Supreme Court upholds Arkansas law regulating PBMs

The Supreme Court on Dec. 10 voted 8-0 to uphold an Arkansas statute regulating the reimbursement rates pharmacy benefit managers must pay to pharmacies.

The case originated in 2015 when a trade group for PBMs filed a lawsuit arguing against an Arkansas law that regulates the reimbursement rates PBMs are required to pay pharmacies. The law requires PBMs to reimburse pharmacies at or above the costs paid for wholesale generic drugs and prevents them from paying their own pharmacies more than what is paid to other ones. Retail pharmacies like CVS, for example, own both a PBM and pharmacies.

PBMs argued the law would make it more difficult to keep costs down, as pharmacies wouldn't have as much incentive to purchase lower-cost medicines from wholesale drugmakers. The federal appeals court agreed in 2018.

In its Dec. 10 decision, the court wrote that the Arkansas law does not regulate "a central matter of plan administration" or stand in the way of a "nationally uniform plan administration." The justices also wrote that the law targeted middlemen rather than employee health plans.

"This is a historic victory for independent pharmacies and their patients," B. Douglas Hoey, CEO of National Community Pharmacists Association, said in a statement. "And it confirms the rights of states to enact reasonable regulations in the name of fair competition and public health."

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