Supreme Court Upholds State Pharmacy Benefit Manager Regulations

The Supreme Court on Wednesday upheld Arkansas’ regulations forcing pharmacy benefit managers to pay pharmacies at least their cost of acquiring a drug.

The court unanimously sided with state regulators, which were supported by the Trump administration, in Rutledge v. Pharmaceutical Care Management Association. The conflict in the case was over an Arkansas law that requires PBMs to pay pharmacies at least the price stated by the pharmacy’s wholesaler and regularly update their Maximum Allowable Cost price lists. The law also outlines a process for pharmacies to appeal particular MACs.

The Supreme Court’s decision overturns a ruling by the 8th U.S. Circuit Court of Appeals that found the Arkansas law was pre-empted by the Employee Retirement Income Security Act.

“Crucially, not every state law that affects an ERISA plan or causes some disuniformity in plan administration has an impermissible connection with an ERISA plan. That is especially so if a law merely affects costs,” Justice Sonia Sotomayor wrote for the majority.

Pharmacy benefit managers had argued that a patchwork of state regulations complicate plans’ operations and that requiring PBMs to cover wholesale costs would discourage pharmacies for searching out the lowest price from suppliers.

“As states across the country consider this outcome, we would encourage they proceed with caution and avoid any regulations around prescription drug benefits that will result in higher healthcare costs for consumers and employers,” PCMA said in a written statement.

Arkansas Attorney General Leslie Rutledge called the decision a unanimous win for local pharmacies and individuals to get access to affordable health care.

The court deliberated quickly, as the eight-justice court heard oral arguments in the case on Oct. 6. Justice Amy Coney Barrett did not participate in the decision because she was not confirmed before oral arguments in the case.


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