Rite Aid 2011 Annual Report Download - page 18

We will not be able to compete effectively if we are unable to attract, hire and retain qualified pharmacists.
As a result of more licensed pharmacists and new graduates seeking positions in many markets,
the national shortage of pharmacists has eased over the past 12 months. Although this is occurring
nationally, there is still an unmet demand for pharmacists in certain regions of the country that are
challenging to staff. We continue to offer competitive compensation plans to retain and attract current
and future pharmacists, work with colleges of pharmacy across the U.S. to recruit both pharmacy
interns and pharmacy graduates and conduct a recruiting program for international pharmacists, but if
the shortage recurs in one or more markets, our ability to compete effectively in any market could be
adversely impacted.
We may be subject to significant liability should the consumption of any of our products cause injury, illness
or death.
Products that we sell could become subject to contamination, product tampering, mislabeling or
other damage requiring us to recall our private brand products. In addition, errors in the dispensing
and packaging of pharmaceuticals could lead to serious injury or death. Product liability claims may be
asserted against us with respect to any of the products or pharmaceuticals we sell and we may be
obligated to recall our private brand products. A product liability judgment against us or a product
recall could have a material, adverse effect on our business, financial condition or results of operations.
If we fail to protect the security of personal information about our customers and associates, we could be
subject to costly government enforcement actions or private litigation.
Through our sales and marketing activities, we collect and store certain personal information that
our customers provide to purchase products or services, enroll in promotional programs, register on our
web site, or otherwise communicate and interact with us. We also gather and retain information about
our associates in the normal course of business. We may share information about such persons with
vendors that assist with certain aspects of our business. Despite instituted safeguards for the protection
of such information, security could be compromised and confidential customer or business information
misappropriated. Loss of customer or business information could disrupt our operations, damage our
reputation, and expose us to claims from customers, financial institutions, payment card associations
and other persons, any of which could have an adverse effect on our business, financial condition and
results of operations. In addition, compliance with tougher privacy and information security laws and
standards may result in significant expense due to increased investment in technology and the
development of new operational processes. For example, in July 2010, settlement orders between us
and the Federal Trade Commission and U.S. Department of Health and Human Services, Office for
Civil Rights were accepted by the agencies. The agencies’ allegations were that we failed to protect
patient and associate identifiable information. As a result of these settlement orders, we, without
admitting any liability, agreed to pay a $1.1 million penalty and are required to establish a
comprehensive information security program, revise HIPAA-related policies and procedures and retain
an independent assessor to conduct periodic compliance reviews.
Item 1B. Unresolved SEC Staff Comments
None
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