Public health experts called the decision by the No. 2 U.S.
drugstore chain a precedent-setting step that could pressure other
stores to follow suit.
CVS, whose Caremark unit is a major pharmacy benefits manager for
corporations and the government Medicare program, believes the
decision will strengthen its position as a healthcare provider.
"I think it will put pressure on other retailers who want to be in
healthcare," said CVS Caremark Chief Medical Officer Dr. Troyen
Although some U.S. cities, including Boston and San Francisco,
already ban the sale of tobacco products in pharmacies, advocates
hope CVS' voluntary decision will have a ripple effect among other
Some retailers stopped selling cigarettes years ago: Target Corp
decided to drop them in 1996, while East Coast supermarket chain
Wegmans Food Markets did so in 2008.
Matthew Myers, president of the Campaign for Tobacco-Free Kids,
which advocates for tobacco control, said that CVS's announcement
could drive momentum for declining tobacco use.
Dr. Risa Lavizzo-Mourey, chief executive officer of the Robert Wood
Johnson Foundation, which focuses on public health, called CVS'
decision "a bold, precedent-setting move because it acknowledges
that pharmacies have become healthcare settings."
While headline grabbing, CVS said the move will not make a big dent
in its profits.
CVS said it will lose about $2 billion in annual sales and between 6
and 9 cents of profit per share this year. Analysts expect the
company to report 2014 revenue of $132.9 billion and a profit of
$4.47 per share, according to Thomson Reuters.
U.S. cigarette sales have fallen 31.3 percent between 2003 and 2013,
according to Euromonitor International.
The falling smoking rates, along with new competition in the last
two years from the low-cost Family Dollar Stores Inc and Dollar
General Corp chains, suggest shrinking prospects for tobacco product
sales at CVS. Dollar stores have far more locations and offer goods
at lower prices.
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Although adult smoking rates have fallen from 43 percent of
Americans in 1965 to the current 18 percent, smoking remains the
leading cause of preventable death in the United States, killing
more than 480,000 people each year.
Last month, the American Lung Association and other advocacy
organizations called on political leaders to commit to cutting
smoking rates to less than 10 percent of the population in a decade
and to protect all Americans from secondhand smoke within five
FOCUS ON HEALTHCARE
The CVS decision comes on the heels of several recent deals
bolstering CVS Caremark's position in the healthcare market.
CVS in December said it expected its pharmacy benefit manager
revenues to rise between 7.25 percent and 8.5 percent in 2014,
easily outpacing growth of 2 percent to 3.25 percent in its retail
In December, CVS and pharmaceutical distributor Cardinal Health Inc
announced a 10-year agreement to form the largest generic drug
sourcing operation in the United States. A month earlier it said it
was buying Coram LLC, Apria Healthcare Group Inc's specialty
infusion services business unit.
CVS executives said the company will replace some of lost cigarette
sales through smoking cessation programs at its pharmacies and will
offer more programs to Caremark members. CVS said the programs will
be also be a key selling point as it tries to land more corporate
contracts this year.
(Reporting by Phil Wahba in New York and Julie Steenhuysen in
Chicago; editing by Jilian Mincer and Lisa Shumaker)
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