Independent Pharmacies Claim Illegal Conduct by Pharmacy Benefits Manager (PBM) Catamaran, Call for Jury Trial

A consortium of 55 independent pharmacies has filed a lawsuit alleging illegal conduct by Catamaran Corporation, one of the nation’s biggest managers of prescription-drug benefits for insurance plans.

Pharmacies hailing primarily from Pennsylvania filed suit this week in the U.S. District Court for the Middle District of Pennsylvania(1) against pharmacy benefit manager (“PBM”) Catamaran Corporation, formerly known as SXC Health Solutions. Catamaran’s annual revenue is nearly $15 billion, managing 350 million patient prescriptions per year.(2)

“Pharmacists are filling prescriptions and are being reimbursed significantly less than what it cost them to acquire the drug” said Rob Frankil in testimony entitled Why Are Some Generic Drugs Skyrocketing in Price?

“In some instances, community pharmacies are faced with having to refrain from filling prescriptions that results in losses of $40, $60, $100 or more per prescription filled.”

The independent pharmacist and owner of Sellersville Pharmacy in Pennsylvania, one of the plaintiffs in the suit against Catamaran, testified before a U.S. Congressional Subcommittee in November 2014.(3)

In court documents, the pharmacies claim Catamaran’s illegal conduct inflates the patient’s cost for prescription drugs through overcharging insurance plans while underpaying the pharmacies that dispense the drugs. According to a survey of more than 1000 independent pharmacists(4), PBMs’ benefit management caused the cost of generic drugs to spike by as much as 600%, 1000%, and even 2000% in some cases.

Catamaran determines the amount of reimbursement pharmacies receive for providing generic medications and other pharmaceutical products. But the pharmacies claim in their filing that Catamaran sets unreasonably low reimbursement rates, makes pricing data inaccessible, infrequently updates the data, and lacks transparency on how drug rebates are or are not applied, all to the detriment of patients and pharmacies.

The pharmacies claim in their complaint that Catamaran’s bad faith and lack of transparency effectively puts their business and continued delivery of patient consultation at risk.

Pharmacy benefit managers are selected by health insurance companies and government health programs to administer pharmaceutical drug plans. The plaintiffs allege that patient choice is becoming increasingly limited by these health plans’ specific selection of Catamaran, which could drive independent pharmacies out of business through manipulation of reimbursement prices as well as other practices.

According to the court documents, PBMs encourage, or effectively require, the insured to use mail order pharmacies instead of their community pharmacy, eliminating the personal consultation patients have come to expect and value from their independent pharmacist.

As alleged in the complaint, independent pharmacies often serve small and rural communities. If the relationships with local pharmacies are severed, the pharmacists claim, the elderly and others in underserved communities will lack needed healthcare support and guidance while community pharmacies struggle to stay in business.

PBMs “completely control aspects of the dispensing of prescriptions with no controls from any professional organization or government agency” testified Mel Brodsky in front of the Pennsylvania House Health Committee in 2013.(5) Brodsky is an independent pharmacist and Executive Director of the Philadelphia Association of Retail Druggists. “They push health dollars out of state to their mail-order facilities thousands of miles away, costing Pennsylvania millions in local taxes as well as jobs in Pennsylvania.”

As of November 2014, sixteen states had passed legislation related to PBM business practices, including the delivery of drug benefits to government health care plans. Similar legislation is being sought in other states.(6)

H.R.244, to be reintroduced in the U.S. House of Representatives for transparency in generic drug pricing, provides for community pharmacies to have information regarding the criteria PBMs use to calculate reimbursements and to have more timely updates when generic drug price changes occur.(7)

The pharmacists filed this lawsuit in Pennsylvania and are asking for a jury trial.


(1) Albert’s Pharmacy, Inc. et al v. Catamaran Corporation, U.S. District Court for the Middle District of Pennsylvania, Civ. No. 3:15-cv-00290-UN2
(2) Catamaran Fact sheet
(3) Congressional Testimony of Rob Frankil, Independent Pharmacist and Member of the National Community Pharmacists Association,November 20, 2014
(4) National Community Pharmacists Association (NCPA) Survey—2014/2014/10/28/ncpa-digest-community-pharmacists-promoting-medication-adherence-generic-drug-savings and—2014/2014/12/09/ncpa-endorses-bill-to-increase-transparency-in-generic-prescription-drug-payments
(5) Pennsylvania House of Representatives Health Committee Testimony of Mel Brodsky, October 8, 2013
(6) Florida Pharmacists Support Legislation to Reform PBM Practices
(7) Support MAC Transparency and Urge Congress to Pass H.R. 244, the MAC Transparency Act

Drug Topics, Voice of the Pharmacist:

Chain Drug Review:

The Pennsylvania Record:

PR Newswire: