Rutledge v. Pharmaceutical Care Management Association

141 S. Ct. 474 (2020)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Pharmacy benefit managers (PBMs) are an important part of the process by which many Americans get their prescription drugs. PBMs serve as intermediaries between prescription-drug plans and the pharmacies that beneficiaries use. When a beneficiary of a prescription-drug plan goes to a pharmacy to fill a prescription, the pharmacy checks with a PBM to determine that person’s coverage and copayment information. After the beneficiary leaves with his or her prescription, the PBM reimburses the pharmacy for the prescription, less the amount of the beneficiary’s copayment. The prescription-drug plan, in turn, reimburses the PBM. The amount a PBM “reimburses” a pharmacy for a drug is not necessarily tied to how much the pharmacy paid to purchase that drug from a wholesaler. PBMs’ contracts with pharmacies typically set reimbursement rates according to a list specifying the maximum allowable cost (MAC) for each drug. PBMs normally develop and administer their own unique MAC lists. The amount that prescription-drug plans reimburse PBMs is a matter of contract between a given plan and a PBM. A PBM’s reimbursement from a plan often differs from and exceeds a PBM’s reimbursement to a pharmacy. That difference generates a profit for PBMs. (In other words in the perverted world of health care, the PBMs are simply unneeded and unnecessary parties involved to make a profit for doing practically nothing that a simple computer program with a look-up table in it could do.) D adopted Act 900 in response to concerns that the reimbursement rates set by PBMs were often too low to cover pharmacies’ costs, and that many pharmacies, particularly rural and independent ones, were at risk of losing money and closing. Act 900 requires PBMs to reimburse Arkansas pharmacies at a price equal to or higher than that which the pharmacy paid to buy the drug from a wholesaler. The Act requires PBMs to tether reimbursement rates to pharmacies’ acquisition costs by timely updating their MAC lists when drug wholesale prices increase. PBMs must provide administrative appeal procedures for pharmacies to challenge MAC reimbursement prices that are below the pharmacies’ acquisition costs. If a pharmacy could not have acquired the drug at a lower price from its typical wholesaler, a PBM must increase its reimbursement rate to cover the pharmacy’s acquisition cost. BMs must also allow pharmacies to “reverse and rebill” each reimbursement claim affected by the pharmacy’s inability to procure the drug from its typical wholesaler at a price equal to or less than the MAC reimbursement price. The Act permits a pharmacy to decline to sell a drug to a beneficiary if the relevant PBM will reimburse the pharmacy at less than its acquisition cost. D is a national trade association representing the 11 largest PBMs in the country. After the enactment of Act 900, PCMA (P). an association that represents the PBMs, filed suit alleging that Act 900 is pre-empted by ERISA. The District Court held that ERISA pre-empts Act 900. The Eighth Circuit affirmed. The Supreme Court granted certiorari.