Walgreens filed a lawsuit against Hagerstown, Md.-based Meritus Medical Center May 13, alleging the hospital's new pharmacy violates a contract with the retail pharmacy chain.
In 2013, Walgreens signed a lease with Meritus to operate a retail pharmacy in an office building attached to the medical center. The terms of the lease stipulated that no part of the medical campus would be used to operate another retail pharmacy, according to the lawsuit.
In fall 2021, Walgreens says it learned Meritus was planning to open a retail pharmacy and asked the medical center to halt those plans, as it would violate the lease agreement. In December 2021, Meritus sold the suite housing Walgreens' pharmacy to a local investment firm, which Walgreens called "a bad faith attempt by Meritus to avoid having to comply" with the lease, according to the lawsuit.
Walgreens alleges Meritus has violated the exclusivity agreement by opening its 1,800-square-foot pharmacy in the lobby of Meritus Medical Center in April. The lawsuit requests Meritus stop operating the pharmacy and not allow any other pharmacy retailers to operate on the medical campus.
Meritus Health President and CEO Maulik Joshi said the system received the filing May 16 and called it a "tough pill to swallow," according to a May 23 news release shared with Becker's. Meritus has argued that it's no longer required to abide by the restrictive clause in the lease, since it sold the suite.
"Our position on this matter is simple: We acted in accordance with the legal contract between Meritus Health and Walgreens, and our intent in developing the Meritus Pharmacy was, and is, to serve our community," Greg Snook, chair of the Meritus board of directors, wrote in a letter to the community published by The Herald-Mail May 23.