Aug. 17, 2023

10th Circuit Hands PBMs Partial Win

in Ruling on 2019 Oklahoma Reforms

  Read the Joint News Release

American Pharmacies today joined other national pharmacy organizations in criticizing a Tenth Circuit Court of Appeals decision on Tuesday that exempts PBMs in ERISA and Medicare Part D plans from certain provisions of an Oklahoma PBM reform law.  

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. The new law was soon challenged in federal court by the Pharmaceutical Care Management Association (PCMA, the PBMs’ powerful trade lobby).

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 Tuesday overturned the federal district court’s decision on those four provisions, ruling that each of them is preempted by ERISA and that the one provision challenged on Medicare Part D is preempted by Med D laws.  

American Pharmacies was among five national pharmacy groups that filed an amicus brief last fall in the PCMA vs. Mulready case, joining the American Pharmacists Association, the National Association of Chain Drug Stores, the National Community Pharmacists Association and the Oklahoma Pharmacists Association. The same groups today issued a joint news release criticizing the decision. 

American Pharmacies General Counsel Miguel Rodriguez said his reading of the 55-page Tenth Circuit opinion reveals flaws in the court's logic. He said the court narrowly interpreted the Supreme Court's landmark 2020 Rutledge vs. PCMA ruling to apply only to state regulations affecting costs to a health benefits plan. He said the court also relied on pre-Rutledge case law, ignoring the Supreme Court's statement that state regulation of an ERISA plan is not preempted even if it weakens uniformity in plan administration. Under the Supreme Court's guidelines, regulating a third-party contractor (the PBM) on guidelines governing the addition or termination of network pharmacies does not rise to preemption.

Rodriguez said the Tenth Circuit also erred in ruling that no state can pass any laws regulating Medicare Part D plans. That ruling contradicts the Eight Circuit's earlier ruling in PCMA vs. Wehbi that a state law can regulate Medicare Part D plans if the state law regulates an area of plan administration not already regulated by federal law.

“This ruling is 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.

In 2021, American Pharmacies and key allies filed an amicus brief with a federal appeals court to defend a Louisiana law giving the state authority to regulate Medicare Part D claims. In July 2021, APRx filed an amicus brief (joined by the Alliance for Transparent and Affordable Prescriptions and the Community Oncologist Alliance) in PCMA v Wehbi in defense of North Dakota's PBM reform laws.

Last year, American Pharmacies provided both financial and legal support to two Tennessee shareholders who are fighting a federal lawsuit filed by a food manufacturer that seeks to have major PBM reforms passed by the Tennessee Assembly in 2021 invalidated for ERISA plans.

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