Doing the right thing first is seldom easy. CVS Caremark announced hat it would become the first national pharmacy chain to stop selling cigarettes along with other 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 Times.
It is a gutsy, principled and potentially expensive move. It’s especially gutsy, and controversial, to get a publicly traded company.
The primary estimates are the decision will surely cost CVS Pharmacy Near Me about $2 billion in sales, or about 17 cents per share of stock, annually. I suspect these estimates are probably low. CVS may only sell $2 billion in tobacco products, although not many customers just purchase a pack of cigarettes whenever they proceed to the drugstore. When they are available, they probably pick up other things too. Maybe milk. Maybe candy. Maybe the prescriptions they need 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 country, 800 in which include “Minute Clinics” which provide basic take care of common ailments and safety measures like flu shots. Merlo has said CVS desires to add 700 more such clinics by 2017. The clear narrative CVS hopes to convey towards the public is that it is actually a company less about selling assorted retail products and much more about meeting medical care needs that do not require a trip to the doctor.
I actually have no doubt that, as CVS says, companies focused on protecting health have no business within the tobacco business. Many 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 company owners can do whatever they want with their companies. They can choose to forego profit for principle.
A phone call like this is tougher for your directors and managers of any publicly traded enterprise like CVS. They have a fiduciary duty to shareholders, and this duty generally takes the type of maximizing the long-run price of the property – which is, the company – entrusted in their mind. CVS may reason that its long-run value is enhanced by sitting on principle in this way. It seems clear this argument will, in large part, concern positioning the company to take a more substantial share of the healthcare dollar moving forward. The company’s leadership may also debate that standing on principle is likely to draw some customers for them, even since they lose others.
Maybe that logic is sound, however it is not going to be simple to prove. I am certain someone will file a lawsuit obliging CVS Customer Service Phone Number to prove it, too. Unfortunately for CVS’ directors and management team, the likely effect on revenue and customer traffic is way more easily quantified than the projected and intangible benefits they presumably hope this decision can provide.
For the time being, CVS is doubling down on its position. Not only will it stop selling cigarettes and tobacco products completely by October, however it will launch a “robust national smoking cessation program” this spring, the La Times reported.
While many shareholders may be hard to conquer, CVS’ decision is drawing praise from medical professionals and antismoking groups. Kathleen Sebelius, secretary of Health and Human Services, said in a statement, “Today’s CVS/Caremark announcement helps bring our country nearer to achieving a tobacco-free generation.” Dr. Risa Lavizzo-Mourey, president and chief executive officer in the Robert Wood Johnson Foundation, said in the decision, “CVS is clearly establishing a leadership position to make the nation healthier and in building a culture of health.” (2) Such public endorsements are likely to help CVS justify its choice, though they may not enough alone to appease shareholders right away.
I don’t think CVS is performing wrong by doing the right thing. Even a public firm can lead by example, as well as the demonstration of a company in the health care business making its customers’ health its chief business focus is a powerful one. Time will zrfhfn if CVS’ shareholders will reap the rewards to be patient with this particular change. In any case, I believe the position of CVS Pharmacy Hours – besides being ethically strong – has sufficient business justification that courts should refrain from second-guessing it. If shareholders are unhappy, they can elect a new board to pick new managers, or they can just sell their shares.
Congratulations to CVS on getting the guts to go first. This nonsmoker, at the very least, is ready to walk an extra block or two to show my appreciation through my purchases. The walking will likely be great for me, too.