CVS snuffs out tobacco sales in stores

The nation’s second-largest drugstore chain will phase out tobacco to focus on providing health care

The company's CEO said, "We've come to the conclusion that cigarettes have no place in a setting where health care is being delivered."
Joe Raedle/Getty Images

CVS Caremark is kicking the habit of selling tobacco products at its more than 7,600 stores nationwide as it focuses on providing health care, becoming the first U.S. pharmacy chain to take cigarettes off the shelf.

The nation's second-largest drugstore chain said Wednesday that it will phase out cigarettes, cigars and chewing tobacco by Oct. 1. CVS executives say removing tobacco will help them increase the company's business of working with doctors, hospitals and other care providers to improve customers' health.

CVS and other major drugstore chains have been adding clinics to their stores and expanding their health care focus for several years. They've been preparing, in part, for an aging U.S. population that will need more care and for the millions of people who are expected to gain health insurance coverage under the federal health care overhaul.

Their pharmacists deliver flu shots and other immunizations, and their clinics have also been expanding the scope of care they deliver. They now help people manage chronic conditions like high blood pressure and diabetes in addition to treating minor illnesses like sinus infections.

CEO Larry Merlo noted that such conditions are made worse by smoking.

"We've come to the conclusion that cigarettes have no place in a setting where health care is being delivered," he said.

The company declined to say what will take tobacco's prominent shelf place behind cash registers at the front of its stores, though it may expand smoking-cessation products that are already sold near cigarettes. Its drugstores do not sell electronic cigarettes, devices that heat a liquid nicotine solution and create a water vapor that users inhale.

Matthew Myers, president of the Campaign for Tobacco-Free Kids, which advocates for tobacco control, said that CVS' announcement could drive momentum for declining tobacco use.

The company's tobacco plan also drew praise from President Barack Obama.

"As one of the largest retailers and pharmacies in America, CVS Caremark sets a powerful example, and today's decision will help advance my administration's efforts to reduce tobacco-related deaths, cancer and heart disease, as well as bring down health care costs — ultimately saving lives and protecting untold numbers of families from pain and heartbreak for years to come," the president said in a statement.

A ripple effect?

Although some U.S. cities, including Boston and San Francisco, already ban the sale of tobacco in pharmacies, advocates hope CVS' voluntary decision will have a ripple effect among other pharmacy chains.

Some retailers stopped selling cigarettes years ago: Target decided to drop them in 1996, and the East Coast supermarket chain Wegmans did so in 2008.

CVS competitor Walgreens, the nation's largest drugstore chain, sells tobacco, as does the world's largest retailer, Walmart, which also operates pharmacies in its stores.

Most independent pharmacies do not sell tobacco, according to the National Community Pharmacists Association.

Walgreens spokesman Michael Polzin said in an email that his company has been evaluating tobacco products "for some time to balance the choices our customers expect from us, with their ongoing health needs." He said the company will continue to do this while also providing smoking-cessation products.

CVS notches about $1.5 billion annually in tobacco sales, but it expects a $2 billion drop in revenue from phasing out tobacco because smokers often buy other products when they visit its stores. However, the company said the decline wouldn’t affect its 2014 earnings forecast. CVS brought in more than $123 billion in revenue in 2012 and ranked 13th on the 2013 Fortune 500 list of biggest U.S. companies.

While the company trails only Walgreens in terms of number of drugstores, it draws most of its revenue from its pharmacy benefits management (PBM) business. PBMs run prescription drug plans for employers, insurers and other customers. They process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies.

Though the bottom line at CVS could suffer, big tobacco probably won't, according to a research note written by Bonnie Herzog, a senior equity research analyst at Wells Fargo Securities. 

She said Wednesday that while she was surprised by the company's move, smokers who would have bought cigarettes at CVS won’t stop buying them altogether. “Rather, they will simply go to other retailers,” she wrote, and tobacco manufacturers won’t feel the impact.

Tobacco is responsible for an estimated 480,000 deaths per year in the U.S., according to the Food and Drug Administration, which gained the authority to regulate tobacco products in 2009.

While adult smoking rates have fallen from 43 percent of Americans in 1965 to the current 18 percent, smoking remains the leading cause of preventable death in the United States.

The FDA announced Tuesday it will launch a $115 million multimedia education campaign starting next week that’s geared toward teenagers. Called “The Real Cost,” the advertisements will depict wrinkled skin on youthful faces and teenagers paying for cigarettes with their teeth, in an effort to show the nation's young people the health costs associated with smoking.

Al Jazeera and wire services

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