CVS to end tobacco sales in 2014

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Alex Paterson's picture
Kathleen Wilbur

On Wednesday, February 5, CVS Caremark announced a groundbreaking decision to halt all tobacco and cigarette sales by October 1, 2014. As a result, the company—which is the US’s second largest drugstore chain in overall sales—will lose an estimated $2 billion in sales.

The ban on the sale of tobacco products includes not only cigarettes but related products such as the nicotine gum many customers sometimes purchased. CVS never sold electronic cigarettes, the popular devices that deliver nicotine sans tobacco to smokers. According to the New York Times, the profit loss is only a “mere dent” in CVS’ overall $123 billion average annual sales.

The company, which has been trying to transition into more of a healthcare provider than simply a retail store, made a significant move in their latest direction when making the decision to halt tobacco sales. In recent years, CVS pharmacies have begun to offer an increasing amount of miniclinics and health advice to its customers.

“We have about 26,000 pharmacists and nurse practitioners helping patients manage chronic problems like high cholesterol, high blood pressure and heart disease, all of which are linked to smoking,” said Chief Executive Officer Larry J. Merlo, according to the New York Times. “We came to the decision that cigarettes and providing health care just don’t go together in the same setting.”

“Ending the sale of cigarettes and tobacco products at CVS/pharmacy is simply the right thing to do for the good of our customers and our company. The sale of tobacco products is inconsistent with our purpose—helping people on their path to better health,” the announcement on the company’s website reads.

According to the Washington Post, President Barack Obama, a former smoker himself, commended the company’s move away from tobacco and said it 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.”

CVS’ MinuteClinics, which are pharmacy-based health clinics, have also opened doors and contracts with hospitals health plans that create the possibility of providing primary care services on weekends and evenings when most doctor’s offices might be closed. Stopping the sale of cigarettes will increase the company’s chances of forming even more relationships and opportunities within the healthcare field.

Despite the strides made by this decision, however, on February 12 it was reported that CVS isn’t quite “quitting” tobacco entirely. According to USA Today, the company still has active connections to more than $17 million in investments in tobacco companies.

The stocks, offered to CVS employees in the chain’s 401(k) plan, are admittedly less than one percent of the overall $6 billion that is invested by more than 200,000 employees.

CVS and its 7,600 drugstores will become the first major pharmacy chain in the nation to stop selling cigarettes.
“We do not see this [tobacco sales ban] having a negative effect on our pharmacy business,” Merlo said.

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