Arkansas Attorney General Leslie Rutledge added an impressive win to the list of her achievements when the Supreme Court ruled in her favor on Thursday, against the Pharmaceutical Care Management Association.
Craig Wilson, with the Arkansas Center for Health Improvements wrote in October: “The Pharmaceutical Care Management Association, which is the national trade association for PBMs, maintains that federal law, the Employee Retirement Income Security Act of 1974, or ERISA, preempts the 2015 Arkansas law, prohibiting the state from directly regulating how plans pay for benefits.”
Justice Sonia Sotomayor delivered the opinion of the Court, in which all other members joined except Justice Amy Coney Barrett, who took no part in the consideration or decision of the case.
Justice Sotomayor wrote: “Arkansas’ Act 900 regulates the price at which pharmacy benefit managers reimburse pharmacies for the cost of drugs covered by prescription-drug plans. The question presented in this case is whether the Employee Retirement Income Security Act of 1974 (ERISA), pre-empts Act 900. The Court holds that the Act has neither an impermissible connection with nor reference to ERISA and is therefore not pre-empted.”
Justice Clarence Thomas wrote the concurring opinion. The opinion of the court delivered by Sotomayor explains the roles and terms used in the case.
“Pharmacy benefit managers (PBMs) are a little-known but important part of the process by which many Americans get their prescription drugs. Generally speaking, PBMs serve as intermediaries between prescription-drug plans and the pharmacies that beneficiaries use. When a beneficiary of a prescription-drug plan goes to a pharmacy to fill a prescription, the pharmacy checks with a PBM to determine that person’s coverage and copayment information. After the beneficiary leaves with his or her prescription, the PBM reimburses the pharmacy for the prescription, less the amount of the beneficiary’s copayment. The prescription drug plan, in turn, reimburses the PBM. The amount a PBM “reimburses” a pharmacy for a drug is not necessarily tied to how much the pharmacy paid to purchase that drug from a wholesaler. Instead, PBMs’ contracts with pharmacies typically set reimbursement rates according to a list specifying the maximum allowable cost (MAC) for each drug. PBMs normally develop and administer their own unique MAC lists. Likewise, the amount that prescription-drug plans reimburse PBMs is a matter of contract between a given plan and a PBM. A PBM’s reimbursement from a plan often differs from and exceeds a PBM’s reimbursement to a pharmacy. That difference generates a profit for PBMs.” Sotomayor wrote.
Rutledge represented 36 states in the case which argued PBMs were “claims-processing middlemen” with “abusive” practices. In a press release Thursday from her office, Rutledge pledged to always protect Arkansans and small businesses such as locally owned pharmacies, from unfair practices.
“This is an important unanimous win for not only locally owned pharmacies that have experienced financial hardships at the hands of pharmacy benefit managers, but more importantly, this is a win for all Arkansans and Americans to have access to affordable health care,” Rutledge wrote.