CVS Will Stop Selling Cigarettes By October
(3BL/JustMeans) - Chain pharmacies are increasingly retooling themselves as health and wellness centers. There are several reasons why, including the Affordable Care Act’s expansion of access to health care coverage. Some chain pharmacies are now running retail health clinics. Over 1,600 such clinics are operated by CVS Caremark, Walgreens, Rite Aid and other chain stores. Some have questioned how pharmacies that offer health services can sell cigarettes which are linked to a slew of health problems, including lung cancer. CVS understands the paradox of selling cigarettes. The company announced recently that it will stop selling cigarettes and other tobacco products at all of its 7,600 stores across the U.S. by October 1, 2014.
This move makes the company, which has the largest retail health clinic system in the U.S. with over 800 MinuteClinic locations, the first national pharmacy chain to stop selling cigarettes. CVS is also launching a program to help consumers stop smoking. Larry J. Merlo, President and CEO, CVS Caremark describes the program in a statement as a “robust national smoking cessation program.” The program will be launched this spring and will provide information and treatment about quitting smoking at CVS pharmacies and MinuteClinics.
CVS estimates that not selling cigarettes and other tobacco products in its stores will cost the company $2 billion in revenues a year, or approximately 17 cents per share. The anticipated impact to this year’s earnings per share is six to nine cents per share. However, the decision is not expected to affect the company’s five-year financial projections. An opinion piece published last month in the Journal of the American Medical Association, co-authored by CVS Caremark Chief Medical Officer Troyen A. Brennan, stated that the “financial gain is outweighed by the paradox inherent in promoting health while contributing to tobacco-related deaths.”
Praise for the company’s decision came from a variety of organizations and people, including President Obama, a former smoker. In a statement, Obama congratulated CVS for deciding “to stop selling cigarettes and other tobacco products in its stores, and begin a national campaign to help millions of Americans quit smoking instead.” John R. Seffrin, Ph.D., CEO of the American Cancer Society, praised CVS for its decision, calling it an “important new development in the fight to save lives from the devastating effects of tobacco use.”
Cigarette sales have been decreasing in recent years, according to a study by Euromonitor International, published last fall. The study shows that retail volume sales of cigarettes decreased by four percent in 2012. Retail volume sales are expected to continue to decrease and post a negative compound annual growth rate (CAGR) of two percent from 2012 to 2017. Although cigarette sales have decreased, lung cancer and other smoking related problems still exist. More people in the U.S. die from lung cancer than any other form of cancer. Cigarette smoking causes about one in every five deaths in the U.S. every year. Secondhand smoke is also a problem. Over 440,000 people die from smoking, including 49,400 from secondhand smoke.