Pennsylvania Record

Tuesday, July 16, 2019

Class action accuses Catamaran Corp. of low-balling pharmacy reimbursements

By Jim Boyle | Feb 13, 2015

HARRISBURG - A company that oversees prescription drug reimbursements

for thousands of independent pharmacies has been accused of using undisclosed accounting formulas to justify low rebates paid to the members in its benefits network, according to a class action lawsuit filed at the U.S. District Court for the Middle District of Pennsylvania.

The suit, filed by 55 independent pharmacies, includes a large amount of business owners from Pennsylvania, all seeking restitution against Catamaran Corporation based on four counts of breach of contract.

The plaintiffs demand payment from the difference between Catamaran's reimbursements for generic drugs and the commercially reasonable rates, plus a more transparent system to inform pharmacy managers of the company's rates and changes.

In court documents, the pharmacies claim Catamaran inflates the patient's cost for prescription drugs through overcharging insurance plans while underpaying the pharmacies that dispense the drugs.

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 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.

Pharmacy benefit managers (PBMs) 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.

The relationship between Catamaran and the independent pharmacies is contractual in nature, but Catamaran does not directly negotiate these contracts, the suit says. Instead, the contracts are usually negotiated in bulk through pharmacy services administration organizations (PSAO), the suit says.

According to the claim, Catamaran exploits independent pharmacies’ required reliance on PSAOs in order to keep critical aspects of the contracts hidden through confidentiality agreements with the PSAOs.

Catamaran’s practice of not disclosing new pricing until a claim adjudicates constitutes bad faith and unfair dealing, the claim says, because it denies pharmacies the opportunity to plan for changes in reimbursement and will inevitably cause financial harm to those pharmacies.

The plaintiffs are represented by attorneys from Williams Cuker Berezofsky, LLC in Philadelphia.

Want to get notified whenever we write about ?

Sign-up Next time we write about , we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

More News