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PREEMPTION

Pharmaceutical Care Management Association v. Rutledge

The Eighth Circuit affirms a district court decision finding that an Arkansas state statute directing the conduct and procedures of pharmacy benefit managers (PBMs) is preempted by the Employee Retirement Income Security Act of 1974 (ERISA). The plaintiff is a pharmacy trade association. The defendant is the state of Arkansas. In 2015, the defendant passed a state law that attempted to govern the conduct of PBMs. PBMs are the entities that verify benefits and manage financial transactions among pharmacies, health care payers and patients. PBMs are intermediaries between health plans and pharmacies, and the contracts between PBMs and pharmacies create pharmacy networks. Based on the contracts and in order to participate in a preferred network, some pharmacies choose to accept lower reimbursements for dispensed prescriptions and therefore may actually lose money on a given prescription transaction. In order to address this trend, the defendant amended its state law to impose pricing mandates on pharmacies and imposed various requirements on PBMs. The plaintiff filed a lawsuit against the defendant, contending that the amendment is preempted by both ERISA and Medicare Part D and that it is unconstitutional. The district court found that Medicare Part D did not preempt the state law and that the law was not unconstitutional; however, the court declared that it was preempted by ERISA. The plaintiff appeals the Medicare Part D ruling, and the defendant cross-appeals the ERISA preemption ruling. ERISA preempts any and all state laws if they relate to any employee benefit plan by having a connection with or reference to such a plan. The court finds that the state law here relates to and has a connection with employee benefit plans and is therefore preempted by ERISA. Medicare Part D funds prescription drug benefits through payments from the Medicare government trust fund, and beneficiaries generally get prescriptions through a Part D network provider. The federal law governing Medicare Part D prohibits federal and state interference in negotiations between Part D sponsors and pharmacies and preempts a state law where the state law acts with respect to the federal standards set by Congress or the Centers for Medicare & Medicaid Services (CMS). The plaintiff argues that the Arkansas law acts with respect to the standards established by Congress and CMS and should be preempted, and the court agrees. Accordingly, the Arkansas state law is preempted by both ERISA and Medicare Part D and, therefore, the court affirms the district court decision in part, reverses in part and remands for entry of judgment in favor of the plaintiff. No. 17-1609 (8th Cir. June 8,2018).

DISABILITY BENEFITS

Hansel v. Aetna Life Insurance Co. et al.

The U.S. District Court for the Eastern...

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