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CVS pulls last of tobacco items a month early, changes name

September 4, 2014 - 12:05am

CVS announced Wednesday that it has pulled all remaining cigarettes, cigars, smokeless tobacco and other tobacco products from each of its 7,700 pharmacies nationwide.

In doing so, the company, long known as CVS Caremark Corp., announced plans to rebrand as CVS Health, a clear nod to the broader role it hopes to play in the health care market.

The move to go tobacco-free, coming a month earlier than planned, carries a substantial risk to CVS’ bottom line, but it also holds the potential for a long-term competitive advantage over its peers, particularly Deerfield-based Walgreen Co., the nation’s largest pharmacy retailer.

“We believe this reflects our broader health care commitment,” said Larry Merlo, the company’s chief executive officer. “What this says about CVS is that we’re a pharmacy innovation company that is at the forefront of a changing health care landscape, and it helps us to play a bigger role in health care.”

The company, the first major pharmacy to undertake such a ban, first announced the plans in February.

CVS estimates that it will forgo about $1.5 billion in annual tobacco sales and an additional $500 million in associated purchases from people who visit pharmacies primarily to buy cigarettes or chewing tobacco.

But, Merlo said, getting out of tobacco clears up a “contradiction” and removes a “growing obstacle” for the company as it pushes deeper into health care.

Eliminating tobacco already has helped with some negotiations, he said.

CVS, based in Woonsocket, R.I., leads the nation with about 900 walk-in clinics, which are staffed to treat minor ailments, administer vaccines and help patients manage chronic illnesses like hypertension and diabetes.

It also has been seeking more partnerships with hospitals, health systems and physicians to manage the health care of groups of patients.

In some cases, such arrangements, which are being adopted by Medicare, Medicaid and private insurers, call for groups of providers to share in savings they’re able to produce by keeping patients healthier and their health care costs low.

Like CVS, Walgreen for years has faced criticism from health and advocacy groups over its policy of selling tobacco products. It also is transforming into a more health care-focused company.

Still, its policy on selling tobacco has not changed.

“We believe that if the goal is to truly reduce tobacco use in America, then the most effective thing retail pharmacies can do is address the root causes and help smokers quit,” Walgreen said in a statement. “A retail pharmacy ban on tobacco sales would have little to no significant impact on actually reducing the use of tobacco.”

Both Walgreen and CVS have smoking-cessation programs. Still, about 18 percent of American adults smoke, a number that hasn’t moved significantly in a decade.

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