Pharmacy Industry Groups Ask Supreme Court to Overturn OK PBM Ruling

August 13, 2024
Hall Benefits Law, LLC

Five pharmacy industry groups have filed an amicus brief supporting the Oklahoma insurance commissioner’s petition for a writ of certiorari to the U.S. Supreme Court concerning a recent Tenth Circuit decision. That ruling partially invalidated a state law regulating pharmacy benefit managers (PBMs). The case is Glen Mulready et al. v. Pharmaceutical Care Management Association, case number 23-1213, U.S. Supreme Court.

In the Tenth Circuit decision, a unanimous three-judge panel found that the Employment Retirement Income Security Act (ERISA) and Medicare Part D preempted Oklahoma’s Patients’ Right to Pharmacy Choice Act. The state law limits the ability of health insurance plans and their PBMs to choose which pharmacies and cost-sharing amounts plan beneficiaries can use for their prescription drug benefits.

According to the pharmacy industry groups, PBMs, which function as intermediaries between pharmacies, health insurance companies, and drugmakers, fail to drive down patient costs and abuse their market power to benefit only themselves. They claim that the three major PBMs – Express Scripts, CVS Caremark, and Optum Rx – have consolidated most of the market power and wealth, driven small pharmacies out of business, and increased medication costs. The pharmacy industry groups suggest that PBMs have inflicted the worst damage in rural America, such as in many parts of Oklahoma, thus leading to this law’s passage.

The pharmacy industry groups further argued in their amicus brief that if the Tenth Circuit ruling remains in place, no regulation of PBMs will be possible. As a result, PBMs will continue to harm pharmacists and patients, even though the statute does not interfere with ERISA’s regulatory scheme.

Many other states have laws like Oklahoma’s regulating PBMs for the same reasons. Based on the Tenth Circuit’s decision, these states are rethinking their laws.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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