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Labor Union Coalition Alerts Industry Analysts About Rite Aid

Wednesday, November 7, 2007 General News J E 4
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ANAHEIM, Calif., Nov. 6 This week, thousands ofTaft-Hartley and union health benefit and pension fund trustees andadministrators are in Anaheim, California, for the annual InternationalFoundation of Employee Benefit Plans conference. The conference is considereda premier marketing opportunity for health and investment management vendors--Rite Aid Health Solutions will be there along with Caremark, Medco and otherPBMs competing for billions of dollars in union business.

While Rite Aid Health Solutions, the company's pharmacy benefit managementunit, is looking to organized labor to expand business and help the companycompete in the burgeoning mail order pharmaceutical sector, labor unions havebig concerns. They expressed those concerns in the following letter that wassent to industry analysts across the USA and in Canada.

In recent months, followers of Rite Aid's stock have watched its pricereach lows for the year. While many analysts had anticipated the difficultiesof the Eckerd/Brooks integration, most did not expect Rite Aid managementwould choose to exacerbate integration problems by escalating a fight with itsunionized workforce.

At present, approximately 25,000 Rite Aid pharmacists, technicians, front-end, and warehouse workers have union representation. These unions - theService Employees International Union (SEIU), the United Food and CommercialWorkers (UFCW), the International Brotherhood of Teamsters - collectivelyrepresent over 5 million U.S. workers.

Rite Aid Health Solutions, the company's pharmacy benefit management unit,is looking to organized labor to expand business and help the company competein the burgeoning mail order pharmaceutical sector. This week, thousands ofTaft-Hartley and union health and pension fund trustees and administrators arein Anaheim, California, for the annual International Foundation of EmployeeBenefit Plans conference. This conference is considered a premier marketingopportunity for health and investment management vendors, and Rite Aid HealthSolutions will be there along with Caremark, Medco and other PBMs competingfor billions of dollars in union business.

Among conference participants, Rite Aid is sure to tout itself as a union-friendly company. However, our unions will be there in force to set therecord straight on the company's recent assaults on workers' rights. Formonths, Rite Aid has failed to comply with legally-binding contractuallanguage governing the rights of workers in newly acquired stores and haswaged a union-avoidance campaign in California among warehouse workers seekingrepresentation through the International Longshore and Warehouse Union (ILWU).

To get the word out about Rite Aid's recent anti-union actions, SEIU, UFCWand ILWU welcomed hundreds of trustees at a reception on the conference'sopening night. Throughout the week, we are distributing information andencouraging union trustees and administrators to question Rite Aid's actionsand encourage them to not do business with the company until it starts doingright by its workers.

Today, Rite Aid is at a critical juncture. The company's future is ridingon the success of the acquisition, the growth of its PBM business, emergencefrom the scandals that plagued the company in the past, and improving samestore sales during the upcoming holiday season. Rite Aid is already on thinice; it can ill-afford to put it all at risk by antagonizing its workforce.

We are fully committed to upholding the legally-binding contractual rightsof Rite Aid and Eckerd Brooks workers and will not stop until we are satisfiedthat Rite Aid is on the right track for its workers, and in turn, itscustomers.

Needless to say, if Rite Aid continues on its current course, investorsmay have legitimate concerns about further underperformance and deteriorationof shareholder value.

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