The move will cost CVS about $2 billion in annual revenue. CVS to stop tobacco sales

CVS announced Wednesday morning that it will stop selling cigarettes and other tobacco products at its more than 7,600 U.S. stores — and challenged other major retailers to follow its groundbreaking move.

“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,” said Larry J. Merlo, president and CEO of CVS Caremark. “Put simply, the sale of tobacco products is inconsistent with our purpose.”


The move, which the company says will be phased in by Oct. 1., earned instant praise from public health advocates, health officials and even President Barack Obama, who said it sends a “powerful message.”

( Also on POLITICO: Obama on CVS: 'Powerful message')

During an appearance on “CBS This Morning,” Merlo said he hopes other retailers “look in the mirror” and make the same choice.

The company’s chief medical officer, physician Troyen Brennan, said the chain had decided it was time to act and hoped it would spur others to follow. He said the decision means the company will forfeit $1.5 billion a year in tobacco revenue; overall, CVS Caremark anticipates bringing in $130 billion this year.

In an essay published Wednesday morning in the Journal of the American Medical Association, Brennan wrote that “CVS Caremark believes that now is the time for retailers, perhaps spurred by policy makers, to eliminate sales of cigarettes and other tobacco products by institutions that also have pharmacies.”

( PHOTOS: 10 smokin’ photos)

“This action may not lead many people to stop smoking; smokers will probably simply go elsewhere to buy cigarettes. But if other retailers follow this lead, tobacco products will become much more difficult to obtain,” he noted.

The company is still considering whether to sell e-cigarettes, and it plans to continue selling alcohol products and snack foods — items that, “when taken in moderation or used occasionally, do not have the effect of the occasional use of tobacco products,” Merlo said on a conference call with reporters.

Merlo said the company has “offsets” that will make up for the multibillion-dollar loss in annual sales of tobacco and related products.

“There are a number of offsets that we have that we are confident with our financial outlook,” he said. He declined to give details but said that the decision positions the company for a growing role in the country’s health care system.

( Also on POLITICO: Walgreens still evaluating cigarette sales)

Shares of CVS Caremark were down 1.4 percent midmorning after the company’s announcement that it would stop selling tobacco products.

Smoking, the top cause of premature death, kills more than 480,000 people in the U.S. annually. Smoking rates have dropped, but the decrease has recently leveled off. Preventing kids from starting smoking remains a big public health challenge.

Tobacco companies were muted about the move. “It is up to retailers to decide if they are going to sell tobacco products,” said Brian May, a spokesman for Altria, the parent company of Philip Morris.

Walgreens, another major pharmacy chain, said it’s evaluating sales of tobacco products.

“We have been evaluating this product category for some time to balance the choices our customers expect from us, with their ongoing health needs,” the company said in a statement. “We will continue to evaluate the choice of products our customers want, while also helping to educate them and providing smoking cessation products and alternatives that help to reduce the demand for tobacco products.”

Rite Aid said in a statement that it sells its tobacco products “in accordance with federal, state and local laws.”

“Additionally, Rite Aid also sells a variety of smoking cessation products and provides additional resources, including our pharmacists, who are available to counsel people trying to stop smoking,” the company said. “We continually evaluate our product offering to ensure that it meets the needs and interests of our customers.”

CVS’s decision puts the company ahead of movements in a handful of states and municipalities that have taken legislative action to ban tobacco sales at pharmacies. In Massachusetts, for example, 55 communities — including Boston — had already banned the practice. San Francisco, too, banned it in 2010. Bills have been introduced to accomplish the same goal in a handful of other states.

Vinayak Jha, a George Washington University doctor and the founder of TobaccoFreeRX — an advocacy group dedicated to ending tobacco sales in pharmacies — said CVS’s decision could accelerate efforts at the state and local level to ban tobacco sales at pharmacies. But he said that process is still too slow and that it will take voluntary action by Walgreens and Rite Aid to spread the effort nationwide.

“I think that the other chains are well aware of the issue, and I think that through pressure, through continuing raising awareness, they will make a similar decision,” Jha said. “The public … needs to continue to keep the pressure on the other two large chains.”

It’s unclear, though, whether the decision will actually have much impact on the nation’s overall smoking rate. RBC Capital Markets analyst Nik Modi points out that three-quarters of all tobacco sales come from convenience stores, not drug stores, so patrons are likely to find another outlet.

Still, anti-smoking advocates were bullish about the move.

Matthew Myers, president of the Campaign for Tobacco-Free Kids, called it a “courageous and historic decision” that comes as public health officials and advocates outline new steps in stopping tobacco use as the country marks the 50th anniversary of the landmark surgeon general’s report on smoking.

“In making this decision, CVS has recognized that selling tobacco products — the No. 1 cause of preventable death — is fundamentally incompatible with its commitment to improving the health of its customers. We urge other pharmacies and indeed all retailers to quickly follow CVS’s example,” Myers said. The decision also drew praise from the American Cancer Society, the American Medical Association and other groups.

In a separate interview with JAMA, Brennan said the company couldn’t reconcile its growing health care business — including the introduction of primary care clinics at many of its stores — with its continued sale of tobacco products. “The paradox of selling tobacco products under the same roof just continued to grow,” he said.

Asked about other major retailers following suit, he noted that Target already declines to sell cigarettes and said he was hopeful other companies would join the effort.

Obama swiftly released a statement praising the decision. “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,” he said.

Health and Human Services Secretary Kathleen Sebelius said the move jibes with her call last month for businesses to help create a “tobacco-free generation.” “I hope others will follow their lead in this important new step to curtail tobacco use,” she said in a statement.

Since 2010, the American Pharmacists Association has encouraged retail pharmacies to cease sales of tobacco products. In a blog post this morning, the association’s CEO, Thomas Menighan, said he was “thrilled” by CVS’s decision and said it could help pharmacies win recognition as health care providers.

“I lost my father to cancer in 1986 when he was far too young. His lifelong smoking was most certainly the cause. I offer a serious congrats to CVS Caremark and all the pharmacists who have made similar moves in their pharmacies,” he said.

Jason Huffman contributed to this report.

This article tagged under: Health

Tobacco

Cigarettes

Politics