Smoke Break: What Tobacco-free Drug Stores Mean for E-cigarettes

Source from:  The Verge 02/10/2014

Cigarettes have been sold in pharmacies for so long that we rarely contemplate the inherent contradiction: stocking the leading cause of preventable death next to prescriptions and vitamins. So when CVS announced its decision earlier this week to stop stocking tobacco products in order to establish itself as a committed health care provider, the news was on every front page. Immediately, competitor Walgreens flip-flopped on a statement it made last year about selling cigarettes and announced it was "evaluating" the possibility of dumping them.

But analysts say the announcement is a manifestation of an existing trend, rather than the sign of a new one. CVS's decision to forfeit $2 billion in revenue will have little impact on the industry, they say, and no impact on people smoking. Another competitor, Rite Aid, announced it's sticking to tobacco for now, while other chains such as Dollar General just started selling cigarettes last year.

Even if CVS did trigger a mass exodus of newly health conscious pharmacies from the tobacco market, it wouldn't make much difference. Less than 4 percent of cigarettes are sold in pharmacies versus 16 percent in convenience stores, 21 percent in tobacco stores, and 48 percent in gas stations, according to market research from Euromonitor. The US would also just be catching up to the rest of the world, where many countries consider selling cigarettes in pharmacies hypocritical. The sale of tobacco products in pharmacies is illegal in most of Canada, for example. If pharmacies stop stocking tobacco products, this "would simply bring the US into line with wider international tobacco distribution norms," says Shane McGuill, Euromonitor's tobacco expert.

The news is still bad for the US tobacco industry. CVS's move is part of the overall "dwindling enthusiasm" for tobacco in the US, McGuill writes in a blog post. Cigarette sales fell 31 percent between 2003 and 2013 with no signs of rebounding. With public smoking bans on the rise, brands have shifted to a "total tobacco" strategy, pushing snuff, snus, nicotine lozenges, and e-cigarettes.
 
RJ Reynolds, the second-largest tobacco company in the US, offered a gracious statement in response to CVS's decision. "We value the long-term relationship we had with CVS and respect their commercial decision," a representative says in an email. "We will work with them as they transition out of the tobacco category in the coming months."

But the company's relationship with CVS likely isn't entirely over. Like most tobacco companies, RJ Reynolds also makes e-cigarettes — which could potentially replace traditional cigarettes on CVS shelves. The pharmacy doesn't sell e-cigarettes yet but says it is "monitoring" them — a common line from retailers as the Food and Drug Administration (FDA) dawdles on releasing regulations for how the products are marketed and sold. Like many US pharmacies, CVS is pushing further into health care by adding in-store clinics and basic medical services. The company needs to know whether e-cigarettes fit this new image. If the FDA determines that e-cigarettes are safe and can be used as a smoking cessation aid, it's likely that CVS will snap them up, and be more profitable as a result: e-cigarette sales doubled in 2013 to $1.5 billion, and are projected to surpass cigarette sales by as early as 2023, according to Bloomberg Industries.

When asked whether their tobacco products ban would affect their decision on whether to sell e-cigarettes in the future, CVS indicated it would not. "There is no tobacco in e-cigarettes," a representative tells The Verge. "FDA is evaluating whether they are effective nicotine replacement products with any health benefit."

The FDA, which regulates cigarettes and tobacco products, was supposed to issue proposed regulations for e-cigarettes back in October. The agency only regulates e-cigarettes that are marketed as therapeutic devices, which is why most e-cigarette companies shy away from claiming they help smokers quit. But amid the uncertainty, news about potential health dangers continues to trickle out. Jurisdictions including New York City and the state of Oklahoma have banned them in public places and state-owned property, respectively.

E-cigarette makers lobbied the FDA for a new regulatory category that would separate the vapor products from tobacco products, officially disassociating e-cigarettes from their out-of-vogue predecessors. Assuming there aren't any surprises about the health impacts of e-cigarettes, which experts say are less harmful than smoking tobacco, the FDA classification will be the dominant factor in where the devices get sold.

"We see electronic cigarettes as an anti-smoking product and we understand the pushback against combustible tobacco cigarettes," says Jeff Holman, president of Vapor Corp., a publicly traded e-cigarette company whose products are already on shelves in Family Dollar, Dollar General, and Rite Aid. "Ultimately, we are hopeful that our product category will benefit from this trend away from tobacco." Enditem