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Considering the ethics and economics of CVS stores ending tobacco sales

CVS, the nation’s second-largest drug store chain, has announced that it will stop selling tobacco products because they pose a conflict with the health mission of the business. Judy Woodruff gets reaction from Dr. Ronald Depinho of the M.D. Anderson Cancer Center and Stephanie Strom of The New York Times.

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    Today's announcement by CVS that it will stop selling tobacco products this fall resounded quickly and loudly in the world of business and public health. CVS, which has 7,600 stores nationwide and is creating more in-store health clinics, said that it will lose about $2 billion annually.

    But, in making the decision, the company's chief executive, Larry Merlo, said — quote — "We have come to the conclusion that cigarettes have no place in a setting where health care is being delivered."

    For more on the significance of this decision and what was behind it, we turn to Dr. Ronald DePinho. He's the president of the M.D. Anderson Cancer Center at the University of Texas. And Stephanie Strom, she's a reporter with The New York Times.

    Welcome to you both.

    Let me start with you, Dr. DePinho. How significant do you think a move this is?

  • DR. RONALD DEPINHO, M.D. Anderson Cancer Center:

    I think this is quite significant.

    In isolation, it may not have a specific impact, but it send a very strong message to all retailers that tobacco is a dangerous product. It extracts a very significant social, economic, toll on our society that is responsible for about 20 percent of deaths in the United States and about 30 percent of cancer deaths. So it's a very important problem.

    And I greatly applaud CVS' bold move in this direction. They have placed people before profits.


    Stephanie Strom, how long has CVS been thinking about doing this, and why do they say they're doing it?

  • STEPHANIE STROM, The New York Times:

    Well, it's really unclear, Judy, how long this has been going on internally in discussions.

    My own guess is that Larry Merlo, the CEO, who is himself a pharmacist, started with the company 20 years ago as a pharmacist, he may have been sort of thinking in this direction before he even got into the CEO's chair. And I suspect that they have thought about it long and hard and finally came to the conclusion that now is the time to do it.

    They are determined to become a health care services company, if you will, more so than just a retail drugstore chain. And they believe that this is one more step in their plan to evolve that way.


    Well, in connection with that, how much of a risk are they taking from a business standpoint?


    Well, you know, the company said that they would — it would reduce their sales by about $2 billion. That's not all cigarettes. That's cigarettes, plus the other things tobacco buyers might purchase at the same time they're buying their cigarettes.

    So, that's off the top line. They did estimate that, on an annual basis, it would cost them about 17 cents per share. So it will deal a blow to their profits, if they don't find a way to replace those revenues. They said that they would probably try to replace some of those revenues with a new smoking cessation program that physicians, care groups, hospitals, and others might refer their patients to, which would, of course, add revenues to CVS.

    But they were kind of unclear about that, and I think that's why the stock took a little bit of a hit today.


    Dr. DePinho, we know CVS has, what, about 7,600 stores around the country, but we're told there are something like 250,000 stores across this country where people can buy tobacco products.

    So how much of a dent is this really is going to make in the availability of cigarettes?


    Well, in isolation, it may not make that significant an impact in itself. But if it gains momentum, it will have an impact.

    Scientific literature has shown that if you reduce access to tobacco products, you actually reduce usage. So if this gains momentum, and other retailers, like Wal-Mart and others, also follow this very courageous path forward, it can have a significant impact on access to tobacco products and their use.


    So, Stephanie Strom, is it expected that these other stores that sell cigarettes, tobacco products are going to follow suit?


    Well, both Walgreens and Rite Aid today issued statements saying the they were always reevaluating the mix of products that they sell, and they would do what was best for their consumers by answering their consumers' demands.

    It is really unclear, I think, at this point whether others will follow suit. There will be, however, pressure on them, because, of course, health care advocates are going to use this as leverage.


    Well, let me…


    Also, I think…


    Yes, go ahead.


    … one point that might be worth making here is that when you have these signal events — look at what Mayor Bloomberg did in New York City when he took the courageous act to ban tobacco use, smoking in restaurants and other public places and bars and so on.

    That had a tremendous ripple effect across many other cities around the world, and other mayors, other legislative officials felt that they had the cover needed to also pursue because of the leadership of New York City in this regard. So, while in isolation, it may not be that impactful, symbolically, it may inspire and galvanize many others, particularly those in health care, such as other pharmacy chains and so on, to really take a step towards becoming involved in health care, as opposed to disease care.


    Well, speaking of that, Stephanie Strom, what does CVS do now in the way of health care, being a health care provider? And what more do they want to do?


    Well, CVS has gone further than almost anyone else in establishing these they things they call minute clinics, which are mini-clinics inside of their stores. They're typically staffed by nurses, physician's assistant, a nurse practitioner.

    And you can go in there, and if you have pink eye, they can tell you, you have pink eye, and here's what you need to take for it. Also, their pharmacists are becoming much more advisers to people. The U.S. has lost a great number of primary care physicians over the years.

    And so these kind of mini clinics in places like CVS are stepping in to that role, if you have a cold, if you have strep throat…




    … you know, the basic medical ailments we all have from time to time.


    So, Dr. DePinho to you, finally, just quickly, you're the head of a major hospital, major cancer center. Do you see health care delivery changing in the way we hear CVS thinking about doing it?


    Well, if you look at the Affordable Care Act and the emphasis today, there is a major shift towards prevention and early detection of disease.

    In the case of cancer, about 50 percent of cancers are preventable, and tobacco plays a major role in that impact. So, I think the entire health care system is moving towards, as I mentioned before, more of a health care system, as opposed to a disease care system, where we can be far more interventive in disease, as opposed to dealing with the problems of advanced disease.


    Well, we want to thank you both, Dr. Ronald DePinho and Stephanie Strom.


    Thank you.

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