The Supreme Court will likely need to issue a new decision to resolve the extent to which state laws seeking to regulate pharmacy benefit managers (PBMs) are preempted by federal insurance law, a lawyer specializing in health policy said at AHIP’s annual conference this month.
Philo Hall, senior general counsel at the law firm Epstein Becker and Green, said preemption of state laws that conflict with federal ERISA, Medicare Advantage (MA) and Part D requirements is currently one of the most significant areas of Medicare law. In a 2020 case, Rutledge v. Pharmacy Care Management Association (PCMA), the Supreme Court ruled that the Employee Retirement Income Security Act (ERISA) did not prevent an Arkansas law on PBMs’ payments for prescription drugs.
“I think what we’ve seen since then is that more guidance is needed from the Supreme Court on that topic,” he said. “And we might be headed to the Supreme Court.” …
Now, the Tenth Circuit will hear the case PCMA v. Mulready, in which PCMA is challenging an Oklahoma state law that also aims to block what the state sees as abusive PBM practices, such as preferring pharmacies that are owned by the PBM. In that case, the judge has asked the Department of Justice (DOJ) to weigh in with an amicus brief on ERISA preemption of state PBM laws.
“That has been a big question for years, and now they’re formally being asked to weigh in, in this case,” Hall said. “So, it could be setting up a circuit split and then headed to the Supreme Court, but I’m most curious about what’s going to be in that DOJ amicus brief on behalf of CMS.”
While CMS would normally be expected to argue that federal law preempts state approaches, Hall said that could be different in this case.
Hall said other litigation is likely to concern topics like the new Medicare Advantage overpayment rule issued by CMS in December 2022 and the 340B drug pricing program.