Saturday, February 8, 2014

CVS No Longer Stacking Tobacco

In a huge PR move this week, CVS Caremark announced their stores will no longer carry tobacco products. The move takes effect October of this year.

 CRK's move surprised me, given that WAG recently fought and had the courts overturn a California law to this effect. While the tobacco-free pharmacy sort of makes since, these pharmacies are not really "health" facilities right now. They're drug dispensaries. You go there to pick up pills, not to lower your cholesterol. And based on this business model, you really want additional foot-traffic. That means "don't alienate 20% of America."

However, that's not what CRK wants to be, or Walgreen's for that matter. Both these places now run their own healthcare on-site. Both these companies want to capture an increasing share of the health-care dollar, and they might have a good shot at it given how most states are moving to deregulate primary care....for instance, substituting nurse practitioners for doctors for certain functions.

Just take a look at the picture, and see the potential sales for WAG and CRK:
Right now, pharmacies are taking that $1,106 dollars per person, and if they can squeeze in some extra sales from that $1,670 that's going to clinics and doctors right now....

Plus, that's expected to grow, while generic drug sales are expected to have weak growth. Given consolidation in PBMs, too, which might keep reimbursement rates down, you might expect pharmacies to aggressively re-invent themselves.

Which is what CRK is doing.

From a public health perspective? I don't see the big deal. The vast majority of tobacco sales take place at gas stations.

However, that does not mean people will stop trying to spin this as a great movement forward in the Great Progressive March of America, or whatever nonsense propels Obama forward ;)

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