CVS CEO Speaks About Tobacco

By Kathy Gurchiek Sep 24, 2014
Seven months after CVS Caremark Corp. announced that it would no longer sell tobacco-related products at its mor​e than 7,600 stores nationwide, the company president and CEO discussed corporate America’s role in reducing chronic illness and delivering better health outcomes for consumers.

Larry J. Merlo, speaking at the National Press Club in Washington, D.C., on Sept. 19, 2014, focused on changes taking place in the nation’s health care system and the effects on consumers, health care providers and government. He also spoke on the Affordable Care Act and factors driving increasing health care spending, especially the growing prevalence of chronic disease, which he said “accounts for $3 of every $4 spent on health care.”

He also talked about CVS’s future offerings to customers, including telemedicine. Telemedicine often involves using two-way video, smartphones, webcams and other wireless technology so that patients do not need to visit the physician in person. Originally, telemedicine was a way to serve people in rural areas with limited access to medical care. Now, CVS has launched a telemedicine pilot at 28 of its MinuteClinics in Los Angeles, Orange County and San Diego, according to a March 10, 2014, post on the Physicians News Network website.

Many of the questions he fielded after his talk centered on the company's decision to no longer sell tobacco products, including e-cigarettes.

“There’s no question,” he said, “that a national conversation about tobacco has been reignited” as a result of CVS’s actions.

In February 2014, the Rhode Island-based company announced its decision to be tobacco-free by October 2014—despite an expected annual loss of $2 billion in sales—saying the sale of such products was inconsistent with its purpose of helping people on the path to improved health.

CVS stopped sales of tobacco products in September 2014, the same month it changed its corporate name from CVS Caremark Corp. to CVS Health. That change, Merlo noted, “signals a fundamental shift in who we are and what we do.”

“We think of ourselves as … a health care company,” said Merlo, who began his career more than 30 years ago as a pharmacist at Peoples Drug, a D.C.-based chain which later became part of CVS. “We wholeheartedly believe it’s the right thing to do for the long-term growth of our company.” CVS celebrated its 50th anniversary in 2013.

In making its decision about selling tobacco products, Merlo said the company sought multiple viewpoints from inside the company—including that of human resources—and engaged leading health organizations such as the American Cancer Society, the American Pharmaceutical Association and the American Medical Association.

The company’s decision, Merlo added, is “resonating” with investors, consumers and potential clients. “We saw the sale of tobacco as an obstacle in terms of forming new partnerships. The financial community understands the value proposition associated with CVS Health and the growth trajectory of the company,” Merlo said.

Asked how the company can take a health-related stand against tobacco products but continue to sell soda, alcoholic beverages, and salty and sugary snacks, Merlo said that while such products do not threaten a person’s health when consumed in moderation, the same is not true for tobacco products.

“There is no amount of tobacco use that can be considered safe,” he said. He added that the company plans to introduce a healthier snack line.

While CVS views itself as a health care company, it will not be venturing into the sale of medicinal marijuana.

“The licenses that we have within our pharmacies do not permit us to sell marijuana,” Merlo said. “We’d have to go out and be relicensed as another provider and we have no plans to get into that line of business.”

Kathy Gurchiek is the associate editor at HR News.

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