BA 400 – 002
February 25, 2014
Essay 2 CVS Caremark
Background and Introduction of CVS Caremark Decision
On February 5th CVS Caremark announced that they would cease the sale of cigarettes and other tobacco products in its stores. This measure is scheduled to begin by October 1, 2014. Once this action is taken, CVS Caremark will be the first national pharmacy chain to drop the sale of tobacco products. The President and CEO of CVS Caremark, Larry Merlo, stated the following, "Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health." ...view middle of the document...
They may agree that the sale of tobacco products and working to provide health care are contradictory. CVS Caremark believes that it is a leader in a trend that its competitors will soon follow. Walgreens and Rite-Aid have both responded that they have also considered this decision.3 If its competitors follow its example, CVS Caremark employees will be able to enjoy a sense of pride knowing they work for a socially responsible company.
The imminent profit loss this decision represents is troublesome. Shareholders in particular derive wealth from the success of the company. However, informed stakeholders likely know they serve to benefit from this decision. For years pharmacies have been more involved in retail than health care. Recently, pharmacies have been trying to shift focus toward becoming a primary health care provider. CVS pharmacies now offer health clinics, basic services like flu shots, and advice to customers regarding health issues.3 This strategic change seems extremely forward thinking. This is especially true with the enactment of the Affordable Care Act. With the projected rise in new patients it is estimated seven million newly insured Americans would be impacted by a physician shortage. A bill has already passed in California allowing pharmacists to distribute drugs without a prescription, analyze certain medical tests, and allows advanced practice pharmacists to perform patient evaluations. This new market is expanding rapidly with the Affordable Care Act and may represent incredible profits for pharmacies.4 The Affordable Care Act also provides financial incentives for doctors, hospitals, and pharmacists to encourage healthy living with their patients.5 As CVS transitions to a more health care oriented focus they must begin to separate themselves from products that contradict this mission.
Arguably the most important stakeholders in any company decision are the customers. CVS Chief Executive Larry Merlo stated “We have about 26,000 pharmacists and nurse practitioners helping patients manage chronic problems like high cholesterol, high blood pressure and heart disease, all of which are linked to smoking.” This decision stands to benefit many customers by promoting healthy living and smoking cessation. According to the secretary of Health and Human Services, Kathleen Sebelius, 5.6 million children alive today will die prematurely due to smoking related diseases. CVS is arguing that it is putting its customers first by encouraging smoking cessation and working to become a leading health care provider.5 Despite CVS Caremark’s argument some customers may argue the ethics of this decision.
Ethical Analysis of Basic Consumer Rights with Respect to this Decision
Our text offers a great deal of information regarding basic consumer rights. First, the right to choose implies consumers have the right to select from a variety of products at competitive prices. It does not seem CVS is guilty of violating this right. Consumers...