ALEXANDRIA, Va. — Groups ranging from the National Community Pharmacists Association (NCPA) to the Food Industry Association (FMI) have applauded the Supreme Court for hearing Rutledge v. Pharmaceutical Care Management Association (PCMA). This historic case seeks to clarify whether states can regulate pharmacy benefit managers, which manage prescription drug benefits for health insurers, Medicare Part D drug plans and large employers.
FMI president and chief executive officer Leslie Sarasin said it was important for the high court to consider the case because the legislation, in her view “strongly limits” how PBMs can exploit their concentrated market power, which she argues threatens patient access to pharmacies. “The unchecked power held by PBMs has put many supermarket pharmacy operations at risk and makes it more likely that food retailers will be forced to close their pharmacies’ doors,” Sarasin said.
“Independent pharmacies serve as a vital safety net for patient care in communities across the country,” said NCPA CEO Doug Hoey. “This has never been truer than throughout the coronavirus pandemic. Yet PBMs have been dodging oversight for years while raking in record profits. For patients, that’s resulted in fewer health care choices and increased out-of-pocket costs. For community pharmacies, the lack of oversight holds them hostage to inflexible, one-sided contracts, causing many of these small businesses to close their doors forever. We’re optimistic the Supreme Court will agree that PBMs do not get to act with impunity from state and federal law and will enable states to protect local businesses and their patients.”
However, advocating on behalf of PCMA, former solicitor general Seth Waxman argued its case builds on decades of important federal protections and Supreme Court precedent. A decision found in favor of Rutledge, according to PCMA, threatens the employer-provided coverage upon which hundreds of millions of Americans rely.
“More than 266 million Americans rely on the prescription drug benefits PBMs administer, and now more than ever we’re committed to protecting accessible, affordable health care,” said PCMA president and CEO JC Scott. “Today showed, yet again, the strength of our arguments and the importance of federal preemption to ensure employers are able to provide the best possible drug benefits for employees, no matter where they live and work.”
At the heart of Rutledge v. Pharmaceutical Care Management Association is whether states can enact regulations that affect PBMs, who argue they are exempt by the Employee Retirement Income Security Act (ERISA) of 1974. The case originates from Arkansas, which passed a law in 2015 prohibiting PBMs from reimbursing local pharmacies at a lower rate than what the pharmacies pay to fill the prescriptions. PCMA challenged the law in court, which is when the pharmacy groups joined efforts to ensure the 2015 precedent stands.
The case made its way to the 8th Circuit Court of Appeals, where the judge ruled in favor of the PBMs. When Arkansas appealed, the Supreme Court asked solicitor general Noel Francisco to recommend whether to take the case. Not only did he urge the court to do so, but he argued strongly that the 8th Circuit erred.
“The court must uphold the Arkansas law, for the sake of our patients and their health care,” said Scott Knoer, executive vice president and CEO of the American Pharmacists Association.