* Joe Cahill has an interesting insight into the decision by CVS to stop selling cigarettes at its pharmacies. He calls it a “smart strategic play.” Here’s why…
CVS Caremark, which is based in Woonsocket, R.I., and Walgreen are working to position themselves as go-to partners for health care providers. But there’s a problem. Partnerships with drugstores require hospitals to get over their reservations about joining forces with purveyors of a chief cause of sickness and death. Cigarettes have been a drugstore staple for generations.
That just changed. Hospitals looking for a partner now can choose between a leading national chain that sells cigarettes and one that doesn’t. All other things being equal, I think hospitals will take the chain that doesn’t sell cigarettes.
CVS Caremark’s chief medical officer emphasized the strategic rationale in an interview yesterday with the Wall Street Journal. Troyen Brennan said cigarette sales often come up in discussions with potential hospital partners, adding, “They’re a little bit suspicious of us because we sell cigarettes.” Dropping smokes, he said, “gives us a competitive advantage because it shows our commitment to health care.” […]
President Barack Obama, U.S. Health and Human Services Secretary Kathleen Sebelius, the American Medical Association and the American Cancer Society all praised CVS yesterday, underscoring Walgreen’s growing isolation from the broader health care community on the issue. […]
Walgreen is in a tough spot. While it doesn’t break out sales numbers, cigarettes almost certainly mean more to the bottom line at Walgreen than they do at CVS Caremark, which also operates a large pharmacy benefit management business in addition to 7,600 drugstores.