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White House Shows Unusual Enthusiasm in Backing CVS

Posted on February 5, 2014

When CVS Caremark Corp. Chief Executive and President Larry Merlo announced that his drugstore chain would stop selling tobacco products , one of the first to respond was the president of the United States.

The speed of the president’s statement indicates that CVS’s decision was likely coordinated with the White House. Every day, countless business decisions are made without any comment from the White House. Something unusual was going on.

This is troubling. It gives the appearance of preference for those who curry favor with the powerful, and it squeezes out smaller entrants who can supply innovative products and services to consumers. What do you think about CVS’s decision? Take our poll.

The president said: “I applaud this morning’s news that CVS Caremark has decided to stop selling cigarettes and other tobacco products in its stores, and begin a national campaign to help millions of Americans quit smoking instead.”

The president congratulated Merlo by name, as well as “all who helped make a choice that will have a profoundly positive impact on the health of our country.”

As long as businesses are acting within the law, they should not be trying to please the federal government. Nor should they refrain from acting because they expect government’s praise. There is no upside to such behavior, and much downside.

As everyone knows by now, CVS, the No. 2 drug store chain, will give up $2 billion in revenues by halting sales of tobacco products. CVS’s stock declined in response to the announcement, but it is not clear that shareholders’ long-term interests will be undermined.

Steven Russolillo and Mike Esterl discuss CVS’s move to end cigarette sales, andDan Gallagher looks at Microsoft’s new CEO.

The management of CVS might not be able to tell shareholders about the pressures the chain may face to win favor with the government, especially in the context of the newly implemented Affordable Care Act. Of course, health groups have been trying for years to limit tobacco sales and advertising.

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12 thoughts on “White House Shows Unusual Enthusiasm in Backing CVS

  1. Dear LeAD(D)er is pleased CVS is taking smokes off the shelves 'cause he and Boehner don't get theirs there anyway.

  2. WhiteFalcon says:

    Any buliness has the right to sell something or not sell it in their place of business, however, when that decision involves something of value being passed under the table, then it becomes collusion. I wonder if CVS is in financial trouble and Ovomit decided that if they would quit selling tobacco products, whicn are among their biggest money makers, that the Government would pass big bucks to them. That would be consistant with Chicago politics and that is what is in DC at present. I smell a rat in all that somewhere.

  3. WhiteFalcon says:

    Sorry, I should have proof read the above. There is a typo or two there.

  4. thomas sweat says:

    It's the high fructose in your soda that does that to your brain, and the are worried about tobacco.

  5. People aren’t going to stop smoking cigarettes because some seller stops selling them. They’ll simply buy them somewhere else. I assume CVS’s decision was motivated by a cost/benefit analysis, i.e. the revenue just wasn’t worth it. I don’t smoke, but I’ve heard that Walgreen’s has the lowest tobacco prices in my town, primarily just to get people in the store. I don’t know if this really works, but CVS apparently doesn’t think so. In any event, who cares?

  6. Tinkerbell_35 says:

    Hayel, CVS owns Walgreen, and Walgreen's is still going to sell tobacco producrs, it's just political trash.

  7. TB,With all due respect, please cite a source indicating that CVS owns Walgreens. These two compete fiercely, and often build on corners opposite each other. Why would CVS cannibalize its own business in this way? I am able to find no reference indicating that one owns the other.

  8. No Business gives up a Billion Dollars in sales, unless there is a sweet bonus down the road .. another government incentive .. what are they getting that would be worth, such a loss ?

  9. If obutthead is involved, you can bet somebody's getting a kickback. I guess we'll have to wait a while to see who it is.

  10. Obama smokes, but he probably prefers marijuana cigarettes.

  11. First they came for your guns…
    Then they came for your bullets…
    Then your children…
    Then your farms…
    Then your doctor…

    Now they come for your tobacco…

    Do you see a disturbing pattern with Demoncraps?