RITE AID: Court Case Reveals Secret Pricing Add-Ons
Today's Wall Street Journal reports that a "quirky job-discrimination lawsuit against Rite Aid [Corp.] pending in federal court in Miami has forced the company to confirm its policy of adding unadvertised surcharges to certain prescription prices." Specifically, it was revealed that "Rite Aid pharmacists are encouraged to tack 50 cents or more onto the price of each bottle of pain pills, antibiotics or other treatment purchased with a no-refill prescription." While first maintaining there was "no such thing" as "positive overrides," Rite Aid Vice Chair Franklin Brown later "confirmed that pharmacists in Rite Aid's 4,000 stores in 31 states have 'entrepreneurial authority' to raise prices on one-time prescriptions," the Journal reports.
Is This Normal?
The drugstore chain "says its policy is common and completely legal." It said the added charge is "justified because pharmacists must set up computer accounts for one-time customers, just as they do for more profitable repeat customers." And industry analysts concede drugstores "routinely charge high prices for some acute-care drugs, while discounting some long-term medications." However, the analysts also point out that Rite Aid's policy "is unusual ... because it gives pharmacists the discretion over when to levy the surcharges." Florida's attorney general's office said it "would look into whether the company had violated the state's ban on unfair and deceptive commercial practices" (Barrett, 2/26).
Not Gonna Sell
In other developments, "Rite Aid ... has agreed to pay a record $900,000 in civil penalties for failing to sell three drugstores in Maine and New Hampshire it had agreed to shed after acquiring drugstores owned by LaVerdiere Enterprises," according to the Federal Trade Commission. The Baltimore Sun reports that the settlement "was the largest ever reached by the FTC for a failure to divest" (2/26). "The FTC is serious when it requires a divestiture, and this payment by Rite Aid should send a message about the costs of failing to comply with our orders," said director of the FTC Bureau of Competition William Baer. "We have worked continuously with the FTC to the best of our ability to divest ourselves of these stores," said Rite Aid spokesperson Sarah Diaz. Bloomberg News/Philadelphia Inquirer reports that Rite Aid "is the nation's largest drugstore chain, with more than 4,000 stores nationwide and $12 billion in annual revenue" (Squeo, 2/26).