June 19, 2024

APRx, Others Urge High Court to Clarify

State Power to Regulate PBMs on ERISA

See the Amicus Brief

In an amicus brief filed late last week, American Pharmacies joined the American Pharmacists Association, the National Association of Chain Drug Stores, NCPA and the Oklahoma Pharmacists Association in urging the U.S. Supreme Court to reverse a 10th Circuit ruling that last year invalidated part of an Oklahoma PBM reform law.

The amicus brief supports Oklahoma Insurance Commissioner Glen Mulready in a suit seeking to reverse the Tenth Circuit's August 2023 ruling in favor of the Pharmaceutical Care Management Association, (PCMA, the PBMs’ powerful trade lobby).

Oklahoma's Patient’s Right to Pharmacy Choice Act was passed in 2019 to protect Oklahomans’ access to pharmacy providers and protect pharmacies from self-serving practices of PBMs. A week before its effective date, the new law was challenged in federal court in the PCMA v. Mulready lawsuit.

The U.S. District Court for the Western District of Oklahoma in 2022 largely upheld the statute. PCMA subsequently appealed just 4 of the 13 provisions to the Tenth Circuit, each of the four dealing with state laws regulating how PBMs include or exclude pharmacies in a network. The Tenth Circuit on Aug. 15 overturned the federal district court’s decision on those four provisions, ruling that each of them is preempted by ERISA and that one provision is preempted by Medicare Part D laws.  

"The decision below leaves a massive regulatory gap over PBMs," the groups said. "It expands ERISA preemption into areas where ERISA has nothing to say, and leaves PBMs free to exert staggering market power in ways that distort and impair a functioning healthcare system."

The joint amicus brief argues that many states currently have regulations similar to Oklahoma's in place and that the Tenth Circuit's decision has left states questioning whether they can exert any real control over PBMs.

"It is untenable to cast that type of federal cloud over critical state efforts in an area of traditionallocal concern," the amicus brief said. "States cannot effectively regulate PBMs — or responsibly investsignificant resources to enforce new PBM-related schemes — without real confidence their reforms will survive. The Tenth Circuit's decision obliterates that confidence."

“The PCMA v. Mulready ruling was incorrect and needlessly muddies the water in terms of state enforcement of PBM regulations in ERISA and Medicare Part D plans,” APRx President Laird Leavoy said. “It underscores the critical need for Congress and the Federal Trade Commission to take strong action at the federal level to create a uniform regulatory landscape.”

American Pharmacies continues to take decisive legal action in defense of PBM reforms. We make our voice heard in courts around the country to ensure that strong laws that have been passed are enforced to their fullest extent.