As of October 1, 2014, CVS/pharmacy stores will no longer sell tobacco products and cigarettes. CVS Caremark Corporation (NYSE: CVS) made the announcement Wednesday in a press release, where the company explained the driving forces behind the decision.
“Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health,” Larry J. Merlo, President and CEO of CVS Caremark stated. “Put simply, the sale of tobacco products is inconsistent with our purpose.”
The Office on Smoking and Health (or, OSH), an office within the Centers for Disease Control and Prevention, states that the leading cause of preventable death in the U.S. each year is tobacco use. In addition to publishing information on how to quit and programs to assist smokers, OSH compiles data on smoking’s adverse health effects. Compared to nonsmokers, mortality is three times higher for a person who has smoked, regardless of sex. Smoking increases the risk of death from cancers of the esophagus, larynx, lung, and oral cavity, which contribute to the higher mortality rate for smokers.
Even though smoking has declined from 42 percent of adults in 1965 to 18 percent today, it remains the leading cause of premature death in the U.S. Furthermore, an article published Wednesday in the Journal of the American Medical Association states that the smoking’s rate of reduction has plateaued; today, 42 million people continue to smoke, and smoking-related illnesses affect 16 million current and former smokers. The article by Troyen A. Brennan, MD, MPH and Steven A. Schroeder, MD calls out the role pharmacies play in perpetuating smoking. Recent studies have displayed that reducing the availability of tobacco products leads to a decline in use. However, by placing cigarettes and tobacco products in pharmacies, smoking becomes associated with health products.
“The new emphasis on restricting availability and reinforcing the social unacceptability of smoking casts a harsh light on pharmacies’ sale of cigarettes and other tobacco products. Advocates have long questioned the juxtaposition of the distribution of medications for promoting health with the sale of the single most deadly consumer product,” Brennan and Schroeder state. “The argument that pharmacies also sell tobacco-cessation products only heightens the paradox. This is primarily a U.S. problem: pharmacies in other developed countries do not sell cigarettes.”
CVS cited the article, and acknowledged the part it had played in contributing to the paradox. CVS says that its new policy brings it in-line with views taken by the American Medical Association, American Heart Association, American Cancer Society, American Lung Association, and American Pharmacists Association. Each group has voiced opinions against the sale of tobacco products in stores that also have pharmacies.
In the press release, CVS also revealed it will begin a program this spring to help people stop smoking. Resources and treatment will be available at CVS, MinuteClinic, and online. ”Every day, all across the country, customers and patients place their trust in our 26,000 pharmacists and nurse practitioners to serve their health care needs,” Helena B. Foulkes, President of CVS/pharmacy said. “Removing tobacco products from our stores is an important step in helping Americans to quit smoking and get healthy.”
CVS projects a loss of $2 billion in annual revenues as a result of no longer having tobacco consumers at its more than 7,600 CVS/pharmacy stores. This is an overall per share loss of 17 cents. Due to the timing of the announcement, CVS said the earnings per share loss for 2014 will be between 6 and 9 cents.
In the third-quarter of 2013, CVS reports that revenues for the three months ending September 30 increased year-over-year by 5.8 percent to reach $32 billion. During that same period, revenues from the Pharmacy Services Segment were up 7.8 percent from the previous year to $19.5 billion. The company will holds its 2013 fourth-quarter earnings call on February 11. CVS said it has identified potential opportunities to offset the impact on profits, but did not detail what they were in the press release.