The Supreme Court on Thursday handed down a ruling in a case being closely watched by the industry, Rutledge v. Pharmaceutical Care Management Association.
The eight justices issuing a decision in the case unanimously upheld the Arkansas law at the center of the case, which prohibits PBMs from reimbursing pharmacies at a lower rate than what the pharmacies pay to fill prescriptions. The court — minus Justice Amy Coney Barrett, who was not seated to hear oral arguments in October — ruled that the law, and by extension several similar laws being passed nationwide, is not preempted by the Employee Retirement Income Security Act,or ERISA, of 1974.
“Today, Arkansas pharmacists join their colleagues across the country to celebrate a triumphant victory years in the making,” said Arkansas Pharmacists Association CEO John Vinson. “The Supreme Court’s ruling means that states can finally protect our patients who receive their pharmacy benefits through their employers. This win should increase drug pricing transparency, increase pharmacy access for patients, improve freedom of choice, and improve the health care for our citizens both during and after the pandemic.”
At issue was the extent to which the ERISA, which regulates private employee benefit plans, preempts the states from regulating the amount that PBMs pay pharmacies to dispense prescription drugs that are covered by an employer-sponsored health plan.The Arkansas law was passed in 2015 in response to PBMs being found to reimburse pharmacies at less than the pharmacy's acquisition cost for a drug. Subsequently, PCMA sued Arkansas attorney general Leslie Rutledge, and the court agreed to hear the case in January.
In the lead-up to October's oral arguments, pharmacy organizations have banded together to urge the justices to uphold the Arkansas law. The National Community Pharmacists Association, the American Pharmacists Association, the Arkansas Pharmacists Association, the National Alliance of State Pharmacy Associations, and all state pharmacy associations jointly commissioned an amicus brief in support of Rutledge and the legislation.
“This is a historic victory for independent pharmacies and their patients,” said Doug Hoey, NCPA CEO "And it confirms the rights of states to enact reasonable regulations in the name of fair competition and public health,” said NCPA CEO Doug Hoey.
Additionally, the National Association of Chain Drug Stores filed an amicus brief urging the court to stand by precedent and uphold the Arkansas law.
"The unanimous decision that Arkansas’ statute regulating PBMs’ drug-reimbursement rates is not preempted by ERISA is strong and sound, and it is extremely significant for Arkansans and for the residents of approximately 40 other states that have enacted similar laws,” NACDS president and CEO Steve Anderson said. “NACDS applauds the U.S. Supreme Court’s ruling and is honored to have engaged in this process through the arguments provided in our amicus brief.”
Organizations already are looking forward to bringing similar laws to states that have not yet implemented them.
“We’re excited to see a unanimous decision from the Court on this case – it’s truly a best case scenario for patients, pharmacists, and pharmacies,” said Rebecca Snead, NASPA executive vice president and CEO. “Now, it’s time to get to work to make sure states have appropriate PBM regulations in place, and continue to work with our members of Congress to do the same for the federal programs.”
APhA's president and CEO Scott Knoer also said the ruling would benefit patients. “This is a great day for pharmacists and their patients,” he said. “For years, PBMs have threatened the sacrosanct relationship between pharmacists and their patients and have never been forced to answer to any authority for their actions. This opinion redresses that imbalance and returns the power to protect the interests of patients to the states and other local authorities, where it belongs.”