Katherine Heigl has dropped out of contract talks with Grey's Anatomy over salary, a well-placed source tells PEOPLE.

"Katie is disappointed and hurt that (producer) Touchstone doesn't value her as much as her other costars, especially Sandra Oh and Isaiah Washington," the source says.

Heigl plays Dr. Isobel "Izzie" Stevenson on the ABC hit medical drama.

A rep for ABC Touchstone TV had no comment.