king who is onlily game is an outspoken opponents of russia's anti-gay laws. russia passed a law banning game propropaganda last june, those e the head likes, i am tony aries, "inside story" is next on al jazerra america. >> higher prices cracking down on youth sales, tougher and tougher health messages all had a role in reducing smoking. now another idea, how about making smokes hard to buy at all. that's the inside story.

>> hello, i'm ray suarez. it's been a half century since the drum beat has begun beating, smoking makes you sick. ering cvs, a huge player in the personal care retail care category has taken a march on its competitors, and made a surprising announcement. they will no longer sell medicines that make you better in the back of the store and selling cigarettes in front of the counter. cigarettes contributes mightily to the tax collections across the united states. it's an interesting corporate call. let's take a closer look.

>> it's the right time and right decision to remove cigarettes from our store shelves, positioning us in a growing role in the healthcare delivery system. >> the country's second largest drugstore chain will phase out cigarettes and other tobacco products in the coming months. in the next coming years you won't see cigarettes on the shelves of the 8,000 cvs stores. it could cost the corporation millions, the obama administration applauded the decision. the president am former smoker praise the chain and said it sends a powerful example that will bring down healthcare costs. katherine sebelius celebrated the decision saying they have taken a step forward in the

retail industry. this announcement comes days after the food and drug administration announced a ad campaign to prevent smoking in teens. >> don't let tobacco control you. >> a pack of cigarettes? >> starting next week the $115 million multi media campaign will be seen on tv stations like mtv in print spots in magazines like teen vogue and social media. it's estimated 90% of smokers pick up the habit before they turn 18. the real cost campaign is aimed at 10 million kids between the ages of 12 and 17 who are not yet hooked but may be attempted. half a million people die each year because of smoking-related illnesses. just last week the fourth

marlboro man paste passed away. nearly half of american adults smoked in 1965 while today only 18% puff away. despite the encouraging numbers 42 million americans can't kick the habit. their addiction makes smoking the leading cause of preventable death with $132 billion in direct medical costs. cvs and other drug stores like it are trying to reinvent themselves by moving beyond the role of traditional pharmacies and becoming healt healthcare providers. with nurses and doctors on staff offering flu shots and diagnosing common ailments. selling a product that leads to chronic health issues is extremely inconsistent with cvs's main goal. >> every day we're helping millions of patients manage

chronic conditions like high blood pressure high cholesterol and diabetes and all of these conditions are made worse by smoking. tobacco products have no place in a setting where healthcare is delivered. >> cvs is not the first retailer to stop selling cigarettes. target did it 20 years ago. there are laws in cities that prohibit cigarettes sells in pharmacies. the cvs move is the latest example of a growing trend that stamp out smoking as the surgeon general concluded in 1964 smoking kills. [ kills. >> organizations like the american cancer society have long been fighting for a ban of tobacco products in drug stores. joining me now in lappet the chief cancer control officer at the american cancer society.

doctor, the sign of the times or something more substantial going on here? >> i think its both. i believe this is an unique time in history. the whole business model for the retail industry is changing but healthcare has truly risen to the top of our national agenda not just for the health of the nation but the economic future of the nation. it is the sign of the times, but it is a company stepping up and realizing it's time to do the right thing. >> do you anticipate that cvs will be a trend setter in this regard, other companies will follow suit, or will they watch and see how it goes for a while? >> that's a great question, and it's a critical one. all of the retail pharmacies themselves have posed this question. cvs is not the first company i'm sure that who has at least raced

the issue of providing healthcare on the one hand but selling tobacco on the other. i personally believe that the other companies will be watching very carefully, but i also think they'll feel pressure as a result of the cvs decision and the positive result and taking action when they otherwise wouldn't have. >> if you're going to continue smoking you'll get your cigarettes some other way. >> in is no question that pharmacies are not the main way people buy cigarettes today. convenience stores are responsible for 80% of 15% of all tobacco sales occur in retail pharmacies. nevertheless i'm very confident at least some people will quit as a result of this decision. they're going walk into the cvs where they've always purchased their pack of cigarettes. they're going to realize it's no

longer sold and they'll be forced to make a personal decision. do i go somewhere else or is this the moment that i quit. we have known for years in fighting the tobacco problem if we make it more difficult to smoke some people quit. every time we make a building smoke-free some people quit. i'm very confident that now we've eliminated one important place to buy cigarette packs some people will quit. >> in its corporate announcement the head of cvs said the mission was no longer consistent with selling cigarettes. are we finally seeing 50 years after the surgeon general's report, putting a dollar amount on the idea of continuing to allow what is a legal product, to continue to be sold. >> i believe we are. that's why i said at the

beginning this moment has changed compared to target's decision 20 years ago because the problem with healthcare costs is impacting our entire economy. you i called it the most impactful health report in history. i believe it will happen again. i'm sure it was complete coincidence that cvs made the decision now as part of the anniversary to make this the moment that they made that key decision to no longer sell tobacco products. there is no question that all of us who are in the healthcare business have a responsibility to look at that triple link, better health, better healthcare experience, but a better

efficient healthcare system. part of that responsibility will be to do the right things to prevent chronic healthness that contribute so much to spending. >> dr. winder, thank you for joining us. when we come back after a quick break we'll continue our conversation about cvs's decision about tobacco and try to understand the public health, branding and business consideration that goes into stopping sales of a lethal but product. i'm here to make the connections to your money real.

al jazeera america. we open up your world. >> here on america tonight, an opportunity for all of america to be heard. >> our shows explore the issues that shape our lives. >> new questions are raised about the american intervention. >> from unexpected viewpoints to live changing innovations, dollars and cents to powerful storytelling. >> we are at a tipping point in america's history! >> al jazeera america. there's more to it. >> welcome back to inside story. i'm ray suarez. cvs, the nation's second largest drugstore chain just announced it will phase out the sale of tobacco products. the decision will cost the company $2 billion in annual revenue, so why do it?

we're going to take a closer look at the pharmacy business and what cvs' business means in the fight for health. director of the smoking smoking cessation leadership, and focusing on the healthcare services industry. and president and ceo of the robert wood johnson foundation joins us here in washington. dr. schrod er, is this a symbolic move? >> it's an important symbol, but my hope as said by dr. winder is it will cause some people who might not have thought of quitting to actually quit now. the fact that you might not see as many advertisements in cvs stores may dissuade some young

people from starting smoking. >> you've done research and written a paper on it, what did you find? was there an effect from geographical proximity to whether or not you'll pick up a pack of cigarettes or not. >> what we found working as health providers as well as working at a store that sells products that will kill them. we researched stores that sold cigarettes. inside stores mainly did not and chain pharmacies did. since then is about independent stories have begun vanishing, the denser of concentrations selling cigarettes, the more likely people are to be smokers. >> you have already heard a couple of times about that conflict of missions between a company that wants to position

itself as a healthcare provider, but around the country local laws vary but many places like cvs sell booze, premium eye ice cream with high butter fat, and so many other things that are not good for you. >> i think it comes into sharp focus because cigarettes and tobacco products are universally harmful. you can't make an argument for continuing to smoke. it leads to chronic illnesses as we talked about. you can make a different kind of argument for most of the other products that you've mentioned. having a healthcare organization, a his where healthcare services are

delivered also selling a product that is universally harmful is a conflict of interest that you can't ignore. >> while you check out your lipitor as well as looking at a quarter of ben and jerry's. >> not quart, but you can have some. >> the company acknowledged from the very beginning that it's going to trim $2 billion from its revenue. yes, it's a north of $100 billion growing concern, how much of a big deal is this as a business decision? >> not necessarily a lot. when you look at what they're bringing in terms of revenue and profitability and cvs is a healthcare servicer, meaning they help plans, health surers employers manage their healthcare costs. that's a key piece of their business.

it makes logical sense to take these products out of the retail side. it's not a big hit to the bottom line. what they can do now is sell products on the other side of the house to employers, to health plans to help them in controlling healthcare costs and drug pricing and costs overall. costs in the u.s. are going up. premiums are going up and expenses in terms of health insurance is going up annually. cvs is trying to help clients control those costs, and it just makes sense that they take the tobacco products out right now. >> arguebly if a place like cvs puts its energy into smoking cessation products they can close some of that $2 billion gap. >> they say they will for 2014 and beyond. they say they can meet or exceed their projections for long-term growth, profitability and revenue.

and again their main business is helping health insurance plans, health insurance sponsors and payers manage their medical costs. this is a key piece of that strategy in terms of being able to sell an all encompasses healthcare services type product. they're getting a lot of pr out of this. they're going to be looked upon as being one of the better players with the pharmacy chain segment, but over all this makes a lot of strategic sense when you look at the total operation, when you look at both sides of the business and what they can get from a growth perspective from a top and bottom line perspective. >> you're an analyst who looks at this sector. is there a way to price in the value of pr when a company makes the decision to trim tw this annually? >> you discount cash flows. that's the end of the story

basically for stock valuation. when you look out beyond five, ten years, when you look at cvs and catc cash flows, it helps businesses control their healthcare costs. it makes good sense in long-term perspective. it's nice to see this happening and from a pr perspective today, and longer term this helps a great deal in growing their business. now they can sell their products easier. they can go ahead and tell planned sponsors and employers, the government for that matter, the services they sell in controlling drug-benefit costs is there, and it's not going to harm their members when they come into the stores. >> not just controlling costs, but actually having as part of the profit picture bringing down medical costs.

a company like cvs with the various businesses it's in has incentive to help people get better. >> absolutely. that's a trend we're seeing in the public healthcare community. part of keeping people healthy is embracing the culture of health and give the opportunity to make the community of making those healthy choices as a default. decreasing the density of communities to buy a hammer unfortunately product and increasing the opportunity to make healthy choices. so in the long run they're increasing their opportunities to keep people healthy, which will help their business model. >> dr. schroder, i know its impossible to design a study on the fly, but how about doing nothing with smoking plumbing from half of the adults to one in five now, and frankly the customers dying out the back end, isn't this a product whose

best days are behind them any way? >> a lot of people think that, partly that's because we live in gated communities. most people i know don't know smokers. smokers are concentrated among poor people, people with mental illness, substance abuse problems, the homeless, so we don't see them. but the stark facts are sobering. 500,000 people a year die from smoking. they're over 43 million smokers as former minister of australia said doing nothing means killing people. >> we're going to take a short break. when we come back we'll talk about the future of the tobacco industry and the healthcare industry. this is "inside story."

>> welcome back to "inside story" i'm ray suarez. 50 years ago nearly half of the

people in the country smoked but now it's down to 18%. on this edition of the program we're talking about the ongoing battle against smoking specifically in light of cvs announcing it will stop the sale of all tobacco products in its stores later this year. and how is the business world positioning it i itself that haa pool of customers that will continue to need it for the foreseeable future. it's tough to strategize around a product that is as unpopular as cigarettes. >> if you're a retailer, it's definitely a head wind. but at the retail sector itself there is an effort to cut back on smoking, and make sure that the pool you're servicing are healthier.

when you're looking at the underwriting, smoking is a key piece of that. they are firms out there like cvs that are controlling those costs and control the use of medical care and usage of pharmaceuticals for that matter, that's a key piece of what's going to be a driver for cvs. when you look at the true value for cvs and true value driver it's pharmacy benefits management business is a key factor. it'the pharmacy management busis is the key driver, and this announcement stay, this strategy goes hand in hand driving value for the firm. >> we've been talking about the to multi in the cigarettes

business. there is to multi in the business as well. >> the factors that people will cut back or stop is price. that's a big factor if a person is going to start in the first place, especially young people. the availability, the ease of being able to smoke, and that speaks to whether you can smoke in a business place or right outside of it, and how well people understand the consequences of smoking. those three factors are critical that people figures o first of t start, and then are motivated to quit. you need to have smoking cessation products and support to insure people be successful.

>> doctor, you mentioned earlier it's a certain sub section in society that is hanging on to the smoking habit. i worked as a convenient store clerk as a college student. i sold cigarettes at $0.75 a pack. now you can see cartons costing $75. what about people who can't stop. what do we do for them. >> we help them smoke. poor old uncle joe has chronic illness. cigarettes is his only pleasure. why help him stop? he'll die 20 years older, death might be miserable, b, he'll

expose little jimmy to second-hand smoke. we're offering help t. we can do that. in terms of cost a lot of people we see panhandling may not be panhandling for food, clothes or alcohol or drugs but for cigarettes because they want them so badly and they don't have the money to buy them. >> still in all does this represent this move by cvs as someone who watches this, as someone who distributes information about health to the country, was it a celebratory moment for you? >> absolutely. this was a huge precedent for a major company like this to say it's willing to take a hit, a financial hit, maybe only short term, we hope, but a courageous move to set a new precedent that

business can do the right thing, and help to contribute to a culture where we all look to be healthier. so this was a very celebratory day for those of us looking to reduce the deaths from tobacco and chronic illnesses that come from tobacco. >> so another step towards de-normaling cigarettes? >> i think we have to take this step, and this was a big step towards denorming cigarette use. >> to my guests, thank you all for a being with me today. that brings us to the end of this edition of "inside story." in washington, i'm ray suarez.

and my answer to him, immediately there and then was, so what? >> wow. there is the only prison in the world with a sun bed. ♪ ♪ ♪ ♪ ♪