Supreme Court hands pharmacy a victory


The U.S. Supreme Court handed pharmacists and other healthcare providers a victory in a unanimous ruling upholding Kentucky's any-willing-provider laws.



Supreme Court hands pharmacy a victory

Independent pharmacists' long-standing legislative campaign to protect their right to join health plan networks recently scored a major victory when the U.S. Supreme Court unanimously upheld Kentucky's any-willing-provider laws.

By rejecting a case filed in 1997 by the Kentucky Association of Health Plans, the Supreme Court ruled in favor of two Kentucky any-willing-provider statutes. One law requires plans to include the services of medical providers such as chiropractors. The other law mandates that plans with an Rx benefit offer beneficiaries a choice of pharmacies, which must agree to the plan's terms and reimbursement. The high court's stamp of approval on Kentucky's statutes bodes well for similar laws adopted in about 32 other states to protect pharmacies. The case sets a legal precedent that those states can now use as a club to beat back future court challenges by insurers or pharmacy benefit managers.

"This is a great result for our short-term and long-term interests," said John Rector, senior VP-government affairs/general counsel, National Community Pharmacists Association, which years ago developed the model pharmacy freedom-of-choice act adopted by the states. "It will make it easier now to enact something comparable in the rest of the states. We are revising our model law to make sure its 100% compliant with the decision."

By upholding any-willing-provider laws, the high court's decision weakened the federal Employee Retirement Income Security Act (ERISA), which generally insulates employers and insurance companies from state healthcare regulations. The ruling, however, strips insurers and PBMs of the legal argument that ERISA preempts any-willing-provider laws adopted by the states. The specter of insurer lawsuits based on ERISA has, in the past, hampered efforts in some states to pass any-willing-provider legislation.

"The PBMs and insurance companies scare the bejesus out of folks with ERISA," said Rector. "They come in at the last minute and say, 'There's no use passing this bill; it'll be preempted by ERISA.' This ruling takes away from our opponents the singular argument they have used in the states."

The court's unanimous decision may also stiffen the spines of state insurance commissioners when it comes to enforcing any-willing-provider laws. "It's more important than it appears in states with laws already on the books," said Rector. "We'll get better enforcement because there won't be ERISA hanging over proper enforcement. For example, it means that PBMs can't force people into mail-order pharmacy. In states with freedom of choice, it would be unlawful to incentivize one pharmacy over another. There has been some hesitancy to enforce state laws because of the ERISA fog, which has been eliminated by the sunshine of this nine-zip Supreme Court decision. It's a very big deal."

While independents tossed bouquets at the justices, the Academy of Managed Care Pharmacy gave the verdict a thumbs-down. The ruling "could seriously hamper the ability of managed care plans to operate most effectively on behalf of their members and clients," AMCP said in a prepared statement. Asserting that health plans have been "diligent" in broadening pharmacy access and noting the number of states that have passed any-willing-provider laws, the group added, "We remain opposed to such laws for two reasons. First, such legislation may put the quality of clinical services, and therefore patients, at risk; and second, such legislation may contribute to the already escalating cost of health care by adding administrative overhead and eliminating economies of scale, volume discounts, and local marketplace competition."

The Pharmaceutical Care Management Association, which represents pharmacy benefit mangers, had no comment on the decision, said Sharon Canner, VP of government affairs and policy.

Beyond its impact in the states, the high court decision will also figure in the political maneuvering over a Medicare prescription drug benefit, Rector said. Congressmen will no longer find protective cover behind the ERISA shield. They'll have to stand up and be counted as politicians who want to deny their constituents pharmacy choice in a PBM-centric Medicare Rx benefit model.

"The reason we've always focused on freedom of choice in Medicare is because it's the linchpin in the whole PBM package," said Rector. "As soon as you provide choice to the consumer, all the rest of the PBM stuff starts falling apart."

Carol Ukens


Carol Ukens. Supreme Court hands pharmacy a victory. Drug Topics May 5, 2003;147:25.

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