Momentous PBM Case Heard by the Supreme Court

Oct 14, 2020

On October 6, attorneys for the State of Arkansas, the U.S. Solicitor General’s Office, and PCMA presented their oral arguments before the US Supreme Court in the landmark Rutledge v. PCMA case. The case will potentially provide clarity on the extent to which states can regulate PBMs, which is of huge significance given that nearly every state in the country has enacted laws attempting to regulate PBMs.

Background on the case:

  • The Supreme Court is reviewing a case in which the U.S. Court of Appeals for the Eighth Circuit ruled certain PBM regulations enacted by the State of Arkansas were preempted by ERISA, meaning the state did not have the authority to regulate employer-or union-sponsored health plans.
  • The Eighth Circuit determined Arkansas’s laws were impermissibly related to and connected with employee benefit plans, also known as ERISA plans.
  • In response, the United States Solicitor General filed an amicus curiae brief on behalf of the United States arguing that the Eighth Circuit’s ruling is “incorrect” and “contrary to [the Supreme] Court’s precedent and the decisions of other courts of appeals.” The federal government has taken the position that federal law does not preempt states from regulating PBMs, including PBMs that serve ERISA plans.
  • The Supreme Court will review the Eighth Circuit’s ruling and potentially provide clarity on the extent to which states can regulate PBMs that serve ERISA plans.
  • Additional background on the case is available on NCPA’s website.

Analysis of 10/6 arguments:

  • Eight Justices heard the 80-minute arguments, during which the Justices pressed PCMA’s counsel to defend its claims of ERISA preemption. Many of the Justices noted that the main effect of Arkansas’s law is simply to regulate what pharmacists are paid for drugs, and Chief Justice Roberts described PBMs as having “byzantine procedures that affect drug prices.”
  • Click here to watch a helpful reaction video to the oral arguments featuring NCPA’s Douglas Hoey, APA’s John Vinson, APhA’s Scott Knoer, and NASPA’s Rebecca Snead, as well as Tiffany Wright, a distinguished Washington, DC attorney and former Supreme Court clerk, where they broke down the arguments and the Justices’ questions.

Now that the case has been heard, we wait for a decision which is expected by June 30, 2021. We will continue to monitor the case and provide updates here.