Unbiased Analysis of Today's Healthcare Issues

Coming to a town near you?

Written By: Jason Shafrin - Feb• 12•14



Many people living outside the U.S., may find it odd that U.S. pharmacies–stores that provide products that are supposed to improve health–sell tobacco as well.  However, this practice may go the way of the dinosaur.  According to the New York Times, CVS Caremark, the country’s largest drugstore chain in overall sales, announced on Wednesday that it planned to stop selling cigarettes and other tobacco products by October.

The chief executive of CVS Larry J. Merlo, said “We came to the decision that cigarettes and providing health care just don’t go together in the same setting.”  In other words, they decided that they can make more money selling health care products than tobacco products.  

How will this effect smoking rates? My guess is that it will have little effect on smoking rates.  Removing CVS as a option to purchase cigarettes decreases the convenience factor for smokers.  Thus, in partial equilibrium, smoking should decrease.  However, suppliers will respond to this new equilibrium.  We could see new stores selling only tobacco pop-up to replace pharmacies.  Alternatively, regular smokers may already be turning to purchasing their cigarettes online.  Thus, in the general equilibrium, the decrease  in convenience factor is likely short-lived.

CVS’s decision may not have a large direct effect on smoking rates, but is part of a larger trend in the U.S. towards decreased prevalence of smoking.


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