CVS Heath makes a new move to smoke out rivals

CVS Health (CVS) is trying to smoke the competition…literally!

The owner of the big drugstore chain also provides prescription drug coverage through its Caremark division.  Now, CVS Health is telling subscribers they will have to pay more if they pick up their prescriptions at pharmacies that sell tobacco products.  Not coincidentally, CVS Health banned tobacco in its stores last month, but rivals Walgreens (WAG) and Rite Aid (RAD) do not.

Yahoo Finance Senior Columnist Michael Santoli says this move certainly gives the appearance of being unfair.

“I do think it will be seen as a little self-serving,” he says.  “And I think you’re going to see people make noise in that direction.”

Still, Santoli believes CVS Health can make an argument for such a move.

“Some of their big clients have come to them and said they would love it if they made their prescription network tobacco free,” he notes.  “So they’re saying they’re basically catering to customer needs.”

The program will require some patients to be charged additional co-pay for prescriptions picked up at places that still sell tobacco.  Walgreens and Rite Aid have not pulled those products because, they say, that won’t reduce tobacco use.

“Obviously, it will help the CVS chain,” Santoli says.

CVS Health operates more than 7700 drugstores nationwide.  It claims the move to pull tobacco products will cost it $2B a year in sales.