On August 31, 2026, the U.S. District Court for the Central District of Illinois granted a preliminary injunction in Pharmaceutical Care Management Association v. Gillespie, No. 26-cv-3200 (C.D. Ill. 2026), blocking enforcement of key reporting requirements of the Illinois Prescription Drug Affordability Act (PDAA) against pharmacy benefit managers (PBMs) serving plans covered by the Employee Retirement Income Security Act of 1974 (ERISA). The decision is the latest in a growing line of federal court rulings addressing when state PBM regulations are preempted by ERISA. The decision underscores the continuing tension between state PBM regulation and ERISA’s goal of nationally uniform plan administration.
The Illinois PDAA and the Court’s Ruling
The PDAA, which was signed in July 2025, imposed significant requirements on PBMs operating in Illinois, including extensive annual reporting obligations to the Illinois Department of Insurance. PBMs were required to disclose detailed claims-level data on each health benefit plan they administered. Such claims-level data included drug lists, claims volume, per-transaction reimbursement amounts, rebate pass-throughs, and copies of every contract between the PBM and the plan sponsor. The first annual report was due September 1, 2026, with noncompliance penalties of up to $10,000 per day.
The Pharmaceutical Care Management Association (PCMA), the national trade association representing PBMs, filed suit on June 16, 2026, arguing that the PDAA’s reporting requirements and network design restrictions were preempted by ERISA. Judge Colleen R. Lawless agreed that PCMA was likely to succeed on its ERISA preemption challenge to the reporting requirements, finding that the PDAA’s reporting mandates bore a strong resemblance to the Vermont statute the Supreme Court struck down in Gobeille v. Liberty Mutual Insurance Co., 577 U.S. 312 (2016). The court held that the PDAA’s requirements were not “incidental” to a permissible state regulation but instead constituted an extensive, standalone data-collection regime that “intrudes upon a central matter of plan administration and interferes with nationally uniform plan administration.” This holding contrasts with the narrower reporting provisions upheld by the Seventh Circuit in Central States v. McClain, 2026 WL 2510865 (7th Cir. Aug. 26, 2026).
ERISA Preemption and State PBM Laws: A Developing Line of Cases
The Gillespie decision does not stand alone. It follows several federal appellate rulings examining the limits of state authority to regulate PBMs serving ERISA-covered plans. In PCMA v. Mulready, 78 F.4th 1183 (10th Cir. 2023), the Tenth Circuit held that ERISA preempted key provisions of Oklahoma’s Patient’s Right to Pharmacy Choice Act, including pharmacy network access standards and anti-steering restrictions that the court found dictated the design and structure of ERISA-covered benefit plans. The Supreme Court declined to review that decision in June 2025, leaving the Tenth Circuit’s holding intact.
In Rutledge v. Pharmaceutical Care Management, 592 U.S. 80 (2020), the Supreme Court held that Arkansas Act 900, which regulated PBM reimbursement rates to pharmacies, was not preempted by ERISA because it operated as a cost regulation and did not dictate plan choices. At the time, Rutledge was viewed as an important affirmation of state authority to regulate PBMs serving ERISA-covered plans. The more recent decisions in Mulready, McKee Foods, and Gillespie, however, help define the limits of Rutledge. Unlike the reimbursement-rate law upheld in Rutledge, these cases involved state laws imposing reporting mandates, network design requirements, or anti-steering restrictions that courts found interfered with ERISA plan structure or administration.
More recently, in McKee Foods Corporation v. BFP Inc., 173 F.4th 242 (6th Cir. 2026), the Sixth Circuit affirmed that Tennessee’s “any willing provider” and anti-steering PBM laws were preempted by ERISA, finding that those provisions “require an ERISA plan to” adopt specific pharmacy network structures in violation of ERISA’s preemption framework.
Together, Mulready, McKee Foods, and Gillespie form a growing body of authority holding that state PBM laws, regardless of their intention, cannot impose requirements that interfere with the administration of federally regulated employee benefit plans.
The Path Forward: The Growing Role of Federal PBM Regulation
The recurring collision between state PBM reform efforts and ERISA preemption makes clear that meaningful regulation of PBM practices in the employer-sponsored health plan context will likely need to come from Congress. States have a legitimate interest in protecting consumers from rising prescription drug costs and opaque PBM business practices. ERISA’s broad preemption clause, which supersedes “any and all State laws” that “relate to any employee benefit plan, “limits how far state legislatures can go when regulating ERISA-covered plans.
The Consolidated Appropriations Act of 2026 (CAA 2026), signed into law in early 2026, includes Section 6224, “Modernizing and Ensuring PBM Accountability,” which establishes new transparency, compensation, and reporting requirements governing PBMs in the Medicare Part D context. Key provisions include codified bona fide service fee standards, enhanced annual reporting to plan sponsors and HHS, and new audit rights for prescription drug plan sponsors. Central operative provisions are due to take effect in 2028. On June 18, 2026, the Centers for Medicare & Medicaid Services (CMS) published a Request for Information (RFI) titled “Pharmacy Benefit Manager Compensation and Data Collection,” seeking industry input on the implementation of Section 6224. Additional rulemaking is anticipated as CMS works to operationalize CAA 2026’s PBM provisions.
Separately, CAA 2026 requires the Secretary to establish standards for “reasonable and relevant” Part D pharmacy contract terms by April 2028 and to issue an RFI by April 1, 2027, seeking input on network pharmacy contracting practices, reimbursement, dispensing fees, quality measures, restrictions, audits, and related issues.
How Frier Levitt Can Help
The evolving legal landscape surrounding PBM regulation creates both risk and opportunity for pharmacies, pharmaceutical manufacturers, plan sponsors, and other industry participants. Frier Levitt has deep expertise in PBM contracting, regulatory compliance, and government advocacy, and regularly assists clients with responses to federal RFIs, including those associated with the CAA 2026, participation in rulemaking proceedings, and petitions to government agencies for policy and regulatory changes. As CMS advances rulemaking under Section 6224 and additional federal oversight measures take shape, proactive engagement with the regulatory process will be essential.
Contact Frier Levitt today to discuss how these state and federal PBM regulatory developments may affect your organization.
Senior Associate
