Three Michigan pharmacies under AG scrutiny after accusations of price gouging

When purchased online from the manufacturer, the same kits sold for $17.98
(Live 5)
Published: Feb. 7, 2022 at 11:25 AM EST
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LANSING, Mich. (WILX) - Attorney General Dana Nessel has warned three pharmacies to cease “unlawful business practices” relating to pricing.

Michigan Attorney General Dana Nessel has issued a Notice of Intended Action (NIA) to the pharmacies following complaints related to an at-home COVID-19 test kit being sold well above its usual price. She says it’s a violation of the Michigan Consumer Protection act, which is designed to protect consumers against unfair trade practices.

The investigation began with consumer complaints received against Value Center Pharmacy II in Madison Heights and Skip’s Pharmacy in Holland. Nessel says the Value Center Pharmacy was charging $50 for the kits while Skip’s Pharmacy was charging $80. When purchased online from the manufacturer, the same kits sold for $17.98.

The NIA states, “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.”

Both Value Center II and Skip’s Pharmacy justified their prices to the AG’s Office by showing invoices revealing how much they had paid to buy them from a third company, Birch Run Drugs.

Although the NIA admits that it is not surprising that the kits may cost more when sold at brick-and-mortar store locations that have different overhead to consider, it goes on to explain, the Office’s opinion, that the prices being charged by Skip’s Pharmacy and Value Center appear to have been made artificially high.

Both Value Center Pharmacy II and Birch Run Drugs are owned by Murali Ginjupalli, who the AG’s office discovered during evidence gathering also has a connection with Birch Run Drugs.

“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,” Nessel’s office wrote in the NIA. “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 [Ginjupalli is] the resident agent for that entity as well.”

The Department has invited the pharmacies to explore a voluntary assurance agreement to avoid additional legal action. They have until Feb. 13 to respond.

The full Notice of Intended Action is included below.

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