A coalition of pharmacy organizations has asked the U.S. Supreme Court (SCOTUS) to allow states to regulate pharmacy benefit managers (PBM), after the Tenth Circuit Court of Appeals struck down a 2019 law passed in Oklahoma.
The effort is being led by a coalition comprising the Oklahoma Pharmacists Association; American Pharmacies Inc.; the American Pharmacists Association; the National Association of Chain Drug Stores; and the National Community Pharmacists Association.
The group said, in June 14 announcement, “PBMs engage in harmful practices that impair patient care, distort the free market, and impose serious costs on everyone in the healthcare industry — aside from themselves. States are ideally positioned to attack PBM misconduct; the regulation of health-care is a traditional state function, and states routinely address market inefficiency and abuse, as Oklahoma did here. The state’s targeted regulation benefits all legitimate market participants and does so without interfering with ERISA’s [Employee Retirement Income Security Act] regulatory scheme. The [Tenth Circuit] decision injects intolerable uncertainty over all states’ efforts to combat this staggering national problem.”
In its petition, the coalition said its members “have witnessed firsthand how pharmacy benefit managers have affected all aspects of pharmacy care and operations, while experiencing the negative effects from leaving PBMs unregulated. These groups have a direct interest in preventing the profound impact on patients and patient care from improper PBM practices.”
Coalition: Oklahoma enacted ‘common-sense’ PBM regulations
Oklahoma, the petition added, “has enacted a series of common-sense reforms designed to combat PBM abuse. … PBMs routinely use market leverage to benefit their own bottom line while hurting the interests of everyone else — patients, plans and providers.
“And PBM practices have devastating effects on pharmacies and pharmacy access for those patients who need it most.”
In response to PBM actions, the petition said, “States have an urgent need to protect their core interests in patient care and the health-care market” and need to preserve “the full range of regulatory options to counteract PBM abuse.”
The petition said the Tenth Circuit Court of Appeals had an “aggrandized view of both PBMs and ERISA preemption,” and contends that the Tenth Circuit’s opinion “would interfere with legitimate state regulation in matters of traditional local concern, and jeopardize important state interests without promoting ERISA’s objectives.
“Indeed, if allowed to stand, the decision … would leave PBMs unregulated in broad areas critical to patient access and medical care.”
Three PBMs control most U.S. prescriptions
In the news announcement, the pharmacy coalition said a trio of PBMs — CVS Caremark, Express Scripts, and OptumRX — “control 80% of all prescriptions in the U.S., and they have extraordinary leverage over the marketplace, which they frequently abuse.”
The announcement described these PBMS as “massive profit centers” that have increased patients’ out-of-pocket costs, reduced patient access to appropriate treatment, and caused the closure of pharmacies they don’t favor.
“The Supreme Court already ruled unanimously in 2020 that states can regulate PBMs,” the announcement noted. “In that case, Rutledge v. PCMA, which upheld an Arkansas law, the court rejected the argument by the powerful PBM lobby that state regulations violate the federal Employee Retirement Income Security Act. That law, passed in 1974, prevents states from passing overlapping and conflicting rules on retirement and health insurance plans.
“But the PBMs are neither. As the pharmacy coalition points out, they are administrators that have grown vastly larger and more powerful than anyone anticipated 40 years ago, mainly because of their unchecked monopolistic practices. What were once relatively small players in the market were replaced by market behemoths.”
