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AG Nessel Issues Notice of Intended Action to Pharmacies for Suspected Price Gouging

LANSING - Michigan Attorney General Dana Nessel issued a Notice of Intended Action (NIA) to three pharmacies - located in Holland, Madison Heights and Birch Run - following complaints related to an at-home COVID-19 test kit being sold for far more than it should.  

The concern about the related businesses arose from consumer complaints received against Value Center Pharmacy II in Madison Heights and Skip's Pharmacy in Holland.  These pharmacies attempted to justify the prices they were charging for the kits by providing invoices showing how much they had paid to buy them from the third company, Birch Run Drugs.   

"As detailed below, this Office has evidence Value Center Pharmacy was charging $50 per kit for the iHealth kit in December 2021, and that Skip's Pharmacy was charging $80 per kit for that same product in early January 2022. We have compared these prices with both those being offered online as well as those being charged by other Michigan pharmacies. The information we have gathered provides probable cause to believe Value Center Pharmacy and Skip's Pharmacy were charging prices to consumers for the iHealth kit grossly in excess of the price at which this kit was being sold by other retailers," the NIA states.  

When purchased online from the manufacturer, the iHealth COVID-19 Antigen Rapid Test currently retails for $17.98 for a package containing two tests and was selling for as high as $19.98 over the past month.  The NIA explains that it is not surprising that the kits may cost more when sold at brick-and-mortar store locations that have overhead tied to making the product immediately available but goes on to explain the prices being charged by Skip's Pharmacy and Value Center appear to have been made artificially high.   

In addition to owning those two pharmacies, the resident agent, Murali Ginjupalli, has a connection with Birch Run Drugs in Birch Run. The Department discovered the relationship during evidence gathering.  

"Compounding this Office's concerns is the resistance we have met in trying to gather information about the prices being offered at Value Center and Skip's Pharmacy for iHealth tests. We understand these stores to be under common ownership. And, when we finally did receive some information we were requesting, it was in the form of invoices showing Value Center and Skip's Pharmacy purchased the kits from Birch Run Drugs. A business look-up of Birch Run Drugs on the Michigan Department of Licensing and Regulatory Affairs (LARA) website shows you are the resident agent for that entity as well. Thus, it appears an effort was made to justify the prices being charged by Value Center and Skip's Pharmacy through invoices that do not reflect arms-length transactions," the NIA explains.  

The Department is inviting the pharmacies to explore a voluntary assurance agreement to avoid additional legal action. They have until Feb. 13 to respond and have also been asked to provide additional documentation.  

"Our attempts to look into consumer complaints have been met with unnecessary roadblocks thus far, so it is my hope this can be resolved without needing to take additional action against these pharmacies," Nessel said. "We will not stand for businesses exploiting this current wave of COVID-19 cases for monetary gain. If you believe the prices for at-home test kits or any other COVID-related item are higher than they should be, please contact our consumer protection team. We remain committed to addressing instances of price gouging." 

For more information, the NIA is now available on the Department of Attorney General's website