U.S. Supreme Court schedules oral arguments in Arkansas PBM case

While it’s been known for a month that the U.S. Supreme Court would hear a major case regarding pharmacy benefit managers (PBMs), a date has now been set for oral arguments.

On Friday (Feb. 21), Arkansas Attorney General Leslie Rutledge, who led the court challenge, announced that on April 27 in Washington, D.C. both sides in Rutledge v. Pharmaceutical Care Management Association (PCMA) would give oral arguments to the nation’s highest court.

“We are now one step closer to protecting Arkansans from skyrocketing prescription drug prices by holding PBMs accountable,” said AG Rutledge. “Nationwide, rural pharmacies are faced with unfair business practices by PBMs that harm consumers and our communities. It’s time states like Arkansas had the power to protect themselves and ensure Arkansans are able to receive necessary medications.”

“For countless years, PBMs have tightened the noose on pharmacists and their ability to serve their communities and provide access to life-saving medications and essential counseling,” said Arkansas Pharmacy Association CEO and Executive Vice President John Vinson, Pharm.D. “Instead, PBMs have prioritized profits and stockholders by using anti-competitive practices, self-dealing, and monopoly-like business practices to create an environment where patients, pharmacists, and employers suffer the consequences – patients lose their choice, pharmacists lose their jobs, and employers lose their money.”

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 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.

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 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.