Walgreen should join CVS in the no-smoking section
In announcing this month that, as of Oct. 1, CVS Caremark Corp. will no longer carry tobacco products in its 7,600 stores, company President and CEO Larry J. Merlo has acknowledged the obvious incongruity of selling cigarettes and other deadly tobacco products while positioning the drugstore chain's pharmacies as health care providers. The decision is momentous, as it heralds a new day of reckoning both for CVS Caremark's peers in the retail pharmacy sector and, importantly, for the tobacco industry.
As shareholders and members of the Interfaith Center on Corporate Responsibility (ICCR), we have been engaging Fortune 500 companies to encourage stronger oversight of environmental and social impacts for more than four decades. And a group of our members has been convening discussions with retail pharmacy chains on the patent hypocrisy of selling tobacco products for more than 20 years. CVS was a relatively new engagement for our investor group, and we were pleasantly surprised when they exhibited this unexpected about-face.
That company representatives conceded that this ethical decision would cost the company roughly $2 billion in sales has resulted in no small measure of “atta boys” (ours among them) and public kudos. While most independent pharmacies have already cleared their shelves of tobacco products, CVS will likely be remembered as leading the charge on this issue as a national chain. And CVS' forward-looking decision is likely to pay off in good will and customer loyalty which, over the long term, will more than make up for the near-term revenue shortfall.
Referring to tobacco as "deadly" may seem overly dramatic until you learn that more deaths are caused each year by tobacco use than by HIV, illegal drug use, alcohol use, motor vehicle injuries, suicides and murders combined. The United Nations Development Programme states: “Tobacco, used as directed, kills about 6 million people yearly, roughly half those who use it.” That such a pernicious product would continue to be promoted in a pharmacy setting, where lifesaving medicines and health care services are dispensed, is disturbing at best.
WHAT'S NEXT, WALGREEN?
When ICCR first engaged pharmacies on the issue of tobacco sales in 1992, pharmacy management explained that, while cigarette revenue accounted for a very small percentage of sales, store traffic would decline if they weren't made available. Another company argued that smokers were better off satisfying their habits at pharmacies because health care professionals were available to counsel smokers and, fortunately, smoking cessation products were also in stock! We have been witness to all manner of credulity-straining defenses put forth by retail pharmacy executives for what is, at bottom, indefensible and irresponsible corporate behavior.
So, how will CVS' decision affect Deerfield-based Walgreen Co., Rite Aid and other pharmacy chains? When last we met with Walgreens, their executives told us they were reviewing their tobacco policy. The company has further committed to launch a "low-income smoking cessation initiative" in partnership with pharmaceutical companies Glaxo SmithKline, Pfizer and ICCR members. While these are certainly welcome signs, Walgreen's stated mission to “help people get well, stay well, and live well” will be called into question so long as cigarettes remain on its shelves.
We are hopeful Walgreen and its peers will use this “day of reckoning” to consider how they can better align their mission with their business plan and that all companies will view CVS Caremark's leadership last week for what it is: an example of what authentic corporate responsibility looks like.