Doing the right thing first is seldom easy. CVS Caremark announced hat it would become the first national pharmacy chain to avoid selling cigarettes and other cigarettes and tobacco products altogether. The company’s chief executive, Larry J. Merlo, said “We came to the decision that cigarettes and providing health care just don’t go together within the same setting,” in accordance with the New York City Times.
It is a gutsy, principled and potentially expensive move. It’s especially gutsy, and controversial, to get a publicly traded company.
The first estimates are that this decision will definitely cost CVS Locations Near Me about $2 billion in sales, or about 17 cents per share of stock, annually. I suspect these estimates are most likely low. CVS may only sell $2 billion in cigarettes and tobacco products, although not many customers just purchase a pack of cigarettes once they go to the drugstore. After they are there, they probably pick up other things too. Maybe milk. Maybe candy. Maybe the prescriptions they have to counter the many ill effects of smoking.
CVS is increasingly moving toward providing more health services at their stores. The pharmacy chain has got the second largest variety of retail locations in the nation, 800 of which include “Minute Clinics” that offer basic take care of common ailments and safety measures like flu shots. Merlo has said CVS wants to add 700 more such clinics by 2017. The clear narrative CVS hopes to convey for the public is that it is a company less about selling assorted retail products and a lot more about meeting healthcare needs which do not require visiting the doctor.
I have undoubtedly that, as CVS says, companies dedicated to protecting health have no business within the tobacco business. A few will probably argue that they have no business in, say, the candy business either. I don’t buy that logic, though. Candy fails to inexorably poison us as tobacco does.
If CVS were a privately held company, the analysis could stop there. Private business people can do anything they want using their companies. They can elect to forego profit for principle.
A call like this is tougher for the directors and managers of any publicly traded enterprise like CVS. They have a fiduciary duty to shareholders, and this duty generally takes the form of maximizing the long-run price of the home – which is, the company – entrusted in their mind. CVS may argue that its long-run value is enhanced by standing on principle this way. It seems clear this argument will, in large part, concern positioning the company to take a more substantial share in the medical care dollar moving forward. The company’s leadership may also reason that standing on principle will probably draw some customers to them, even as they lose others.
Maybe that logic is sound, yet it is not likely to be very easy to prove. I am sure someone will file a lawsuit obliging CVS Customer Service Phone Number to prove it, too. Unfortunately for CVS’ directors and management team, the likely impact on revenue and customer traffic is far more easily quantified compared to projected and intangible benefits they presumably hope this decision can provide.
In the meantime, CVS is doubling down on its position. It will not only stop selling cigarettes and tobacco products completely by October, but it will launch a “robust national quitting smoking program” this spring, the La Times reported.
While many shareholders may be hard to conquer, CVS’ decision is drawing praise from health care professionals and antismoking groups. Kathleen Sebelius, secretary of Health insurance and Human Services, said in a statement, “Today’s CVS/Caremark announcement helps bring our country even closer to achieving a tobacco-free generation.” Dr. Risa Lavizzo-Mourey, president and chief executive officer of the Robert Wood Johnson Foundation, said of the decision, “CVS is clearly establishing a leadership position to make the country healthier and then in creating a culture of health.” (2) Such public endorsements will likely help CVS justify its choice, though they may not really enough alone to appease shareholders right away.
I don’t think CVS does wrong by doing the right thing. Even a public firm can lead by example, as well as the demonstration of a company inside the health care business making its customers’ health its chief business focus is really a powerful one. Time will zrfhfn if CVS’ shareholders will reap the rewards to be patient with this change. In every case, I think the position of CVS Hours Saturday – besides being ethically strong – has sufficient business justification that courts should refrain from second-guessing it. If shareholders are unhappy, they can elect a brand new board to pick new managers, or they can just sell their shares.
Congratulations to CVS on having the guts to go first. This nonsmoker, at least, is willing to walk an added block or two to show my appreciation through my purchases. The walking will be beneficial to me, too.