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US pharmacy giant CVS stops cigarette sales, costing them $2 billion a year

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By Noel Young, Correspondent

February 5, 2014 | 3 min read

One of America’s biggest pharmacy chains will no longer sell tobacco products at its 7,600 stores by Oct. 1.

CVS makes it clear

The decision will cost CVS $2 billion in tobacco and tobacco-related sales a year, or 3% of overall sale.

The decision was praised by President Obama, himself a former smoker.

CVS officials say selling cigarettes while promoting wellness doesn't make sense.

"Selling tobacco is very inconsistent with being in that business," said Helena Foulkes, CVS's pharmacy president.

"We really thought about this decision as it relates to the future as a health company — it's good for customers and our company, in the long run."

Foulkes said CVS sees its future as an alternative to the doctor's surgery, with 26,000 pharmacists and nurse practitioners advising customers about how to control their high cholesterol, diabetes and high blood pressure.

"Any form of tobacco use makes those chronic conditions more difficult to deal with," she told USA Today. This is good for business and "the right thing to do."

President Obama — a former smoker — praised the CVS announcement. He said : "As one of the largest retailers and pharmacies in America, CVS Caremark sets a powerful example. “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."

FOOTNOTE: A CVS spokeswoman told the Drum the company does not sell e-cigarettes and "has no plans to do so." It does however sell smoker-cessation supplies.

CVS officials met tobacco company chiefs to explain the decision, knowing that it would affect the tobacco industry's bottom line, too.

"Obviously, you would think they would be disappointed about the decision," said Larry Merlo, CEO of CVS Caremark.

But he said they understood the rationale behind the decision. Morgan Stanley issued an analysis saying that CVS probably accounts for about 2% of industry sales.

"We do not believe that CVS's exit — or the potential exit of other pharmacy chains in the future — will reduce total sales," the statement reads.

Other pharmacies are expected to eventually follow suit.Some cities in California and Massachusetts have already banned tobacco sales at all pharmacies. CVS expects to lose about $2 billion in sales annually

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