NCPA said the brief, filed in the U.S. Court of Appeals for the Eighth Circuit, supports Arkansas in a lawsuit initiated by PCMA in August 2015 against Act 900, state legislation that amends laws on prescription drug pricing and reimbursement. A federal court in December 2015 denied a motion by Arkanas to dismiss the suit.
The legal tussle has prevented Arkansas from implementing a more transparent system in which pharmacy benefit managers (PBMs) set generic drug reimbursement to pharmacies, according to NCPA.
“The Arkansas legislature approved Act 900 because it recognized that PBMs’ secretive approach to determining generic prescription drug reimbursement was unfair to pharmacies and patients,” NCPA chief executive officer B. Douglas Hoey said in a statement. “Pharmacies deserve to know what their reimbursement will be for a medication and that they can at least break-even on what they dispense. That’s the kind of essential transparency Act 900 enacted.”
When PCMA announced the lawsuit in August 2015, it claimed that Arkansas’ Act 900 would provide a “blank check” to drug stores by forcing employers to reimburse retail pharmacies at higher rates for drugs and removing incentives for drug stores to dispense lower-priced options.
PCMA noted that the court’s later denial of Arkansas’ motion to dismiss upheld the association’s contention that the state’s law is preempted by the Employee Retirement Income Security Act (ERISA), the federal law regulating health benefit plans, and Medicare Part D. “This favorable ruling means Arkansas must now defend a law that raises health care costs for employers and consumers,” PCMA president and CEO Mark Merritt stated at the time.
Yet NCPA described PCMA’s claim that Act 900 is preempted by ERISA and the Medicare Modernization Act (MMA) as “flawed.”
“We believe they have not cleared the high bar that allows federal law to override state laws,” Hoey explained. “In our filing, we argue for the Court of Appeals to ‘affirm the portion of the District Court’s judgment finding no preemption under the MMA, reverse the portion of the judgment finding preemption under ERISA, and remand with directions for the District Court to enter judgment in favor of the Attorney General on all claims.’ In other words, allow the law to stand as originally intended by the elected officials in Arkansas.”