CASE 1920
The Mission of CVS: Fired up aboutCorporate
Social Responsibility and Pharmacy Innovation
CASE NOTES FOR INSTRUCTORS
CVS made national news when it announced it was going to stop selling tobacco products, forgoing $2
billion in sales in the short-run. CVS claimed it was making this decision because it wanted to position
itself as a healthcare company, and it did not see tobacco product sales as being congruent with a
company that should be known for health. While this will cost CVS in the short-run, it is likely to
positively impact future partnerships with healthcare companies. It could also give the firm a competitive
advantage over rival firms Rite Aid and Walgreen’s.
This case discusses CVS’s decision. However, students should be aware that even a firm striving to be
socially responsible still has ethical lapses. For instance, two Florida CVS locations got into trouble for
enabling oxycodone abuse among customers. A shoplifter was killed by a store manager after a scuffle,
leading the man’s family to file a civil lawsuit against the manager and claiming CVS should be held
liable. The company itself has experienced problems with the HIPAA privacy law and potentially
deceptive marketing practices.
How companies respond to their ethical lapses reveals whether they learned from their mistakes. After the
ethical misconduct took place, CVS took measures to reduce risk areas and increase its positive influence
among customers, employees, communities, etc. It has adopted a stakeholder orientation that considers
the needs of a variety of stakeholders, including customers, employees, shareholders, communities,
suppliers, and the environment. The company’s recent acquisition of Target’s pharmacies will help
increase its reach in other states and solidify its reputation as a healthcare firm.
It has also implemented measures to try and prevent future issues. For instance, in West Virginia CVS
voluntarily decided to stop selling some cold medications due to the rising abuse of methamphetamine
use in the area. This shows the firm is proactively trying to address potential problems before they
snowball into a major crisis.
Students should learn from this case that a company can emerge from past mistakes as a stronger firm.
They should also realize that social responsibility is a continuous process requiring organizations to
remain vigilant, identify risks, and proactively promote ethical behavior.
QUESTIONS AND DISCUSSION
1. How has CVS handled its ethical challenges?
CVS has handled its ethical challenges in a number of ways. For the HIPAA privacy violation, it took
a more reactive approach when it was found guilty of misconduct. The company paid a fine and was
forced to implement a Corrective Action plan. It was also fined for deceptive marketing practices,
In these situations, CVS mainly reacted to the situations and penalties imposed on the company. In
more recent years, the company has begun to adopt a more proactive approach, attempting to handle
ethical challenges before they become problems. For instance, it sees selling tobacco products as
hypocritical in its mission to become a healthcare company and—even though it is perfectly legal to
2. Evaluate CVS’s decision to no longer sell tobacco products.
Students’ answers will vary. Some might think it is a bad idea. After all, CVS will lose money in the
short-term, and its competitors have not made a similar commitment. Some might question if this is
socially responsible to the company’s shareholders. On the other hand, from a long-term
perspective this will likely benefit CVS in its mission to position itself as a healthcare
3. What is the future of CVS in positioning itself as a healthcare company based on its decision to be
socially responsible?
Students’ answers will vary. Its decision to be socially responsible aligns well with its positioning as a
healthcare company. How this decision will affect the organization in the long-term remains to be
.
ADDITIONAL RESOURCES
Students can read about CVS’s decision to stop selling tobacco products at this link:
http://www.nytimes.com/2014/02/06/business/cvs-plans-to-end-sales-of-tobacco-products-by
-october.html.
The oxycodone scandal is explained in this Wall Street Journal article:
http://www.wsj.com/articles/SB10001424052702303717304577279871365405382.
Ways in which CVS continues to fight against tobacco use:
https://www.forbes.com/sites/susanmcpherson/2016/07/06/two-years-after-the-ban-how-cvs-c
ontinues-to-take-on-tobacco/#196c99641e2f