(AP/WBEN) While CVS Caremark Corp. is removing tobacco in an effort to focus more on being a health care provider, don't expect it or other companies with a similar focus to cut out other vices.
CVS chief medical officer, Dr. Troyen Brennan, said the company has no plans to remove alcohol.
"At this point, we're dealing with cigarettes, which are unalterably unhealthy for people and different from any other substance that people either drink or eat," he said.
And Morningstar analyst Vishnu Lekraj doesn't envision companies cutting out sugary or unhealthy foods, either.
Tobacco presents a different level of risk than those other products. He noted, for instance, that health insurers consider tobacco use when they price an insurance policy for an individual customer. Conversely, they don't consider whether that person drinks or eats poorly.
"Tobacco is one of the most dangerous products that is legal right now," he said. "So you can't necessarily say to your customers that you're trying to curb health care costs ... while at the same time you're selling cigarettes out of your stores."
CVS Caremark Corp., which has 7,600 stores nationwide, said it will lose about $2 billion in annual revenue by phasing out tobacco, but the move will not affect its 2014 earnings forecast. CVS notches about $1.5 billion annually in tobacco sales, but it expects a bigger hit because smokers often buy other products when they visit their stores. The company brought in more than $123 billion in total revenue in 2012.
|"I think that they definitely will lose the the smoker. I think that they may gain from other aspects of the business,"
- Prof Isaac Ehrlich, Economics, University at Buffalo
|" Not only is their decision promoting a healthy lifestyle, but New York spends $8.17 billion caring for people made sick from smoking. That's just an example that perhaps this decision is based not just on a healthy lifestyle but on financials,"
- Joanne Jacobs, American Cancer Society
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CVS Caremark Corp., which has 7,600 stores nationwide, said it will lose about $2 billion in annual revenue by phasing out tobacco, but the move will not affect its 2014 earnings forecast. CVS notches about $1.5 billion annually in tobacco sales, but it expects a bigger hit because smokers often buy other products when they visit their stores.
The company brought in more than $123 billion in total revenue in 2012 and will phase out cigarettes, cigars and chewing tobacco by Oct. 1 in its 7,600 stores nationwide
The move is the latest evidence of a big push in the drugstore industry that has been taking place over several years. Major drugstore chains have been adding in-store clinics and expanding their health care offerings. Their pharmacists deliver flu shots and other immunizations, and their clinics now manage chronic illnesses like high blood pressure and diabetes and treat relatively minor problems like sinus infections.
Among other things, they're preparing for increased health care demand. That's in part due to an aging U.S. population that will need more care in future years. It's also the result of the millions of people expected to gain health insurance under the health care overhaul.
As CVS has been working to team up with hospital groups and doctor practices to help deliver and monitor patient care, Brennan- the chain's chief Medical Officer said the presence of tobacco in its stores has made for some awkward conversations.
"One of the first questions they ask us is, `Well, if you're going to be part of the health care system, how can you continue to sell tobacco products?'" he said. "There's really no good answer to that at all."