For Immediate Release - July 27, 2011

Rite-Aid Pays $2.1 Million to Resolve Allegations of Prescription Drug Overcharges to Massachusetts Cities and Towns

Latest settlement marks $7.9 million in recoveries to Massachusetts cities and towns

BOSTON - The Rite Aid Corporation (Rite-Aid) will make a payment to the Commonwealth and to approximately 100 cities and towns in Massachusetts totaling $2.1 million, Attorney General Martha Coakley announced today. The pharmacy chain entered into a settlement with the AG's Office after an investigation revealed the company had been overcharging public entities for prescription drugs under the workers compensation insurance system.

This case, which is the fifth of its kind, marks a total $7.9 million in recoveries to Massachusetts cities and towns. A similar case against The Walgreens Company was resolved earlier this month.

"This case is about fairness to cities and towns, especially during these tough economic times," said Attorney General Martha Coakley. "Our ongoing investigation has uncovered how numerous Massachusetts pharmacies have been overcharging local communities for prescription drugs. Since our review began last year, we have recovered almost $8 million for cities and towns and helped prevent overcharges in the future."

The Attorney General's Office alleges that Rite-Aid billed and received payment from cities, towns and state agencies for filling prescriptions drugs for workers compensation claimants at prices in excess of those permitted by Massachusetts laws. Under the terms of the settlement, filed in Suffolk Superior Court, Rite-Aid will make a payment to the Commonwealth totaling $2.1 million. This payment includes $1 million to cities and towns that were allegedly overcharged by Rite-Aid since 2002 and an additional $1.05 million to the Commonwealth.

As part of this latest settlement, the city of Boston will receive approximately $41,000 in restitution. In addition, the cities of Springfield, Holyoke, Chicopee, Easton, Fall River, Lawrence, Lowell, Pittsfield, Taunton, and Wrentham will each receive refunds in excess of $10,000. On average, municipalities will receive approximately $4,500.

The settlement is part of an ongoing investigation by the Attorney General Coakley's Insurance and Financial Services Division of prescription drug overcharges by pharmacies to public entities under the workers compensation insurance system. Earlier this month, the Attorney General announced a similar agreement with Walgreens for $2.8 million. The Attorney General has also reached similar settlements with CVS, Shaws Supermarkets, and Stop & Shop, bringing the total returned to cities and towns under worker's compensation prescription overcharges settlements to $7.9 million

This matter was handled by Assistant Attorneys General Peter Leight and Glenn Kaplan, and by mathematician Burt Feinberg and economist Bryan Lincoln of Attorney General Coakley's Insurance and Financial Services Division.

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