Pharmacy Benefits Manager Ordered to Restore Rebates to Clients

May 24, 2006 ( - The Department of Labor (DoL) has announced a consent judgment against Sacramento-based Pharmaceutical Care Network (PCN), resolving claims that it allegedly retained the assets of health plan clients in connection with rebates from drug manufacturers and payments to pharmacies for prescription drug claims.

According to the announcement, the consent judgment requires PCN to restore $721,323 to 24 health plan clients and pay civil monetary penalties to the DoL.   In addition, PCN must disclose information to clients relating to pharmacy benefit management services and fees and account for claim payments and rebates.

The suit alleges that PCN improperly retained a portion of drug rebate amounts belonging to multiemployer health plan clients as well as an undisclosed transaction fee for each pharmaceutical claim processed, the announcement said. The suit also alleges that PCN received undisclosed additional compensation from the plans by retaining the difference between drug prices established by health plan clients and the lower drug prices established between PCN and certain chain pharmacies.

The case resulted from an investigation conducted by the San Francisco regional office of the Labor Department’s Employee Benefits Security Administration.