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Business

CVS takes a stand, halts tobacco sales

CVS Caremark on Wednesday announced it would stop selling cigarettes in its stores, winning praise from health advocates, lawmakers, and the nation’s former smoker-in-chief, even though the move is expected to have much greater symbolic impact than practical effect.

Even as President Obama and public health officials called on other pharmacy chains to follow CVS, analysts noted that tobacco products are a small and shrinking share of sales for the Woonsocket, R.I., company and its competitors. Tobacco sales represent less than 2 percent of CVS Caremark Corp.'s annual revenues, and are likely to decline further as more communities across the country ban tobacco sales in drug stores.

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Already, Boston and 79 other Massachusetts communities, accounting for about half the state’s population, have passed such bans.

Still, as both CVS executives and industry analysts noted Wednesday, the move will make it easier for the company to form partnerships with doctors, hospitals, and insurers and allow the chain to expand its brand as a health care provider — a business expected to become more lucrative as the population ages and the new federal health care law increases demand for basic services such as checkups.

CVS already offers medical clinics, flu shots, and other immunizations in many of its 7,600 stores nationwide and could further develop such services in partnerships with hospitals, analysts said. It also operates a large business managing drug benefits plans for private companies.

“CVS has aligned its business to the pharmacy,” said Scott Mushkin, an analyst with Wolfe Research in New York. Tobacco, he added, is, “an ancillary business, it’s not the reason why most people go to CVS.”

CVS, the nation’s second largest drug store chain after Walgreen Co., said it would end tobacco sales in a taped message Wednesday morning from chief executive Larry Merlo that was posted on its website. Merlo said the company will remove all tobacco products from its stores by Oct. 1, and launch a smoking cessation campaign this spring and could potentially expand its products to help customers stop smoking, CVS officials said.

“Tobacco products have no place in a setting where health care is delivered,” Merlo said. “Put simply, the sale of tobacco products is inconsistent with our purpose.”

Obama hailed the decision “as a powerful example” that would help efforts to, “reduce tobacco-related deaths, cancer, and heart disease, as well as bring down health care costs.” Kathleen Sebelius, US secretary of health and human services, and other public health advocates called on other pharmacy chains to follow CVS’s example.

“CVS made a very compelling argument today that if you’re in the business of health care, you shouldn’t be in the business of selling tobacco products,” said Vince Willmore, spokesman for the Campaign for Tobacco-Free Kids. “We’ll be taking that argument to every store with a pharmacy to make sure this is a catalyst for them.”

But CVS's competitors said they weren’t quite ready to kick the habit. Walgreen spokesman James W. Graham said in an e-mail that the drugstore chain Walgreens has evaluated the sale of tobacco for some time to “balance the choices our customers expect from us, with their ongoing health needs.” He said the company will continue its evaluations while offering products to help people quit smoking.

Rite Aid, which ranks third behind CVS Caremark in sales, said it sells tobacco products in accordance to federal and state laws, but it is constantly reviewing its product mix to meet customer demand.

Walmart, the world’s largest retailer, also operates pharmacies in its stores. The company declined to comment.

The US tobacco market has been shrinking for decades, and today, fewer than 1 in 5 adults smoke, down from nearly half in 1965. But tobacco is still responsible for more than 400,000 deaths a year in the United States, according to the Food and Drug Administration.

Whether the CVS decision to stop selling tobacco will result in fewer smokers remains unknown, said Margaret Reid, who directs tobacco control efforts at the Boston Public Health Commission. But it will certainly make tobacco products less readily available to smokers.

Because it will prohibit tobacco sales, Reid said, CVS will no longer have colorful displays of various brands lined up behind cashiers — displays that can trigger the urge to smoke in those hooked on the habit.

Daniel Mclaughlin, 25, of Boston, a former smoker who quit because it became too expensive, said it will likely cost smokers more to buy cigarettes at other stores once CVS leaves the market.

“I’ve got mixed reviews on it,” Mclaughlin said. You can get them now “in CVS for cheaper than anywhere else.”

Anna Leah Eisner, 19, a Boston University student who was outside the CVS near Copley Square, said the company’s decision made sense. “If CVS is trying to stay healthy, then that’s good for them,” said Eisner.

Analysts said it is probably only a matter of time before other pharmacy chains do the same as CVS. “This rachets up the pressure for peers,” said Dane Leone, a senior analyst with Macquarie Capital, a New York investment firm.

Michael Siegel, a tobacco researcher at BU’s School of Public Health, said he doubts that stopping the sale of tobacco in pharmacies will lead a lot of smokers to quit since they can buy their cigarettes at gas stations, convenience stores, and other outlets.

But CVS’s move sends a signal about tobacco use that is more powerful than government-imposed sales bans.

“When drug stores choose to do this on their own, it makes a much larger statement and has the potential to change social norms,” he said. “This is a corporate decision, not the nanny state trying to tell people what to do. It’s totally different, and I think more effective.”

Globe correspondents Taryn Luna and Frank Olito contributed to this report. Deirdre Fernandes can be reached at deirdre.fernandes@ globe.com. Follow her on Twitter @fernandesglobe.
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