Plain-English summary
Court allows Arkansas law limiting pharmacy benefit manager reimbursements to stand, rejecting ERISA preemption
The Supreme Court ruled (Dec. 10, 2020) that Arkansas’ Act 900 — which limits how pharmacy benefit managers (PBMs) reimburse pharmacies by requiring reimbursement at or above wholesale cost — is not preempted by the Employee Retirement Income Security Act (ERISA). The Court reversed the Eighth Circuit and sent the case back for further proceedings.
Why this matters
This decision lets states regulate certain PBM practices affecting how pharmacies are paid for prescription drugs, limiting the scope of ERISA preemption and giving states more room to police middlemen in drug pricing. That can affect drug costs, pharmacy revenues, and state efforts to protect local pharmacies.
Who may feel it
- Retail and independent pharmacies (especially in-state pharmacies)
- Pharmacy benefit managers (PBMs)
- State governments and regulators
- Health plans that use PBMs and their plan participants
- Employers that sponsor ERISA-covered health plans
Key questions
- Does ERISA preempt a state law that regulates PBM reimbursement rates paid to pharmacies for prescription drugs?
- How far does ERISA preemption extend when a state law affects entities (like PBMs) that administer or process claims for ERISA-covered plans?