Pharmacy Groups React to Landmark Supreme Court Hearing

Rutledge v. Pharmaceutical Care Management Association to determine state regulation of controversial PBMs

NCPA October 6, 2020

ALEXANDRIA, Va. – The National Community Pharmacists Association (NCPA) and the Arkansas Pharmacists Association (APA), alongside the American Pharmacists Association (APhA) and the National Alliance of State Pharmacy Associations (NASPA), today 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 (PBMs), the controversial middlemen that manage prescription drug benefits for health insurers, Medicare Part D drug plans, and large employers.

“Independent pharmacies serve as a vital safety net for patient care in communities across the country,” said B. Douglas Hoey, NCPA CEO. “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 issue a ruling enabling states to protect their local businesses and their patients.”

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. The PBM lobby, PCMA, challenged the law in court, which is when the pharmacy groups joined efforts to ensure the 2015 precedent stands.

“For countless years, PBMs have meticulously woven a fantasy portraying themselves as valiant heroes working to lower prescription drug prices and create effective networks to simplify and streamline a patient’s pharmacy experience,” said John Vinson, APA executive vice president and CEO. “The nightmarish reality shows a stark contrast of PBMs prioritizing profits and stockholders by inflating drug prices for patients, strangling community pharmacies with lowered reimbursements, and irresponsibly spending insurance dollars paid by employers and patients across the country. I applaud the Supreme Court’s decision to hear this landmark case, and I look forward to how a favorable outcome will allow pharmacists to continue caring for their patients without the constant pressures and unsustainable conditions created by the greed of pharmacy benefit managers.”

The case made its way to the federal 8th Circuit Court of Appeals, where the judge ruled in favor of the PBMs. When Arkansas appealed the ruling, the Supreme Court asked US Solicitor General Noel Francisco to recommend whether to take the case. Not only did the Solicitor General urge the Court to take the case, but he argued strongly that the 8th Circuit erred in its decision.

“The Court must uphold the Arkansas law, for the sake of our patients and their health care,” said Scott J. Knoer, MS, PharmD, FASHP, APhA executive vice president and CEO. “Unchecked and unaccountable PBMs are a major reason why dysfunctionality is rampant in health care. It defies logic why such powerful oligopolies, with their stranglehold on the pharmacy marketplace, have been able to avoid reasonable oversight for so long. It’s time for this to end.”

There is wide bipartisan agreement in the states that PBMs must be regulated. In fact, 45 state attorneys general and the District of Columbia, both Democrats and Republicans, signed on to an amicus brief recently supporting Arkansas’s appeal of the 8th Circuit Court’s decision to the Supreme Court. Additionally, NCPA, APA, APhA, NASPA, and every state pharmacy association joined in submitting a brief.

“States began introducing legislation to regulate PBMs in the early 1990s,” said Rebecca Snead, RPh, NASPA executive vice president and CEO. “More than 25 years later, every state has at least one law in place to try to curb unfair PBM practices, with several of those laws including plans affected by ERISA. This case is crucial to ensure states’ rights to regulate these entities.”

The case was originally scheduled to be argued in April but was postponed due to the coronavirus pandemic. The case will be decided in early spring 2021. Click here for more information on Rutledge v. PCMA.