Term: 2020
Docket: 18-540
Rutledge v. Pharmaceutical Care Management Association
- Pro
18-540 RUTLEDGE V. PHARMACEUTICAL CARE MANAGEMENT DECISION BELOW: 891 F.3d 1109 QUESTION PRESENTED: Thirty-six States have enacted legislation to curb abusive prescription drug reimbursement practices by claims-processing middlemen-known as pharmacy benefit managers (PBMs)-who make money on the spread between the rates at which they reimburse pharmacies and the drug prices they charge health plans. In response, Respondent Pharmaceutical Care Management Association (PCMA), a PBM trade association, has launched a barrage of litigation across the country arguing that state regulations of PBMs generally, and state drug-reimbursement regulations specifically, are categorically preempted by the Employee Retirement Income Security Act of 1974 (ERISA). Disregarding this Court's ERISA precedent (and contrary to the First Circuit's conclusion that PBM regulations are categorically not preempted by ERISA), the Eighth Circuit embraced that argument. The question presented here is: Whether the Eighth Circuit erred in holding that Arkansas's statute regulating PBMs' drug-reimbursement rates, which is similar to laws enacted by a substantial majority of States, is preempted by ERISA, in contravention of this Court's precedent that ERISA does not preempt rate regulation. LOWER COURT CASE NUMBER: 17-1609 PRESS RELEASE OF APRIL 3, 2020 IN KEEPING WITH PUBLIC HEALTH GUIDANCE IN RESPONSE TO COVID-19, THE COURT WILL POSTPONE THE ORAL ARGUMENTS CURRENTLY SCHEDULED FOR THE APRIL SESSION. 4/13/2020: ARGUMENT TO BE RESCHEDULED FOR THE OCTOBER TERM 2020 CERT. GRANTED 1/10/2020
In the case of Rutledge v. Pharmaceutical Care Management Association, 2020, the US Supreme Court ruled in favor of Arkansas by upholding a state law that regulates pharmacy benefit managers (PBMs), which act as intermediaries between pharmacies and health insurance providers. The court's decision was unanimous (8-0). PBMs had argued that the Employee Retirement Income Security Act of 1974 (ERISA) preempts such state laws but Justice Sonia Sotomayor, writing for the court, disagreed stating ERISA does not preempt an Arkansas law regulating PBM reimbursement to pharmacies. This ruling is significant because it allows states to protect rural and independent pharmacies from being underpaid for drugs they dispense - a practice that often leads these businesses into losses or closure due to low reimbursements from PBMs.
In the dissenting opinion for Rutledge v. Pharmaceutical Care Management Association, Justice Alito argued that the majority's decision to uphold Arkansas' law regulating pharmacy benefit managers (PBMs) contradicts previous rulings on ERISA preemption and could potentially disrupt national uniformity in health care administration. He contended that PBMs are integral parts of ERISA plans, thus any state laws affecting their operation should be preempted by federal law. Justice Alito also expressed concern about potential consequences of this ruling as it might encourage other states to enact similar legislation which would lead to a patchwork of different rules across the country, undermining Congress’s intent for nationwide uniformity in benefits plan regulation under ERISA.
