Ethical Corporation is now Reuters Events - LEARN MORE
The US pharma giant’s straight-talking report makes its prescription for a better world easier for investors to swallow
Walk into one of the 9,600 CVS Health emporiums around the US and you’ll find almost anything you could need: snacks, greeting cards, household goods, cosmetics and, of course, drugs dispensed by white-coated pharmacists in the back.
But unlike direct competitors Walgreens, Duane Reade, Rite Aid and Walmart, you will not find cigarettes or tobacco. In 2014, CVS Caremark, as it was named at the time, said it would stop selling tobacco products and changed its name to CVS Health. The intention was to better align the business with the company purpose, helping people on their path to better health. You can’t beat the logic, and the decision removed the absurdity of a pharmacy selling tobacco. Detractors warned of lost revenue ($2bn a year) and others accused the company of hypocrisy. After all, CVS Health would continue selling processed foods high in sugar, fat and salt. It’s tough being in the health business.
The retail pharma sector faces a challenging landscape as it battles online pharmacies and pharma tourism, as the sick head across borders to get their pills cheaper elsewhere. But with a fast-ageing and increasingly medicated population, business opportunities abound. Markets are expanding, as our society experiments with ways to improve access and quality of care, and provide preventative care.
CVS Health’s tobacco cessation programme was just the beginning of the company’s shift to a pharmacy and health-services business. Services now include MinuteClinic, 1,000 walk-in medical clinics across the US that provide various treatments and exams for non-emergencies. Telehealth enables CVS Health to use online and mobile platforms to communicate with customers about everything from correct dosages to vital signs. Pharmacy Advisor provides the 75 million members of the company’s pharmacy benefit management plan with personal or phone consultation with pharmacists to help manage chronic diseases.
As the business shifted, so too did CVS Health’s corporate social responsibility (CSR) strategy, called, rather cutely, Prescription for a Better World. The strategy is driven by the company purpose and is intended to align with its growth plan. The three pillars of the strategy are “health in action”, “planet in balance”, and “leader in growth”.
CVS Health has taken the high moral ground. It’s fair to expect its CSR report to give the reader a chance to judge the authenticity of its healthier-than-thou stance. We should also be able to reckon if CVS is indeed more responsible than its tobacco-peddling competitors.
With a cautiously optimistic tone, the report paints a sobering picture of the healthcare landscape in the US. CVS Health discusses the growing prevalence of chronic disease, prescription medication abuses and the epidemic of dependency on prescription painkillers and heroin. It also looks at the consequences of global warming on people’s health and its business. And it’s honest about those naughty snacks and beverages. CVS Health continues to sell many products that contribute to obesity, but it is transitioning to healthier, fresher offerings to provide better options for customers.
The report ticks many of the best-practice boxes and is “in accordance” with GRI G4 Guidelines. The expected data is there: workforce diversity, GHG emissions, water use, supplier screening and audits…
But the report would benefit greatly from more goal-setting. CVS is tackling difficult challenges and readers need to know the KPIs and targets that are in place for each pillar. This would provide clarity on the company’s performance year on year and enable the reader to differentiate progress from assertion. CVS Health could then measure its impact against standards such as the UN Sustainable Development Goals.
The report’s sober design and presentation may enhance its authenticity, but understanding would be improved with the judicious use of infographics and images to enhance the story. The overall impression is that CVS is trying to tell a straight story, rather than painting a rosy PR picture. We get a clear view of the company and how CSR is integral to the business.
The report provides the confidence that the company is genuinely grappling with how to grow the business in a rapidly changing landscape while retaining the purpose of a pharmacy: to help people keep healthy.
In New York City I have many choices about where to take my prescription and get my toothpaste and coconut water. After reading the report, CVS is now my first choice.
Robert Lock is a consultant with Context Group, a sustainability strategy and communications consultancy with offices in London, Los Angeles and New York.Robert Lock CVS Health strategy pharmaceuticals CVS tobacco sales ban