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CVS And NYC Set The Pace Versus Tobacco

It's hard to quit smoking. On average, it takes seven attempts to get off the coffin nails. I learned this listening to a panel on cigarette marketing this week. But I know, anecdotally, how hard it is. My brother has been trying for years. 

The D.C. panel, which was sponsored by Legacy, examined the role retail plays in perpetuating smoking. On hand was Larry Merlo, CEO of CVS, which made big news with its announcement earlier this year that since it is, after all, a pharmacy, it would no longer sell cancer sticks. 

The tobacco industry spends $9 billion a year on point of purchase (POP) marketing, I learned. That is, according to the panel, a million dollars an hour and about 90% of their ad budgets. In California, which has one of strongest anti-tobacco policies, there are four gas stations for every 10,000 people. There are 96 tobacco outlets for as many. 

One of the participants launched a slide show showing some choice examples: at Family Dollar, an M&M's stand-alone display, obviously meant to appeal to kids, adjacent to a display for cigarettes. And there was a photo of a Circle K storefront, on which a poster reassured CVS customers that the convenience store chain is the place to buy cigarettes consumers can no longer get at one of CVS' 7,700 stores (which as of Sept. 3 became tobacco free.) No surprise; cigarettes constitute 40% to half of convenience store revenue.

To be clear, CVS isn't just being saintly with its cigarette ban. Rather than the 40% that the convenience store players get, a pharmacy only makes 2% of its revenue on cigarettes. And what they lose will probably be made up by changes in how medical services are delivered that support a new, more clinical role.

Merlo said that the company now has 26,000 pharmacists and nurse practitioners in its retail system. "Our healthcare system will change more in the next 10 years than [it has] in the last 50, so we see an opportunity to play a bigger role." And he said selling tobacco is a barrier to making those changes because it makes it harder to make the deals. "It's a barrier to forming new partnerships for new delivery systems, whether for physicians or hospital systems. Cigarettes get in the way." 

That said, CVS will, in fact take an initial hit from killing cigarettes, per Merlo: the company stands to lose around $2 billion in annual revenue. "Nothing can make up for that." But he also said that short-term financial headwind is worth the long-term growth. 

If more pharmacies ought to follow CVS' lead, more states should follow New York’s. The city has been, or had been, an aggressive anti-smoking advertiser at retail with posters showing graphic images of what cigarettes can do to your body. The city got sued for that and lost. But its other efforts have paid dividends. And we're not even talking about the ban on smoking in restaurants and bars. It's now just very expensive to buy cigarettes here.

Elizabeth Kilgore, director of communications, chronic disease prevention and tobacco control at the NYC Department of Health, said the city has seen a 30% decline in smoking , and almost 50% decline in smoking among youth. "We see price as a driving force," she said. And the city has a Sensible Tobacco Enforcement policy: bans on all cigarette discounts. 

It now costs around $11 to buy a pack of cigarettes here. In Florida, where my brother chain smokes and can't/won't/doesn't want to quit, even though he was diagnosed with emphysema last year, a pack costs between $5 and $6. He could move here, but he gets tired just walking across the room.

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