Drugstore tobacco sales under fire
BYLINE: By ANN ZIMMERMAN, The Wall Street Journal
SECTION: BUSINESS NEWS
Antismoking advocates are taking the battle against cigarettes to the aisles of pharmacies as well as retailers with in-store health clinics, arguing that stores promoting health care shouldn't also be selling tobacco products.
Tuesday, San Francisco's city board of supervisors will voteon whether to bar cigarette sales at pharmacies as of Oct. 1, a measure Mayor Gavin Newsom modeled after similar bans already on the books in Canada.
Other efforts have cropped up across the U.S. to pass state and city laws banning the sales of cigarettes at drugstores and retailers offering in-store health services. While no major ban has passed in the U.S. yet, widespread approvals of such measures would affect pharmacies such as CVS/Caremark Corp. and Walgreen Co., supermarket chains and big-box retailers, including Wal-Mart Stores Inc.
The issue is a particularly touchy one for Wal-Mart, the world's largest retailer. Wal-Mart is trying to expand business by positioning itself as a champion of affordable health care, attracting more customers to its pharmacies with cheap prices on generic drugs and opening health clinics in many of its stores, all of which sell tobacco products. Wal-Mart, however, doesn't have stores that would be affected by San Francisco's ban as proposed.
Supporters of the sales bans say they are trying to reduce tobacco-related illnesses by limiting access to cigarettes, which have established health hazards. By ratcheting up the social unacceptability of cigarettes, supporters believe they can deter young people from starting tobacco habits.
Opponents portray the efforts as selective legislation that will have little impact on smoking rates, while making retailers choose between selling what customers want and offering affordable health care.
The San Francisco voteis being closely watched. The city "was the first to ban smoking in workplaces and other public places, and has been a catalyst for other jurisdictions," said Matt Myers, president of the national Campaign for Tobacco-Free Kids. "If San Francisco prohibits the sale of tobacco in pharmacies, we could well see this prohibition spread across major areas of the nation."
A study by researchers at Yale University found that 82 percent of 1,000 California pharmacists surveyed and 72 percent of 988 adult consumers questioned support a ban of tobacco products at pharmacies. The proposed San Francisco ban is supported by the California Pharmacists Association, the California Medical Association, and the American Cancer Society, among other groups.
Leading up to the San Francisco vote, backers have had trouble winning legislative approval of bans. Ban measures introduced this year in Rhode Island, New Hampshire, Tennessee and Illinois to bar stores and pharmacies with health clinics from selling tobacco and, in some cases, alcohol, all stalled. A bill in New York that would have applied to all pharmacies, including those in big retailer and supermarket outlets, also foundered.
Opponents of the tobacco bans believe stores will get out of the clinic business if they are forced to choose between providing health care and selling cigarettes. "We do not understand how forcing retailers to choose between having an in-store clinic and selling tobacco products serves the broader goal of providing consumers with easier access to high-quality, affordable health care," says Tine Hansen-Turton, executive director of the Convenient Care Association, which represents the roughly 1,000 health clinics located in retail outlets in the U.S. The clinics are primarily staffed by nurse practitioners and clinical nurse specialists who treat common ailments such as sore throats and sinus infections.
It is a tough call for retailers, which would be forced to give up a big source of revenue and lose a significant customer draw. Grocery stores, drugstores, wholesale clubs and mass merchandisers accounted for 19 percent of tobacco sales in the U.S. last year, or at least $13 billion.
But a few big retailers already have given up cigarettes. Target Corp. quit the sales habit in 1996 believing that new laws restricting cigarette sales made them too labor-intensive to dispense. The chain says the financial impact was minimal. Earlier this year Wegmans Food Markets Inc., a Northeastern-based food-store chain, discontinued sales because of "the destructive role smoking plays in health," Chief Executive Danny Wegman said at the time.
Wal-Mart stopped selling cigarettes in its Canadian stores in 1994 as the provincial government of Ontario was adopting a law that would bar stores operating pharmacies from selling cigarettes, a ban seven other Canadian provincial governments later approved.
Cigarettes have gotten harder to buy in recent years. About a decade ago, state laws began prohibiting retailers from selling tobacco products to individuals under age 18, and in some cases, age 19. Most states also began enacting laws requiring stores to keep cigarettes behind cash registers or separate customer service counters instead of easily accessible, free-standing kiosks.
While cigarette sales have fallen 18 percent in volume terms since 2000, 17.4 billion packs were sold last year. Over that same period, sales of other tobacco products-moist snuff, roll-your-own tobacco and small cigars increased by the equivalent of 1.10 billion packs of cigarettes, according to researchers at the Harvard School of Public Health.
Retailers are grappling with the ethics of reconciling a health care business with tobacco sales. In November, CEO Thomas Ryan of CVS said his company was considering eventually halting the sale of cigarettes.
"We have a vision in our company to strive to improve human life, and it is a challenge around cigarettes," Mr. Ryan said at a conference. "It's a big number from a dollar standpoint ... We've had internal battles and discussions. I wouldn't rule it out at some point down the road."
Wal-Mart wouldn't comment on legislative attempts to ban cigarettes, but in the past, CEO Lee Scott has indicated customer preferences dictate what it sells at its stores. "There are still a tremendous number of our customers who smoke," Mr. Scott told Wall Street Journal editors at a recent meeting in New York. "We've got a market to serve, and second we've got shareholders to think about," he added.
Doug McMillon, head of Wal-Mart's Sam's Club unit that sells its tobacco products mainly to convenience stores, said halting cigarette sales is something he has "thought about. I don't expect it to happen in the next year. It's a big business, so it makes it harder to stop," he said at the Journal meeting.
In a letter to San Francisco Mayor Newsom, the National Association of Chain Drug Stores doubted prohibiting the sale of tobacco products in drugstores would reduce smoking. "Such a ban would only succeed in making an arbitrary determination as to which retailers would be permitted to sell products that remain legitimately for sale in the state and in the nation," the letter said.
Local jurisdictions mulling a ban are each drawing the line on tobacco sales in a different place. The San Francisco proposal wouldn't affect sales at grocery stores with pharmacies or warehouse clubs such as Costco Wholesale Corp. Backers reason that grocery stores and warehouse clubs don't market themselves as promoting health care, said Mitch Katz, director of San Francisco's Department of Public Health.
"Supermarkets draw a cross-section of people, but a pharmacy attracts a vulnerable population people with illnesses," Dr. Katz said.
New York Assemblyman Sam Hoyt drafted a bill earlier this year to restrict the sale of tobacco-related products in pharmacies, including those in grocery stores and big-box retailers. He said he acted after Wegmans halted cigarette sales, because he didn't think enough retailers would follow its lead voluntarily.
The bill didn't make it out of committee, but Mr. Hoyt said he'll try again next year.
A bill drafted by the Illinois State Medical Society earlier this year drew a rebuke from the Federal Trade Commission, which criticized portions of it as potentially anti-competitive. In addition to banning tobacco products and alcohol at stores with walk-in health clinics, the bill would require permits to operate clinics, curb clinic price-comparison ads, and require more physician involvement.