States Start to Take Advantage of New Authority Over PBMs

State governments have begun to pursue aggressive policies to make PBMs more transparent, accountable to plan sponsors and less expensive to contract with — efforts that are bolstered by Rutledge v. Pharmaceutical Care Management Association (PCMA), a lawsuit decided by the Supreme Court at the end of 2020 in which the justices held that states were not in violation of the Employee Retirement Income Security Act of 1974 (ERISA) in attempting to regulate the rates at which PBMs reimburse pharmacies.

According to the National Academy for State Health Policy (NASHP), a think tank and policy advocacy group, so far this year 42 states have considered 108 bills relating to PBM regulation. That wave of legislation is in part driven by Rutledge, which, as a March Milliman Inc. report put it, “creates a clear pathway for states to impose minimum thresholds on pharmacy…prices affecting reimbursement levels paid by plan sponsors,” which “means PBMs could be forced to pay pharmacies a minimum price for drugs.”

The lawsuit originated with a PCMA-led challenge of an Arkansas law, Act 900, which requires PBMs to reimburse pharmacies at no less than what pharmacies pay to acquire drugs.

© 2024 MMIT
Peter Johnson

Peter Johnson

Peter has worked as a journalist since 2011 and has covered health care since 2020. At AIS Health, Peter covers trends in finance, business and policy that affect the health insurance and pharma sectors. For Health Plan Weekly, he covers all aspects of the U.S. health insurance sector, including employer-sponsored insurance, Medicaid managed care, Medicare Advantage and the Affordable Care Act individual marketplaces. In Radar on Drug Benefits, Peter covers the operations of (and conflicts between) pharmacy benefit managers and pharmaceutical manufacturers, with a particular focus on pricing dynamics and market access. Before joining AIS Health, Peter covered transportation, public safety and local government for various outlets in Seattle, his hometown and current place of residence. He graduated with a B.A. from Colby College.

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