Supreme Court Ruling Against PBMs in Rutledge v. PCMA

Independent pharmacy celebrated a huge win last week as the US Supreme Court issued a historic ruling on Rutledge v. PCMA. The unanimous decision was a breakthrough in the fight against PBMs and their poor reimbursements that have been threatening local pharmacies for years.

The Case: Rutledge, Attorney General of Arkansas v. Pharmaceutical Care Management Association

This case was heard in order to determine whether states can pass regulations that mitigate the harmful practices of PBMs – the middleman between pharmacies, insurance companies, and manufacturers. It revolved around one such regulation – Act 900. Act 900 is an Arkansas law that mandates fair compensation to pharmacists for the drugs they dispense.

The plaintiff, PCMA, is a trade group that represents PBMs such as CVS/Caremark, OptumRX and Express Scripts. They sought to prove that Act 900 should be preempted by the Employee Retirement Income Security Act (ERISA), and therefore asserting that it should not be allowed in state law. ERISA is a federal law that regulates commercial health plans, so PCMA argued that the Arkansa law, Act 900, would be interfering with the regulation of health plans by imposing cost regulations on PBMs. The US Supreme Court, however, disagreed.

The Decision: 8-0 in favor of the interests of community pharmacy

The US Supreme Court found that Act 900 does not fundamentally interfere with the administration of health plans and therefore is not preempted by ERISA. The unanimous decision was ruled on Thursday, December 10th. This ruling upholds the Arkansas law that pharmacies cannot be reimbursed any less than the cost of purchasing and dispensing a drug. Pharmacies are no stranger to drug costs that far exceed the poor rebates from PBMs, so this is a monumental stride in the fight for fair reimbursement for pharmacies.

For more information, read this One Pager from NCPA on the Rutledge v. PCMA decision.

The Impact:

The Supreme Court’s ruling means that states will finally be able to protect their patients who receive pharmacy benefits through their employers and have a say in the actions of PBMs. They can have more control of their own fate instead of succumbing to a widely-unchecked multibillion dollar industry. This decision should hopefully increase drug pricing transparency, increase pharmacy access, and improve healthcare for US citizens.

Many pharmacies, especially rural locations, have been forced to close their doors after dealing with the devastating effect of PBMs. This ruling gives a positive outlook on helping pharmacies stay open and preventing a lack of healthcare access in their communities. For many Americans living in rural towns, their local pharmacy is their most easily accessible healthcare provider.

What’s Next:

Moving forward, this landmark case will pave the way for other states to put PBM regulations into place similar to Arkansas’ Act 900. This case marks the first time in history that the US Supreme Court has ruled a decision on a case pertaining to PBMs. The seemingly “untouchable” PBMs are now being held accountable for their actions and the playing field is beginning to level. There is still plenty of work to be done, but for now, independent pharmacies can celebrate this win and work towards a brighter future.

Thank you to everyone who was involved in making this win a reality!

The Arkansas Pharmacists Association (APA) and National Community Pharmacists Association (NCPA), along with other allied organizations have fought hard to win this case which has been 15 years in the making. We are excited to see what the future holds for independent community pharmacy!

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