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WOONSOCKET, R.I. — In support of the health and well-being of its patients and customers, CVS Caremark announced on Wednesday that it will stop selling cigarettes and other tobacco products at its more than 7,600 CVS/pharmacy stores across the United States by Oct. 1, making CVS/pharmacy the first national pharmacy chain to take this step. It also will undertake a robust national smoking-cessation program that will launch in the spring.
"As the first national pharmacy chain to step up and make this change, this decision really underscores our role in the evolving healthcare marketplace," Larry Merlo, president and CEO of CVS Caremark, told reporters Wednesday morning. "Tobacco products have no place in a setting where healthcare is delivered." CVS Caremark will not extend its tobacco ban to other less-than-healthy products, however, as the chain will continue to sell salty snacks and chocolate, and beer and wine where applicable.
"When you look at — whether it's a bar of chocolate, a bag of chips, a glass of wine — those items taken in moderation or used occasionally do not have the [health impact] that the occasional use of tobacco does. There's nothing that's safe about tobacco," Merlo said.
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Coinciding with this announcement, a Journal of the American Medical Association Viewpoint article published Thursday morning details the importance of this decision in light of the expanding role of the pharmacy industry in health care delivery. The article is co-authored by Steven A. Schroeder, director, Smoking Cessation Leadership Center, University of California, San Francisco, and CVS Caremark chief medical officer Troyen Brennan.
"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," Merlo said. "Put simply, the sale of tobacco products is inconsistent with our purpose."
Merlo continued, "As the delivery of health care evolves with an emphasis on better health outcomes, reducing chronic disease and controlling costs, CVS Caremark is playing an expanded role in providing care through our pharmacists and nurse practitioners. The significant action we're taking today by removing tobacco products from our retail shelves further distinguishes us in how we are serving our patients, clients and healthcare providers and better positions us for continued growth in the evolving healthcare marketplace."
"This spring we'll launch a robust national smoking cessation program with the goal of helping millions of Americans quit smoking and get healthy," Helena Foulkes, president of CVS/pharmacy, told reporters. "As a retail pharmacy and a pharmacy benefit manager and a retail clinic, the tools we offer our patients and customers will be critical in helping them make smoking cessation a realistic choice for them," she said. "We have an opportunity to bring these programs to our clients and health plans as well. So part of our efforts this spring will be to introduce these smoking cessation programs to our clients."
The program is expected to include information and treatment on smoking cessation at CVS/pharmacy and MinuteClinic along with online resources. The program will be available broadly across all CVS/pharmacy and MinuteClinic locations and will offer additional programs for CVS Caremark PBM plan members to help them to quit smoking.
"Every day, all across the country, customers and patients place their trust in our 26,000 pharmacists and nurse practitioners to serve their healthcare needs," Foulkes said. "Removing tobacco products from our stores is an important step in helping Americans to quit smoking and get healthy."
In the JAMA Viewpoint published online Thursday morning, Brennan and co-author Schroeder wrote, "The paradox of cigarette sales in pharmacies has become even more relevant recently, in large part because of changes in the pharmacy industry. Most pharmacy chains are retooling themselves as an integral part of the healthcare system. They are offering more counseling by pharmacists, an array of wellness products and outreach to clinicians and healthcare centers. Perhaps more importantly, pharmacies are moving into the treatment arena, with the advent of retail health clinics. These retail clinics, originally designed to address common acute infections, are gearing up to work with primary care clinicians to assist in treating hypertension, hyperlipidemia and diabetes — all conditions exacerbated by smoking."
The move has generated broad support across many healthcare associations, including the American Lung Association, the American Heart Association, the American Pharmacists Association, the Campaign for Tobacco-Free Kids, Legacy and the Robert Wood Johnson Foundation. “Pharmacists are health care providers and we must commit to limiting access to products that are known to cause disease and poor health," stated Thomas Menighan, APhA EVP and CEO.
"CVS Caremark is continually looking for ways to promote health and reduce the burden of disease," Brennan said. "Stopping the sale of cigarettes and tobacco will make a significant difference in reducing the chronic illnesses associated with tobacco use."
Smoking is the leading cause of premature disease and death in the United States, with more than 480,000 deaths annually. While the prevalence of cigarette smoking has decreased from approximately 42% of adults in 1965 to 18% today, the rate of reduction in smoking prevalence has stalled in the past decade. More interventions, such as reducing the availability of cigarettes, are needed.
CVS Caremark's decision to stop selling tobacco products is consistent with the positions taken by the American Medical Association, American Heart Association, American Cancer Society, American Lung Association and American Pharmacists Association, which all have publicly opposed tobacco sales in retail outlets with pharmacies.
The company stated that its decision to exit the tobacco category does not affect the company's 2014 segment operating profit guidance, 2014 EPS guidance or the company's five-year financial projections provided at its Dec.18th Analyst Day. The company estimates that it will lose approximately $2 billion in revenues on an annual basis from the tobacco shopper, equating to approximately 17 cents per share. Given the anticipated timing for implementation of this change, the impact to 2014 earnings per share is expected to be in the range of 6 cents to 9 cents per share. The company has identified incremental opportunities that are expected to offset the profitability impact. This decision more closely aligns the company with its patients, clients and healthcare providers to improve health outcomes while controlling costs, and positions the company for continued growth.
"The $2 billion would represent about 3% of our earnings," Merlo told reporters Wednesday morning. "To be clear this is an investment in our future growth," he explained. "Everyday patients and customers are putting their trust in us to help them on their path to better health and removing tobacco products from our shelves is an important step that further enhances our company purposes and helps us to better meet the needs of healthcare providers and our customers."
But where will CVS' $2 billion in tobacco product sales go? Dollar store operators Dollar General and Family Dollar both introduced tobacco products into their stores in the past 18 months, which means they, along with the convenience store sector, may benefit the most from the CVS decision as their customers go somewhere else for their tobacco purchase, suggested Sterne Agee analyst Chuck Grom. "While we don't have any specific insights, it's probable that other drug store chains, such as Walgreens and Rite Aid, may follow the lead of CVS in removing tobacco to support the health and wellbeing of its customers. If such developments ultimately manifest - the potential comp life would only augment," Grom said.