States and Independent Pharmacies Achieve Monumental Victory in the Supreme Court

On Thursday December 10, 2020, the Supreme Court of the United States (SCOTUS) issued a unanimous decision in the case Rutledge v. PCMA ruling in favor of the Petitioner, Leslie Rutledge, the Attorney General of Arkansas, and against the Pharmaceutical Care Management Association (PCMA). The PCMA is a powerful lobbying group representing the largest pharmacy benefit managers (PBMs) in the country. In Rutledge, the SCOTUS unanimously held that Arkansas’ Act 900 is not preempted by the Employment Retirement Income Security Act of 1974, more commonly known as ERISA.

By way of background, in 2015, Arkansas enacted Act 900 to address PBM reimbursement in Arkansas that was so low many independent pharmacies and providers were losing money and, in some cases, being forced to close. Due to serious concerns regarding Arkansans’ access to critical pharmacy services, Arkansas enacted Act 900 to address PBMs’ predatory reimbursement practices. PCMA immediately challenged Act 900 arguing that it was preempted by ERISA. After the Eight Circuit held Act 900 preempted by ERISA, the SCOTUS granted Petitioner’s application for a writ of certiorari on January 10, 2020, entertained oral argument on October 6, 2020, and issued its decision today reversing the Eighth Circuit’s ruling and holding that Act 900 was not preempted. In reaching its decision, the SCOTUS noted that “Act 900 amounts to cost regulation that does not bear an impermissible connection with or reference to ERISA”, and therefore it is not preempted.

The significance of the SCOTUS’s decision in Rutledge for independent pharmacies and other providers cannot be overstated. Because many other States have enacted laws similar to Act 900, time will demonstrate just how impactful the SCOTUS’s decision will be on preventing abusive PBM reimbursement practices. For now, it is beyond reasonable dispute that the Court’s decision in Rutledge has dealt a significant “blow” to the PBMs’ ability to pay unreasonably low reimbursement rates by removing ERISA preemption from the PBMs’ arsenal of weapons to challenge State laws regulating their reimbursement practices.

Frier Levitt successfully filed an Amicus Curiae brief in the Rutledge case in support of Petitioner Rutledge’s appeal on behalf of Community Oncology Alliance (COA) and several leading community oncology providers advocating on behalf of cancer patients and oncology providers. The Amicus Curiae brief brought to the Supreme Court’s attention the unique perspective of community oncology practices arguing in favor of the interests and needs of oncology patients and providers across the country and articulating the various ways that PBMs have interfered with optimal cancer care, including the importance of preserving the rights of States to legislate “to protect the health and well-being of their respective citizens.”

How Frier Levitt Can Help

Contact us today to speak with an attorney and learn more about the Rutledge decision, its potential implications for independent pharmacies and community oncology practices throughout the country, and how we may be of assistance to your practice in leveraging the Rutledge decision to ensure that you are not the victim of abusive PBM reimbursement strategies going forward.

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