Although the smoking rate has declined from nearly 45% in the 1960s, 18% of American adults continue to smoke.  Smoking imposes external costs through increased use of public health insurance, higher private health insurance premiums for both smokers and non-smokers, reduced labor market productivity, and exposure to secondhand smoke.  At the same time over 75% of smokers wish to quit, but only 2 to 3% of smokers obtain long-term abstinence annually.  This confluence of factors has motivated Federal, state, and local governments to implement a range of anti-smoking policies in efforts to reduce smoking and associated costs.  Two of the most commonly utilized policies are cigarette taxation and venue-specific smoking bans. 

A robust economic and public policy literature has examined the impact of anti-smoking policies on smoking outcomes (e.g., participation, cessation, cotinine levels).  Little work has focused on how these policies motivate smokers to quit, however.  Understanding how policies may induce cessation behaviors can shed light on the mechanisms through which policy changes may lead to changes in smoking outcomes.  One potentially important cessation behavior is utilization of smoking cessation pharmaceuticals.  Indeed, the clinical literature suggests that cessation attempts assisted by pharmaceuticals are more successful than unassisted attempts.

Utilization of smoking cessation pharmaceuticals is not without cost nor does their use guarantee cessation.  The monthly cost of Chantix (a drug we study here) is roughly $125.  Moreover, smoking cessation pharmaceuticals have side effects such as hallucinations, nausea, insomnia, and depression, and have one year effectiveness rates of less than 25%.  Thus, if policies induce utilization of smoking cessation pharmaceuticals without leading to successful cessation, these policies may lead to substantial reductions in consumer welfare for smokers.

We make use of proprietary data from IMS-Health to examine how two standard anti-smoking policies, cigarette taxes and smoking bans, influence utilization of smoking cessation pharmaceuticals.  Our IMS-Health data cover the universe of prescriptions for Zyban, Chantix, Wellbutrin, and generic buproprion administered between 1999 and 2012.  We employ standard state and year fixed effects regression models to estimate relationships.  Utilizing data drawn from the Tobacco Use Supplements to the Current Population Survey over the same period, we estimate comparable models of cessation attempts and successful cessation to provide descriptive evidence on whether utilization of these pharmaceutical products translates into successful cessation.  In extensions, we study how policy changes influence out-of-pocket expenditures on smoking cessation pharmaceutical products, heterogeneity by consumer characteristics, and changes in consumer welfare.

Our preliminary results suggest that increases in cigarette taxes and implementation of more restrictive venue-specific smoking bans may lead to increased demand for, and expenditures on, smoking cessation pharmaceuticals.  We find mixed evidence that these policies translate into successful cessation, however.  These findings have implications for public policies and broaden our understanding of consumer behavior in response to government regulation.