The decision was hailed by President Obama, a former smoker himself, and by public health experts who hope the move away from tobacco products by the retailer would prompt other stores to follow suit.
Walgreens, the nation’s top drugstore, said it would still sell cigarettes for now, but will continue to evaluate the product category, according to Reuters. Third-ranked Rite Aid Corp. did not immediately respond to a request for comment.
“Today’s decision will help advance my administration’s efforts to reduce tobacco-related deaths, cancer, and heart disease, as well as bring down healthcare costs,” Obama said in a statement.
CVS is a major pharmacy benefits manager for corporations and the U.S. government’s Medicare program. CVS Caremark Company said the decision would strengthen its position as a health-care provider.
“I think it will put pressure on other retailers who want to be in health care,” said CVS Caremark Chief Medical Officer Dr. Troyen Brennan.
Tobacco is already banned in U.S. cities such as Boston and San Francisco, while retailers such as Target stopped selling cigarettes in 1996, nearly two decades ago.
Dr. Risa Lavizzo-Mourey, chief executive officer of the Robert Wood Johnson Foundation, which focuses on public health, said CVS had made “a bold, precedent-setting move because it acknowledges that pharmacies have become health care settings.”
CVS doesn’t expect the move to make a huge dent in its revenues. While the company said the cost would be about $2 billion in annual sales and 6 cents to 9 cents in profit per share this year, the company is expected to report 2014 revenue of $132.9 billion and earnings of $4.47 per share, according to Thomson Reuters.
“We believe the move will be viewed as a positive long-term decision by CVS, despite the near-term profit drag, as it paves the way for increased credibility with both health-care consumers and payers,” ISI Group analyst Ross Muken wrote in a note.
Matthew Myers, president of the Campaign for Tobacco-Free Kids, said the CVS announcement could help lead more people to quit smoking. Smoking rates among American adults plummeted from 43 percent in 1965 to 18 percent now, but it is still the leading cause of preventable death in the United States, killing more than 480,000 people each year.
U.S. cigarette sales fell 31.3 percent between 2003 and 2013, according to Euromonitor International.