Independent pharmacies sue PBM Catamaran, alleging illegal conduct

Fifty-five independent pharmacies filed a lawsuit on Feb. 9 against pharmacy benefit manager Catamaran Corporation, alleging illegal conduct that has led to economic losses for the plaintiffs, who primarily reside in Pennsylvania.

Some of the Pennsylvania pharmacies that are participating in the suit are Albert’s Pharmacy, Pittston; Alert Pharmacy Services, Mt. Holly Springs; Big Spring Pharmacy, Newville; Waymart Pharmacy, Waymart; Olexy Pharmacy, Taylor; Cambria Pharmacies, Philadelphia; Cook’s Pharmacy, Shavertown; County Line Pharmacy, Hatboro; and Sellersville Pharmacy, Sellersville.

See also: Generic drug price hikes cause hardships for pharmacies, patients

Rob Frankil, pharmacist and owner of Sellersville Pharmacy, who is listed as a plaintiff in the lawsuit, testified about the economic impact of skyrocketing generic drug prices before a U.S. Congressional Subcommittee in November 2014.

“Pharmacists are filling prescriptions and are being reimbursed significantly less than what it cost them to acquire the drug,” Frankil said. “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.”

Another independent pharmacist, Mel Brodsky, who is the executive director of the Philadelphia Association of Retail Druggists, claimed before the Pennsylvania House Health Committee in 2013 that “[PBMs] 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.”

According to the court documents, the plaintiffs claim that the encouragement of the use of mail-order pharmacies by PBMs, instead of the use of community pharmacies, leads to the elimination of personal consultation with the community pharmacist that patients have come to expect and value.

Allegations against Catamaran

The independent pharmacies allege that “Catamaran does not and will not directly negotiate these contracts with independent pharmacies,” only with pharmacy services administration organizations (PSAO). The contracts of the plaintiffs in the lawsuit were negotiated between Catamaran and a PSAO, according to the court papers.

The plaintiffs state that Catamaran prevents independent pharmacies that use a PSAO from gaining access to the full contracts that explain their drug reimbursement from the PBM.

In addition, the plaintiffs claim that Catamaran stated in its April 2014 company bulletin that pharmacies would not have advance notice of reimbursement rate changes until the time of claim adjudication. The plaintiffs reported, “By contrast, other large PBMs provide notice of rate changes in advance of adjudication.”

Without advance warning, independent pharmacies cannot plan for reimbursement changes and are adversely affected by this practice. In a National Community Pharmacists Association (NCPA) survey of more than 1,000 independent pharmacists last year, it was claimed that PBM benefit management had led to high spikes in generic drug costs - as high as 600%, 1,000%, and even 2,000% - in some cases.

“In Iowa, more than forty independent pharmacies have been wiped out by Catamaran since it became a major player in that state in January 2013,” the lawsuit alleges. “That is the month Catamaran took over as PBM for Wellmark Blue Cross and Blue Shield (which controls over 60% of Iowa’s commercial insurance market), and that is when Catamaran started to impose substantially reduced generic-drug reimbursement rates for the independent pharmacies in Iowa that serve Wellmark’s plan members (stores which include certain of those owned by Plaintiff Astrup Drug Inc.)”

The lawsuit claims that the PBM “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,” according to the law firm, Williams Cuker Berezofsky, which filed the case, Albert’s Pharmacy, Inc. et al v. Catamaran Corporation.

Catamaran’s failure to respond in a timely matter to MAC pricing appeals or to respond at all is also alleged by the plaintiffs. They also allege that the PBM does not reimburse retroactively with a price adjustment when the MAC pricing appeal is successful.

Plaintiff requests

The plaintiffs have asked for damages to be determined by a jury and based on the difference between the PBM’s reimbursements to plaintiffs for generic-drug claims and rates that are commercially reasonable. They have also asked for reimbursement rates for generic-drug claims to be set in good faith.

In addition, the plaintiffs request that damages be established retroactively for the difference between reimbursement rates from successful MAC pricing appeals and the amounts that were actually reimbursed for particular drug claims prior to the successful appeals.

They also want Catamaran to update its MAC lists within seven days of a price hike from a generic-drug manufacturer.

Catamaran declined to comment on this story.

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