CVS’s Rivals Need to Sell Tobacco to be Profitable: Experts

Walgreen and Rite Aid are unlikely to follow the lead of CVS in halting tobacco sales, experts say. Unlike CVS, which reported revenue growth in the third quarter of this year, its rivals do not have pharmacy benefit management units.

CVS on Tuesday reported third-quarter review growth of 9.7 percent, to $35 billion, Bloomberg reports. The company saw a 16 percent gain in its pharmacy services unit, which offset the loss of cigarette sales, the article notes.

Jeff Jonas, a portfolio manager at Gabelli Funds, said of Walgreen and Rite Aid, “They’re just not performing as well, so they kind of need those sales.” Both companies say they are taking steps to fight tobacco use. Walgreens says it will offer customers access to an online quit-smoking program, while Rite Aid’s pharmacists help teach customers how to reduce nicotine use.

Walgreen said helping smokers quit is the most effective thing retail pharmacies can do to reduce tobacco use in America. Wal-Mart, the nation’s biggest retailer, and Kroger, the largest grocery store chain, said they do not plan to stop selling cigarettes.

CVS, which stopped selling tobacco products in September, has taken steps to pressure other pharmacies to do the same. Some customers will soon be required to make a $15 co-payment on prescriptions filled at non-CVS pharmacies that sell tobacco products, under new rules issued by Caremark, the pharmacy benefits management arm of CVS.