Supreme Court to hear case on states’ authority to regulate PBMs

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Supreme Court to hear case on states’ authority to regulate PBMs

By Sandra Levy - 01/13/2020

The United States Supreme Court this spring will review a case with big implications for the pharmacy world.

The court has agreed to hear oral arguments in Rutledge v. Pharmaceutical Care Management Association, at the center of which is the question of whether, under the federal Employee Retirement Income Security Act of 1974, or ERISA, states can regulate that amount that pharmacy benefit managers pay pharmacies to dispense drugs covered by employer-sponsored health plans. 

Most recently, the State of Arkansas challenged an 8th Circuit Court decision that ruled in favor of the PBM trade association claim that ERISA preempts state regulation of reimbursement and payment practices of PBMs. The ruling prevented an Arkansas law from taking effect that proponents said would effectively prevent PBMs from reimbursing pharmacies less than their acquisition cost on medications. The Arkansas example is just the most recent example, though. Many states have recently passed laws regulating PBMs, with lower courts split on whether ERISA bars state action and activities related to PBMs.

“ERISA has long enabled employers to provide consistent, nationwide health care benefits due to its preemption of state laws," said PCMA president and CEO JC Scott. "We are committed to federal preemption, which is a vitally important issue to ensuring high-quality health care for patients."

Scott said that conflicting laws create "significant administrative inefficiencies" that divert funds from providing health care services. "We are confident in the merits of our arguments in this case and look forward to presenting them before the U.S. Supreme Court," he said."

The National Community Pharmacists Association applauded the Supreme Court decision to hear the Arkansas case. NCPA said it plans to file a brief supporting the state of Arkansas before the Supreme Court. The organization has been vocal in its efforts to regulate PBM practices that it contends drive insurance premiums and patient out-of-pocket costs higher while impacting local pharmacies' business. 

“This is an important moment for community pharmacies,” said NCPA CEO Doug Hoey. "ERISA doesn’t shelter the practices of PBMs,” Hoey continued. “We’re very optimistic that the Supreme Court will agree that PBMs do not get to act with impunity from state and federal law.”

The American Pharmacists Association also praised the Supreme Court's decision to hear the case, noting that the case has broad implications on PBM regulation nationwide. 

"We're pleased with the Supreme Court's decision to hear this case," said Ilisa Bernstein, APhA senior vice president, pharmacy practice and government affairs. "PBM business practices have been putting significant financial strain on pharmacies in the United States by pulling financial resources that were once applied to patient care into unproductive administrative layers and profits for the middlemen. This in turn impacts patient access to the services and patient care delivered by pharmacists every day in communities across the country. State regulatory oversight plays an important role in curbing PBM detrimental practices."

Bernstein said the court's decision demonstrates how important this issue is. "State regulatory oversight plays an important role in curbing PBMs. A ruling from the Supreme Court will provide clarity in the United States. APhA fully supports pharmacists in seeking fairness and protecting patient access to care," she said. 

The National Association of Chain Drug Stores also praised the U.S. Supreme Court’s decision to hear the case, and for providing another chance for Arkansas and other states to help make reimbursement to pharmacies more fair, and to benefit patients.

“Patients and pharmacies across the nation can find hope in the U.S. Supreme Court’s decision to take this important case,” said NACDS president and CEO Steve Anderson. “The Eighth Circuit Court of Appeals’ decision should be reversed. That decision would be an important step for fair reimbursement for pharmacies and for the patients who rely on the accessibility of pharmacies for essential health and wellness services.”

Finally, The Arkansas Pharmacists Association posted this statement on Facebook: "The case is very important both locally and nationally in the fight to regulate pharmacy pricing middlemen and increase PBM accountability for pricing policies that harm employers and more importantly the health and well being of patients."

 

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