DOJ lawsuit could hamper Rite Aid’s turnaround

The news that the US government is suing Rite Aid, accusing the drugstore chain of “knowingly” filling illegal controlled substance prescriptions only adds to the financial and operational woes of the embattled drugstore chain.

The US Department of Justice said Monday that Rite Aid “disclosed controlled substances in violation of the False Claims Act and the Controlled Substances Act.” The complaint, filed by a False Claims Act whistleblower with the Department of Justice, alleges that between May 2014 and June 2019, Rite Aid pharmacists filled hundreds of thousands of prescriptions for controlled substances, including opioids, that “did not have a legitimate medical purpose.” were not granted for a medically recognized indication or not in the context of normal professional practice.”

“The Justice Department is using every tool at our disposal to counter the opioid epidemic that is killing Americans and rocking communities across the country,” said US Attorney General Merrick Garland. “This includes holding companies like Rite Aid accountable for knowingly filling unlawful controlled substance prescriptions.”

Rite Aid declined to comment on the government’s complaint Tuesday night.

The legal costs of such a high-profile case could run into the tens of millions of dollars, legal analysts say. And a potential settlement could be in the hundreds of millions of dollars or more, as the federal government has reached other massive settlements in other opioid lawsuits.

“We allege that Rite Aid filled hundreds of thousands of prescriptions that did not meet legal requirements,” Assistant Attorney General Vanita Gupta said. “According to our complaint, Rite Aid pharmacists repeatedly filled prescriptions for controlled substances with obvious warning labels, and Rite Aid intentionally deleted internal notes about suspected prescribers. These practices opened the floodgates for millions of opioid pills and other controlled substances to flow illegally from Rite Aid stores.”

The potentially costly investigation comes at a bad time for Rite Aid, which continues to lose money and has closed stores amid rising costs and increasing competition from rival drugstore chains led by CVS Health, Walgreens and Walmart, while online retail giant Amazon is delving deeper into the market Pharmacy encroaching and outpatient health care.

Meanwhile, Rite Aid has been led by several different directors and board members over the past five years. Rite Aid’s board of directors is currently seeking a permanent successor to the last CEO, Heyward Donigan, who left the company in January after leading the company since August 2019.

Rite Aid named Elizabeth “Busy” Burr, board member and longtime healthcare executive, as interim CEO in January. At that time, Rite Aid’s management confirmed its guidance for fiscal 2023, which forecast “net loss of between $584 million and $551 million, adjusted EBITDA of between $410 million and $440 million, and capital expenditures of approximately $225 million.” dollars” forecast.

By the time Donigan left the company, Rite Aid had already closed 145 unprofitable stores in her last year as CEO and was not ruling out closing more underperforming locations, executives said.

As of Tuesday, Rite Aid was yet to set a date for the release of its next earnings report, which is scheduled for the fiscal fourth quarter ending February 28 of this year.

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