Solicitor General asks U.S. Supreme Court to hear Arkansas PBM case

U.S. Solicitor General Noel Francisco recommended Thursday (Dec. 5) that an Arkansas case involving pharmacy benefit managers be heard by the U.S. Supreme Court.

Francisco agreed with a petition by Arkansas Attorney General Leslie Rutledge for the Supreme Court to hear a case involving Act 900, passed by the Arkansas General Assembly in 2015.

Rebecca Jeffrey, Rutledge’s deputy communications director, said a decision on whether the U.S. Supreme Court hears the case is expected in January. She said the office is confident the court will hear the case.

Act 900 requires pharmacy benefit managers (PBMs) to reimburse pharmacies at or above their wholesale costs paid for generic drugs and prevents them from paying their own drugstores more than they pay others.

In a 2017 ruling that otherwise dismissed a lawsuit by the Pharmaceutical Care Management Association, which represents PBMs, U.S. District Judge Brian Miller said Act 900 was preempted in health plans regulated by the federal Employee Retirement Income Security Act (ERISA).

Large employers fall under an exemption included in that law, passed by Congress in 1974. A three-judge 8th Circuit Court of Appeals agreed in 2018 and also said Act 900 was preempted by the federal government’s Medicare Part D program.

PBMs act as middlemen between health insurance companies and pharmacies. Their reimbursement rates are supposed to incentivize pharmacies to find lower wholesale drug prices. But pharmacies have complained that PBMs have been reimbursing them below their cost to acquire a drug.

“Small town pharmacies are experiencing financial hardship at the hands of the pharmacy benefit managers requiring they operate at a loss or go out of business,” Rutledge said in a press release.

Three PBMs dominate the market – CVS Caremark, which is part of the corporation that operates the CVS drugstore chain, OptumRX and Express Scripts.