CVS Declares War on Smoking

Will crusade to encourage more drug stores to ditch tobacco benefit c-stores?

CVS tobacco cigarettes (CSP Daily News / Convenience Stores)

WOONSOCKET, R.I. --CVS Health Corp. is offering a prescription-drug plan that charges patients more if they buy their medications at pharmacies that sell tobacco products, a plan that could benefit the company's own network of drugstores, reported The Wall Street Journal.

It could also benefit convenience stores if more drug stores stop selling tobacco, sending smokers to other retailers that do sell cigarettes.

The plan, offered by CVS's pharmacy benefits unit Caremark, features copayments that are up to $15 higher on prescriptions filled where tobacco is sold. That could give people covered by such plans an incentive to buy their medications at CVS, which stopped selling tobacco products last month, said the report.

Rival drugstore chains like Walgreen Co. and Rite-Aid Corp. have resisted calls to stop selling tobacco themselves, saying it wouldn't have a significant impact on smoking rates.

CVS spokesperson Carolyn Castel said the company created the plan after being approached by Caremark clients interested in creating a tobacco-free pharmacy network. People covered by the new plan would be able to buy medications at the lower copays at Target Corp., which doesn't sell tobacco, as well as tobacco-free local or regional drug stores.

The company is opening itself up to criticism that it is designing coverage plans that give an advantage to its own pharmacies, the report said. David Balto, a former policy director at the U.S. Federal Trade Commission (FTC) who is now an antitrust attorney, said the tobacco-free network could be problematic if it effectively steers patients to CVS.

"There's no cost savings that comes about from limiting the network," Balto told the newspaper. "It's really another effort to limit the ability of their rivals to effectively compete."

CVS's tobacco-free network is only in the early stages. The first employer to sign on is the city of Philadelphia, where around 5,400 nonunion employees will have to make an additional $15 copayment if they fill their prescriptions at pharmacies that aren't part of what is called a preferred health network.

About 100 independent pharmacies and between 150 and 200 CVS stores will participate in the Philadelphia network, said the report.

Some independent pharmacies are crying foul.

"It's an unfair competitive practice," said John Giampolo, who heads the Independent Pharmacy Alliance, a trade group and buying cooperative that represents 3,000 pharmacies in New York and three other states. "Consider a local pharmacy that hasn't carried tobacco for years, but the consumer may not know whether the pharmacy participates or not. So a consumer may go to a CVS pharmacy to save the $15. An independent pharmacy may have to scramble to do their own marketing."

Click here to view the full Journal report.