CVS to Stop Selling Cigarettes

Pharmacy Chain Says Tobacco Products Don’t Fit With Push as Health-Care Provider.

CVS, the nation’s second-largest pharmacy chain, said Wednesday it would stop selling all cigarettes and tobacco products nationwide by October, saying they have no place in a drugstore company that is trying to become more of a health-care provider.

The move is a bold and expensive one for CVS, a unit of CVS Caremark Corp. It reflects a major push by retail pharmacies away from simply dispensing drugs toward a more integrated role of providing basic health services to Americans—including millions of newly insured—amid an expected shortage of primary care doctors.

The news is another blow to the $100 billion tobacco industry that is wrestling with slumping sales, rising taxes, widening smoking bans and a resurgence of public-information campaigns on the perils of smoking.

For CVS, the move will be costly. The drugstore chain estimates it will forgo $2 billion in annual revenue from tobacco and other sundries as a result.

But CVS is counting on the strategy to give it a competitive edge over rival pharmacies in forging partnerships with hospitals, insurers and physician groups. These types of alliances are critical to drugstores like CVS and Walgreen Co. as they redefine themselves amid a downturn in prescription-drug sales.

CVS sees its future in making its in-store clinics a convenient health-care alternative to long waits at the doctor’s office, along with CVS pharmacists counseling patients. That goal was increasingly at odds with racks of cigarettes, cigars and chewing-tobacco residing behind the cashier’s counter, said Larry Merlo, chief executive, in an interview.

The CVS move drew praise from the White House and other government officials. Health and Human Services Secretary Kathleen Sebelius called the CVS move “an unprecedented step in the retail industry.”

Pharmacies aren’t the first place consumers go to buy a pack of smokes. Of the nearly 290 billion cigarette sticks sold in the U.S. in 2012, 47.5% were purchased at gas stations, 21.1% in specialty tobacco stores and 15.9% in convenience stores, according to Euromonitor International. Pharmacies handled only 3.6% of volume.

CVS is launching this spring smoking cessation programs at its pharmacies and in-store clinics—in effect, trading smokers for those people wanting to quit.

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