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Why CVS Is Ready to Lose Billions and Stop Selling Cigarettes Why CVS Is Ready to Lose Billions and Stop Selling Cigarettes Why CVS Is Ready to Lose Billions and Stop Selling Cigarettes Why CVS Is Ready to Lose ...

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Health Care

Why CVS Is Ready to Lose Billions and Stop Selling Cigarettes

The retail juggernaut will stop selling cigarettes and other tobacco products beginning Oct. 1.

February 5, 2014

CVS Caremark will cease its sale of cigarettes and other tobacco products in all of its CVS/pharmacy stores by Oct. 1, the company announced Wednesday.

The behemoth retailer said it will take an annual hit of $2 billion in revenue due to its decision, a sizable sum that amounts to just 1.6 percent of the company's $125 billion average yearly haul.


"Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health," said Larry J. Merlo, president and CEO of CVS, in a statement. "Put simply, the sale of tobacco products is inconsistent with our purpose."

But this isn't just about public health. Already the decision is garnering heavy media coverage, which could serve to counteract the company's estimated revenue shortfall. The move, which some might see as long overdue at a one-stop shop that doubles as a convenience store and pharmacy, could be a savvy publicity coup that builds brand loyalty with certain demographics. That's especially true of the 67 percent of Americans who view smoking as either an extremely or a very serious problem for society.

Already Wednesday, Merlo appeared on CBS's This Morning to talk about the decision, and his store. "This decision really underscores the role that CVS is playing in our health care system," he told Charlie Rose. "There's a growing emphasis on healthy outcomes, managing chronic disease." Merlo also said that the $2 billion annual loss is part of his company's long-term growth strategy, and emphasized that "we're evolving into a health care company."

And it's personal. Merlo's father, he told CBS, was a smoker who died young from cancer. Merlo said he hasn't yet spoken with other major drugstore executives about the move.

The White House immediately praised the decision. President Obama, who has been a smoker, hailed it as a "powerful example" that could help millions of Americans quit smoking.

"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," Obama said.

The pharmacy will also undertake a national smoking-cessation program, Merlo said in a statement. The program will begin in the spring and include online resources as well as information and treatment at CVS pharmacies and MinuteClinics.

The announcement comes as efforts to curb tobacco use are again increasing nationwide. The 50th Annual Surgeon General's Report on Smoking and Tobacco, released last month, added several ailments to the roster of diseases caused by smoking.

The FDA announced a major antitobacco campaign Tuesday to prevent and reduce smoking among young people.

Health and Human Services Secretary Kathleen Sebelius joined the president in applauding the decision, calling it an "unprecedented step in the retail industry."

"We need an all-hands-on-deck effort to take tobacco products out of the hands of America's young generation, and to help those who are addicted to quit," she said in a statement. "Today's CVS Caremark announcement helps bring our country closer to achieving a tobacco-free generation."

CVS is the second-largest drugstore chain in the nation, behind Walgreens, which also sells tobacco products. Michael Polzin, a Walgreens spokesman, told the Wall Street Journal that the company has been "evaluating this product category for some time to balance the choices our customers expect from us, with their ongoing health needs."

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