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CVS to stop selling tobacco products, set to lose $2 bln

Published time: February 05, 2014 17:01
Near empty cigarette shelves are seen at a CVS store in New York February 4, 2014. (Reuters / Eric Thayer)

Near empty cigarette shelves are seen at a CVS store in New York February 4, 2014. (Reuters / Eric Thayer)

America’s second-largest drugstore chain announced on Wednesday that it will stop selling tobacco products in all its stores nationwide this year.

The decision by CVS Caremark will remove cigarettes, cigars, and chewing tobacco from the company's 7,600 stores by October 1, as it continues to expand its health care operations. CVS stated it will become the first national pharmacy chain to phase out tobacco products.

"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 CVS President and CEO Larry J. Merlo in a press release. "Put simply, the sale of tobacco products is inconsistent with our purpose."

According to USA Today, company executives see CVS becoming more of an alternative to the doctor’s office in the future – more than 800 "MinuteClinic" medical clinics have already been opened in stores nationwide – and the move to do away with tobacco sales was made not just to expand its business with doctors and other medical professionals, but also to eliminate the contradiction of being a health care operation that sells cigarettes.

"One of the first questions [medical groups] ask us is, 'Well, if you're going to be part of the health care system, how can you continue to sell tobacco products?'" CVS Chief Medical Officer Dr. Troyen Brennan told the Associated Press. "There's really no good answer to that at all."

Even President Barack Obama had something to say about the decision. He issued a statement describing the news as a positive step forward.

"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," Obama said.

The move also caused Health and Human Services Kathleen Sebelius to call on others to follow suit. Walmart and Walgreens both sell tobacco products at stores housing pharmacies, though it’s unclear whether they’ll stop anytime soon.

"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,” said Walgreens spokesman Jim Graham to CNN.

Although pharmacies are only responsible for 4 - 5 percent of all cigarette sales in the United States, the move won’t come without a cost. Tobacco sales at CVS account for roughly $1.5 billion in annual revenue, and the company expects to lose out on $2 billion in sales a year as a result, since smokers would often buy other products along with cigarettes.

Some cities, meanwhile, aren’t waiting for drugstores to take action. San Francisco and Boston have passed laws banning tobacco sales within pharmacies, and legal challenges to the initiatives were dismissed in court.

In addition to removing tobacco products, CVS stated it will launch a national program to help individuals quit smoking in the spring, which will include “information and treatment on smoking cessation at CVS/pharmacy and MinuteClinic along with online resources.”

While the percentage of those smoking has dropped over the last few decades, tobacco still kills about 480,000 Americans every year, according to the Food and Drug Administration.