Wolters Kluwer Legal Scholar Winner: The CVS Co-Payment - The Next Step in the Anti-Tobacco Initiative or an Anti-Competitive Practice?

In September 2014, CVS and Caremark, CVS Health’s pharmacy benefits manager, became the first major pharmaceutical chain to ban tobacco sales in all of its 7,700 stores. The company is moving forward with a plan to “improve public health and generate goodwill” among its customers. However, while their commitment to remove tobacco products from its shelves is admirable and a step in the right direction against cigarettes and other addictive products, CVS sacrificed a reported $2 billion in annual tobacco sales for this initiative. In an attempt to compensate for their financial damages, beginning in 2015, Caremark will require certain customers to pay an extra co-payment on any prescription filled at a pharmacy that sells tobacco products. The co-payment could be as high as $15 for some customers. Caremark currently works with Walgreens, Rite Aid, Target, Kroger, and CVS as a pharmaceutical benefits manager, responsible for processing and paying prescription drug claims. Of those, only CVS and Target are tobacco-free. With a start date of January 1, 2015, employers and Caremark-managed pharmacies would have the option of joining the tobacco-free network, and any of its customers that fill at a pharmacy not in the network would have to pay the additional co-payment. This action is meant to encourage other pharmacies in the Caremark network to join the tobacco-free network and ban tobacco sales in their store. Furthermore, CVS hopes that this initiative will drive business in their direction; individuals who do not want to pay an extra co-payment will leave their tobacco-selling pharmacy and come to CVS. The additional co-payment appears to be the answer to CVS’s financial losses since pulling tobacco-products from its shelves...

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