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CVS Pharmacy

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CVS Pharmacy
Company typePublic
Subsidiary
IndustryRetail
FoundedLowell, Massachusetts, U.S. (May 8, 1963 (1963-05-08))
FounderStanley and Sidney Goldstein
Ralph Hoagland
Headquarters
Woonsocket, Rhode Island
,
U.S.
Number of locations
7,182 CVS and Longs Drugs stores (2010)[1]
Area served
Nationwide
RevenueIncrease US$55.663 billion (2009)
Increase US$2.019 billion (2009)
Increase US$1.660 billion (2009)
Number of employees
80,000 (2005)
ParentCVS Caremark
Websitecvs.com

CVS Pharmacy, or simply CVS, is the second largest pharmacy chain in the United States (after Walgreens), with over 7,000 stores in 41 states and Puerto Rico. As the retail pharmacy division of CVS Caremark, it sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products and cosmetics, film and photo finishing services, seasonal merchandise, greeting cards and convenience foods through their CVS Pharmacy and Longs Drugs retail stores and online through CVS.com. It also provides healthcare services through its MinuteClinic healthcare clinics as well as their Diabetes Care Centers. Most of these clinics are located within CVS stores.

CVS is incorporated in Delaware, and is based in Woonsocket, Rhode Island. It was founded in Lowell, Massachusetts in 1963.

Name

A newer CVS Pharmacy storefront in St. Louis, Missouri.

CVS Pharmacy used to be a subsidiary of Melville Corporation, where its full name was initially Consumer Value Stores. Melville later changed its name to CVS Corporation in 1996, after Melville sold off all of its non-pharmacy stores.

CEO Tom Ryan has said he now considers "CVS" to stand for "Customer, Value, and Service".[2]

During the company's days as a regional chain in the Northeastern U.S., many of CVS' stores did not include pharmacies, as in some jurisdictions, pharmacies are required to label themselves as such.

Today, the company seldom builds new stores without pharmacies, and is gradually phasing out these shops that remain outside of New England. Any new non-pharmacy store is usually built in a more urban setting, where another CVS with a pharmacy exists within walking distance, such as downtown Boston or Providence. These stores usually lack a pharmacy and a photo center, but carry most of the general merchandise items that a normal CVS Pharmacy carries, such as health and beauty items, sundries, and food items.

Acquisitions and growth

A CVS Pharmacy (Store #6240) in Southside Place, Texas (Greater Houston) that was formerly an Eckerd.
A CVS Pharmacy, in Durham, North Carolina.
  • In 1964, CVS had 17 stores that sold primarily health and beauty products.
  • In 1967, CVS began operation of its first stores with pharmacy departments, opening locations in Warwick and Cumberland, Rhode Island.
  • CVS was acquired by the now-defunct Melville Corporation in 1969, boosting its growth.
  • By 1970, CVS operated 100 stores in New England and the Northeast.
  • In 1972, CVS nearly doubled in size with its acquisition of 84 Clinton Drug and Discount Stores. The purchase introduced CVS to the Midwest with stores in Indiana.
  • In 1977, CVS acquired the 36-store New Jersey-based Mack Drug chain.
  • In 1980, CVS became the 15th largest pharmacy chain in the U.S. with 408 stores and $414 million in sales.
  • In 1988, CVS celebrated its 25th anniversary, finishing the year with nearly 750 stores and sales of about $1.6 billion.
  • In 1990, CVS acquired the 500-store Peoples Drug chain, which established the company in new mid-Atlantic markets including Washington, D.C., Pennsylvania, Maryland, and Virginia. The newly acquired stores were converted to CVS stores.
  • Also in 1990, CVS bought the 23-store Rix Dunnington chain.
  • In 1993, CVS withdrew from the southern California market.
  • Until 1996, CVS was a division of Melville Corporation. During that year, Melville divested its other subsidiary retail chains, which included Linens 'n Things, KB Toys, and Marshalls, and changed its name to CVS Corporation. Formerly traded as MVL on the New York Stock Exchange, the company now trades under the symbol CVS.
  • In 1997, CVS more than doubled its 1,400 stores after purchasing the 2,500-store Revco chain. The acquisition brought CVS into the Ohio Valley and southeastern United States; previously, the company's footprint had not been south of Virginia. CVS was able to afford so large a purchase because of its recent Melville divestiture.
  • In 1998, CVS acquired 207 stores from Arbor Drugs, bringing its store total to 4,100 across 24 states. The transaction gave CVS its first stores in Michigan and an instant lead in the highly competitive Detroit market.
  • In 1999, CVS acquired Soma.com, the first online pharmacy, and renamed it CVS.com. This allowed CVS to become the first fully integrated online and brick-and-mortar pharmacy.
  • In 2004, CVS purchased 1,268 Eckerd drug stores, as well as Eckerd Health Services, a PBM/Mail-order pharmacy business, from J. C. Penney. Most of the former Eckerd stores, which were converted to CVS stores by June, are located in Florida and Texas, as well as other southeastern states. Because J. C. Penney credit cards were accepted at Eckerd locations, CVS continues to accept them as well.
  • On January 23, 2006, CVS announced that it had agreed to acquire the freestanding drug store operations of supermarket chain Albertsons. The deal included the acquisition of 700 drug stores trading under the Osco Drug and Sav-On Drugs banners, mostly in the midwestern and southwestern United States with primary concentration of stores in southern California and the Chicago area, and was formally completed on June 2, 2006. Transition of Sav-On and Osco stores to the CVS brand began shortly thereafter, and was completed by December 2006. CVS now dominates the southern California market. Also included were Albertsons Health'n'Home (now CVS Home Health) durable medical equipment stores. Approximately 28 CVS Home Health locations are present in Arizona, California and the Kansas City area, representing CVS' first venture into the specialized DME market.
    CVS had previously operated stores in southern California, but completely withdrew from the market in 1993. CVS sold virtually all of the locations to Sav-On's then owner American Stores, who operated them under the name American Drug Stores. As a result, many of the stores CVS gained in January 2006 had been the stores it owned prior to 1993. Before their re-acquisition, the stores were operated under the name Sav-On Express (the Express name was used to help customers identify those stores that did not carry all the lines of merchandise as compared to the larger, traditional Sav-On Drugs locations). CVS now operates over 6,200 stores in 43 states and the District of Columbia.[3] In some locations CVS now has two stores less than two blocks apart.
Alternative logo of CVS Pharmacy
  • On July 13, 2006, CVS announced that it had entered into a definitive agreement to acquire Minneapolis-based MinuteClinic, the pioneer and largest provider of retail-based health clinics in the U.S. MinuteClinic operates as a wholly owned subsidiary of CVS Corporation. MinuteClinic health care centers are staffed by board-certified nurse practitioners and physician assistants who are trained to diagnose and treat common family illnesses such as strep throat and ear, eye, sinus, bladder and bronchial infections, and provide prescriptions when clinically appropriate. MinuteClinic also offers common vaccinations, such as flu shots, tetanus, and Hepatitis A & B. The clinics are supported by physicians who collaborate with the physician assistants and nurse practitioners. There are currently over 550 locations across the United States, most of which are within CVS Pharmacy locations.
  • On November 1, 2006, CVS announced that it was entering into a purchase agreement with Nashville-based Caremark Rx Inc., a pharmacy benefits manager. The new company is called CVS Caremark Corporation and the corporate headquarters remains in Woonsocket, Rhode Island. The new pharmacy services business, including the combined pharmacy benefits management (PBM), specialty pharmacy, and disease management businesses, is headquartered in Nashville, Tennessee. The new CVS Caremark Corporation is expected to achieve about $75 billion in yearly revenue for 2007. The merger was formally completed on March 22, 2007. Tom Ryan, CVS's Chairman and CEO, remains president and CEO of the combined company, while Caremark's President and CEO, Mac Crawford, is Chairman of the Board.
  • On November 7, 2007, Mac Crawford stepped down as Chairman of the Board for CVS Caremark. He was replaced by President and CEO of CVS Caremark, Tom Ryan.
  • On August 12, 2008, CVS Pharmacy announced that it would acquire Longs Drugs for $2.9 billion. Walgreens made a counteroffer, but dropped it. The deal closed Oct 30, 2008.[4]

Online

The domain cvs.com attracted at least 26 million visitors annually by 2008 according to a Compete.com survey.

CVS no longer owns the soma.com domain name, which it acquired with the purchase of online drugstore pioneer Soma. The domain name now belongs to a lingerie retailer.

Environmental record

In 2005, CVS participated in a program to reduce the pollution of Maine's waterways. CVS agreed to accept drugs for disposal, so that people would not dispose of them in ways that reach rivers and other bodies of waters.[5][6][7]

Controversies

A CVS location (#7606) in Austin, Texas, across from the University of Texas at Austin

Homeopathy

On April 1 2011, the James Randi Educational Foundation awarded CVS Pharmacy the tongue-in-cheek Pigasus Award for selling homeopathic remedies alongside medicines recognized by science.[8]

On October 31 2011, author Randall Munroe, creator of the webcomic xkcd created a satirical comic about alternative medicine titled "Alternative Literature". The alt text of the comic noted the sale of "homeopathic pills on the same shelves with--and labelled similarly to--their actual medicine." The text goes on to assert that the morality of such deception would be obvious to a child.[9]

Prescription errors

During 2005 a rash of prescription mistakes came to light in some of CVS Corporation's Boston-area stores. An investigation confirmed 62 errors or quality problems going back to 2002. In February 2006, the state Board of Pharmacy announced that the non-profit Institute of Safe Medication Practices (ISMP) would monitor all Massachusetts stores for the next two years.[10] Later, a 2007 segment on 20/20 accused CVS, Walgreens and Rite Aid among other pharmacies, of making various prescription dispensing errors. This segment aired in March 2007 and was called "ABC News '20/20' Undercover Pharmacy Investigation". CVS responded by claiming they have designed and invested millions of dollars in a comprehensive quality assurance program.[11]

Executives accused of bribing State Senator

Former CVS executives John R. Kramer and Carlos Ortiz were charged with bribery, conspiracy, and fraud (including mail fraud) by a federal grand jury for allegedly paying State Senator John A. Celona (D-RI) to act as a "consultant" for the company. Between February 2000 and September 2003, CVS paid Celona $1,000 a month, and he received tickets to golf outings and sporting events and compensation for travel to Florida and California. In August 2005, he pleaded guilty to mail fraud charges, and in January 2007, he was fined a record $130,000 by the Rhode Island Ethics Committee. The investigation was led by the FBI and the Rhode Island State Police, and the case was prosecuted by Assistant U.S. Attorneys Gerard B. Sullivan and Dulce Donovan. Additional information is available in a press release from the FBI's Boston field office.[12]

Texas lawsuit over illegally dumping patient information

Texas Attorney General Greg Abbott sued CVS in April 2007, for illegally dumping confidential patient information while closing an acquired Eckerd store in Liberty, Texas. CVS is accused of breaking the 2005 Identity Theft Enforcement and Protection Act. There are also other possible violations under the violations under Chapter 35 of the Business and Commerce Code.[13] CVS settled by paying $315,000 to the state and agreeing to overhaul its information security system.[14]

Deceptive business practices

A CVS store in West Hollywood, California.

In February 2008, CVS settled a large civil lawsuit for deceptive business practices. The Kaiser Family Foundation reported:[15]

CVS Caremark has agreed to a a $38.5 million settlement in a multi-state civil deceptive-practices lawsuit against pharmacy benefit manager Caremark filed by 28 attorneys general, the Chicago Tribune reports.[16] The attorneys general, led by Lisa Madigan (D) of Illinois and Douglas Ganslar (D) of Maryland, allege that Caremark "engaged in deceptive business practices" by informing physicians that patients or health plans could save money if patients were switched to certain brand-name prescription drugs (Miller, Chicago Tribune, 2/14).[16]

However, the switch often saved patients and health plans only small amounts or increased their costs, while increasing Caremark's profits, Connecticut Attorney General Richard Blumenthal (D) said (Levick, Hartford Courant, 2/15).[17] Pennsylvania Attorney General Tom Corbett (R) said the PBM kept discounts and rebates that should have been passed on to employers and patients (Levy, AP/San Francisco Chronicle, 2/14).[18] In addition, Caremark did not "adequately inform doctors" of the full financial effect of the switch and did not disclose that the switch would increase Caremark's profits, the lawsuit alleges (Chicago Tribune, 2/14).[16]

...The settlement prohibits Caremark from requesting prescription drug switches in certain cases, such as when the cost to the patient would be higher with the new prescription drug; when the original prescription drug's patent will expire within six months; and when patients were switched from a similar prescription drug within the previous two years (Hartford Courant, 2/15).[17] Patients also have the ability to decline a switch from the prescribed treatment to the prescription offered by the pharmacy under the settlement, Madigan said (Bloomberg News/Philadelphia Inquirer, 2/15).[18]

Methamphetamine lawsuit

A CVS location in Macomb, Illinois, formerly an Osco.

On October 14, 2010, CVS was ordered to pay 77.6 million dollars in fines and returned profits stemming from a lawsuit alleging improper control in the sale of an ingredient used to make methamphetamine.[19] CVS will forfeit 2.6 million in profits from the illegal sale of pseudophedrine as well as have to pay a fine of 75 million dollars, the largest civil penalty ever paid under the Controlled Substances Act.

Cigarette sales

In 2007 CEO Thomas Ryan said the company was considering halting the sale of cigarettes within its pharmacies but has not done so, citing internal market research that discovered ceasing cigarette sales will not change consumer behaviour (of buying cigarettes).[20] This contradictory approach to selling healthcare products and harmful products such as cigarettes on the same premises has drawn CVS and other pharmacies who continue the practice considerable criticism, including some regional bans on the practice.[21] [22]

References

  1. ^ CVS Caremark 2010 Annual Report
  2. ^ Berlinski, Peter (January/February 2006). "Ryan Preaches PL to CVS Team". Private Label Magazine. Retrieved 2008-03-03. {{cite news}}: Check date values in: |date= (help)
  3. ^ "CVS to Postpone Shareholder Meeting to Vote on Caremark Merger" (Press release). CVS Caremark. Retrieved 2008-03-03.
  4. ^ "CVS Caremark Successfully Completes Tender Offer for Longs Shares". MarketWatch. October 30, 2008. Retrieved November 4, 2008.
  5. ^ "Maine's First Drug Take Back Keeps Waterways Cleaner", Environment News Service, February 9, 2005. Retrieved May 8, 2008.
  6. ^ "CVS Pharmacy Plans Drug Collection for S. Portland, Maine",NERC Email Bulletin, January 2005. Retrieved May 16, 2008.
  7. ^ "Cleaning Up Medical Waste", MSW Management, Elements 2007, Vol. 16, No. 4. Retrieved May 16, 2008
  8. ^ Mestel, Rosie (April 1, 2011). "Dr. Oz, Andrew Wakefield and others, um, 'honored' by James Randi". Los Angeles Times. Retrieved April 02, 2011. {{cite web}}: Check date values in: |accessdate= (help)
  9. ^ This was referred to in the xkcd story of October 31, 2011 (see image alt text) Randall Munroe (October 2011, 2011). "Alternative Literature". xkcd.com. Retrieved October 31, 2011. {{cite web}}: Check date values in: |date= (help)
  10. ^ Rowland, Christopher (2006-02-10). "CVS faces pharmacy reviews". Boston Globe. Retrieved 2008-02-25.
  11. ^ "Drugstores Respond to '20/20'". The Blotter. ABC News. 2007-03-30. Retrieved 2008-02-25.
  12. ^ "Two CVS executives are accused of paying State Senator John Celona to advance the drug company's legislative agenda" (Press release). U.S. Department of Justice. 2007-01-18. Retrieved 2008-02-25.
  13. ^ "CVS accused of dumping Texas customers' records". AP/Dallas Morning News. 2007-04-17. Retrieved 2008-02-25.
  14. ^ Porretto, John (March 26, 2008). "CVS, Texas settle lawsuit over dumping customers' records". Boston Globe. Retrieved 30 July 2010.
  15. ^ "CVS Caremark Agrees To Pay $38.5M To Settle Allegations That It Did Not Pass on Rebates, Discounts to Patients, Employers". Kaiser Daily Health Policy Report. Kaiser Family Foundation. 2008-02-15. Retrieved 2008-02-25.
  16. ^ a b c Miller, James P. (2008-02-14). "CVS Caremark settles deceptive-practices complaint for $38.5 million". Chicago Tribune. Retrieved 2008-02-25.
  17. ^ a b Levick, Diane (2008-02-15). "Caremark Settles States' Probe". Hartford Courant. Retrieved 2008-02-25.
  18. ^ a b Levy, Marc (2008-02-14). "Caremark to pay $38M to settle drug-switching complaint". AP/San Francisco Chronicle. Archived from the original on 2008-06-11. Retrieved 2008-02-25. Cite error: The named reference "levy" was defined multiple times with different content (see the help page).
  19. ^ "CVS to pay $77.6 million in meth case". CNN. 14-Oct-2010. Retrieved 14-Oct-2010. {{cite news}}: Check date values in: |accessdate= and |date= (help)
  20. ^ Berkrot, Bill (November 14, 2007). "CVS wrestles with cigarette sales". Reuters. Retrieved April 16,2011. {{cite news}}: Check date values in: |accessdate= (help)
  21. ^ Rubenstein, Sarah (July 29, 2008). "Cigarette Sales in Drugstores Come Under Fire". The Wall Street Journal. Retrieved April 16,2011. {{cite news}}: Check date values in: |accessdate= (help)
  22. ^ Hussar, PhD, Daniel A. (March 1, 2009). "Pharmacy cigarette sales must end". Modern Medicine. Retrieved April 16,2011. {{cite news}}: Check date values in: |accessdate= (help)
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