Sometimes in life, you just know things aren’t going to end well. Over the past several months, for instance, the Rite Aid near my house had become so unkept and understocked that I’d taken to referring to it as “the store that time forgot.” So I was not surprised when Rite Aid announced Monday it is declaring bankruptcy for the second time in less than two years.
This bankruptcy is more final than the one Rite Aid filed in 2023. Rather than just a financial reorganization, the company is putting its remaining 1,200-plus brick-and-mortar locations — down from about 2,000 at the time of its first bankruptcy filing — on the market, selling off its prescription business, closing distribution centers and laying off workers. Many Rite Aid stores likely will go begging for buyers and will end up being shut down entirely.
In recent decades, Rite Aid seemed to zig when it should have zagged.
But this isn’t simply a sad story of a less-than-current business model failing to keep up with customers. Nor is “the dramatic downturn in the economy,” as CEO Matthew Schroeder claimed in a letter to employees Monday, ultimately responsible for putting fatal pressure on the financially troubled store. In fact, Rite Aid was experiencing financial woes long before President Donald Trump returned to the White House and began to sow economic chaos. Instead, Rite Aid is an instructional tale about a mismanaged company that was so fatally weakened it couldn’t survive amid the increasing consolidation of health care in the U.S.
In recent decades, Rite Aid seemed to zig when it should have zagged. It ran up billions of dollars in debt, in part, buying rival chains in the early 2000s, when more forward-thinking c-suite leadership would have been thinking more about how to compete with — and possibly shift — to a more online model. Like other pharmacies, it suffered from customers’ increasing propensity to buy necessities and impulse purchases online.
Rite Aid also, like other giant pharmacy chains, repeatedly filled questionable prescriptions during the opioid crisis, ignoring red flags in the pursuit of profit. This decision was both morally reprehensible and bad business. Rite Aid would be sued for its role in inappropriately dispensing addictive painkillers more than 1,000 times, including by the federal government, leaving the company with so many potential liabilities that it needed to resolve the situation in its initial bankruptcy filing.
On top of these errors, Rite Aid found itself unable to keep up in a health care world increasingly dominated by monopolylike pharmacy benefit managers. As I noted last fall, PBMs were initially developed as a way to save consumers money on prescription medications. But that changed when they came under the control of health care giants such as Aetna (which is, in turn, part of CVS), Cigna and UnitedHealth. The PBMs owned by the three industry giants process 4 out of 5 prescriptions issued in the United States. They, in turn, use their market power to push their captive customers to prescription pharmaceuticals that benefit the PBMs’ bottom line, including when a cheaper equivalent drug is available or the patient’s doctor believes another pill would do a better job. 5% of pharmacies nationwide have shut down since the beginning of last year. PBMs also steer business to favored pharmacies (which they sometimes own) while reimbursing others at such low rates that the Federal Trade Commission concluded many independent pharmacies were losing money on many of the prescriptions they filled. Rite Aid tried to keep up, but its PBM, Elixir, couldn’t compete, and Rite Aid ultimately sold Elixir during its first bankruptcy. As a result of all this, the local pharmacy — whether independently owned or controlled by a giant chain — is an increasingly endangered species. The American Economic Liberties Project, where I am on staff, calculated that 5% of pharmacies nationwide have shut down since the beginning of last year, making it harder for many Americans, especially those living in rural areas, to access necessary medical care or needed medications. Now, a still-to-be-determined number of Rite Aids will join that number. None of this is healthy — not for the health care industry, its workers or patients like you and me.
Helaine Olen
Helaine R. Olen is the author of "Pound Foolish: Exposing the Dark Side of the Personal Finance Industry" and a co-author of "The Index Card: Why Personal Finance Doesn't Have to Be Complicated." She has been a columnist for The Washington Post and Slate, and her work has appeared in numerous other publications, including The New York Times and The Atlantic. She is managing editor of the American Economic Liberties Project. 
