In lieu of its rising role as a health-care providers, CVS announced on Wednesday that it will stop selling cigarettes in all 7,600 of their stores.
Though CVS expects sales to take a big $2 billion annual sales hit, CVS looks at the move as a boost in appeal. One of the steps to bouncing back from the hit is by signing customers to smoking cessation programs, according to Reuters.
In the Reuters report, Larry Merlo, president and chief executive of CVS, said in a video statement that removing tobacco products from shelves will, "better serve out patients, clients and health-care providers, while positioning CVS Caremark for future growth as a health-care company."
According to the Washington Post, the CVS Caremark is a pharmacy benefits manager for corporations and the US government's Medicare program and the larger role pharmacies are taking by offering walk-in clinics and services like managing health plans.
In a CNN report, banning cigarettes make the clinics more appealing because they are now more aligned with the law with no tobacco-products presence in their stores.
The CNN report states that the law encourages doctors, hospitals and pharmacists to help patients become healthier and could come to more agreements with healthcare providers leading to a potential financial bonus if the pharmacy program helps reduce smoking rates in their patients.
Executives said that removing tobacco from the shelves would assist in striking profitable deals with hospitals and health insurers, appealing to those recently signed under the Affordable Care Act, according to a report by CNN.
Although the tobacco-products won't be completely off of CVS's shelves until Oct. 1, the financial blow was effective immediately.
According to Reuters, CVS shares fell 1 percent, while competing drug stores like Walgreen Co. and Rite Aid Corp, rose between 2 and 3.9 percent respectively. Shares of cigarette makers, like Lorillard Inc., Altria Group and Reynolds American, however all slipped since the announcement.
Despite the loss in revenue, CVS executives see there's more to gain from removing tobacco products from their locations, and look to continue to build upon their role as a health-care provider. Currently, CVS is the largest US pharmacy healthcare provider, with over 800 MinuteClinic locations, as stated in the Reuters report.
"I think CVS recognized that it was just paradoxical to be both a seller of deadly products and a health care proiders," US Centers for Disease Control and Prevention Direction Thomas Frieden said in the report.
Healthcare experts hope that CVS will serve as the example and other major drugstores will follow suit. Some US cities have already banned tobacco sales in pharmacies, according to CNN.
According to Washington Post, Walgreens spokesman Jim Cohn said that the company is already looking to making similar moves, evaluating "product" category to evaluate what exactly is in supply-and-demand at pharmacies. Cohn said that the company is evaluating what products their customers want, but at the same time education them and provide alternatives to feed that demand.
John Seffrin, American Cancer Society's chief executive said that smoking rates have boiled down to 50 percent, but there are still 43 million Americans that smoke daily.
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