U.S. Supreme Court May Soon Provide Clarity on PBM Regulations 

By Consumers for Quality Care, on September 4, 2024

The U.S. Supreme Court may soon decide on the merits of a 50-year-old federal law which stands in the way of allowing states to regulate pharmacy benefit managers (PBMs) across health insurance plans covering most Americans, according to Stateline.  

Independent and family-owned pharmacies across the country are struggling to stay in business due to the incredible, almost monopolistic market power of PBMs, which control most of the prescription-drug market. Because of their size, independent pharmacies have little leverage to negotiate fair contracts with PBMs, which charge high fees while also forcing mom-and-pop pharmacies to accept low reimbursement rates. 

Though all 50 states have passed legislation aimed at addressing PBMs, these laws only apply to about one-third of the population. That is because a federal law, the Employee Retirement Income Security Act (ERISA), prohibits these measures from applying to plans funded and administered by large employers, where most Americans get their coverage.  

But five years ago, Oklahoma tried to change that, passing a law regulating PBMs’ predatory business practices. Almost immediately, the Pharmaceutical Care Management Association (PCMA), a trade group that represents PBMs, sued to overturn the law, and last summer they won a victory when the U.S. Court of Appeals for the Tenth Circuit ruled in their favor. Oklahoma appealed to the U.S. Supreme Court, asking it to overturn the 10th Circuit’s decision. Their appeal is supported by a bipartisan coalition of state attorneys general as well as five pharmacist trade groups. 

If the U.S. Supreme Court should side with Oklahoma, it could open the doors for states to regulate employer-based health insurance plans. Until then, ERISA restricts states from reigning in PBMs’ predatory business practices.    

Oklahoma Insurance Commissioner Glen Mulready hopes that the U.S. Supreme Court will provide some legal relief. “We just need clarity on the issue,” he said. “That’s what’s needed by lots of folks across the country as they’re watching this or have watched this play out.” 

If left unchecked, PBMs will continue to engage in anticompetitive business practices, forcing independent pharmacies to shut their doors, limiting consumers’ access to medications, and driving up the price of prescription medications. CQC urges lawmakers and regulators to continue to scrutinize PBM activities and take action to ensure access to affordable care for all consumers.