CVS Caremark Snuffing Out Sale Of Tobacco

CVS Caremark yesterday announced a tobacco cessation program of its own, saying it will stop selling tobacco products in its 7,600 outlets by Oct. 1, which will result in a hit of about $2 billion in annual sales representing 1.6% of the company’s 2012 revenues. 

It is a “landmark decision” by the No. 2 drugstore chain, write Noam N. Levey and Tiffany Hsu in the Los Angeles Times. “No major retailer has taken steps to limit tobacco sales since Target announced in 1996 that it would stop selling tobacco products.”

“Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do…,” said CVS Caremark president and CEO Larry J. Merlo in a statement announcing the decision early yesterday. "Put simply, the sale of tobacco products is inconsistent with our purpose.”

“Leading medical organizations and professionals are applauding” the decision, reports CBS News’ Michelle Castillo. 

The company’s chief medical officer, Troyen A. Brennan, M.D., M.P.H., co-published an article in the Journal of the American Medical Association (JAMA) Viewpoint yesterday pointing out that “most pharmacy chains are retooling themselves as an integral part of the health care system” and find themselves treating conditions in their retail health clinics that are “exacerbated by smoking.”

In addition, CVS’ Caremark division “accounts for more than 60% of the company’s $123 billion revenue every year, serving as a pharmacy benefit manager, or PBM, that handles the prescription-drug benefits for insurers and large employers,” Timothy W. Martin and Mike Esterl report in a Wall Street Journal sidebar on the announcement.

The company says it hopes it is “setting an example” for other retailers but CNN Money’s Melanie Hinken reports that its major competitors, No. 1 Walgreens and Rite-Aid, will only say that they continue to evaluate the situation while pointing out that they also sell smoking cessation products. Other stores, such as Dollar General, cite tobacco’s impact on the bottom line.

“For retailers, tobacco products typically have far lower profit margins than other items, such as prepared foods or beverages,” Hinken writes. “But they help drive store traffic, industry analysts say.”

In an opinion piece in USA Today, Katrina Trinko asks why stop at cigarettes, which “are hardly the only ‘unhealthy’ item CVS sells. Take junk food …” Not to mention celebrity magazines. “Is it really healthy for us as a culture to read the latest gossip, the stories that detail the divorces and drug use and alcohol abuse of people we’ve never met,” she asks. 

Kathleen Sebelius, U.S. Secretary of Health and Human Services, said in a statement that the CVS decision was “an unprecedented step in the retail industry” and predicted it would have “considerable impact,” Stephanie Strom reports in the New York Times.

“The White House said it played no role in CVS’s move, a senior official said. But federal officials are working closely with companies and state-and-local governments on anti-tobacco initiatives, he added,” Martin and Esterl report in their Wall Street Journal piece.

“We’re creating momentum to de-normalize and de-glamorize what we now understand is an addictive drug,” said Howard Koh, assistant secretary for health at the Department of Health and Human Services. “Selling cigarettes in pharmacies has always represented a troubling paradox.”

On that note, a well-argued long-copy advertisement titled “E-Cigarettes Have Taken Us Back 50 Years” ran on the New York Times op-ed page yesterday. While applauding the use of e-cigarettes to wean current smokers off the use of tobacco, it attacked marketing designed to “produce nicotine addiction and smoking habits that lead to tobacco use.”

Pointing out that e-cigarette use among middle and high school students had doubled to 1.8 million users from 2011 to 2012, according to the Centers for Disease Control, David Timberlake, MD and Amy Lukowski, PsyD, of the National Jewish Health organization write: “Of special concern is the marketing of these products, which clearly has been developed to glamorize vaping and attract young people. This cannot be tolerated by society.” 

The Wall Street Journal’s Esterl pointed out in December that the e-cigarette industry is “unleashing a flurry of new TV ads to reach as many consumers as quickly as possible and cement their brands nationally” in the face of a possible ban by the Food and Drug Administration.

“Those who care about public health should be rejoicing that the private sector is not only placing anti-smoking advertising on the country’s largest stage, but that the ad actually offers smokers an appealing alternative to smoking,” write Jeff Stier of the National Center for Public Policy Research and Gregory Conley of the Heartland Institute in the New York Post, responding to the controversy over a Super Bowl e-cig ad. 

A PSA released on on the 50th anniversary of the landmark report linking smoking to chronic diseases “points out that 5.6 million children alive today will ultimately die early from smoking if we do not do more to reduce current smoking rates.”

The Food and Drug Administration, meanwhile, launched its first tobacco prevention campaign targeted at adolescents yesterday. The $115 million multimedia education campaign is called “The Real Cost” and aims to depict some side effects of smoking such as yellow teeth and wrinkled skin, reports the AP’s Michael Felberbaum reports

In one of two TV ads, teens “tear off a piece of their skin and use pliers to pull out a tooth in order to pay for their cigarettes,” writes Felberbaum.

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1 comment about "CVS Caremark Snuffing Out Sale Of Tobacco".
  1. Elsie Maio from SoulBrandingSM Institute/Humanity, Inc , February 6, 2014 at 9:16 a.m.
    A good example of using brand positioning as a management decision tool: CVS is aiming for a health-care/wellness lifestyle positioning.