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Arkansas Seeks U.S. Supreme Court Review of Eighth Circuit Ruling Striking Down MAC Law

Back on October 22, 2018, the state of Arkansas filed a petition for a writ of certiorari with the U.S. Supreme Court, asking them to review the U.S. Court of Appeals for the Eighth Circuit’s decision, specifically asking the Supreme Court to consider “[w]hether the Eighth Circuit erred in holding that Arkansas’s statute . . . is preempted by ERISA[.]” Most recently, on April 15, 2019, the Supreme Court invited the Solicitor General, Noel Francisco, to file a brief expressing the view of the United States regarding the Arkansas Eighth Circuit’s ruling striking down Arkansas’s Maximum Allowable Cost (MAC) Law.

In its petition, Arkansas noted that numerous “states have enacted legislation designed to curb the abusive PBM reimbursement practices that have driven independent pharmacies from the marketplace.” A month after Arkansas filed their petition, a group of 32 other states filed an amicus brief in support of Arkansas, noting that the Eighth Circuit’s “expansive interpretation of ERISA preemption in this case threatens to interfere with States’ ability to exercise their long-standing authority to regulate PBM conduct[.]” The Pharmaceutical Care Management Association (PCMA), a trade association exclusively representing the interests of Pharmacy Benefit Managers (PBMs), opposed the petition filed by Arkansas. 

In the last several years, over 30 states have passed legislation aimed at curbing abusive PBM practices. In 2013, Arkansas joined those states and enacted legislation aimed at specifying PBM reimbursement rates for certain generic drugs that are priced based on MAC, or Maximum Allowable Cost. Shortly after the Arkansas law went into effect, PCMA filed a lawsuit challenging the law, claiming that it was preempted by ERISA and Medicare Part D. The U.S. District Court for the Western District of Arkansas determined that the law was valid under Medicare Part D, but agreed with the PCMA that it was preempted under ERISA. Both parties to the lawsuit appealed to the Eighth Circuit—Arkansas challenged the court’s ERISA ruling while PCMA challenged the court’s Medicare Part D ruling. The Eighth Circuit ultimately held that the law was preempted under both ERISA and Medicare Part D.

Frier Levitt continues to track this case and its potential impact on other state laws aimed at regulating PBM practices and is well positioned to assist pharmacies in challenging improper PBM practices. Frier Levitt is also capable of assisting states in drafting effective laws that will withstand legal challenges by the PCMA and corresponding judicial scrutiny. Frier Levitt represents pharmacies across the United States in challenging PBM audits, network access and reimbursement practices and policies. Contact us today to speak with an attorney about how your pharmacy may leverage the various federal and state laws that have been enacted to protect pharmacies and to learn the latest information about this important case.