Should Pharmacies Sell Harmful Products?
ISSUE: Should major pharmacies discontinue selling cigarettes because they are in the
healthcare business?
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CVS, the second-largest pharmacy chain in the United States, has announced it is discontinuing sales
of cigarettes and other tobacco products. In a risky move that will cost it $2 billion in sales, CVS
believes that selling cigarettes is incompatible with its intention to position itself as a healthcare
provider. By the end of 2014, it is estimated that the number of insured Americans will increase by
11 to 13 million. Pharmacies such as Walgreen’s, CVS, and Rite Aid are competing with one another
to capture a share of this growing market. They are attempting to move away from their position as
drugstores and move toward becoming healthcare providers.
CVS believes that the move, although costly in the short-term, will provide it with a competitive
advantage. It has formed partnerships with about two dozen health systems in its quest to embrace
healthcare. According to CVS Caremark’s Chief Medical Officer, doctors from these organizations
questioned how CVS could claim to be a healthcare company but still sell cigarettes. Tobacco
products are the number cause of preventable death in the United States. CVS believes
discontinuing sales of tobacco products will increase its standing with its health system partners,
providing it with a competitive advantage over rival pharmacies that continue to sell cigarettes.
This creates an ethical dilemma for CVS’s rivals. Walgreen’s has argued that selling cigarettes is
necessary in remaining competitive with its rivals. It has, however, partnered with GlaxoSmithKline
Consumer Healthcare to launch Sponsorship to Quit, a free online smoking cessation clinic. Rite
Aid, the third largest pharmacy in the nation, has stated it will continue selling cigarettes based on
the needs and demands of its customers. However, it also offers a number of smoking cessation
products to help tobacco users who want to quit.
From a stakeholder orientation, this issue can be examined a variety of ways. Those that believe
Walgreen’s, Rite Aid, and other pharmacies should follow CVS’s lead feel that it is the most ethical
response if they want to position themselves as health services companies. They feel it is hypocritical
to offer customers access to harmful products while promoting that they care about consumer
health. Possible advantages also exist for pharmacies choosing to discontinue tobacco-related
product sales. CVS has been praised by a number of stakeholders, including former President Barack
Obama, for taking a stand and being socially responsible. It is possible that health care partners will
be more inclined to do business with CVS over other pharmacies who continue to sell cigarettes.
These lucrative partnerships could serve to give pharmacies a long-term competitive advantage.
On the other hand, there are potential downsides for companies that follow CVS’s lead. One of the
most obvious would be loss of profits. CVS acknowledges that it will lose revenue from cigarette
sales, and other companies face the same losses should they choose to discontinue tobacco
products. In fact, CVS’s stock went down after the announcement that it was eliminating cigarette
sales. Conversely, the stock of Walgreen’s and Rite Aid increased. This shows that investors believe
selling cigarettes is more beneficial financially, at least in the short-term. From a stakeholder
perspective, it is necessary to consider the needs of investors as well as customers because the firm
has a duty to work toward profitability. Finally, cigarettes and tobacco products might be harmful,
but they are not illegal. While many customers might applaud CVS for taking a stand, cigarette
smokers lose out. According to Walgreen’s and Rite Aid, their decision to sell cigarette products is
based on consumer demand. While this might seem to contradict these pharmacies’ intentions to
become healthcare firms, critics claim that as retailers, they must listen to consumer demands and
offer products that consumers desire.
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There are two sides to every issue:
Affirmative Side: Major pharmacies should stop selling cigarettes because they are harmful
products that are not consistent with their healthcare focus.
Negative Side: Major pharmacies should not stop selling cigarettes because they are legal, highly
profitable for the company, and offer consumer choice.
