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.

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