Pharmaceutical Care Management Association (PCMA) v. RutledgeDate Filed: August 13, 2015
District Court: Eastern District of Arkansas – 4:15-cv-00510-BSM
Appellate Court: 8th Circuit No. 17-1609, No. 17-1629; Supreme Court No. 18-540
Nature of Suit: Pharma Legislation Challenge
Defendant Type: State
Plaintiff Type: Private
Case Info: https://sourceonhealthcare.org/litigation-and-enforcement-highlights-november-2018/, https://sourceonhealthcare.org/legal-challenges-against-state-pbm-laws-may-culminate-in-supreme-court-review/, https://sourceonhealthcare.org/pharmacy-benefit-managers-under-legal-scrutiny-u-s-supreme-court-to-decide-if-states-can-regulate-pbm-reimbursement-to-pharmacies/, https://sourceonhealthcare.org/a-decision-in-rutledge-the-supreme-court-upholds-states-rights-to-regulate-health-care-costs/
Court Document: https://wsauth.bna.com/wsauth/blawauth?target=https://www.bloomberglaw.com/document/X1Q6O09AF0O2, https://www.bloomberglaw.com/document/X1MJBURH0000N?, https://src.bna.com/CGe, https://src.bna.com/Drr, https://www.supremecourt.gov/opinions/20pdf/18-540_m64o.pdf
Act 900 (SB 688), enacted in 2015, required disclosure of generic drug pricing and sets a floor on prices that PBMs can pay to pharmacies for generic drugs. Pharmaceutical Care Management Association (PCMA), a trade association representing PBMs, brought the suit against the state in 2015.
Closely following the 8th Circuit decision in PCMA v. Gerhart handed down just two months earlier which struck down a similar Iowa law, the District Court of Arkansas was compelled to strike down the Arkansas law in March 2017. The district court found that ERISA preempted the law but Medicare Part D did not.
The 8th Circuit affirmed on appeal and held that both ERISA and Medicare Part D preempted Arkansas’ drug pricing law Act 900. Arkansas filed a petition for certiorari, requesting the Supreme Court to review the case, citing split circuit court decisions in the matter of ERISA preemption of PBM laws among the 1st Circuit, 8th Circuit, and D.C. Circuit, which created “‘confusion and uncertainty’ about state power to regulate drug prices.” Multiple states including California and New York signed on the amicus brief to the Supreme Court, urging review of the case. The Supreme Court granted certiorari of the case in January 2020.
On December 10, 2020, the Supreme Court issued a unanimous decision (8-0, Justice Barrett did not participate in the case) that overturned the 8th Circuit and upheld the law. The ruling found that Arkansas’ law is a price regulation that is not preempted by the Employee Retirement Income Security Act of 1974 (ERISA). Read more in the Source blog post.