Rite Aid 2013 Annual Report Download - page 11

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above. Our results of operations in the fourth and first fiscal quarters may fluctuate based upon the
timing and severity of the cough, cold and flu season, both of which are unpredictable.
Regulation
Our business is subject to federal, state, and local government laws, regulations and administrative
practices. We must comply with numerous provisions regulating health and safety, equal employment
opportunity, minimum wage and licensing for the sale of drugs, alcoholic beverages, tobacco and other
products. In addition we must comply with regulations pertaining to product content, labeling, dating
and pricing.
Pursuant to the Omnibus Budget Reconciliation Act of 1990 (‘‘OBRA’’) and comparable state
regulations, our pharmacists are required to offer counseling, without additional charge, to our
customers about medication, dosage, delivery systems, common side effects and other information
deemed significant by the pharmacists and may have a duty to warn customers regarding any potential
adverse effects of a prescription drug if the warning could reduce or negate such effect.
The appropriate state boards of pharmacy must license our pharmacies and pharmacists. Our
pharmacies and distribution centers are also registered with the Federal Drug Enforcement
Administration and are subject to Federal Drug Enforcement Agency regulations relative to our
pharmacy operations, including regulations governing purchasing, storing and dispensing of controlled
substances. Applicable licensing and registration requirements require our compliance with various state
statutes, rules and/or regulations. If we were to violate any applicable statute, rule or regulation, our
licenses and registrations could be suspended or revoked or we could be subject to fines or penalties.
Any such violation could also damage our reputation and brand.
In recent years, an increasing number of legislative proposals have been enacted (including the
Patient Protection and Affordable Care Act), introduced or proposed in Congress and in some state
legislatures that affect or would affect major changes in the healthcare system, either nationally or at
the state level. The legislative initiatives include changes in reimbursement levels, changes in qualified
participants, changes in drug safety regulations and e-prescribing. We cannot predict the timing of
enactment of any such proposals to the extent not yet approved or the long-term outcome or effect of
legislation from these efforts on our business.
Our pharmacy business is subject to patient privacy and other obligations, including corporate,
pharmacy and associate responsibility imposed by the Health Insurance Portability and Accountability
Act. As a covered entity, we are required to implement privacy standards, train our associates on the
permitted uses and disclosures of protected health information, provide a notice of privacy practice to
our pharmacy customers and permit pharmacy customers to access and amend their records and receive
an accounting of disclosures of protected health information. Failure to properly adhere to these
requirements could result in the imposition of civil as well as criminal penalties.
We are also subject to laws governing our relationship with our associates, including minimum
wage requirements, overtime, working conditions and unionizing efforts. Increases in the federal
minimum wage rate, associate benefit costs or other costs related to associates could adversely affect
our results of operations.
In addition, in connection with the ownership and operations of our stores, distribution centers and
other sites, we are subject to laws and regulations relating to the protection of the environment and
health and safety matters, including those governing the management and disposal of hazardous
substances and the cleanup of contaminated sites. Violations or liabilities under these laws and
regulations as a result of our current or former operations or historical activities at our sites, such as
gasoline service stations and dry cleaners, could result in significant costs.
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