CASE 2

The Mission of CVS: Corporate Social Responsibility

and Pharmacy Innovation

INTRODUCTION anniversary in 2003 was marked with increasing west-

ward expansion, 44 million loyalty card holders, and
In 1963, brothers Stanley and Sidney Goldstein founded more than 4,000 stores in approximately 30 states. In
the first Consumer Value Store (CVS) with partner the following five years, the company’s acquisitions
Ralph Hoagland in Lowell, Massachusetts. The store allowed CVS to gain leadership in key markets, begin a
originally sold health and beauty supplies. It was widely mail order business, and open its 7,000th retail location.
successful, and grew to include 17 stores in one year. By It would also undergo a name change to CVS/Caremark
1967, CVS began offering pharmacy in-store depart- after acquiring Caremark Rx, a prescription benefits
ments, and in less than a decade it was acquired by the management organization.
retail holding corporation Melville Corporation. This The two most important acquisitions in the history
marked the beginning of CVS’s expansion across the of CVS include MinuteClinic walk-in health clinics (in
east coast through new store openings or mergers and 2005) and Caremark Rx, Inc., (in 2007), a pharmacy
acquisitions. It soon reached the milestone of exceeding benefits management company. To date, MinuteClinic
$100 million in sales in 1974. has facilitated over 18 million patient visits in 800
As the company grew, it faced intense competition, clinics across 27 states, putting them in prime position
which it responded to through a differentiation strategy. to reach their 2017 goal of operating 1,500 clinics in
CVS focused on its core offerings of health and beauty 35 states. CVS/Caremark, as it was renamed after the
products, placing stores in shopping malls to generate acquisition, became the second largest pharmacy in
more foot traffic. This strategy worked well for the the United States after Walgreen’s, introducing new
company, causing it to hit $1 billion in sales by 1985. services such as online prescription refills. By 2011, the
The company celebrated their 25th year in 1988 with company had more than $100 billion in revenue, 7,500
750 stores and $1.6 billion in sales. The acquisition of retail pharmacies, 31 retail specialty pharmacies, 12
People’s Drug stores enabled CVS to establish its pres- specialty mail order pharmacies, 18 onsite pharmacies,
ence more widely along the coast and spurred the launch and a pharmacy benefit management business.
of PharmaCare, a pharmacy benefit management (PBM) CVS purchases and stocks products that meet
company providing services to employers and insurers. the highest quality standards as well as its own line
In 1996 the Melville Corporation restructured, and of products whose specifications and performance are
CVS became independent as a publicly traded company annually tested and reviewed to ensure compliance
on the New York Stock Exchange. with applicable consumer safety laws. In addition, the
This new surge of investment allowed the company company has instituted its own Cosmetic Safety Policy
to expand widely across the nation into the Midwest that cosmetic products on the shelves must meet. CVS
and Southeast. CVS’s acquisition of 2,500 Revco stores employs 200,000 people in over 7,600 locations across
became the largest acquisition in U.S. retail phar- 46 states, the District of Columbia, Puerto Rico, Brazil,
macy history. With the rise of the Internet, CVS seized and Northern Ireland. Corporate headquarters are
upon the opportunity to launch CVS.com in 1999 located in Woonsocket, Rhode Island. In one year, CVS
(and Caremark.com after the 2007 acquisition). This filled and managed 1.6 billion prescriptions, provided
became the first fully integrated online pharmacy in the services to 63 million PBM clients, and surpassed $126
United States. In another first for the U.S. pharmacy billion in net revenues. The company is proud to note
retail industry, the company introduced the ExtraCare their number 13 spot on the Fortune 100 list. It has
Card loyalty program in 2001. The company’s 40th also paid dividends to shareholders for 69 consecutive

*This case was prepared by Yixing Chen, Christine Shields, and Michelle Urban for and under the direction of O. C. Ferrell and Linda
Ferrell © 2014. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an adminis-
trative, ethical, or legal decision by management. All sources used for this case were obtained through publicly available material.

439

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 440 Business and Society

quarters, with dividend increases for 11 consecutive The allegations initiated investigations by the Office
years. Today, CVS is one of the largest pharmacy health of Civil Rights (OCR) and the FTC, marking the first
care providers and pharmacies in the United States, and such collaborative investigation into a company’s prac-
is comprised of four business functions: CVS/Caremark, tices. These investigations revealed other issues as well,
MinuteClinic, PBM Services, and Retail Pharmacy. including a failure of company policies and procedures
The following case will explain some of the legal to completely address the safe handling of sensitive
and ethical challenges CVS/Caremark has encoun- patient information, lack of proper employee training
tered, including a settlement with the Federal Trade on disposal of sensitive information, and negligence
Commission (FTC) and U.S. Department of Health in establishing repercussions for violations of proper
& Human Services (HHS) regarding violations of the disposal methods. This was in spite of the fact that
Health Insurance Portability and Accountability Act CVS materials reassure clients that their privacy is a top
(HIPAA) Privacy Rule, deceptive business practices, and priority for the pharmacy. This claim, in addition to the
unseemly conduct by a manager resulting in a death. investigative findings, prompted the FTC to allege that
Our examination will also include how CVS/Caremark CVS was making deceptive claims and had unfair securi-
responded to such allegations, and how they have ty practices, both of which are violations of the FTC Act.
worked to redefine the company as a healthcare pro- CVS settled the case with the U.S. Department
vider. We will analyze the company’s ethical structure, of Health & Human Services (HHS), which over-
including their recent decision to stop selling cigarettes, sees the enforcement of the HIPAA Privacy Rule, for
as well as an overview of some criticisms the company $2.25 million regarding improper disposal of patients’
has received during their transition. The conclusion health information. The settlement also mandated that
offers some insights into the future challenges CVS will the company implement a Corrective Action Plan with
likely experience. the following seven guidelines: (1) revise and distribute
policies regarding disposal of protected health infor-
mation; (2) discipline employees who violate them;
ETHICAL CHALLENGES (3) train workforce on new requirements; (4) conduct
internal monitoring; (5) involve a qualified, indepen-
Like most large companies, CVS must frequently dent third-party to assess company compliance with
address ethical risk areas and maintain socially respon- requirements and submit reports to HHS; (6) establish
sible relationships with stakeholders. Although CVS internal reporting procedures requiring employees to
has excelled in social responsibility, it has suffered from report all violations of these new privacy policies; and
ethical lapses in the past. The next section addresses (7) submit compliance reports to HHS for three years.
some of CVS’s most notable ethical challenges, some of The company also settled with the FTC by signing a
which resulted in legal repercussions. consent order, requiring the company to develop a com-
prehensive program that would ensure the security and
confidentiality of information collected from customers.
HIPAA Privacy Case of 2009 In so doing, the company agreed to a biennial audit
from an independent third party. This audit is meant to
As a company grows and achieves widespread influ-
ensure that CVS’s program meets the FTC’s standards
ence, it also inherits a responsibility to act ethically and
for its security program. CVS is forbidden by law from
within the law. In 2009, CVS/Caremark was accused of
misrepresenting its security practices.
improperly disposing of patients’ health information. It
was alleged that company employees threw prescription
bottle labels and old prescriptions into the trash with-
out destroying sensitive patient information, making it
Deceptive Business Practices
possible for the information to fall into public hands. In addition to privacy challenges, CVS/Caremark
This is a violation of the HIPAA Privacy Rule, which has been accused of deceptive business practices.
requires companies operating in the health industry to A 2008 civil lawsuit involving 28 states was filed
properly safeguard the information of their patients. against the personal benefits management division of

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 Case 2 The Mission of CVS: Corporate Social Responsibility and Pharmacy Innovation 441

CVS/Caremark, which acts as the prescription drug The DEA suspension decreased the amount of such
claim intermediary between employers and employees. narcotics being distributed to the two CVS locations by
It also maintains relationships with drugstores and 80 percent in a period of three months, limiting their
manufacturers. The allegations of the lawsuit included ability to make a profit. When the matter came before
urging doctors to switch patients to name brand pre- a federal judge, he ruled that the company was at fault
scriptions under the notion that it would save them for lack of proper oversight in distributing the drug and
money. Furthermore, these switches were encouraged other narcotics. The ruling further implied company
without informing doctors of the financial burden it negligence as such a large amount of pills should have
would impose on patients, and employer healthcare been noticed as a blatant abnormality.
plans were not informed that this activity would benefit Later that year, the DEA completely revoked
CVS/Caremark. This could be seen as a conflict of inter- the licenses of the two locations to sell controlled
est at the expense of customers. Due to these allegations, substances—the first time this has occurred with a
the suit called for a revision in how the division gives national retail pharmacy chain. CVS claims that they
information to consumers. In the end, CVS/Caremark have improved their procedures regarding its distribu-
signed a consent decree without admitting fault and tion of controlled substances; however, the DEA’s claims
paid a settlement of $38.5 million to reimburse states explicitly included negligence on the part of pharmacists
for the legal costs and patients overcharged due to the in light of obvious “questionable circumstances.” These
switch in prescription. In a similar matter, a multiyear- circumstances included the fact that several customers
long FTC investigation concluded (in 2009) that the were coming to Florida from out of state to fill pre-
company had misled consumers regarding prices on scriptions. Many lacked insurance and paid in cash, a
certain prescriptions in one of its Medicare plans. red flag that can suggest illegal use of drugs. This was
The switch harmed elderly customers as they were in addition to the heavy pill problem in the area which
billed for up to ten times the amount they anticipated. had already prompted state legislation.
CVS/Caremark settled with the FTC for $5 million to Testimonies from employees indicated company
reimburse customers for the change in price. negligence as they had knowledge of the top prescrib-
ing doctors in the area and awareness that daily oxy-
codone quotas were being depleted—sometimes within
30 minutes of the pharmacy opening. Pharmacists also
Overdistribution of Oxycodone indicated that they set aside pills for those patients they
In 2012, CVS faced challenges with another federal considered to have a real need for them because they
agency—the Drug Enforcement Administration (DEA). had strong suspicions that most of the people purchas-
The DEA suspended the company’s license to sell con- ing the pills were abusers. They did not feel at liberty
trolled substances at two Florida locations, only a few to refuse prescriptions to customers, however, because
miles apart from one another. These locations were they are not trained to diagnose illnesses. In 2013, CVS
found to have ordered a total of 3 million oxycodone announced a review of its database of healthcare pro-
pills in 2011. The average order for a U.S. pharmacy viders to find abnormalities in narcotic prescriptions.
in the same year is 69,000 pills. Intensifying the mat- They found and notified at least 36 providers to whom
ter, abuse of narcotics (pain pills) is prevalent in the they would no longer fill orders due to high prescrip-
area. Florida state legislation had been implemented in tion rates.
response to the issue as local clinics became known as Another incident in 2014 involving the disap-
“pill mills” for their liberal distribution of prescriptions pearance of 37,000 pain pills in four California stores
for pain pills. brought the DEA and CVS together again. These stores
CVS responded to the DEA’s investigation by have a history of not being able to account for sev-
notifying some of the area doctors that they would eral pain prescription drugs. This incident carries up to
not fill prescriptions written for oxycodone (Schedule 2,973 violations of the Federal Controlled Substances
II narcotics). However, they also requested a tempo- Act and could cost the company up to $29 million
rary restraining order against the DEA, which would in penalties. In 2012, the DEA investigated missing
disable the temporary suspension of selling the drugs. pills in a store wherein an employee admitted taking

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 442 Business and Society

approximately 20,000 pills. This piqued the curiosity of Innovative programs such as Pharmacy Advisor and
investigators, who found three retail locations that each Maintenance Choice, developed in collaboration with
had thousands of pills missing. researchers from Harvard University and Brigham and
Women’s Hospital, help patients stay on their medica-
tions. Research shows that regular interaction between
Death of a Shoplifter patient and pharmacist increases the likelihood that
patients will adhere to their medication regimen. Many
In 2010, a man accused of shoplifting toothpaste was patients who take regular prescriptions often think that
chased out of a CVS store by a manager. Video surveil- they are well enough to cease taking their medication.
lance footage showed an altercation between the two. However, when the symptoms of their ailments reap-
Six bystanders came to the manager’s assistance, one of pear, the costs are great, both financially and medically.
whom was seen kicking and punching the perpetrator CVS’s programs allow the company to inform patients
while the manager held him around the neck. Within about the benefits and risks of these effects through edu-
seconds, the man was heard saying he could not breathe cation and awareness. The entire industry also benefits
and died shortly thereafter. Police investigated the from this knowledge by preventing more costly medical
incident and have not filed charges despite the medical procedures due to medication non-adherence, which
examiner’s classification of the death as a homicide. The occurs when patients skip or incorrectly take their dos-
manager claimed that the shoplifter punched him, so he age requirements. This is estimated to cost between $5
retaliated in self defense. The victim’s mother is filing a and $10 for every $1 spent on adherence programs.
civil lawsuit against the manager and claiming CVS is These services are key components of CVS’s com-
liable for her son’s death. Whether or not CVS is found petitive advantage, allowing them to provide the best
culpable, the tragedy cast a shadow over CVS and how possible patient care. They were also proactive in pre-
it handles shoplifters. paring patients for Health Care Reform. For instance,
CVS/Caremark partnered with the Centers for Medicare
and Medicaid Services to raise awareness about new
MOVING TOWARD A services available to Medicare patients under the ACA.
To help people keep up with these and other
HEALTHCARE COMPANY changes in healthcare, CVS has established its pres-
Despite the ethical challenges CVS has experienced, it ence on social media and mobile devices. The company
is trying to reposition itself as a socially responsible introduced a mobile application for customers to con-
organization that places priority on consumer health. veniently refill prescriptions, while their Facebook and
Being a quality healthcare company not only offers Twitter pages provide helpful health tips. Customers
reputational benefits, but financial advantages as well. benefit from using CVS’s digital tools for savings and
Changes in both the economic and healthcare landscape new user experience. CVS’s iPad application allows
are creating new opportunities for CVS to provide dif- individuals to have a 3D digital pharmacy experience
ferent programs and redefine itself. Trends including reminiscent of shopping in store. Those who are unable
the declining number of primary care physicians, the to physically visit the store, or prefer the convenience
16 million baby boomers who are becoming eligible of shopping from home, are able to partake in the CVS
for Medicare benefits, and the more than 30 million experience through the company’s technology. With
newly insured Americans under the Affordable Care over 10 million registered users, many are saving money
Act (ACA) offer CVS an attractive market in which to and time filling and refilling prescriptions as well as
expand. For example, CVS has refocused its efforts on having instant access to essential drug information.
supplying the growing need for chronic disease man- MinuteClinics are one of the major contributors
agement that consumes costly resources when patients to CVS’s rebranding efforts. These clinics are the first
do not adhere to physician recommended medications in healthcare retail history to be accredited by the
and monitoring methods to maintain health. PBM ser- Joint Commission, the national evaluation and certify-
vices are being successfully implemented, including mail ing agency for healthcare organizations and programs
order, specialty pharmacy, plan design and administra- in the United States. This accreditation signifies the
tion, formulary management, discounted drug purchase clinic’s commitment to and execution in providing safe,
arrangements, and disease management services. quality healthcare that meets nationally set standards.

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 Case 2 The Mission of CVS: Corporate Social Responsibility and Pharmacy Innovation 443

In addition to healthcare services, MinuteClinics provide Walmart Stores, Inc., Walgreen Co., and Rite Aid Corp.,
smoking cessation and weight loss programs that con- highlighting the contradiction of selling deadly products
tribute positively to people’s health. These clinics are and healthcare services simultaneously. The letter also
also the first retail clinic provider to launch a partner- noted that drug store sales make it easier for younger
ship with the National Patient Safety Foundation for its age groups to begin smoking and more difficult for
health literacy program to help improve patient educa- those trying to quit smoking. Walmart and Walgreen
tion and community health. acknowledged the letter, but made no indication that
Under the ACA, healthcare organizations are eli- they would stop selling tobacco products. Rite Aid
gible to become members of the Accountable Care responded by saying they will continue to sell both
Organizations (ACO) program. This program ensures tobacco products as well as smoking cessation services,
that members are accountable in providing quality as the practice is legal. While this letter does not seem
healthcare to the sick as well as meeting certain stan- to have much of an influence on retailers, some specu-
dards to provide health-conscious programs such as late that it increases the pressure on the $100 billion
those related to smoking cessation and weight loss. tobacco industry, which is already facing decreasing
Accountability is measured by positive outcomes, result- sales, rising taxes, and smoking bans. For CVS, the
ing in cost savings, which in turn is divided up among decision will affect their short-term profits and reduce
members to continue these effective programs and each share by $0.06–$0.09 each. Investors do not seem
services. There are at least 123 ACOs in the United worried, however, as the long-term benefits will make
States, and more than 360 ACOs have been established up the difference.
as Medicare providers since the ACA went into effect—
covering over 5.3 million patients.
CRITICISM AGAINST CVS
REVEALING CVS’S NEW CVS’s new programs are encroaching on the medical
industry by providing services to patients. As custom-
DIRECTION: TOBACCO-FREE CVS ers increasingly choose to visit local pharmacy clinics
In order to be consistent with their transition from for aches, pains, or common illnesses, primary physi-
pharmacy to healthcare company, CVS has made some cians are feeling the losses, especially since this sector’s
landmark decisions aimed toward helping individuals healthcare professionals are dwindling. Choosing a
lead healthier lives. In 2014, CVS announced that it retail pharmacy clinic over a physician’s office benefits
would no longer sell tobacco products. The revenues the patient with lower costs and savings, which is a
generated from selling tobacco products are about threat to traditional doctors’ offices. Some groups are
$2 billion annually, so this bold decision sends a strong publicizing negative feedback on pharmacy care. For
message to stakeholders regarding the values of the instance, the American Academy of Pediatrics issued
company. A company that is consistent in their actions a statement warning patients not to visit such clinics
will gain a good reputation, which will attract more because they cannot offer the specialized care children
customers and generate revenue. This decision also need. Some groups argue that programs such as CVS’s
gives CVS an advantage in terms of the ACA. As the MinuteClinic do not offer the same caliber of service
ACA changes the healthcare landscape, companies are and care as a doctor. However, as stated above, CVS
racing to get a stronghold in the new system to be listed holds itself to a very high standard for care in trying to
as a preferred pharmacy. CVS/Caremark’s alignment in help patients be healthy. It continues to be accredited by
defining itself as a healthcare provider will likely result the Joint Commission.
in stronger relationships with doctors and hospitals, CVS MinuteClinics do recognize their limitations,
creating an advantage of preference. The goal is that however. Their website offers information to visitors
referrals for medication will be done through CVS and regarding when they should and should not visit the
serve to boost reputation within all CVS segments. clinics. For example, the website recommends that
This, in conjunction with its status as an ACO, puts patients with severe symptoms such as chest pain, short-
CVS in a competitive position to attract newly insured ness of breath and difficulty breathing, poisoning, tem-
Americans. peratures above 103 degrees Fahrenheit (for adults) and
This decision spurred 24 state attorneys general 104 (for children), and ailments requiring controlled
to send letters to other pharmacy retailers, including substances should seek care elsewhere. MinuteClinics

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 444 Business and Society

staff nurse practitioners and physician assistants who all stakeholder needs are addressed. The following sec-
are able to provide services for minor wounds, com- tions will describe how they meet the needs of other
mon illnesses, wellness tests and physicals, etc. Other stakeholders.
information regarding insurance and pricing are also
available on the website.
Employees
CVS implemented the Values in Action program for
STAKEHOLDER ORIENTATION employees, giving them a chance to recognize colleagues
CVS’s mission to be a pharmacy innovation company is through online reward systems. Peers can nominate
guided by five values: innovation, collaboration, caring, each other across the company for leadership traits and
integrity, and accountability. CVS uses these values to other commendable accomplishments. Each nomination
determine their actions and decisions, which offers a grants points, which can be redeemed for merchandise,
glimpse into their ethical culture. The company’s goal is travel, and more. Programs like these let employees
to use their assets to reinvent the pharmacy experience know they are valued and empower them in their com-
and offer innovative solutions that help people on a bet- mitment to CVS. The Values in Action Breakthrough
ter path to health. This goal relays to stakeholders that Awards is an annual company-wide broadcast that
the company cares about their health. CVS/Caremark’s honors specific individuals exemplifying the company’s
business is committed to fostering a culture that values in innovation, collaboration, caring, integrity,
encourages creativity and innovation, recognizing that and accountability.
contributions from all members are a high priority. This CVS focuses strongly on compliance and integrity
commitment highlights their value of collaboration with training for employees. The compliance and integrity
partners and stakeholders, which also serves to hold training for employees is led by a Compliance Officer.
them accountable for their operating activities—thus Regular compliance education and training programs,
strengthening their integrity. Another important factor a confidential 24/7 ethics hotline, and an efficient
in their ethical culture is to address enhanced access to audit, response, and prevention process are components
care while also lowering its cost. that make this program comprehensive. The company
CEO Larry J. Merlo emphasizes the long-term per- also supports the development of employees through
spective the company is committed to with each deci- professional development training sessions. The pur-
sion and how it will affect each stakeholder group. He pose of such training is not only to keep employees
states that CVS’s priorities remain in customer health, current on new technologies and processes but to help
the sustainability of healthcare systems, good steward- them advance in their careers within the company.
ship, positive contributions to their communities, and a
meaningful workplace for employees. Such a statement
from the top leader of the company sets the tone that
creates the ethical culture behind CVS. The company’s
Shareholders
Code of Conduct includes ethical behavior expecta- CVS seeks to protect shareholder interests while main-
tions, and they are proud to have good relationships taining broad stakeholder engagement. As a result,
with employee unions who represent approximately CVS carefully designed a comprehensive corporate
6 percent of their workforce. CVS employs a Chief governance system ranging from board independence
Compliance Officer, offers regular compliance educa- to executive compensation. Following a corporate gov-
tion and training, provides an ethics hotline for con- ernance framework, a variety of specialized committees
fidential reporting, and has developed a response and has been established with different functions for share-
prevention guideline for addressing violations of CVS’s holders. From an information governance standpoint,
policies or federal, state, or local laws. CVS’s corporate the oversight committee makes recommendations to
governance includes a privacy program, information enhance the ability of information security. On behalf of
security, and a corporate framework that focuses on the the board of directors, the audit committee is in charge
company’s values. of the risk oversight and is responsible for protecting
So far we have addressed how CVS meets the the reputation and core interests of the company.
needs of its customer stakeholders. However, CVS In order to balance the interests of different groups,
tries to maintain a stakeholder orientation in which senior management created a reformative executive

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 Case 2 The Mission of CVS: Corporate Social Responsibility and Pharmacy Innovation 445

compensation system. This system is based on financial Suppliers

performance as well as service quality and customer
satisfaction. While a pay for performance compensation CVS has developed a commitment called Prescription
system is still utilized at CVS, a significant portion of for a Better World, which encompasses their Code of
annual executive compensation is delivered into long- Conduct, Supplier Ethics Policy, Supplier Diversity,
term equity rather than short-term. In a move to further and Supplier Audit Program to promote integrity,
align the commitment of CVS to link pay with perfor- accountability, and diversity. These programs work
mance, total shareholder return is added on a three-year to ensure that human rights are respected throughout
incentive plan. Each three-year period is known as a the entire supply chain. In developing these policies,
cycle that has a predetermined set of goals for the com- CVS used principles initiated by the International
pany/executive to accomplish. At the end of each term, Labor Organization and the United Nations’ Universal
performance is evaluated and the executive will receive Declaration of Human Rights. The human rights frame-
compensation based on these results. For example, if the work guides all suppliers of CVS to avoid unethical and
results surpass the goal by 25 percent, the executive pay illegal practices such as child labor, human trafficking,
will increase by a certain predetermined amount. The discrimination, and dangerous workplace conditions.
details will vary for each cycle, but the purpose of the The Supplier Audit Program is a risk-based assess-
plan is to pay only when the company and its sharehold- ment conducted by more than one third party to
ers are benefited from the performance of the executive. evaluate workplace conditions, including labor, wages
and hours, health and safety, management system and
environment, as well as operational, financial and legal
Communities risks, to assure that employees’ rights are not being
violated. This program was fully expanded to factories
CVS has grown its ethical culture not only to include the in countries considered to be at high risk for such viola-
company’s functions but the communities around them. tions, and they are in the process of implementing full
Community engagement and philanthropic endeavors, social audits for subcontractors in these areas. In addi-
for example, are long-standing commitments CVS has tion, CVS works with globally recognized organizations
devoted time and resources in developing. Community including Worldwide Responsible Accredited Production
partnerships have supported veteran hiring, scholar- (WRAP) and Social Accountability International (SAI)
ships to future pharmacists, and engaged high school, to ensure their measurements are relevant and effec-
college, and post-graduate students’ interest in science, tive. Finally, partnerships with Intertek’s GSV pro-
technology, engineering, and math (STEM) careers. CVS gram maintains the company’s certification status with
believes that by helping to further advancements in the the U.S. Customs-Trade Partnership Against Terrorism
best health outcomes, they are investing in their current (C-TPAT) program to ensure quality of products made
and future workforce. in countries such as China.
CVS donated over $75 million to various organiza-
tions and builds strategic partnerships with them to cre-
ate an awareness of healthy behaviors and educate the Environmental Impact
community on ways to become insured under the ACA.
The company also offers free health screenings and Environmental impact is also important to CVS. They
flu shots for the uninsured, prescription discount card record their progress on this front in their annual
programs, and other community programs to supply Corporate Social Responsibility (CSR) Report. They
individuals with the medications they need to maintain have set a carbon intensity reduction goal of 15 per-
health. The discount card program saves customers over cent by 2018, and through energy efficiency upgrades
70 percent on medications, resulting in millions of dol- have been able to address 9 percent of that goal to
lars in savings every year. Volunteerism is also support- date. CVS opened their first Leadership in Energy and
ed by CVS, as employees are encouraged to form groups Environmental Design (LEED) Platinum store, which
and obtain sponsorship from the company to address will serve as a test site to determine the most effective
needs within their community. The company reported and relevant environmental innovations for the com-
12 such national groups and 40 regional groups involv- pany’s environmental operations goals. They will use
ing over 4,000 employees in 40 states who donated over this information to set best practices before constructing
2,000 hours to community initiatives. other stores.

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 446 Business and Society

CVS expanded their Energy Management System Sources

(EMS), which is designed to ISO (International
Organization for Standardization) specifications. This Reed Abelson and Natasha Singer, “CVS Settles
digital system tracks and manages energy use, so that Prescription Price Case,” The New York
each store can be continually monitored and adjusted Times, January 12, 2012, http://www.nytimes.
according to each location’s condition. They are also in com/2012/01/13/business/cvs-caremark-settles-charges-
the process of upgrading lighting in the stores to more over-prescription-prices.html?pagewanted=all&_r=2&
energy efficient bulbs. Increasing water use was identi- (accessed August 4, 2014).
fied as a significant inefficiency, and CVS has responded “Annual Report,” CVS Caremark, 2013, http://ir2.flife
by eliminating irrigation at retail locations and opting .de/data/cvs1/igb_html/index.php?anzahl=1&bericht_
for less water-intensive landscapes. Finally, CVS offers id=1000001&lang=ENG (accessed August 5, 2014).
customers ways to recycle and properly dispose of Devlin Barrett, “Judge Rules against CVS in Oxycodone
expired, unused, or unwanted medications, which ben- Fight,” The Wall Street Journal, March 13, 2012, http://
efits both human and environmental well-being. online.wsj.com/news/articles/SB1000142405270230
3717304577279871365405382 (accessed August 4,
2014).
CONCLUSION Rebecca Borison, “CVS/Pharmacy iPad App Mimics in-
store Experience,” Mobile Commerce Daily, August 14,
CVS is implementing strategies and allocating resources 2013, http://www.mobilecommercedaily.com/cvsphar-
in the hope of achieving an ethical culture that benefits macy-exec-offering-virtual-store-experience-via-ipad-app
all stakeholder groups. This helps CVS to maximize eth- (accessed August 4, 2014).
ical decision-making and remain sustainable for years Hank Cardello, “CVS and the Rise of Corporate Profitable
to come. It seems they have learned from previous ethi- Morality,” Hudson Institute, February 27, 2014, http://
cal lapses by being aware of addiction problems within www.hudson.org/research/10138-cvs-and-the-rise-of-
their communities. In 2014, CVS voluntarily opted to corporate-profitable-morality (accessed June 6, 2014).
stop selling some cold medications in West Virginia and “Corporate Social Responsibility Report,” CVS Caremark,
surrounding areas as more methamphetamine labs and 2012, http://investors.cvscaremark.com/˜/media/Files/C
corresponding abuse became more prominent through- /CVS-IR/reports/cvs-caremark-csr-report-2012.pdf
out the state. The company’s impact on the environment (accessed August 5, 2014).
is one of the next big challenges they will have to over- “Corporate Social Responsibility Report,” CVS Caremark,
come. As one of the largest pharmacies in the United 2013, http://info.cvscaremark.com/CSR-Report/#1
States, they have a long way to go to reduce their overall (accessed August 5, 2014).
footprint. However, they are on the right track, having “Company History,” CVS Caremark, http://info.cvscare-
set goals and implementing action steps to achieve these mark.com/about-us/our-purpose/company-history
goals. With the mission of helping people live healthier (accessed June 6, 2014).
lives and innovating the pharmacy industry, CVS has “CVS Caremark Maintenance Choice Program Improves
a great responsibility in developing a business model Medication Adherence for US Airways Employees and
allowing them to remain competitive while acting ethi- Dependents,” CVS Press Release, September 15, 2010,
cally at the same time. http://info.cvscaremark.com/newsroom/press-releases
/cvs-caremark-maintenance-choice-program-improves-
medication-adherence-us (accessed August 4, 2014).
Questions for Discussion “CVS Caremark Settles FTC Charges: Failed to Protect
Medical and Financial Privacy of Customers and
1. How has CVS handled its ethical challenges? Employees; CVS Pharmacy Also Pays $2.25 Million to
2. Evaluate CVS’s decision to no longer sell tobacco Settle Allegations of HIPAA Violations,” The Federal
products. Trade Commission, February 18, 2009, http://www.ftc
3. What is the future of CVS in positioning itself as .gov/news-events/press-releases/2009/02/cvs-caremark-
a healthcare company based on its decision to be settles-ftc-chargesfailed-protect-medical-financial
socially responsible? (accessed August 2, 2014).

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 Case 2 The Mission of CVS: Corporate Social Responsibility and Pharmacy Innovation 447

“CVS Pays $2.25 Million & Toughens Disposal Practices Timothy W. Martin, “CVS to Kick Cigarette Habit,”
to Settle HIPAA Privacy Case,” U.S. Department of The Wall Street Journal, February 6, 2014, pp. B1–B2.
Health and Human Services, http://www.hhs.gov/ James P. Miller, “CVS Caremark Settles Deceptive-
ocr/privacy/hipaa/enforcement/examples/cvsresolu- practices Complaint for $38.5 Million,” Chicago
tionagreement.html (accessed August 2, 2014). Tribune, February 15, 2008, http://articles.chicagotri-
Mike Estrel, “States Urge Retailers to Drop Tobacco,” bune.com/2008-02-15/business/0802140788_1_cvs-
The Wall Street Journal, March 18, 2014, p. B3. caremark-caremark-rx-pharmacy-benefits (accessed
“Everybody Loves a Quitter,” CVS MinuteClinic, http:// August 2, 2014).
www.cvs.com/minuteclinic/resources/smoking-cessation Chris Morran, “CVS Being Investigated After 37,000 Pain
(accessed August 4, 2014). Pills Go Missing,” The Consumerist, March 11, 2014,
Joseph H. Harmison, “CVS Caremark Abuses Warrant http://consumerist.com/2014/03/11/cvs-being-inves-
through FTC Investigation and Remedies,” The Hill, tigated-after-37000-pain-pills-go-missing/ (accessed
May 25, 2010, http://thehill.com/blogs/congress-blog/ August 4, 2014).
healthcare/99759-cvs-caremark-abuses-warrant-through- Mark Morelli, “Healthy First: CVS Will Stop Selling
ftc-investigation-and-remedies (accessed August 2, 2014). Cigarettes,” The Motley Fool, February 7, 2014, http://
“Investor Fact Sheet,” CVS Caremark, March 2014, www.fool.com/investing/general/2014/02/07/healthy-
http://investors.cvscaremark.com/˜/media/Files/C/CVS- first-cvs-will-stop-selling-cigarettes.aspx (accessed
IR/reports/cvs-factsheet.pdf (accessed August 5, 2014). August 6, 2014).
Chris Isidore, “Cigarette Sales: Walgreens, Rite-Aid, “Our Pharmacy Advisor Program,” CVS Caremark, http://
Wal-Mart, Kroger & Safeway Urged to Selling info.cvscaremark.com/cvs-insights/our-pharmacy-advi-
Tobacco,” CNN Money, March 17, 2014, http:// sor-program (accessed August 4, 2014).
www.wptv.com/web/wptv/news/health/cigarette-sales- Paul Edward Parker, “Rite Aid Responds to CVS Decision
walgreens-rite-aid-wal-mart-kroger-safeway-urged-to- to Stop Selling Tobacco,” Providence Journal, February 6,
selling-tobacco (accessed August 6, 2014). 2014, http://www.providencejournal.com/breaking-news/
Bruce Japsen, “How Obamacare Helps CVS Kick The content/20140206-rite-aid-responds-to-cvs-decision-to-
Habit,” Forbes, February 2, 2014, http://www.forbes stop-selling-tobacco.ece (accessed August 6, 2014).
.com/sites/brucejapsen/2014/02/15/how-obamacare- Amy Pavuk, “Rx for Danger: DEA Blasts CVS for
helps-cvs-kick-the-habit/ (accessed June 6, 2014). Ignoring ‘Red Flags’ at Sanford Stores,” Orlando
Elisabeth Leamy, “Drug Discount Cards Help You Save Sentinel, October 28, 2012, http://articles.orlandosen-
on Prescription Meds,” ABC News, August 20, 2012, tinel.com/2012-10-28/news/os-cvs-dea-oxycodone-
http://abcnews.go.com/Business/drug-discount-cards- ban-20121028_1_sanford-cvs-sanford-pharmacies-
save-money-prescription-meds/story?id=17029498 sanford-stores (accessed August 4, 2014).
(accessed August 5, 2014). Amy Pavuk, “Two Sanford Pharmacies Banned From
Donna Leinwand Leger, “DEA: Oxycodone Orders by Selling Oxycodone, Controlled Substances,” Orlando
Pharmacies 20 Times Average,” USA Today, Sentinel, September 12, 2012, http://articles.orlan-
February 7, 2012, http://usatoday30.usatoday.com/ dosentinel.com/2012-09-12/news/os-sanford-cvs-
money/industries/health/story/2012-02-06/dea-cvs-oxy- caremark-revoke-drugs-20120912_1_revokes-prescrip-
codone-raid/52994168/1 (accessed August 4, 2014). tion-drug-abuse-oxycodone-and-other-prescription
Natasha Leonard, “Homeless man Choked to Death (accessed August 4, 2014).
After Shoplifting Toothpaste,” Salon, January 18, “Press Release: More Partnerships between Doctors and
2013, http://www.salon.com/2013/01/18/homeless_ Hospitals Strengthen Coordinated Care for Medicare
man_choked_to_death_after_shoplifting_toothpaste/ Beneficiaries,” Centers for Medicare and Medicaid
(accessed August 4, 2014). Services Press Release, December 23, 2013, http://
“The Long-Term Incentive Plan,” CVS Carenark, March www.cms.gov/Newsroom/MediaReleaseDatabase/
24, 2009, http://www.wikinvest.com/stock/CVS_ Press-Releases/2013-Press-Releases-Items/2013-12-23.
Caremark_Corporation_(CVS)/Long-term_Incentive_ html (accessed August 4, 2014).
Plan (accessed August 6, 2014). “Quality,” CVS MinuteClinic, http://www.cvs.com/minute-
Kris Maher and Sara Germano, “CVS Takes Steps on clinic/visit/about-us/quality (accessed August 4, 2014).
Meth Abuse in West Virginia,” The Wall Street Journal, “Services,” CVS MinuteClinics, http://www.cvs.com/
July 8, 2014, p. A3. minuteclinic/services (accessed August 4, 2014).

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 448 Business and Society

Kyle Stock, “Pediatricians Seek Risk-to Kids and CVS Caremark, http://info.cvscaremark.com/about-us/
Themselves-in DrugStore Health Clinics,” Bloomberg our-purpose-building-bridge-better-health (accessed
Businessweek, February 24, 2014, http://www.busi- August 5, 2014).
nessweek.com/articles/2014-02-24/pediatricians-see- Jessica Wohl, “CVS Cuts Off Docs Who Prescribe Too
risk-to-kids-and-themselves-in-drug-store-health-clinics Many Narcotics,” NBC News, August 22, 2013, http://
(accessed June 6, 2014). www.nbcnews.com/health/health-news/cvs-cuts-docs-
“We’re a Pharmacy Innovation Company and Every Day who-prescribe-too-many-narcotics-f6C10975693
We’re Working to Make Health Care Better,” About (accessed August 4, 2014).

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