Hundreds of Benefit Fund Trustees Question Viability of Rite Aid Pharmacy Benefit Management Company

Monday, November 5, 2007 General News
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ANAHEIM, Calif., Nov. 5 More than five hundredattendees at the International Foundation Employee Benefits conference inAnaheim, CA., walked through the convention center in the opening hours of theconvention on Sunday carrying bags that say: Trust Rite Aid? Think Twice!Most of the attendees are involved in administering union health care andpension trusts.

Their message is related to Rite Aid, the nation's third-largest drugchain and its attempt to boost its fledgling two-year old pharmacy benefitsmanagement company (Rite Aid Solutions) at the conference. Problems plaguethe company as they struggle with plummeting stock, a consumer fraud suit andescalating labor disputes. They are unsuccessfully trying to integrate 1,854recently acquired Brooks and Eckerd stores. In addition, Rite Aid remainsunder the watchful eye of federal billing fraud monitors.

A labor coalition brought together 1199SEIU (Service EmployeesInternational Union), the nation's largest health care union; ILWU, theInternational Longshore and Warehouse Union, and UFCW, (United Food andCommercial Workers). At a packed reception at the conference Wendell Young,of UFCW said, "We're here with SEIU and the ILWU and we represent a lot ofmembers between our unions. Rite Aid used to be the kind of company you couldwork with, but when they changed management their executive suite took ananti-union turn. This company has become a real problem."

Young is referring to the fact that Rite Aid is violating its contractualobligations and federal labor law and running aggressive anti-union campaignson both coasts.

Peter Olney, of the ILWU told conference attendees, "The workers at RiteAid's distribution center came to us wanting to organize in March 2006. Whatfollowed from Rite Aid was something you'd expect from Wal-Mart, not from acompany that's 40 percent unionized."

In the past two months, the Canadian and US media have reported that thenew CEO of Jean Coutu Group Inc., who in June sold 1,800 U.S. Brooks andEckerd stores to Rite Aid, is urging shareholders to be patient after earningswere eroded by $24.8 million from its interest in Rite Aid Corp. Jean Coutustock has dropped by almost 20 per cent in the last three months, and Rite Aidis struggling to integrate the Canadian chain's former U.S. stores.

Many are concerned that at a time when industry analysts and institutionalstockholders are watching Rite Aid closely to see whether it will be able tosuccessfully pull off the integration of the Eckerd/Brooks chain, Rite Aid hasmade a choice to fight with workers and their unions and in doing so, risklosing business and spoiling the integration of the operations of the drugstore chains.

Furthermore, several Rite Aid business practices have been questionableand the company has settled millions of dollars in lawsuits.

The conference will continue from Sunday through November 7 at the AnaheimConvention Center Yvonne Armstrong of 1199SEIU said, "We're asking allconference attendees to stop by Rite Aid's booth and tell them to think twiceabout trusting them with their business until they do the right thing." discusses issues of concern to investors,consumers, and seniors. discusses issues of concern to Rite Aid,.Eckerd and Brooks employeesOn the East Coast: - The current UFCW and 1199SEIU contracts signed by the Rite Aid Corporation include legally binding language that directs Rite Aid's conduct when there is a merger or takeover like that of the Eckerd/Brooks stores. Rite Aid is required to recognize the union as the collective bargaining agent for, and apply the terms of the contract to, any acquired stores within the contract's geographic area when the union demonstrates majority support. - The company has instructed Eckerd store manager

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