The Supreme Court of the United States (SCOTUS) ruling in Rutledge v. Pharmaceutical Care Management Association (PCMA), a pharmacy benefit manager (PBM) trade association, is a long-awaited advance in PBM regulations and protecting independent pharmacies.
While the court’s judicial review is crucial to interpreting regulations, only the legislature can create new or amend existing laws.
Currently, the unanimous SCOTUS decision is only applicable to Arkansas regulations; however, it will significantly impact the more than 35 states (including Iowa, Maryland, New Jersey, and Kentucky) with legislation that addresses reimbursement rates and drug prices. The majority and concurrent opinions stated that:
States can regulate PBMs.
“State rate regulations that merely increase costs or alter incentives for Employee Retirement Income Security Act of 1974 (ERISA) plans without forcing plans to adopt any particular scheme of substantive coverage are not pre-empted by ERISA.” – SCOTUS Slip Opinion, Page 2.
Pharmacies can refuse to fill at a loss.
“Allowing pharmacies to decline to dispense a prescription if the PBM’s reimbursement will be less than the pharmacy’s cost of acquisition does not interfere with central matters of plan administration.” – SCOTUS Slip Opinion, Page 2.
Pharmacies refusing to fill at a loss are not denying patient benefits.
“When a pharmacy declines to dispense a prescription, the responsibility lies first with the PBM for offering the pharmacy a below-acquisition reimbursement.” – Justice Sotomayor, Majority Opinion, Page 9.
PBMs make profits in the passthrough.
“A PBM’s reimbursement from a plan often differs from and exceeds a PBM’s reimbursement to a pharmacy. That difference generates a profit for PBMs.” – Justice Sotomayor, Majority Opinion, Page 2.
At EPIC Rx, we are evaluating existing PBM regulations with stakeholders and partners. We still anticipate challenges, but this decision gives pharmacy a path forward for changes in states other than Arkansas.
We will continue fighting for independent pharmacies to preserve the valuable services, patient care, and economic support they provide their communities.
We look forward to updating you in the future.
Jay Romero
President
EPIC Pharmacy Network