The Rite Aid Corporation is preparing a Chapter 11 bankruptcy filing to restructure debts including opioid liabilities, according to The Wall Street Journal and Bloomberg.
According to their sources, the Philly-based pharmacy chain’s advisers have entered confidential discussions to plan ahead of the filing. The company is still finalizing its plans, which could change, the reports noted.
According to the WSJ, Rite Aid hasn’t agreed on a settlement that it knowingly oversupplied prescription painkillers. From the U.S. Attorney’s Office:
The Justice Department announced on March 13, 2023, that the United States filed a complaint in intervention in a whistleblower lawsuit brought under the False Claims Act (FCA) against Rite Aid Corporation and various subsidiaries (collectively Rite Aid) alleging that Rite Aid knowingly filled unlawful prescriptions for controlled substances. In addition to alleging claims under the FCA, the government’s complaint also alleges violations of the Controlled Substances Act (CSA).
“We allege that Rite Aid filled hundreds of thousands of prescriptions that did not meet legal requirements,” said Associate Attorney General Vanita Gupta. “According to our complaint, Rite Aid’s pharmacists repeatedly filled prescriptions for controlled substances with obvious red flags, and Rite Aid intentionally deleted internal notes about suspicious prescribers. These practices opened the floodgates for millions of opioid pills and other controlled substances to flow illegally out of Rite Aid’s stores.”
The bankruptcy filing would pause the federal, state and local claims against the retailer. The move would also likely consolidate the thousands of claims against the pharmacy retailer and allow it to resolve them in one place.
According to Retail Dive, a filing could help the retailer restructure $3.3 billion in debt.
“The retail drugstore industry is highly competitive and consolidation has accelerated,” Rite Aid said in its most recent annual report. “We believe that such trends will continue due to vertical integration of retail pharmacy companies with [pharmacy benefit managers], insurance companies, and providers; aggressive generic pricing programs at competitors such as Walmart as well as via the growth of discount cards; and increased utilization of digital commerce, will further increase competitive pressures in the industry.”
Rite Aid is one of the largest pharmacy chains in the US, with more than 2,200 locations, including stores in Roslyn, Abington Township, Melrose Park, and Huntingdon Valley.
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Photo: Rite Aid