[18-540] Rutledge v. Pharmaceutical Care Management Association

Rutledge v. Pharmaceutical Care Management Association

Justia · Docket · oyez.org

Argued on Oct 6, 2020.

Petitioner: Leslie Rutlege, Arkansas Attorney General.
Respondent: Pharmaceutical Care Management Association.

Advocates:

• Nicholas J. Bronni (for the petitioner)
• Frederick Liu (for the United States, as amicus curiae, supporting the petitioner)
• Seth P. Waxman (for the respondent)

Facts of the case (from oyez.org)

In 2015, the legislature of Arkansas passed a law regulating the conduct of pharmacy benefits managers ("PBMs")—the entities that serve as intermediaries between health plans and pharmacies—in an attempt to address the trend in that state of significantly fewer independent and rural-serving pharmacies. PBMs perform numerous functions in this rule, including creating a maximum allowable cost ("MAC") list which sets reimbursement rates to pharmacies dispensing generic drugs. As a result of contracts between PBMs and some pharmacies, some other pharmacies might actually lose money on a particular prescription transaction. The Act sought to address this and other situations where the conduct of PBMs could cause harm to pharmacies.

Pharmaceutical Care Management Association (PCMA), a pharmacy trade association, filed a lawsuit on behalf of its members claiming, among other arguments, that Arkansas Act 900 is preempted by both ERISA and Medicare Part D. The district court found that ERISA did preempt some portions of the Act but that Medicare Part D did not preempt the Act.

On appeal, the U.S. Court of Appeals for the Eighth Circuit affirmed in part and reversed in part, finding that Act 900 was preempted by both ERISA and Medicare Part D. The appellate court noted that ERISA broadly preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plans." Because Act 900 “both relates to and has a connection with employee benefit plans,” ERISA preempts it.

Question

Does ERISA preempt an Arkansas law regulating pharmacy benefit managers’ drug-reimbursement rates?