ALEXANDRIA, Va. – A group of nine pharmacy associations filed a friend of the court (amicus curiae) brief in the Eighth Circuit of the U.S. Court of Appeals today defending North Dakota’s right to regulate pharmacy benefit managers (PBMs).
The parties to the amicus brief are the National Community Pharmacists Association (NCPA) and the American Pharmacists Association (APhA), along with the pharmacy associations of seven states within the jurisdiction of the Eighth Circuit: Arkansas Pharmacists Association; Iowa Pharmacy Association; Minnesota Pharmacists Association; Missouri Pharmacy Association; Nebraska Pharmacists Association; North Dakota Pharmacists Association; and South Dakota Pharmacists Association.
The case, Pharmaceutical Care Management Association (PCMA) v. Wehbi, is the first to consider at the federal appellate level the scope of the U.S. Supreme Court’s unanimous decision last year in Rutledge v. PCMA upholding an Arkansas state law regulating the abusive practices of PBMs. (PCMA is a trade association for pharmacy benefit managers; Nizar Wehbi is the North Dakota State Health Officer.)
In its new filing, PCMA argues that notwithstanding the Supreme Court decision, a regulatory vacuum should still exist that would forestall limiting how PBMs leverage concentrated market power to the detriment of plans, patients, and pharmacies. The state’s filing asserts that its legislation is protected by Rutledge.
The amicus brief filed by the pharmacy associations today argues that ERISA does not preempt North Dakota law. It states, “PBMs are neither ERISA plans nor [third party administrators] that administer such plans. They are mere service providers who negotiate at arms-length with ERISA plans.” Previous court challenges have confirmed the North Dakota law neither references ERISA plans nor has a connection with ERISA plans.
“The states have an obligation to protect patients and local businesses, and a unanimous Supreme Court made clear in December that they have a right to do so,” said NCPA CEO B. Douglas Hoey. “PBMs have increased fees on pharmacies by 91,500 percent in recent years. They steer patients to their own corporate pharmacies, and they slash reimbursements for local pharmacies. Their behavior is meant to eliminate their competition and force patients to abandon their preferred healthcare providers. We’ve been in this fight from the beginning, and we intend to see it through.”
“The PBM industry is trying to defend the indefensible,” said Scott J. Knoer, APhA executive vice president and CEO. “PBMs are essentially asserting that they live within a regulatory vacuum, answerable to no one but themselves. But no one is above oversight. Given their oppressive market dominance and their well-documented, self-serving predatory behaviors that harm states, health plans, patients and pharmacies, this cannot be allowed to stand.”
“The North Dakota legislature consistently and overwhelming has supported efforts to address market abuses by the PBM industry and rightfully so. The North Dakota District court further confirmed the North Dakota legislature acted in the best interests of its citizens and local businesses. This case will hopefully send a message to the PBM industry that their anticompetitive and abusive practices will not be allowed to continue at the detriment of patients, employers, government funded entities, taxpayers and the profession of pharmacy,” said Mike Schwab, Executive Vice President of the North Dakota Pharmacists Association.