The U.S. Supreme Court will hear a case brought by Arkansas Attorney General Leslie Rutledge against the pharmacy benefit management (PBM) industry, according to a statement issued Friday (Jan. 10) from Rutledge’s office.
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.
Three PBMs dominate the market – CVS Caremark, which is part of the corporation that operates the CVS drugstore chain, OptumRX and Express Scripts.
The legal battle began with Act 900, passed by the Arkansas Legislature in 2015, which sought to require 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).
U.S. Solicitor General Noel Francisco recommended Dec. 5 that the Arkansas case – Rutledge v. Pharmaceutical Care Management Association, No.18-540 – be heard by the U.S. Supreme Court. Rutledge has argued that more than 16% of rural pharmacies closed in recent years due to declining PBM payments on generic prescriptions causing Arkansans to be unable to receive necessary medications.
“Today is a victory for Arkansas and especially our rural pharmacies,” Rutledge said in the statement. “Pharmacy benefit managers need to be held accountable for the alarming number of small town pharmacies they have closed due to unfair business practices.”
The PBM industry has said the industry works to improve patient outcomes and is not responsible for price or other issues that may harm smaller pharmacies.
“As the public debate in Arkansas continues to unfold on drug pricing issues and the role of PBMs in the health care system, it is vital to understand PBMs are an integral part of the solution that lower drug costs for patients, and ultimately health insurance premiums, while most importantly, helping improve patients’ health,” Dr. Edmund Pezalla, a scholar-in-residence at the Duke-Margolis Center for Health Policy in Washington, noted in an opinion piece posted by Talk Business & Politics.