Rite Aid Acquisition of Brooks, Eckerd Raises Concerns

VERMONT - Starting in early March, Vermonters' choices for filling their prescriptions will be a lot more limited. The Rite Aid Corporation [1] has announced plans to buy out all Brooks and Eckerd stores throughout the United States, including 31 retail outlets in Vermont. Assuming the Federal Trade Commission approves the deal, Rite Aid will become the largest drug store chain on the East Coast and the third largest in the United States.

In an arrangement that was first announced in August and approved by the company's shareholders several weeks ago, Rite Aid would acquire more than 1800 Brooks and Eckerd stores in 31 states. The total number of Rite Aid drug stores in Vermont would increase from 11 to 42. Nationally, the company would also gain a presence in four new states:

Massachusetts, Rhode Island, North Carolina and South Carolina.

The Rite Aid buyout has raised some concerns in Vermont about the possibility of store closures, layoffs and retail vacancies. Dennis McMahon, a retired Burlington attorney, says he's alarmed about the anti-competitive trend this spells for the retail drug industry in Vermont, as well as its effect on local employment and real estate.

"I'm very concerned about the environmental impact of store closings, plus the larger concern of Vermonters losing their jobs," he says. McMahon has filed a complaint with the FTC and written a letter to Governor Jim Douglas asking that the acquisition be investigated. However, he's not optimistic that the FTC will reject the deal on antitrust grounds, since many other retailers, such as supermarket chains and big-box buyers' clubs, have gotten into the prescription-drug market in recent years.

"This acquisition allows us to be a lot more competitive and allows us to have greater scale in the pharmacy industry," says Rite Aid spokesperson Jody Cook with the Camp Hill, Pennsylvania-based company. "In the long run, this will be a real benefit to our customers."

Consumers should start seeing changes sometime after March 3, when the contract is expected to be finalized, Cooks says. Banners will start appearing on existing Brooks and Eckerd stores, and renovations to some will take place in the next 12 to 18 months. In addition to the new company signage and brand changes, some new Rite Aid stores will also add consultation rooms where patients can speak privately with their pharmacists about their medications and disease states, she says.

The Rite Aid spokesperson could not say how many people Rite Aid, Eckerd and Brooks currently employ in Vermont, except to say that each store has about 10 to 15 employees apiece. Cook also couldn't say whether stores will be closed in Vermont, or which ones, though she did note that every effort would be made to keep Eckerd and Brooks associates "part of the team."

Rite Aid has strict policies prohibiting pharmacists from refusing to fill certain prescriptions, such as birth control and morning-after pills, based on their own personal beliefs, she adds. If a Rite Aid pharmacist refuses to fill a prescription on religious or ethical grounds, it is his or her responsibility to find another pharmacist in the store to fill it, or find another Rite Aid store to do so in a timely manner.

Earl Pease, who owns the independent Lakeside Pharmacy in Burlington, admits that it can be hard for smaller stand-alones to compete with the chain stores' name recognition. But he claims that most prescriptions in the United States are still filled at independently owned pharmacies like his.

Pease also says he's far more troubled by other outside forces affecting all pharmacies - such as changes by the federal government in Medicare/ Medicaid reimbursement rates for prescription drugs. "This is the first time I've ever felt uneasy about the marketplace," says Pease, who's operated his Pearl Street drug store for the last 26 years. "It's very, very worrisome."