CVS improves business, health without cigarettes

By Wesley Higgins, COLUMNIST
On February 12, 2014

 

By the end of this year, CVS pharmacy will discontinue cigarette sales. The company’s resolution could not only be an ethical choice, but a business savvy one.

CVS is the second largest pharmacy chain in the U.S., following Walgreens, with around 7,600 stores throughout the nation. In 2012, cigarettes sales contributed $1.5 billion to the overall revenue of $123 billion.

In other words, only 1.2 percent of CVS’ total earnings.

The lost profit could likely be replenished by other sources, but even if it couldn’t, there are worse things in life than an unhealthy stock return.

Tobacco is responsible for about 480,000 deaths a year in the U.S., according to the U.S. Food and Drug Administration. Cigarettes and health are a contradiction and a subsequent conflict of interest for a pharmacy.

It is ludicrous for a health store to sell tobacco.

It’s the equivalent of Hertz selling liquor, Muvico selling vuvuzelas or Toys “R” Us selling grenades.

Though common sense implies tobacco is unhealthy no matter where it’s sold, it would be unwise to underestimate subconscious predisposition for association. It could be confusing for a child to see a parent buy medicine and cigarettes from the same store.

It’s easy to be cynical and call CVS’ newfound sense of corporate social responsibility a public relations stunt. Yet, even if that’s the case, virtue out of self-interest is virtue nonetheless.

The exhaustive media coverage and subsequent positive public reaction will likely counterbalance short-term profit loss. Many health-conscious consumers these days are loyal to companies that preach well-being — health sells.

There is speculative evidence of this in CVS’ stock price, which outperformed the market average over the past week.

Yet, in the long term, one may assume CVS may lose money for two reasons.

The buzz will eventually dissipate and the decision to stop at a CVS will once again depend entirely on whether a U-Turn is needed to reach a Walgreens instead.

It is also reasonable to assume fewer cigarette sales will lead to fewer sick people, which will lead to fewer people buying medicine from CVS in general.

However, there are two flaws to this: it assumes smoking is a habit of convenience and that healthcare spending is static.

According to a Bloomberg report, Healthcare spending will rise to 20 percent of the U.S. GDP within the next decade as a result of an aging population and the Affordable Care Act.

As a response to doctors’ inability to meet higher demand, CVS will likely allocate its resources to open more in-store clinics to provide basic health services.

Healthcare providers and doctors may be more willing to refer patients to CVS pharmacies and clinics due to its improved image. The Affordable Care Act also offers financial incentives to providers who actively encourage a healthier lifestyle.

It’s been 50 years since the Surgeon General reported the risks of tobacco use. The consequential decline in smoking is not due to the report alone; it is because smoking is no longer considered the norm.

Americans no longer smoke in restaurants, physicians no longer smoke in front of patients and CVS no longer sells cigarette.

If CVS doesn’t become the martyr of Wall Street, all the better.

Wesley Higgins is a junior
majoring in mass communications.

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