Supreme Court to take up PBM state regulations

Supreme Court to take up PBM state regulations

The U.S. Supreme Court has taken up a case reviewing how states regulate pharmacy benefit managers.

At issue is whether the federal Employee Retirement Income Security Act preempts an Arkansas law regulating companies like Express Scripts and CVS Health.

The PBM lobbying group, Pharmaceutical Care Management Association, successfully challenged the law on ERISA preemption grounds in the Eighth Circuit, which twice struck down laws in Arkansas and Iowa.

At least 38 states have passed laws ostensibly aimed at curbing drug costs by regulating PBMs.

“These inconsistent and often conflicting state policies eliminate flexibility for plan sponsors and create significant administrative inefficiencies. These inefficiencies divert funds from where they should be spent: providing access to the healthcare services on which employees of plans across the country rely,” said PCMA President and CEO J.C. Scott in a prepared statement.

PBMs are often cited as black boxes that use tactics like spread pricing to grow their profits without delivering real benefits to taxpayers or beneficiaries.

Recent studies have found that PBM prices often exceed Medicaid fee-for-service drug prices, which has prompted states to break off their relationships with the PBMs.

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