The news are full of excitement regarding a recent US Supreme court decision in Rutledge v PCMA. But there is still lots of confusion what this decision means for independent pharmacies.
So let’s look at what the case is really about.
It all started in Arkansas when the state passed Act 900, which provided that:
- PBMs are to tie reimbursement rates to pharmacies’ acquisition costs by timely updating their MAC lists when drug prices increase in a timely manner.
- PBMs must provide administrative appeal procedures for pharmacies to challenge MAC reimbursement prices that are below the pharmacies’ acquisition costs.
- PBMs must allow pharmacies to reverse and rebill each reimbursement claim affected by the pharmacy’s inability to procure the drug from its typical wholesaler at a price equal to or less than the MAC reimbursement price.
- The Act permits a pharmacy to decline to sell a drug to a beneficiary if the relevant PBM will reimburse the pharmacy at less than its acquisition cost.
The Pharmaceutical Care Management Association (PCMA) representing the 11 largest PBMs in the country, challenged the Act arguing – like in many other state cases – that ERISA pre-empted it and the state could not regulate PBMs in how they administer pharmacy benefit. The Eight Circuit (the appeal court) agreed with the PCMA. The state appealed the case to the U.S. Supreme Court which held that ERISA does not necessarily interfere with state objectives: “ERISA does not pre-empt state rate regulations that merely increase costs or alter incentives for EIRSA plans without forcing plans to adopt any particular scheme of substantive coverage.”
While the case is a strong step towards effective PBM regulations, a lot of work still remains to strengthen and enact proper regulations that would protect independent pharmacies and reduce drug cost. Also remember, Rutledge only deals with a narrow issue whether ERISA preempts state laws regulating PBMs. After losing this argument, PCMA may come up with other arguments why states cannot interfere with PBM practices.