2014-02-06 P-D: “CVS makes waves with decision to stop selling tobacco”

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Doubtless this is primarily a business decision, with a view to the long term, but it’s a welcome one nonetheless, and I would hope other drugstores would follow suit. My wife and/or I visit the local Ferguson Walgreens typically once a week while doing the weekly shopping and it’s always bugged me to see the wall of tobacco products, albeit now moved behind the checkout counter. I view it as ethically wrong for a pharmacy to sell any nicotine-related item other than for smoking-cessation, even if it’s a “legal product,” as smokers and other smoking advocates are quick to remind us.

I recall not so many years ago when there was still smoking permitted in hospitals, even on the cancer floor, and they sold tobacco products in their gift shop as well. They argued it was both a service to patients and a way for volunteers to raise money. (I’m thinking particularly of Barnes-Jewish Hospital, where I once went to protest the practice to the head of PR, to no avail.)

This move by CVS may be a further sign of the times, albeit slow progress on what remains our number one health issue.

CVS makes waves with decision to stop selling tobacco
NATION’S NO. 2 DRUGSTORE CHAIN WILL PHASE OUT SALES OF CIGARETTES, CIGARS AND CHEWING TOBACCO BY OCT. 1.

By Kavita Kumar kkumar@post-dispatch.com 314-340-801741

Typical Walgreens checkout counter tobacco display. Note the fire extinguisher sign on the far left, and the blu electronic cigarette display far right. Photo: Martin Pion

Typical Walgreens checkout counter tobacco display. Note the fire extinguisher sign far left, and the “blu” electronic cigarette display far right.      Photo: Martin Pion


Public health advocates applauded CVS Caremark’s landmark announcement on Wednesday that it would end the sale of cigarettes and other tobacco products at its 7,600 drugstores nationwide by Oct. 1.
         The drugstore chain said it was taking the step to better align its business with its focus on health and wellness.
         Like other major drugstore chains, CVS has been moving away from being just a retail store and pharmacy in recent years to offering more health care services, including in-store clinics.
         Analysts said Wednesday that although the announcement created a lot of buzz, including praise from President Barack Obama, it probably wouldn’t influence consumers to rush to transfer their prescriptions to, or from, CVS.
         But it could help bolster the nation’s second-largest drugstore’s brand image in markets where it’s expanding, such as St. Louis, noted Judson Clark, a health care analyst with brokerage Edward Jones in Des Peres.
         “In a place like St. Louis where people are perhaps less familiar with CVS, this is going to be a positive” for the company, he said.
         CVS, which has had a local presence in the Metro East for years, has been steadily expanding on the Missouri side of the St. Louis region, opening at least 15 stores since 2009. More area stores are still in the works, including one at the site of long-vacant Linens ’N Things near the St. Louis Galleria.

RISING HEALTH NEEDS

One motivating factor for the company’s announcement has been its anticipation for an uptick in health care demand. That’s in part because of an aging U.S. population that will need more care in future years. It’s also the result of the millions of people who are expected to gain health insurance under the Affordable Care Act.
         As CVS has been working to team up with hospital groups and doctor practices to help deliver and monitor patient care, Dr. Troyen A. Brennan, the chain’s chief medical officer, said the presence of tobacco in its stores had made for some awkward conversations.
         “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.”
         CVS stores do not sell electronic cigarettes. The company is also expanding its smoking cessation efforts, including training its pharmacists to counsel people on how to quit.
         “We’ve come to the conclusion that cigarettes have no place in a setting where health care is being delivered,” said CVS CEO Larry Merlo, who noted that many of the chronic conditions their clinics treat are made worse by smoking.
         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.
         CVS’ decision, of course, is likely to put pressure on rivals, including slightly larger Walgreen Co., to follow suit.
         “If you’re Walgreens or Rite-Aid, you’ve got to think about it,” said Jason Long, a St. Louis area retail consultant. “This shines a light to say, ‘OK guys, really you think you should sell tobacco and liquor?’ ”
         In a statement, Walgreens said it would “continue to evaluate” the tobacco product category.
         But Long didn’t necessarily foresee a ripple effect on other retailers such as groceries with in-store pharmacies, because the latter make up a relatively smaller part of their overall business.
         Representatives from Schnuck Markets, Dierbergs Markets and Shop ’n Save did not respond to requests for comment.
         As for those who still want to buy tobacco, Long noted that CVS’ move won’t mean a shortage of places to buy it, with some dollar store chains recently adding cigarettes to their store offerings.
         So while smokers may have to get their fix elsewhere, he didn’t see CVS’ decision making a big difference in customers’ decisions as to where to pick up their health and beauty items.
         “At the end of the day, drugstores are a lot like grocery stores — you go to the closest one,” he said.
         But investors were a bit circumspect. CVS stock dropped about 1 percent to $65.44 in heavy volume by the end of trading on Wednesday. That was probably due in part to the company’s statement that the cessation of selling tobacco products will result in a loss of $2 billion in annual revenue. Walgreen, by contrast, topped the S&P 500’s gainers, rising $1.90, or 3.4 percent, to $57.85.
         Clark, of Edward Jones, thought the CVS dip was a bit of an overreaction by investors. He noted that $2 billion was just a small part of the company’s $123 billion in overall revenue. And he added that tobacco had a lower profit margin than other items in drugstores such as cosmetics.
         “I think it’s always refreshing when you see a company that is willing to sacrifice short-term profits for a long-term vision,” he added.
         On its own, CVS’ move won’t hurt cigarette companies much. Drugstores overall account for only 4 percent of cigarettes sold. That pales compared with 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.
         Several cities, including San Francisco, Boston and many smaller Massachusetts towns, have considered or passed bans on tobacco sales in stores with pharmacies. Other places such as New York City have sought to curb retail displays and promotions and raise the legal age at which someone can buy tobacco products.
         The share of Americans who smoke has fallen dramatically since 1970, to about 18 percent from nearly 40 percent. But the rate has stalled since about 2004, with about 44 million adults in the U.S. smoking cigarettes.
         Kevin Frazier has been frequenting the CVS on Lindell Boulevard in St. Louis to buy his cigarettes since it opened. He said the price of a pack of Mavericks was cheaper there than at some other outlets.
         But he wasn’t worried about the upcoming change. Frazier figured he would go to tobacco stores to get his cigarettes once the change went into effect. He added that the drugstore’s decision didn’t surprise him, with more and more places being smoke-free these days.
         “I should probably stop doing it myself,” he added.

The Associated Press contributed to this story.

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