When sweet reason fails, brute force baby!

[rubato]

CVS ramps it up:

http://www.vox.com/2014/10/20/7014987/c ... pharmacies

Early last month, CVS became the first major pharmacy chain to halt the sales of tobacco products. At its 7,700 pharmacies across the country, cigarette sales are now a thing of the past.

You can think of that as phase one of the CVS war on tobacco. Today, the pharmacy chain announced phase two: making it unprofitable for competitors to sell tobacco either.

To understand how CVS can wield this kind of influence over other pharmacy chains, you have to understand how its business works. Most of us know CVS as the pharmacy chain with brick and mortar stores all across the country. And that is a big part of CVS' business. But another big part of CVS' business is Caremark, a pharmacy benefits manager.

Caremark is a company that insurance plans contract with to run the drug side of health coverage, doing things like setting up a pharmacy network and determining co-payments. Most health insurers use pharmacy benefit managers and, in that world, Caremark is one of the biggest players. And CVS announced today that it's bringing Caremark into the fight against tobacco, too.

Caremark-managed health plans will now charge an additional $15 co-pay for any drugs picked up in a pharmacy that sells tobacco products, the Wall Street Journal's Pharmalot blog reports Monday morning. More from Ed Silverman there:

A CVS Health spokeswoman tells us that "numerous" Caremark clients have asked about developing a "tobacco-free" network of pharmacies. And so, CVS "is in the process of identifying pharmacies that do not sell tobacco products," she writes us. She did not provide a specific start date.

CVS is using its force as a pharmacy benefit manager to create a huge disadvantage for competitors who sell tobacco. And if consumers in Caremark-managed plans want to avoid that extra $15 co-pay, they can go fill their drugs at the one national chain that doesn't sell cigarettes: CVS.

This new decision helps explain why CVS was okay with giving up an estimated $2 billion in profits when they decided to end cigarette sales. This change to Caremark policies will likely have the effect of driving more prescriptions into CVS stores, as consumers seek to avoid the $15 surcharge. After all, who wants to pay more for antibiotics just because the store happens to be selling cigarettes in a totally separate aisle? ... "

They play rough.


Personally I prefer the California approach. Run ads showing the tobacco executives lying their Republican asses off on television and let the natural sense of outrage take over.



yrs,
rubato

[Big RR]

Perhaps some antitrust litigation is in the future; although the way tobacco is demonized by many, perhaps not. Yhy a nonsmoker should pay an additional copay to pick up a prescription in a pharmacy that sells cigarettes is beyond me except to push people to the "approved' pharmacies.

[Guinevere]

Wow, that's definitely anti-competitive, vertical integration, verging on trying to establish a monopoly.

Caremark can kiss my grits, really. I've never smoked, I have no desire to smoke, and I've worked with the same pharmacist for 15+ years. I'm not driving out of my way to a huge chain location, that doesn't give a crap about me, and is the slowest I've ever seen filling scripts (I've had to use them twice when I got sick out of town) because someone wants to control my non-existent bad behavior.

[Big RR]

Guin--my only concern is that the medical insurance companies have gotten a lot of leeway in establishing exclusive networks of providers, so I don't know if this behavior would be exempt. My guess is not, but who knows what exemptions medical insurers have?

[Sue U]

"Participating provider qualification" v. "anti-trust violation."

Perhaps some antitrust litigation is in the future

Ya think? Somebody's going to be hiring a lot of lawyers. Maybe it's time to re-tool our practices.

[Big RR]

Personally, I'd love to be involved in something like that.

[Guinevere]

Sign me up!

[Gob]

Pharmacies selling smokes? You couldn't make it up. We're so unfree here!!!

[Big RR]

Actually, the agenda here is not cigarettes, but an effort of the big chain pharmacies to squeeze out the independents. For most pharmacies, sales of things like tobacco products and lottery tickets make up a lot of their profits, as the payment on pharmaceutical plans is squeezing them on profits. Major chains, like CVS, have major buying power for their drugs and other products they sell, and thus they can be competitive with other stores (like supermarkets and discounters) on various other things they sell like shampoo, toothpaste, cosmetics, candies, etc. Independents don't have this clout and thus, their profit margins are slim and they can't match the bigger stores prices on the non pharma products. For some, selling tobacco products is a way to make up this difference (as prices are pretty controlled) and they would close without these profits (kind of like other convenience stores). The big chains and their affiliated insurers would rather not have to deal with the independents, so if they could remove a significant portion of their profit, it would make sense (especially if they could couch it as a concern about health). And so Caremark is charging $5 more to fill prescriptions at independent stores to push people to their chain, and hopefully force the independents to close their doors.

[kristina]

The only independent pharmacy in my town closed about four years ago. They were just a pharmacy; no Halloween candy/liquor/groceries/magazines like the CVS sells.

[Econoline]

Pharmacies selling smokes? You couldn't make it up. We're so unfree here!!!

Pharmacies? No. It would be more accurate to call the big drugstore chains "large stores selling a large variety of products, including smokes and prescription drugs."

[Jarlaxle]

Here's a question: would the charge also apply to, say, filling a script at a Wal-Mart or Stop & Shop pharmacy if that store sells smokes?

[BoSoxGal]

My local pharmacy is also the local liquor store. 'Nuff said.

[Gob]

Do you also have pharmacies which sell ...medications... over there?

[Econoline]

Most pharmacies here are part of larger--sometimes MUCH larger--stores; establishments which sell only (or even mostly) prescription drugs, non-prescription drugs, and other medical-related products (e.g. bandages, disinfectants and such) are pretty much a thing of the past in the U.S. There are a few here and there, but they are, by far, the exception rather than the rule.

[BoSoxGal]

I frequented such an establishment on Capitol Hill back when I was a law student in DC; I'd never seen such a place before or since. Tiny shop full of bedpans, walkers, crutches, etc. with a pharmacist on duty.

I doubt it's still in business.

[Econoline]

Interestingly, such stores--the few that still exist (and there IS still one in my neighborhood!)--are not the ones likely to be selling cigarettes. OTOH, the big-box stores like Walmart, Kmart, Target, etc. probably sell plenty of cigarettes but sell plenty of everything else too, so I don't imagine that tobacco sales make a hell of a lot of difference to them one way or the other. This move by CVS seems to me to be aimed mostly at their direct competitors, like Walgreens and Rite-Aid.

[Big RR]

I think a good number of independent pharmacies still sell tobacco products (I'd say about haf-2/3 in my area do); few can survive on prescriptions alone with the third party payment situation. As for K-mart, Walmart, and the like, what do you bet that they are exempted because the pharmacy is in a separate section and is rung up separately from the store? They have the space to do that, independent pharmacies do not. And whatever their motivation, I doubt CVS/Caremark wants to take these behemoths on in a court challenge; hit the target of least resistance first.

[oldr_n_wsr]

I have not seen an independent pharmacy around here in years. There used ot be one near us which we used, but they became a bank outlet.

CVS and Walgreens have been building like crazy around here. Rite Aid not so much. I think there is a CVS every 3 miles with more planned.

I go to KMART. I have a rapour with the pharmacist there.

[Big RR]

Give it some time oldr, and the chains are all you will see. Then the captive pharmacies will only carry generics from the affiliated insurer's approved (read, cheapest) suppliers and not stock any prescription drugs not on the insurer's preferred formulary ("you'll have to wait a few days while I order it or I can call your doctor to see if we can substitute this drug...") and eventually not carry them at all. Prescriptions will be filled not by the pharmacist, but by the army of technicians (s)he "oversees". And customer service, to the extent it exists at all, will eventually disappear.