US pharmacy chain Rite-Aid has filed for Chapter 11 bankruptcy protection. The company faced numerous lawsuits over the misuse of painkillers.
Under pressure from hundreds of lawsuits, the large US pharmacy chain Rite-Aid has filed for Chapter 11 proceedings with creditor protection. The plaintiffs’ allegation: In numerous cases, Rite-Aid had customers fill illegal prescriptions for painkillers.
In March, the US Department of Justice also took Rite-Aid to court. Rite-Aid is said to have ignored clear warning signs when it came to suspicious prescriptions for opioid painkillers. The company denies the allegations.
Chapter 11 as a legal maneuver?
With the application for creditor protection, Rite-Aid is now trying to get rid of the claims from the numerous lawsuits. If a company files for creditor protection under Article 11 of the US Bankruptcy Code, it may initially continue to operate its business under the supervision of a bankruptcy judge and develop plans for debt repayment. During this time, creditors cannot access the assets.
In addition, in the case of Rite-Aid, the company even receives financing of $3.45 billion for continued operations during the insolvency proceedings. However, Rite-Aid’s problems are not just due to the opioid crisis. The pharmacy chain is also heavily in debt.
Other chains paid high compensation
Rite-Aid is not the first pharmacy chain in the United States to be sued for providing prescription painkillers (opioids). But the chains CVS, Walgreens, Boots and Walmart solved the problem differently – with a settlement: Together they paid a total of 13.8 billion dollars in compensation. In doing so, they settled thousands of lawsuits filed by US states and municipalities.
The financially strong chains were accused of having exacerbated the opioid epidemic. In the United States, there have been almost 650,000 deaths from overdoses of addictive painkillers since 1999. Since 2021, more than 75 percent of all deaths have been caused by opioids, according to the US health authority CDC. This includes both painkillers and illegal drugs such as heroin.
Many experts attribute the opioid crisis to the overprescription of opioid painkillers. Until the mid-1990s, these were reserved for the treatment of seriously ill patients. The manufacturers, wholesalers and US pharmacies are accused of aggressively advertising the drugs and failing to respond to warning signs of the addiction crisis.