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In an attempt to promote health and to boost public image, the company CVS has decided to stop selling cigarettes at all of their stores. While this may seem like the socially responsible thing to do, it will mean that CVS will lose out on making a lot of money.
Read the following article that discusses CVS’s decision to stop selling cigarettes. Then, using the information from this text to support your answer, write an argumentative essay responding to the prompt below.
Do you feel that CVS has made the right decision in stopping the sale of cigarettes at all of their locations?
In your essay, be sure to
- establish a precise and credible position that responds appropriately to the prompt.
- explain your position with claim(s), reasons, and evidence from the texts.
- analyze explicit ideas/information from texts and interpret the authors’ meaning and purpose.
- refer to sources when appropriate.
- discuss and respond to counterclaim(s) or alternate claims and/or evidence.
- represent content from reading materials accurately.
- order ideas and information within and across paragraphs and uses appropriate transitional words/phrases in a way that allows the audience to follow the argument.
- include a conclusion that supports the position.
- use language and tone appropriate to the audience and purpose.
- demonstrate a command of standard English conventions.
CVS to Stop Selling Cigarettes:
Pharmacy Chain Says Tobacco Products Don't Fit With Push as Health-Care Provider
CVS, the nation's second-largest pharmacy chain, said Wednesday it would stop selling all cigarettes and tobacco products nationwide by October, saying they have no place in a drugstore company that is trying to become more of a health-care provider.
The move is a bold and expensive one for CVS. It reflects a major push by retail pharmacies away from simply dispensing drugs toward a more integrated role of providing basic health services to Americans—including millions of newly insured—amid an expected shortage of primary care doctors.
The news is another blow to the $100 billion tobacco industry that is wrestling with slumping sales, rising taxes, widening smoking bans and a resurgence of public-information campaigns on the perils of smoking.
For CVS, the move will be costly. The drugstore chain estimates it will forgo $2 billion in annual revenue from tobacco and other sundries as a result.
That hit on revenue will shave about six to nine cents a share off of operating earnings this year and about 17 cents annually from next year's earnings.
CVS had expected earnings of $4.36 to $4.50 a share this year, with analysts projecting revenue of around $133 billion.
But CVS is counting on the strategy to give it a competitive edge over rival pharmacies in forging partnerships with hospitals, insurers and physician groups. These types of alliances are critical to drugstores like CVS and Walgreen Co. as they redefine themselves amid a downturn in prescription-drug sales.
CVS sees its future in making its in-store clinics a convenient health-care alternative to long waits at the doctor's office, along with CVS pharmacists counseling patients. That goal was increasingly at odds with racks of cigarettes, cigars and chewing-tobacco residing behind the cashier's counter, said Larry Merlo, chief executive, in an interview.
"Cigarettes have no place in an environment where health care is being delivered," said Mr. Merlo, a 58-year-old former pharmacist who became CEO of CVS Caremark in 2011. "This is the right decision at the right time as we evolve from a drugstore into a health-care company."
CVS has more than two dozen relationships with health systems across the U.S., including Cleveland Clinic and Emory Healthcare in Atlanta. But in the initial discussions, doctors immediately ask how CVS can still sell tobacco products, said Troyen A. Brennan, CVS Caremark's chief medical officer. "They're a little bit suspicious of us because we sell cigarettes," Dr. Brennan said. "This move gives us a competitive advantage because it shows our commitment to health care."
CVS's move is expected to put pressure on its main rivals to adopt similar measures. Each of those competitors, like CVS, is wooing sick patients with the promise they could help them better manage their health—and make sure they stay on their prescription medications.
"It just doesn't make sense, if you exist to promote health and you sell one of the major causes of death in the U.S.," said Otis Brawley, chief medical officer at the American Cancer Society.
Michael Polzin, a Walgreen spokesman, said the company would continue to evaluate its sales of tobacco products. "We have been evaluating this product category for some time to balance the choices our customers expect from us, with their ongoing health needs," Mr. Polzin said.
U.S. cigarette industry volumes are already in a yearslong tailspin and slipped an estimated 4% in 2013. The adult smoking rate in 2012 stood at 18.1% in 2012, down from 42% in 1965, according to the government.
Tobacco still remains the No. 1 cause of preventable disease and death. New evidence suggests it is an even bigger killer than previously thought: A U.S. Surgeon General report last month linked smoking to 480,000 deaths annually, up from a previous estimate of 443,000 deaths. It attributed at least $289 billion in annual costs from smoking, including $150 billion for lost productivity and $130 billion in medical care.
"It is up to retailers to decide if they are going to sell tobacco products,'' said William Phelps, a spokesman at Marlboro cigarettes and boasts a roughly 50% share of the U.S. tobacco market.
"We value the long-term relationship we had with CVS and respect their commercial decision. We will work with them as they transition out of the tobacco category in the coming months," said David Howard, a spokesman at Camel cigarette maker of Newport cigarettes and the No. 3 player, declined to comment.
Shares of the three tobacco companies fell between 0.8% and 2.3% in trading Wednesday.
The CVS move drew praise from the White House and other government officials. Health and Human Services Secretary Kathleen Sebelius called the CVS move "an unprecedented step in the retail industry."
Federal, state and local regulators are stepping up anti-tobacco efforts. The Food and Drug Administration is launching a $115 million, yearlong media blitz including television advertisements next week targeting teenage smokers. The FDA is also considering curbs on menthol-flavored cigarettes and the White House last year proposed roughly doubling the federal excise tax on cigarettes.
Some municipalities have balked at the incongruous combination of pharmacies and cigarettes. Since 2008, San Francisco and Boston and more than a dozen towns in Massachusetts have banned retail pharmacies from selling tobacco products.
Lawmakers in several states including Colorado and Vermont want to raise the legal smoking age to 21 years from 18 years, following in the footsteps of New York City. Some states including Kentucky and Alabama are weighing tax increases. A pack of cigarettes in Chicago already has $6.16 in state and local taxes, up from, $3.66 less than two years ago.
Pharmacies aren't the first place consumers go to buy a pack of smokes. Of the nearly 290 billion cigarette sticks sold in the U.S. in 2012, 47.5% were purchased at gas stations, 21.1% in specialty tobacco stores and 15.9% in convenience stores, according to Euromonitor International. Pharmacies handled only 3.6% of volume.
Still, dropping tobacco products is a rare move by a big retailer. Target stopped selling cigarettes in 1996, saying they weren't profitable and were too costly to stock. In 2008, Wegmans Food Markets Inc., a northeast supermarket chain, dropped tobacco products too, as a way to promote healthy lifestyles for consumers.
But CVS, with 7,600 stores across the nation, is the largest company to make such a move and the first national player to do so for explicitly public health reasons.
CVS is launching this spring smoking cessation programs at its pharmacies and in-store clinics—in effect, trading smokers for those people wanting to quit. About 7 of 10 smokers indicate they want to quit, with about half attempting to stop every year, and opportunities exist, especially with health insurers, for partnerships, Dr. Brennan said.
CVS Stops Tobacco Sales Today, Changes Name To Reflect New Era
CVS, the giant drugstore chain that shocked the U.S. public health community and Wall Street with its decision earlier this year to remove tobacco products from its shelves by October, said cigarettes are officially no longer on store shelves a month ahead of schedule.
The move to remove tobacco products effective this morning coincides with a company decision to also change its corporate name to CVS Health (CVS), from CVS/Caremark Corp. to reflect “its broader health care commitment” and desire to change the future health of Americans.
When CVS first announced in February that it would end the sale of tobacco products at its stores effective October 1, chief executive officer Larry Merlo said it would cost the company about $2 billion in annual sales, or about 3 percent of company revenues.
Merlo said in an interview with Forbes that the loss of those sales continues and “will cycle through the next 12 months.” He described the decision to stop selling tobacco as “one of those intangibles” that helps the company win new business and make up for lost sales from cigarettes and related products.
Though not directly tied to the decision to stop selling tobacco, Merlo said the company has already tallied “$5.4 billion in new business wins for 2015.” The company operates a large pharmacy benefit management company, known as CVS/Caremark, as well as 7,700 retail pharmacies and 900 walk-in clinics.
CVS employees removed tobacco products from stores ahead of schedule (CVS Health photo)
“We offer a lot of benefits for clients and that is resonating in the marketplace,” Merlo said in an interview.
The move to end cigarette and other tobacco sales comes after years of pressure from public health advocates and groups like the American Medical Association. Retailers like CVS have been particularly criticized for the inherent conflict of making money off of fast-growing pharmacies while at the same time selling products known to harm public health.
None of CVS competitors such as Walgreens (WAG) or Wal-Mart (WMT) have followed suit with decisions to stop selling tobacco products even as they, too, push further into the health care business with retail clinics staffed by nurse practitioners and offer more services from pharmacists.
“Changing the name catches up with what we have been doing,” Merlo told Forbes.
Merlo said CVS is creating a new model for the era that follows the implementation of the Affordable Care Act.
“ACA deals with access,” Merlo added. “We have to focus on our quality role.”
Just last month, CVS said it entered into a clinical affiliation with MedStar Health, a 10-hospital system in the Washington D.C. area, bringing to 41 the number of health system and health care provider affiliations the drugstore giant has across the country.
Such relationships are critical as the Affordable Care Act, private insurance companies and self-insured employers increase their contracts with accountable care organizations. ACOs group providers of medical care together to care for a population of patients.
If the group of providers under the ACO reduces costs over a year’s time, it shares in the savings with the insurance company. CVS and Walgreen say they help by providing lower-cost services and working more closely with doctors and hospitals to keep patients on their medications and away from high cost hospital settings.
Ending tobacco sales today boosts CVS’ ability to partner with traditional health care providers, executives said.
“The sale of tobacco in a retail pharmacy conflicts with the purpose of he health care services delivered there,” said Dr. Troyen Brennan, chief medical officer at CVS Health . “Even more important, there is evidence developing that indicates that removing tobacco products from retailers with pharmacies will lead to substantially lower rates of smoking with implications for reducing tobacco-related deaths.”