Skip to main content
. 2014 Oct;104(10):1844–1850. doi: 10.2105/AJPH.2014.302069

TABLE 1—

Characteristics and Market Effects of Proposed Model Minimum Price Laws

Type of Minimum Price Law Description Characteristics and Potential Effect on Market
1. Flat rate minimum price Sets a specific floor price below which no tobacco product may be sold Would create a baseline minimum price, simplifying implementation and enforcement.Tobacco companies could continue to set their own retail prices as long as they are above the amount established by law. “High end” tobacco products would be unaffected by law.Requires automatic inflationary adjustments in the law or updates at regular intervals to keep pace with inflation.
2. Markup minimum price Requires high minimum percentage markup at the retail level from an identified baseline price (e.g., list price or wholesale price) Would not require adjustments for inflation.
Would create a distinct minimum price for each of the hundreds of brands of tobacco products on the market, and the minimum prices would change over time, complicating compliance and enforcement.Tobacco companies may be able to manipulate the base cost identified in the law to lower the minimum retail price.
3. Hybrid flat rate or markup law Requires high minimum percentage markup at the retail level and sets a specific price floor below which no tobacco product may be sold Would create both a baseline minimum price and a product-specific minimum price for each of the hundreds of brands of tobacco products above the baseline floor price.
As with the flat rate price alone, this approach requires inflationary adjustments.Tobacco companies still may be able to manipulate the base cost on which the markup is based to lower minimum price.