An Arkansas pharmacy law is headed to the Supreme Court
Should PBMs be allowed to claim ERISA to preempt state laws?
State laws reining in PBMs often hit a speedbump: PBMs simply ignore them. How? The PBMs claim that federal law (ERISA, the Employee Retirement Income Security Act) preempts state law.
In 2015, Arkansas passed a bill regulating MAC lists — requiring PBMs to reimburse pharmacies at a price equal to or higher than the pharmacy acquisition cost. The PBMs ignored it, and even got a summary judgement in district court prohibiting the law’s enforcement because of ERISA.
But the State of Arkansas fought back; it challenged the PBMs’ position in federal court. (The case is Rutledge* v. Pharmaceutical Care Management Association.) The state lost. The 8th Circuit Court found in favor of PCMA, and PBMs were emboldened to continue to ignore state laws — they could expand DIR fees and enact other outlandish practices.
In a nutshell, that’s why PBMs’ horrendous practices haven’t changed much.
But Arkansas wasn’t done. It appealed the 8th Circuit Court’s ruling to the U.S. Supreme Court. On January 10, the Supreme Court agreed to hear the case. That means it could overturn the 8th Circuit Court’s decision.
A ruling in favor of Arkansas would mean that PBMs can no longer claim an ERISA preemption against State laws that attempt to regulate some of their behaviors.
Our friends at the Arkansas Pharmacy Association will be filling an amicus brief in support of overturning the decision, and GPhA, along with other states, will consider signing onto the brief once it is drafted.
You’ll be hearing more about this effort shortly and we will be asking for your support to help the Arkansas Pharmacists Association offset some of the cost of preparing the brief, which will be costly! Remember that a win in this case is a win for pharmacy in all 50 states.
The SCOTUS review is not only huge news, it dovetails with what’s happening in Georgia, where two bills limiting PBM steering took effect at the beginning of the year. GPhA is aware of instances where PBMs are ignoring these state laws, so a positive ruling by SCOTUS in the Arkansas case will help buoy Georgia’s laws too.
The next few months are going to be busy one for GPhA’s advocacy team as they work at the Georgia capitol and support our friends in Arkansas. Keep an eye on your mailbox for e-mail updates, check out the GPhA website, and read updates in the daily GPhA Buzz as we track these critical efforts!
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Reminder: Georgia’s new anti-steering law is a bit different than other states’, and even previous laws passed in Georgia. The new law regulates pharmacies affiliated with PBMs from accepting prescriptions steered to them by their affiliated PBM.
So while the PBMs might argue (incorrectly, we believe) that ERISA supersedes state law, there’s no question that Georgia and other states have the right to regulate the activities of licensed pharmacies.
