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Email to a FriendThe Supreme Court agreed Friday (Jan. 10) to hear a case that could revive an Arkansas law regulating pharmacy benefit managers, a move with widespread implications for state efforts to lower drug prices through limits on PBMs’ activities and profits. The decision is a win for over 30 states and the Trump administration, as well as for community pharmacists who allege PBMs are inflating drug costs for patients.
The 2015 Arkansas law required PBMs in the state to reimburse pharmacies for generic drugs at a price at least equal to the pharmacies’ cost for the drug, based on the invoice from the wholesaler. It also created appeals procedures for pharmacies to challenge PBMs’ reimbursement rates, and it created a “decline-to-dispense” option for pharmacies that would lose money on a transaction. The U.S. Court of Appeals for the 8th Circuit struck down the law in 2018, ruling the law was preempted by the federal Employee Retirement Income Security Act. Arkansas asked the Supreme Court to review the 8th Circuit’s decision. That request was supported by more than 30 other states and the Trump administration, which argued in court papers that the 8th Circuit’s decision is incorrect.
At least 38 states have laws on the books restricting the conduct of PBMs, according to a brief filed by the states supporting Supreme Court review.
“The court of appeals’ decision invalidating Arkansas’s PBM statute has created confusion and uncertainty regarding states’ power to regulate these significant market participants,” the states wrote.
The Pharmaceutical Care Management Association, the trade group for PBMS, has fought some of the state laws, arguing that they improperly infringe on federal laws like ERISA.
PCMA opposed the request for Supreme Court review in the Arkansas case, but the group said Friday it was confident the court would uphold the 8th Circuit’s decision.
ERISA “has long enabled employers to provide consistent, nationwide health care benefits due to its preemption of state laws,” PCMA President JC Scott said. “We are committed to federal preemption, which is a vitally important issue to ensuring high quality health care for patients.”
“Unique state laws governing the administration of pharmacy benefits are proliferating across the country, establishing vastly different standards,” Scott continued. “These inconsistent and often conflicting state policies eliminate flexibility for plan sponsors and create significant administrative inefficiencies.”
The National Community Pharmacists Association cheered the Supreme Court’s decision to take the case.
“Pharmacy benefit managers have virtually no oversight, and as a result they behave like monopolies,” the association’s CEO, Douglas Hoey, said. “Not only have PBMs failed to manage the cost of prescription drugs, which is why they were created, but they are inflating prices for patients and destroying local pharmacies.”
When the Arkansas legislature passed the PBM law, it said the law’s purpose was to prevent closures of independent and rural pharmacies.
The Supreme Court has not yet scheduled a date for oral arguments in the case.
The case is Rutledge v. Pharmaceutical Care Management Association, No. 18-540. -- James Romoser (jromoser@iwpnews.com)
The 2015 Arkansas law required PBMs in the state to reimburse pharmacies for generic drugs at a price at least equal to the pharmacies’ cost for the drug, based on the invoice from the wholesaler. It also created appeals procedures for pharmacies to challenge PBMs’ reimbursement rates, and it created a “decline-to-dispense” option for pharmacies that would lose money on a transaction. The U.S. Court of Appeals for the 8th Circuit struck down the law in 2018, ruling the law was preempted by the federal Employee Retirement Income Security Act. Arkansas asked the Supreme Court to review the 8th Circuit’s decision. That request was supported by more than 30 other states and the Trump administration, which argued in court papers that the 8th Circuit’s decision is incorrect.
At least 38 states have laws on the books restricting the conduct of PBMs, according to a brief filed by the states supporting Supreme Court review.
“The court of appeals’ decision invalidating Arkansas’s PBM statute has created confusion and uncertainty regarding states’ power to regulate these significant market participants,” the states wrote.
The Pharmaceutical Care Management Association, the trade group for PBMS, has fought some of the state laws, arguing that they improperly infringe on federal laws like ERISA.
PCMA opposed the request for Supreme Court review in the Arkansas case, but the group said Friday it was confident the court would uphold the 8th Circuit’s decision.
ERISA “has long enabled employers to provide consistent, nationwide health care benefits due to its preemption of state laws,” PCMA President JC Scott said. “We are committed to federal preemption, which is a vitally important issue to ensuring high quality health care for patients.”
“Unique state laws governing the administration of pharmacy benefits are proliferating across the country, establishing vastly different standards,” Scott continued. “These inconsistent and often conflicting state policies eliminate flexibility for plan sponsors and create significant administrative inefficiencies.”
The National Community Pharmacists Association cheered the Supreme Court’s decision to take the case.
“Pharmacy benefit managers have virtually no oversight, and as a result they behave like monopolies,” the association’s CEO, Douglas Hoey, said. “Not only have PBMs failed to manage the cost of prescription drugs, which is why they were created, but they are inflating prices for patients and destroying local pharmacies.”
When the Arkansas legislature passed the PBM law, it said the law’s purpose was to prevent closures of independent and rural pharmacies.
The Supreme Court has not yet scheduled a date for oral arguments in the case.
The case is Rutledge v. Pharmaceutical Care Management Association, No. 18-540. -- James Romoser (jromoser@iwpnews.com)