December 21, 2014

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What is $2 Billion of Lost Revenue Worth to CVS Caremark?

CVS' decision supports how the enormous benefit to public health can be backed by solid business rationale.

Carol-cone

By Carol Cone, Edelman

My mother died of lung cancer in September 1988.  She did smoke, but stopped cold in 1964, the day after the Surgeon General’s report linked smoking to lung cancer deaths and other severe diseases.

The recent CVS announcement [Edelman client] to stop selling cigarettes and other tobacco products brought back childhood memories of my mom’s relationship with tobacco. One of our family rituals was to help her unload big brown paper bags of groceries, which always included two cartons of Kent cigarettes, the ones with “micronite filter”, so I learned from the TV ads. I recall the tobacco smell reverberating throughout the house, lingering at our dinner table, in the car and especially in the living room where my mom held her monthly maj jong games.

I’ll never forget the day she quit. 

Mom told my sister Peggy and me, “A key piece of news came out today.  Smoking causes lung cancer.  I’m going to stop. Now!” 

And she did. 

At that age, I really didn’t understand how hard it was to stop.  If I did, I would have showered my mom with praise and lots of hugs and kisses.

When she became ill, 20 years later, we were surprised it was lung cancer.  Was it from her cigarette smoking?  How could it be? She stopped decades ago. Yet, it was likely.

Aligning With a Mission…

I was thrilled to hear CVS Caremark's news. President and CEO Larry Merlo demonstrated a principled action linking what the company stands for – promoting health – to what it sells and to a social issue, lung cancer and COPD.  He embraced the new role for a CEO as identified by the findings of the 2014 Edelman Trust Barometer.

He donned the mantle of a “Chief Engagement Officer”, taking the lead on creating societal change that would generate long-term value for CVS Caremark shareholders and its various stakeholders, by delivering value to society.

In a statement he said:

"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. Put simply, the sale of tobacco products is inconsistent with our purpose."

…and Building Trust

CVS worked with our team at Edelman to ensure the announcement was clearly understood by its stakeholders – media, Wall Street, customers and stakeholders – as the right thing to do in the long term, as a health care company.

In fact, the company's action is supported by Edelman’s ongoing Trust research, which explains how the enormous benefit to public health can be backed by solid business rationale. Over the past few years, for example, with increasing transparency and public engagement, Trust results have revealed 16 attributes or business practices that contribute to deepening confidence and support. These are further grouped into five categories of business conduct: engagement, integrity, products and services, purpose, and operations.

Among these, the greatest trust-building opportunities lie in practices that fall under engagement and integrity, such as placing consumers ahead of profits and demonstrating that business is taking responsible steps to address an issue – exactly what CVS Caremark has done.

edelman trust barometerCreating a Tobacco-Free Generation

The announcement also comes right on the heels of a new World Health Organization announcement that globally, approximately 14 million new cases of cancer were diagnosed in 2012, with lung cancer the most common cause of death accounting for 19.4 percent of an estimated 8.2 million fatalities.

Kudos for this courageous action were immediate from NGOs around the country including The American Lung Association [Edelman client] who commended CVS Caremark  for its forward-thinking decision to prioritize the health and well-being of current and future customers and employees and for helping create a tobacco-free generation.

“Decreasing the availability of tobacco products as CVS Caremark is doing is an important and bold step toward making it harder for people to get access to these harmful products,” said Risa Lavizzo-Mourey, chief executive of the Robert Wood Johnson Foundation.

I can just imagine the conversations in the boardroom at CVS Caremark, related to the loss of a potential $2 billion dollars though. In fact, I wish I had heard the arguments pro and con. What a fascinating deliberation. 

How exciting that the pro side won, indicating another extraordinary example of a company that recognizes and embraces their inextricable role in society as they conduct business.

And they are doing more to make smoking history.

This spring CVS Caremark will begin offering smoking cessation programs with the goal of getting half a million Americans to stop smoking, an additional step as it evolves into a healthcare company.

I wish my mother was alive to see this day. She would have smiled.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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