According to attorneys, Pharmacy retail chain Rite Aid has successfully resolved a dispute with pharmaceutical supplier McKesson Corp (MCK.N), ensuring uninterrupted fulfillment of customers’ prescriptions throughout Rite Aid’s bankruptcy proceedings.
After filing for Chapter 11 bankruptcy in New Jersey, Rite Aid swiftly took legal action against McKesson. The reason behind this step was to prevent the cancellation of an integral drug supply agreement that constituted a staggering 98% of Rite Aid’s prescription drug sales.
Joshua Sussberg, a legal representative for Rite Aid, made the announcement regarding the settlement during a court hearing in Trenton. Sussberg informed the court that McKesson committed to continuing the supply of drugs throughout the duration of Rite Aid’s bankruptcy proceedings. In return, Rite Aid pledged to speed the payment process for new drug shipments and ensure that these deliveries are settled before other creditor payments.
The settlement is in the finalization stage and will soon be presented to the court for approval, as confirmed by Sussberg to U.S. Bankruptcy Judge Michael Kaplan, who presides over the case. Although the agreement pertains only to the period during which Rite Aid remains in bankruptcy, both parties—Rite Aid and McKesson—are set to engage in ongoing negotiations aimed at forging a more enduring solution.
With over 2,000 retail outlets across the United States, Rite Aid’s bankruptcy filing has forced the company to limit its operation and close a few loss-making outlets, divest its pharmacy benefit subsidiary Elixir, and resolve litigations related to the sale of addictive opioid medications.
In the lawsuit filed against McKesson, Rite Aid contended that the distributor had wrongly made an attempt to terminate the drug supply agreement just before Rite Aid’s bankruptcy announcement. Rite Aid accused McKesson of using the threat of cutting off the drug supply unless an immediate payment of $700 million was made for amounts owed under the contract.
A spokesperson from McKesson confirmed the resolution of the dispute and affirmed the company’s commitment to continue drug shipments throughout Rite Aid’s bankruptcy period. Rite Aid’s reliance on McKesson for its drug supply spans two decades, during which the company paid McKesson a substantial $9 billion under the contract in the year 2023, according to court documents. Rite Aid explained that it maintains minimal drug inventory, necessitating daily deliveries from McKesson to sustain its operations.
