The majority of states have signed onto an amicus brief asking the US Supreme Court to decide whether they have the right to regulate pharmacy benefit managers, part of an ongoing debate about who has what power to oversee the industry.
The legal filing disclosed Monday included state attorneys general from 31 states and the District of Columbia, noting that “all states regulate pharmacy benefit managers (PBMs) to some degree.” It follows a decision by the Tenth Circuit Court of Appeals last year that sided with the Pharmaceutical Care Management Association’s challenge to a 2019 Oklahoma law, and the state’s subsequent appeal.
At the heart of the case is a dispute between state governments, which have increasingly targeted PBM practices for oversight, and the PBM industry, which argues that it should be regulated largely at the federal level because so much of its business falls under the Employee Retirement Income Security Act of 1974 (ERISA) and Medicare Part D.
The Oklahoma law was meant to allow more pharmacies to join the coverage networks set up by PBMs. The PBMs, through PCMA, have argued that provisions in the law undercut ERISA and Medicare Part D.
The Tenth Circuit agreed, hampering enforcement of the bill. Oklahoma Insurance Commissioner Glen Mulready called the decision “disappointing” and said in August that it would be appealed.
In attempting to bring the case to the Supreme Court, state AGs have argued that the Tenth Circuit’s decision significantly broadened a separate, 2021 decision from the Eighth Circuit Court of Appeals that PBM regulations instituted in North Dakota largely didn’t supersede federal law. The AGs argued that inconsistencies between the courts have “caused further uncertainty about the extent to which states may regulate PBMs.”
Greg Lopes, PCMA’s vice president of public affairs, said in a statement provided Wednesday that including more pharmacies in networks would increase drug costs.
“The 10th Circuit was right to hold that Oklahoma’s law is preempted under both ERISA and Medicare Part D, and we will continue to defend that decision,” Lopes said.
The push by states’ top law enforcers underscores the extent to which PBMs have found themselves in lawmaker’s sights, regardless of political party. The Federal Trade Commission is two years into investigating the largest pharmacy middlemen, which a bipartisan group of senators sought more details on in January. FTC Chair Lina Khan said in March that some of the PBMs were not fully complying with the probe.