Tobacco state: why Japan was the perfect testing ground for Philip Morris

Inside a tastefully furnished shop in a fashionable part of Tokyo, a range of elegant pen-like devices stand in wooden display cases. The stripped-back decor gives the shop a quietly clinical feel and refreshments are on offer at a cafe point in the corner. Should you want to shop online, you can expect the help of a personal “care expert” who can find the products that “suit your taste preferences best”.

If this service echoes that of a private medical surgery, then there’s an irony to what’s being sold. The devices come under the banner of Iqos, the flagship heated tobacco range made by Philip Morris, one of the world’s “big four” tobacco companies. While PMI markets Iqos as a healthier alternative to smoking, some experts question the evidence that says heated tobacco is better for you than cigarettes.

Healthier or not, Iqos has become big business for Philip Morris. Last year it brought in more money for the company than Marlboro, the world’s biggest selling cigarette brand.

Japan was where Philip Morris launched Iqos, in 2014. Its success there formed a core part of the company’s global strategy – and the choice of country was no coincidence.

The company aimed to secure lower tax rates and indoor-use exemptions for Iqos in Japan, then to point to these successes when speaking to other regulators. Now a major TBIJ investigation can reveal that the company made secret six-figure payments to fund scientific research into heated tobacco – and sacked the employee who blew the whistle.

Philip Morris told TBIJ that the employee’s allegations were investigated and found to be without merit. It said his employment was “lawfully terminated” and his allegations “were not the basis of the termination”.

In Japan, tobacco companies keep a close relationship with the government. Japan Tobacco International (JTI) – another of Big Tobacco’s “big four” – is one-third owned by the Ministry of Finance. Its senior executives have regularly been appointed directly from government. And companies even enjoy legislative support in the form of the Tobacco Enterprise Law, which encourages the growth of the industry and curbs efforts to bring in tighter regulations.

A permissive approach to tobacco control trickles down from the top. Unlike in the UK and most of the US, some indoor smoking is permitted and there are no national restrictions on adverts or promotional offers for cigarettes. You can still pick up a packet of Marlboro from a vending machine.

The upshot is a booming tobacco industry that was worth $14.3bn in 2023, of which the government collected $6.4bn in tax.

Japanese law does not restrict tobacco companies from donating to politicians’ election campaigns. Lobbying laws are virtually nonexistent. And over the years, Japan’s more industry-friendly legislators have stifled effective action from anti-smoking campaigners.

In doing so they have been backed up by tax officials at the Ministry of Finance, which has supplied numerous executives to the JTI boardroom. For a full 27 years after the company’s privatisation in 1985, one or both of the president and chair were former Ministry of Finance officials.

Such connections are not confined to the Treasury. A 2017 Reuters report revealed that the former deputy minister for health met privately with Philip Morris Japan’s president of operations, who laid out the company’s pitch claiming that Iqos was less harmful than cigarettes.

The minister in question, Emiko Takagai, recently joined a parliamentary group that is lobbying for heated tobacco products to receive preferential tax treatment.

Iqos is advertised as a better alternative to smoking – part of PMI’s publicly stated ambition to “deliver a smoke-free future”. But the company’s own figures on this appear to vary wildly. In its 2023 annual report, the company said 73% of Iqos users had stopped smoking. In filings to American regulators in 2020, however, the company put the proportion of Japanese Iqos users who no longer smoke at just 14%.

Either way, Iqos has been a roaring success in Japan, where PMI’s heated tobacco products have been outselling its cigarettes since 2019. In 2023, the company’s heated tobacco products outsold cigarettes in Japan by more than double. But whether this should be seen as a public-health success, however, is debatable.

Each year, an estimated 129,000 Japanese people die of smoking-related illnesses. While the country has been slow to implement many of the tactics that are known to lower smoking rates – such as restrictions on advertising and packaging – it has provided fertile ground for Big Tobacco companies to market and sell their own cigarette alternatives. Perhaps this should be little surprise in a country where tobacco money is woven into the fabric of the state.