Pharmacy chain CVS said Wednesday it will stop selling tobacco products at its 7,600 locations across the United States, a move that public health advocates hope will become a watershed and pressure other large drug store franchises to follow suit.
CVS executives said the decision could cost billions of dollars in revenue because cigarettes draw so many customers in their stores. But by jettisoning tobacco products, CVS can further define its pharmacies as full-fledged health-care providers and strike more profitable deals with hospitals and health insurers. CVS stores already are home to over 750 MinuteClinics, the country’s largest chain of pharmacy-based health clinics, offering flu shots and diagnosis of common ailments like ear infections and strep throat.
“An important and growing part of our business is the work we do with clients and health insurance plans,” CVS Pharmacy president Helena Foulkes said in an interview Tuesday. “As we thought about supporting their goals about improving outcomes and lowering costs, we believe that’s the future we’re looking towards. As we become more connected to their health-care work, this is an important decision for us to make.”
The company plans to phase out all tobacco sales by Oct. 1, and expects it could lose approximately $2 billion in annual revenue generated both by tobacco sales and other products purchased by the same shoppers. The pharmacy chain generates approximately $125 billion in revenue annually.
“CVS taking this step is a giant leap forward. From a purely commercial standpoint, it doesn’t make any sense,” said Robin Koval, president of the Legacy Foundation, a non-profit that focuses on ending smoking. “It’s a conversation that’s been going on for quite some time between public health groups and retailers, but progress has been very slow.”
President Obama — himself a former smoker — praised the CVS decision in a statement Wednesday morning, saying that the move by the pharmacy chain “sets powerful example” that 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.”
SOURCE: SARAH KLIFF
The Washington Post