February 5

CVS Caremark to stop selling tobacco products

The nation’s second-largest drugstore chain says it will phase out cigarettes, cigars and chewing tobacco by Oct. 1.

By Michael Felberbaum And Tom Murphy
The Associated Press

CVS Caremark is kicking the habit of selling tobacco products at its more than 7,600 drugstores nationwide as it focuses more on providing health care.

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Marlboro cigarettes are on display in a CVS store in Pittsburgh. The move to phase out cigarettes, cigars and chewing tobacco by Oct. 1 will cost the nation’s second-largest drugstore chain about $2 billion in annual revenue.

The Associated Press

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The nation’s second-largest drugstore chain said Wednesday that it will phase out cigarettes, cigars and chewing tobacco by Oct. 1, a move that will cost about $2 billion in annual revenue but won’t affect its 2014 earnings forecast. CVS Caremark leaders say removing tobacco will help them grow the company’s business of working with doctors, hospitals and other care providers to improve customers’ health.

CVS Caremark Corp. and other major drugstore chains have been adding clinics to their stores and expanding their health care focus for several years now. They’ve been preparing, in part, for an aging U.S. population that will need more care and for the millions of people who are expected to gain health insurance coverage under the federal health care overhaul.

Their pharmacists deliver flu shots and other immunizations, and their clinics also have been expanding the scope of care they deliver. They now help people manage chronic illnesses like high blood pressure and diabetes in addition to treating relatively minor problems like sinus infections.

CEO Larry Merlo noted that chronic conditions are made worse by smoking.

“We’ve come to the conclusion that cigarettes have no place in a setting where health care is being delivered,” he said.

The company declined to say what will take tobacco’s prominent shelf place behind cash registers at the front of its stores. CVS Caremark will test some items and may expand smoking cessation products that are already sold near cigarettes. Its drugstores do not sell electronic cigarettes, devices that heat a liquid nicotine solution and create a water vapor that users inhale.

CVS Caremark has been working to team up with hospital groups and doctor practices to help deliver and monitor patient care, and the presence of tobacco in its stores has made for some awkward conversations, Chief Medical Officer Dr. Troyen A. Brennan said.

“One of the first questions they ask us is, ‘Well, if you’re going to be part of the health care system, how can you continue to sell tobacco products?’” he said. “There’s really no good answer to that at all.”

The drugstore chain also plans to expand its smoking cessation efforts. That includes training its pharmacists to counsel people on how to quit smoking.

The company’s tobacco plan drew praise from President Barack Obama, who said in a statement that he applauded the news.

“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,” the president said.

Tobacco is responsible for about 480,000 deaths a year in the U.S., according to the Food and Drug Administration, which gained the authority to regulate tobacco products in 2009.

On its own, the CVS move won’t hurt cigarette companies much. Drugstores overall account for only 4 percent of cigarettes sold. That pales compared to gas stations, which generate nearly half of those sales. But it’s another in a long line of changes that have led cigarette sales to fall because of health concerns, higher prices and taxes, and social stigma.

The federal government has renewed efforts to reduce the death and disease caused by tobacco use on the heels of the 50th anniversary of the landmark 1964 surgeon general’s report that launched the anti-smoking movement. A new 980-page report issued last month by acting Surgeon General Boris Lushniak also urged new resolve to make the next generation smoke-free.

(Continued on page 2)

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