CVS apparently has a plan to make up some of the $2 billion in annual sales that it's losing from cutting off the sale of cigarettes and other tobacco products last month. According to The Wall Street Journal, the plan takes advantage of the fact that CVS also owns Caremark, one of the United States' largest pharmacy benefits managers — which are intermediaries between insurance companies and pharmacies. CVS' reported plan is to have Caremark begin raising certain customers' copays by up to $15 when they fill a prescription at a pharmacy that sells tobacco products.
Other pharmacies won't be happy about this
The result would be twofold: other pharmacies may begin feeling pressure to cut off tobacco sales, and CVS would become a more appealing place to fill prescriptions. When CVS originally announced its plan to end tobacco sales, it said that it wanted to focus more on health-related services, and this would play right into that. CVS may find itself making more money filling prescriptions, as customers head there to save money — or, worryingly for smaller pharmacies, head to CVS because they aren't sure if they'll be charged the additional fee elsewhere.
CVS did not respond to a request for comment on the plan, though the Journal makes it sound like it received some degree of confirmation on the upcoming policy. It's not stated exactly who would receive the surcharge or when it would go into effect.
The policy does seem to play into CVS' stated goal of promoting good health. CVS points the Journal to a study it ran that found that banning tobacco sales in pharmacies reduced the total number of people buying tobacco products by 13.3 percent in Boston and San Francisco, which implemented citywide bans toward the end of the 2000s. That said, CVS is using its ownership of a related business to disadvantage its competitors, which there's little doubt other pharmacies will be unhappy with. The merged company has occasionally been the subject of antitrust concerns, though not to any substantial results.
Correction: CVS is estimated to lose $2 billion in annual revenue, not profit.