US Supreme Court Proceeds With Hearing on Landmark PBM Regulation Case

October 6, 2020

Rutledge v. Pharmaceutical Care Management Association seeks to clarify whether states can regulate pharmacy benefit managers.

Do you think the Supreme Court will rule in favor of enacting regulations on PBMs?

Several pharmacy groups applauded the Supreme Court of the United States (SCOTUS) for agreeing to hear Rutledge v. Pharmaceutical Care Management Association (PCMA).

The Supreme Court heard oral argument today in the case concerning federal versus state regulation of pharmacy benefit managers (PBMs) and drug costs. Starting today, the hearing can be viewed on CSPAN.

The historic case seeks to clarify whether states can regulate PBMs, according to the National Community Pharmacists Association (NCPA), American Pharmacists Association (APhA), The National Alliance of State Pharmacy Associations (NASPA), and the Arkansas Pharmacists Association (APA).1

Although the case was originally scheduled to be argued in April, it was postponed due to the coronavirus pandemic. SCOTUS will make a final decision on the case in early spring 2021.

Rutledge v. Pharmaceutical Care Management Association argues whether states can enact regulations that affect PBMs, which attest they are exempt by the Employee Retirement Income Security Act (ERISA).

The case originates from Arkansas, which passed a law in 2015 prohibiting PBMs from reimbursing local pharmacies at a lower rate than what the pharmacies pay to fill the prescriptions.

“For countless years, PBMs have meticulously woven a fantasy portraying themselves as valiant heroes working to lower prescription drug prices and create effective networks to simplify and streamline a patient’s pharmacy experience,” said John Vinson, executive vice president and CEO of APA.

“The nightmarish reality shows a stark contrast of PBMs prioritizing profits and stockholders by inflating drug prices for patients, strangling community pharmacies with lowered reimbursements, and irresponsibly spending insurance dollars paid by employers and patients across the country,” Vinson added. “I applaud the Supreme Court’s decision to hear this landmark case, and I look forward to how a favorable outcome will allow pharmacists to continue caring for their patients without the constant pressures and unsustainable conditions created by the greed of pharmacy benefit managers.”

PBMs have been “dodging oversight for years while raking in record profits,” said NCPA CEO B. Douglas Hoey. “For patients, that’s resulted in fewer health care choices and increased out-of-pocket costs. For community pharmacies, the lack of oversight holds them hostage to inflexible, one-sided contracts causing many of these small businesses to close their doors forever. We’re optimistic the Supreme Court will agree that PBMs do not get to act with impunity from state and federal law and will issue a ruling enabling states to protect their local businesses and their patients.”

Forty-five state attorneys general and the District of Columbia, both Democrats and Republicans, signed on to an amicus brief supporting Arkansas’s appeal of the 8th Circuit Court’s decision to the Supreme Court.2

In addition, NCPA, APA, APhA, NASPA, and every state pharmacy association joined in submitting a brief.3

References

1. Pharmacy groups react to landmark Supreme Court hearing. News release. NCPA, APA, APhA, NASPA; October 6, 2020. Accessed October 6, 2020.

2. Brief for California, 44 Other States, and the District of Columbia as Amici Curiae in Support of Petitioner. Leslie Rutledge v. PCMA. US Supreme Court. March 2020. Accessed October 6, 2020. https://www.supremecourt.gov/DocketPDF/18/18-540/134605/20200302130544620_18-540tsacCalifornia.pdf

3. Brief of Arkansas Pharmacists Association, National Community Pharmacists Association, American Pharmacists Association. National Alliance of State Pharmacy Associations, and Fifty-One Other Pharmacist Associations as Amici Curiae Supporting Petitioner. Leslie Rutledge v. PCMA. US Supreme Court. Accessed October 6, 2020.https://ncpa.org/sites/default/files/2020-08/ncpa-brief-18-540-tsac-APA-NCPA-APhA-NASPA.pdf