Oklahoma Seeks Supreme Court Review of Tenth Circuit Ruling on State PBM Regulation

The Tenth Circuit Court of Appeals, in Pharmaceutical Care Management Association (PCMA) v. Mulready, struck down certain provisions in the Patient’s Right to Pharmacy Choice Act, an Oklahoma law designed to ensure adequate pharmacy network access and prohibit pharmacy benefit managers (PBMs) from directing patients to PBM-affiliated pharmacies exclusively

PCMA, an association representing PBMs, argued that the Oklahoma law conflicted with the Employee Retirement Income Security Act (ERISA) and Medicare Part D. Initially, the Oklahoma federal district court ruled in favor of the state law, stating that ERISA didn’t preempt it. However, on appeal, the Tenth Circuit found that ERISA and Medicare Part D did preempt certain provisions of the law, meaning that the provisions couldn’t be applied to health plans covered by these federal programs.

This ruling highlights the ongoing legal battles over state regulations of PBMs. On May 10, 2024, Oklahoma officials petitioned for a higher review, urging the Supreme Court to overturn the Tenth Circuit’s decision. They contend that the Supreme Court’s ruling in Rutledge v. PCMA supports state regulation of PBMs. However, while Rutledge v. PCMA established that ERISA does not preempt state laws that increase costs or alter incentives for ERISA plans without mandating specific substantive coverage, the Tenth Circuit found that the Oklahoma law directly affected PBM pharmacy networks and hindered fundamental network designs. Thus, the Tenth Circuit decision may be challenging to overturn as the Supreme Court held in Rutledge that there was a “mere cost regulation that did not have an impermissible connection with ERISA plans,” Whereas, the Oklahoma law attempted to “govern a central matter of plan administration” and “interfere with nationally uniform plan administration.”

Read the decision here. Read the Supreme Court Petition here.