Briefs from pharmacy groups ask Supreme Court to uphold Arkansas PBM law

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Briefs from pharmacy groups ask Supreme Court to uphold Arkansas PBM law

By Sandra Levy - 03/02/2020

Ahead of a potential landmark Supreme Court case, pharmacy groups are filing briefs asking the court to uphold an Arkansas law meant to rein in how pharmacy benefit managers reimburse pharmacies. 

The National Association of Chain Drug Stores filed an amicus brief with the court related to Rutledge v. Pharmaceutical Care Management Association that asked the court to overturn a ruling by the Eighth Circuit Court of Appeals which said that the Arkansas law — which is similar to laws in 40 other states — is preempted by the Employee Retirement Income Security Act, or ERISA. 

The Arkansas law prevents PBM contracts from reimbursing pharmacies less than the cost of buying and dispensing prescription medications. PBMs have said that certain language in ERISA exempts them from state regulation. Pharmacy groups argue that the law precludes states from regulating employee benefit plans, but not third-party vendors hired by the plans, say the pharmacy groups.

“In addressing such losses, Arkansas’s legislature has chosen to ensure that pharmacies can keep their doors open to patients," NACDS' brief said. "Under a straightforward application of this Court’s precedents, Arkansas’s law is not preempted. It does not refer to ERISA plans, has only an attenuated connection to ERISA plans, and serves laudable policy goals unrelated to the purposes of ERISA. The Court should resolve this case narrowly and leave those precedents intact, rather than using this case as a vehicle to make broad changes to preemption law.”

Ultimately, NACDS argues, “under this Court’s precedents, any incidental effect Arkansas’s law will have on the relationship between PBMs and ERISA plans is insufficient to trigger ERISA preemption.”

NACDS noted that the Arkansas law's goal ultimately is to prevent the closure of pharmacies, which it said can impact the healthcare access of patients in rural areas and health outcomes. 

NACDS wasn't the only pharmacy organization that filed an amicus brief Monday. A separate brief filed by the National Community Pharmacists Association, the Arkansas Pharmacists Association, the American Pharmacists Association and the National Alliance of State Pharmacy Associations also called on the court to overturn the Eighth Circuit's ruling and support states taking action on behalf of its business and citizens. 

“Our brief argues that the states have the obligation and the legal authority under federal law to protect their local businesses and their patients," NCPA CEO Doug Hoey said, noting that PBM actions have led to 45,000% fee increases on pharmacies and increased out-of-pocket costs for patients, among other consequences. 

PBMs’ below-cost reimbursements have left marks on the pharmacy industry, particularly on independent rural pharmacies," the groups' brief says. "In the last 15 years, 16.1% of independently owned rural pharmacies have closed, and 630 rural communities went from having one or more pharmacies to having none.”

APhA executive vice president and CEO Thomas Menighan noted that PBM practices have an impact on public health. “Currently unregulated PBM business practices limit access to pharmacists’ care and thus, to optimal use of medicines by the American public,” he said. “A Supreme Court ruling in favor of Arkansas’ oversight of PBMs would ensure patients of fairness, transparency and access to a readily available, knowledgeable health care provider – their pharmacist.”

In addition to the pharmacy trade groups, pharmacy associations from almost every state as well as the District of Columbia have signed on to the NCPA, APA, APhA and NASPA brief, signaling widespread national support for the regulation of PBMs.“We are thrilled and grateful that every state association and three national pharmacist associations have united and signed on to this amicus brief supporting the years-long battle pharmacists have fought against the Goliath PBM industry,” said APA CEO and executive vice president John Vinson.  “Pharmacists and patients in Arkansas are enthusiastically assured in Attorney General Leslie Rutledge and her team in this landmark case that could improve healthcare for every patient in the United States.”

The Supreme Court will hear the case on April 27.

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