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CVS Caremark to stop selling tobacco products

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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.

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 has more than 50 stores in Indianapolis and at least two dozen more in surrounding communities.

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 minor illnesses like sinus infections.

CEO Larry Merlo noted that conditions like those 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, CVS 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.

Brennan said the company does not plan to phase out alcohol sales.

"At this point, we're dealing with cigarettes, which are unalterably unhealthy for people and different from any other substance that people either drink or eat," he said.

The company's tobacco plan drew praise from President 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.

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 a smoke-free generation.

Health and Human Services Secretary Kathleen Sebelius called on others to follow the CVS Caremark example.

"We need an all-hands-on-deck effort to take tobacco products out of the hands of America's younger generation, and to help those who are addicted to quit," she said in a separate statement.

CVS Caremark competitor Walgreen Co., the nation's largest drugstore chain, sells tobacco, as does the world's largest retailer, Wal-Mart Stores Inc., which also operates pharmacies in its stores. But Target Corp., another major retailer with pharmacies in its stores, does not.

Most independent pharmacies also do not sell tobacco, according to the National Community Pharmacists Association.

Walgreen spokesman Michael Polzin said in an email his company has been evaluating tobacco products "for some time to balance the choices our customers expect from us, with their ongoing health needs." He said the company will continue to do this while also providing smoking cessation products.

Several cities, including San Francisco and Boston, have considered or passed bans on tobacco sales in stores with pharmacies. Other places like New York City have sought to curb retail displays and promotions and raise the legal age someone can buy tobacco products.

On the flip side, discounters such as Family Dollar have started selling tobacco over the last couple years. They note that smokers make more frequent stops at retailers in order to buy tobacco, and their customers are more likely to be tobacco users.

CVS notches about $1.5 billion annually in tobacco sales, but it expects the $2 billion drop in revenue from phasing out tobacco because smokers often buy other products when they visit their stores. The company brought in more than $123 billion in revenue in 2012 and ranks 13th on the 2013 Fortune 500 list of biggest U.S. companies.

While the company trails only Walgreen in terms of number of drugstores, it actually draws most of its revenue from its pharmacy benefits management, or PBM, business. PBMs run prescription drug plans for employers, insurers and other customers. They process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies.

CVS Caremark shares slipped 55 cents, to $65.56 each Wednesday, more than an hour before markets opened and after the company made its announcement.

U.S. retail sales of tobacco, which is comprised largely of cigarettes, were about $107.7 billion in 2012, according to market researcher Euromonitor International. Less than 4 percent of retail cigarette sales come from drugstores like CVS and Walgreens.

The share of Americans who smoke has fallen dramatically since 1970, from nearly 40 percent to about 18 percent. But the rate has stalled since about 2004, with about 44 million adults in the U.S. smoking cigarettes. It's unclear why it hasn't budged, but some market watchers have cited tobacco company discount coupons on cigarettes and a lack of funding for programs to discourage smoking or to help smokers quit.

Tobacco companies also have increasingly relied on their packaging and displays at retailers to build brand loyalty and grab consumers because it is one of the few advertising levers left to them after the government curbed their presence in magazines, billboards and TV.

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  • Tobacco Kills
    Tobacco use is the #1 cause of death and disease in the WORLD. Point, blank, period. This is a fact. Yes, alcohol CAN kill but tobacco use kills more people annually in the US than more than AIDS, alcohol, car accidents, illegal drugs, murders and suicides combined. It is a KNOWN fact that it kills 480,000 people per year. There is not 1 known health benefit to tobacco use, there is however known health benefits to alcohol when used in moderation. Tobacco, when used in moderation can still kill you or at minimum get you sick. Is obesity a problem in the US, absolutely but food is necessary to live, tobacco is not. Big difference.
  • Blah Blah Blah
    What a bunch of drivel. Comparing a business decision that will either succeed or fail by winning or losing customers to the Tea Party? Really? This is the epitome of what a free society is about! No one is forcing you to shop at CVS and uphold their values. You don't like them, then go shop at any of the thousands of other choices. Just like Chick-fil-a's choice not long ago. They are free to express their views. And just like the free American that I am, I am free to completely and utterly disagree with it and take my business elsewhere. I have smoked for almost 40 yrs and am a recovering alcoholic and addict. I fail to see how their decision to eliminate a product, and for logical reasons, is horrible because they did not include other products with it. Well they did not eliminate candy, soda, and other junk foods either. With the obesity issues in America! That kills thousands and costs the tax payers millions! How hypocritical of them! The horror! What a joke. Rather than criticizing them for not doing enough, why not applaud what seems like a rational decision. To me it would make more sense to then encourage them to eliminate alcohol and anything else that would be "hypocritical" for them to continue selling, rather than criticizing the decision they made.
  • Also
    While I completely agree with not selling cigarettes, to make a real difference in their customer's health, they should stop selling junk food and soft drinks. Obesity is causing an actual health crisis in this country far beyond tobacco or alcohol use.
  • Alcoholics still welcome
    CVS is hypocritical unless it stops selling alcohol too. Alcohol is more dangerous to society than a few smokers lighting up outside. Political correctness is lame; so is CVS.
  • Logic
    Everything is not a political issue. The link between cigarettes and cancer, emphysema and other health issues is indisputable.
  • Kudos!
    I have long marveled at the incongruity of a pharmacy chain that sold both life-prolonging drugs and instruments of death. CVS is to be congratulated for making that bold move. They get all our business, anyway, but it's great to know it's well-spent money!
  • Removing Cigarettes From CVS and not Alcohol
    There is a BIG difference and, in my opinion a good one to decide to not sell cigarettes and continue to sell alcohol. Have you ever had fumes from alcohol being blown in your nose in a public/private place? Have you been stopped on the street to bum a drink? How many fires has alcohol caused? I know drinking and driving causes many accidents but most offenders are usually fined, may lose their license, and some end up in jail. Is there a penalty for polluting someone breathing air, personal space? How many smokers get fines for anything? Both are bad but usually the consequences DAILY to others from smokers are far worst. I agree with CVS-start by getting rid of the cancer sticks!
  • Changing of the guard . .
    Coming soon to a Denver CVS: No tobacco, but plenty of marijuana cigarettes.
  • CVS/Walmart/Tea Party
    This is as transparent as their store is. They advocate freedom, but it must fall within the perimeters of THEIR definition of freedom. Didn't see any comment about yanking their massive alcohol section out of their stores. As a retired health care worker, I can probably cite more alcohol related diseases from that as tobacco. I think cigarettes are terrible, but it is my choice to not have it in my life. Hmm! Maybe, it's just because they are making a killing off of booze, but taking losses in their tobacco products. Sounds like CVS is the 'Tea Party' version of drug store chains. A consumer must think the way THEY think, and yes, we believe in our country, God(right winged conservative thinking,) but when their mounted televisions is playing Fox News in the background. If you think as we, then, absolutely, you have all of the freedoms that this country represents. Their claim of freedom and democracy is just as ridiculous as those of the Tea Party mentality. If you don't play ball by their rules, then you are un-American, liberal radicals and we will not play. What happened to all of our God given (Christian conservative God,)freedoms and rights? This is just as contradictory and as double standard as that of the Tea Party politicians in Washington, who essentially has frozen all of the progress we could have made in the last six years. The people spoke but since it didn't have their agenda, then they were willing to stall and sabotage everything that they could, to see that President Obama was simply a liberal minded figure head. I have never seen this country as polarized as it is now, and this is exactly why. If they truly believed in the rhetoric in they are trying to sell us, then the booze section should be yanked as well. But since CVS has 'chosen' what is best for us, the consumer's hands are tied, just as they did to President Obama. Unfortunately, we, as citizens of the United States should be able to decide what is good and not good for us, and no government, and now I guess, a drug store chain, has the right to impose their values on citizen living here.
  • Thumbs down CVS
    ...Great - and I will do the opposite - no business for CVS from me.
  • Bravo
    Bravo CVS! I normally go to Walgreens because I like the layout and feel of their stores better, but I will be doing all of my pharmacy shopping at CVS from now on!
  • removing tobacco? how about alcohol?
    I am not a smoker and do not condone smoking, however I cannot see how people criticize smoking so much and not alcohol. Alcohol causes many health problems also and it kills, just like cigarettes, does not only affect the one with the addiction but those around them. My father was an alcoholic, killed at the age of 41, my younger sister died from cirrosis of the liver at age 34 and my ex husband had seizures from alcohol. These are just a few examples of damage from alcoholism, never mind the innocent victims killed by intoxicated drivers and you are going to quit selling cigarettes and continue to sell alcohol in your stores? Really?
    • Kudos CVS!!!!
      Due to this decision, I will give CVS all the business I possibly can even if they cost bit more at times.

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