health, Inc., the Agricultural Outlook journal, CITIBASE, and the Producer Price Index series provided by the US Bureau of Labor Statistics. According to these researchers, OTC conversion raised nicotine gum consumption by 178 percent using the single-equation estimate, and 180 percent using the instrumental-variables estimate. In regards to the OTC conversion of nicotine patches, researchers report an increase in consumption of 93 percent using the single-equation estimate and an increase of 78 percent using the instrumental-variables estimate. To estimate the social benefits of OTC conversion, the researchers attempted to answer several questions (separately for nicotine gum and nicotine patches). First, among the extra sales of nicotine replacement drugs as a result of OTC conversion, how many quit attempts were there? Second, of those quit attempts, how many were successful? Third, of those who succeeded, how many would have quit anyway without the nicotine replacement products? Finally, after a net number of permanent quits achieved from extra sales of nicotine replacement drugs from OTC conversion is estimated, what are the estimated benefits in years of life saved and in monetary terms? These researchers report that OTC conversion of nicotine replacement drugs and their subsequent increased consumption (177-180% increase for nicotine gum and 78-92% increase for nicotine patches) generated annual net social benefits of $1.8-2 billion in a single year. Health Econ 2002 January;11:389-402. Return to Top