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Comment by christopheraden | Hacker News Reader

My first question was how CVS-Caremark, a publicly traded company would be allowed to do this, considering it would hurt their bottom line. I didn't think ethics were a reasonable excuse for knowingly hampering profits, unless they felt there was some long-term benefit to their business of not selling cigarettes. Fiduciary duty trumps morals.

Does it have anything to do with the fact that CVS-Caremark is one of the largest PBMs in the US (second only to ExpressScripts, actually)?

There's more at play here than just a moral action.

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Public companies do not have a "fiduciary duty" to put profits ahead of morals. Whatever made you think that was the case?

Executives are beholden to the board who is beholden to the shareholders. If the shareholders don't want this, they can force change at any level.

  Whatever made you think that was the case?

Probably because public companies frequently use this as an excuse for their immoral business practices. Examples? Basically any health insurance company in the US.

There are a couple of benefits to doing this:

1) They look better

2) They get extra shelf space back

3) They don't have to secure all those high-dollar cigarettes or worry about their theft

4) As smoking declines, they'll probably eventually have to do this anyway, so why not get some positive spin out of it?

I'm willing to guess they've run the number and know this isn't going to be a huge hit to their business.

If the article on the same topic in the WSJ is accurate, this decision was portrayed as a strategic move by CVS to move further toward becoming a healthcare provider rather than simply a drugstore. CVS already has nurse practitioners providing basic care in clinics in some of their stores, and apparently CVS tries to have their pharmacists counsel people on some health concerns. It was reported that, in trying to deepen their relationship with the medical community and some medical organizations, that CVS's continued sale of cigarettes was a point of distrust among the medical community. CVS wants to prove that it is earnest in trying to become a healthcare provider.

There is a large shortage of primary care physicians in the US that is only expected to get worse (which continues to result in the utilization of physician assistants and nurse practitioners for primary care). Furthermore, slipping cigarette sales in recent years (and renewed campaigns to curb smoking in the US) make this look like a long-term tactical bet by CVS.

As has been repeated many times here, there is no legal "fiduciary duty" that requires profit maximization in lieu of every other business goal. They don't need a reason any better than good PR.

>Fiduciary duty trumps morals.

That's an anti-corporate fallacy.

It's not really anti-corporate when the same logic is used in defense of corporate actions. It's just incorrect.

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