Bankrupt Rite Aid is resolving a drug supply dispute with McKesson


Written by Dietrich Knuth

NEW YORK (Reuters) – Pharmacy chain Rite Aid has settled a crucial dispute with drugmaker McKesson Corp to ensure customers’ prescriptions can continue to be filled during Rite Aid’s bankruptcy, lawyers said on Tuesday.

Rite Aid, which filed for Chapter 11 bankruptcy Sunday night in New Jersey, sued McKesson the next morning, seeking to prevent it from terminating a drug supply agreement that accounts for 98% of the pharmacy chain’s prescription drug sales.

Rite Aid attorney Joshua Sussberg announced the settlement at a court hearing Tuesday in Trenton, saying McKesson will continue to supply the drugs at least until the end of Rite Aid’s bankruptcy case. In return, Rite Aid will make faster payments for new drug shipments and ensure that new shipments are paid for before it pays other creditors.

Rite Aid is finalizing the settlement and will submit it to the court for approval, Sussberg told US Bankruptcy Judge Michael Kaplan, who is overseeing the case.

While the agreement only covers the period that Rite Aid remains in bankruptcy, it and McKesson will continue to negotiate a long-term solution, Sussberg said.

Rite Aid, which has more than 2,000 retail stores in the United States, has filed for bankruptcy with a plan to close underperforming stores, sell its Elixir pharmacy business, and resolve lawsuits related to its sale of addictive opioid drugs.

The lawsuit against Mckesson alleged that the distributor improperly attempted to terminate the drug supply agreement on Saturday, before Rite Aid filed for bankruptcy. Rite Aid accused McKesson of threatening to cut off its supply of the drug unless it immediately paid $700 million for amounts owed under the contract.

A McKesson spokesperson confirmed that the dispute has been resolved and that the company will continue to send shipments during Rite Aid’s bankruptcy.

Rite Aid has relied on McKesson for its drugs for 20 years, and paid McKesson $9 billion under the contract in 2023, according to court filings. Rite Aid said it maintains a very low inventory of medications, forcing it to rely on daily shipments from McKesson.

(Reporting by Dietrich Knuth, Editing by Alexia Garamfalvi and Bill Berkrot)

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