CVS Caremark to impose surcharges at pharmacies selling tobacco

October 23, 2014

CVS Health recently announced that, starting next year, it may charge additional copays to patients who fill prescriptions at pharmacies that sell tobacco products.

CVS Health recently announced that, starting next year, it may charge additional copays to patients who fill prescriptions at pharmacies that sell tobacco products.

A company spokesperson, Carolyn Castel, said the $15 tobacco surcharge is an option insurance companies and employers can choose or reject. She said the surcharge amount would vary according to the client. The surcharges would be implemented by Caremark, the pharmacy benefits manager owner by CVS Health.

CVS pharmacy sales offset lost tobacco revenues

Earlier this year, CVS pulled removed tobacco products from all of its stores. CVS said the surcharge idea was prompted by employers and health plans that have inquired about a tobacco-free network. However, some analysts and industry insiders point to other motives.

“CVS retail drugstore business will certainly benefit, because prescription volume will shift into CVS retail pharmacies from other drugstore chains,” said Adam Fein of Pembroke Consulting. “Today, Caremark’s PBM pays for almost one-third of the prescriptions filled at CVS’s retail pharmacies. This program will further increase the volume staying within CVS Health’s integrated payer and dispensing system.”

 

Ricky R. Goldwasser, a Morgan Stanley analyst, said the move could net CVS about 6% of the revenues it will lose by ending tobacco sales. He said it would also pressure Walgreens and other competitors to end tobacco sales.

John Giampolo, head of the Independent Pharmacy Alliance, told the Wall Street Journal that CVS’ move would give it “an unfair” competitive advantage. “Consider a local pharmacy that hasn’t carried tobacco for years, but the consumer may not know whether the pharmacy participates or not. So a consumer may go to a CVS pharmacy to save the $15. An independent pharmacy may have to scramble to do their own marketing,” Giampolo said.

CVS said it would provide customers with a list of pharmacies where the surcharge would not be charged before implementing the new program.