Mulready v. Pharmaceutical Care Management Association
Brief Summary: Pharmaceutical Care Management Association (PCMA), a trade association representing pharmacy benefit managers (PBMs), sued the Oklahoma Insurance Commissioner in an effort to invalidate an Oklahoma law aimed at improving patient access to pharmacy providers, partly by regulating PBMs.
Overview: In 2019, Oklahoma passed the Oklahoma Patient’s Right to Pharmacy Choice Act, which established prohibitions on PBM-imposed restrictions of an Oklahoman’s right to choose a pharmacy provider. In response, PCMA filed a lawsuit against the Oklahoma State and its Insurance Commissioner challenging the Act. PCMA alleged that the Oklahoma law was preempted by the Employee Retirement Income Security Act (ERISA) and Medicare Part D, meaning that federal law overrides conflicting state laws in certain areas resulting in the state law being invalid.
ERISA is a federal law which sets minimum standards for most voluntarily established retirement and health plans in employer-sponsored health plans. These standards aim to create a uniform regulatory framework intended to protect the interests of plan participants and their beneficiaries. To maintain this uniformity, ERISA’s “preemption clause” overrides any state laws that “relate to” employer-sponsored health plans.
Initially, the U.S. District Court for the Western District of Oklahoma largely ruled in favor of Oklahoma and its Insurance Commissioner, finding that ERISA did not preempt the Act. However, the court held that six of the thirteen challenged provisions were preempted by Medicare Part D. PCMA subsequently appealed the court’s ERISA ruling on four provisions of the Act and its Medicare Part D ruling on one provision.
On appeal, the Tenth Circuit Court of Appeals reversed this decision, ruling that ERISA preempted several provisions of the law, including:
- Access Standards: Setting minimum standards for PBM networks to ensure patients have access to a nearby, in-network, and preferred pharmacy.
- Discount Prohibition: Prohibiting PBMs from using discounts to steer patients toward PBM-affiliated pharmacies instead of independent ones.
- “Any Willing Provider” Provision: Requiring PBMs to allow any pharmacy that meets their terms and conditions to join their network.
- Probation Provision: Barring PBMs from terminating a licensed pharmacy’s participation in the network solely because the pharmacy is on probation.
The court reasoned that ERISA forbids state laws that mandate benefit structures, quoting the Supreme Court’s decision in Rutledge v. PCMA, 141 S. Ct. 474, 480 (2020), “[h]owever sliced, the network restrictions ‘require providers to structure benefit plans in particular ways.'” In Rutledge v. PCMA, the U.S. Supreme Court held that an Arkansas law regulating PBMs was not preempted by ERISA, reasoning that the law was a general regulation that neither dictated plan choices nor acted immediately and exclusively upon ERISA plans.
On May 10, 2024, the Oklahoma’s Insurance Department asked the U.S. Supreme Court to review the Tenth Circuit’s decision, reasoning that Mulready “is irreconcilable with [the Supreme Court’s]unanimous decision in Rutledge.”
Court Updates: On August 15, 2023, the Tenth Circuit Court of Appeals reversed the District Court’s decision, ruling that ERISA preempted several provisions of Oklahoma Patient’s Right to Pharmacy Choice Act, and on May 10, 2024, Oklahoma’s Insurance Department petitioned the U.S. Supreme Court to review the Tenth Circuit’s decision.
Current Status: On October 7, 2024, the U.S. Supreme Court requested the U.S. Solicitor General to submit a brief after the Tenth Circuit struck down the state law.
Impact: This case has significant implications for the regulation of PBMs. If the U.S. Supreme Court elects to hear the case, their decision on the enforceability of the state’s PBM regulations could have pose a significant implication on the ability of states to protect consumers and regulate harmful PBM practices.
Last Updated on December 14, 2024 by Aimed Alliance
