- The U.S. Supreme Court said Friday it will take up a case on whether states can regulate certain aspects of prescription drug reimbursement, essentially taking on pharmacy benefit managers.
- A federal appeals court previously ruled in favor of PBMs, find The Employee Retirement Income Security Act preempts states from regulating their rates.
- Arkansas Attorney General Leslie Rutledge argued a Supreme Court review is needed to give guidance to states and the lower courts about "what regulations of the central players in prescription drug markets are and are not preempted by ERISA."
PBMs have come under intense scrutiny over their lack of transparency amid the rising costs of prescription drugs and the role they play in the process. The companies serve as the middlemen between the health plans, pharmacies and drug manufacturers.
PBMs have come under fire in particular for their use of spread pricing, in which they reimburse pharmacies one price for a prescription drug but charge the plan another, driving profits for the PBM, some have alleged.
The practice has attracted the attention of both state and federal lawmakers. Some states, including Iowa and Arkansas, have attempted to regulate spread pricing.
Iowa's state insurance commissioner found that PBMs were reimbursing pharmacies below the acquisition costs for certain drugs, leading some pharmacies to go out of business, according to the petition before the Supreme Court.
"Such below-cost reimbursements have left marks on the pharmacy industry, and particularly so on independent rural pharmacies," it reads.
The Arkansas law seeks to protect pharmacies from below-cost reimbursements. The Pharmaceutical Care Management Association, the PBM lobbying group, has protested such changes and filed the lawsuit against Arkansas' legislation.
"These inconsistent and often conflicting state policies eliminate flexibility for plan sponsors and create significant administrative inefficiencies. These inefficiencies divert funds from where they should be spent: providing access to the health care services on which employees of plans across the country rely," PCMA said in a statement.
The group said it's confident in its arguments and looks forward to presenting its case before the high court.