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Supreme Court rejects PBMs' bid to block state rate regulation

The unanimous decision could lead to other states regulating PBMs in similar ways to a 2015 Arkansas law that prevailed in this case.

Healthcare Dive


In a unanimous decision, the U.S. Supreme Court said it is lawful for Arkansas to impose certain regulations on pharmacy benefit managers, overturning lower court decisions. Thursday's ruling could open the door for other states to pass similar laws.


The PBM lobby had argued that federal law — specifically the Employment Retirement Income Security Act — bars states from imposing regulations on PBMs, including policies that affect rates. The Supreme Court ruled against the PBM lobby in an 8-0 decision. Justice Amy Coney Barrett did not participate in the case as she was not yet seated prior to oral arguments.


The central issue before the court was an Arkansas law passed in 2015 that sought to regulate what PBMs pay pharmacies for prescriptions. Specifically, the law forbid PBMs from reimbursing pharmacies below their cost to acquire a drug. Essentially, the law sought to institute a pricing floor for pharmacies as it is common for PBMs to reimburse pharmacies below the actual cost to acquire a drug from a wholesaler, putting financial pressure on pharmacies, particularly independent ones.


But the Pharmaceutical Care Management Association, the lobby for PBMs, argued the Arkansas law treaded into ERISA territory, which preempts any state law that relates to an employer-sponsored plan.


The Supreme Court said the PCMA argument misunderstands the bounds of ERISA. Justice Sonia Sotomayor wrote the opinion for the court. Continue Reading

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