Rutledge v. Pharm. Care Mgmt. Ass’n

Whether the Eighth Circuit erred in holding that Arkansas’s statute regulating PBM’s drug-reimbursement rates, which is similar to laws enacted by a substantial majority of States, is preempt by ERISA, in contravention of this Court’s precedent that ERISA does not preempt rate regulation.

Arkansas enacted a statute regulating the rates pharmacy benefit managers (PBM) reimburse pharmacies for drugs. The statute intended to prevent additional pharmacy closures by protecting against below-cost reimbursements. Respondent filed suit arguing the statute was preempted under Employee Retirement Income Security Act of 1974 (ERISA) and Medicare Part D. The district court found ERISA preempted the statute but not Medicare Part D. Respondent appealed under Medicare and Petitioner cross-appealed under ERISA. The Eighth Circuit Court of Appeals found for Respondent on both, reasoning the statue impermissibly referenced ERISA because PBM’s customers included ERISA plans and impermissibly connected with ERISA because the rates or reimbursement of prescription drugs are an “area central to plan administration.” Petitioner argues the decision below conflicts with Supreme Court precedent and would vastly expand the scope of ERISA preemption. Petitioner argues under Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 324 (1997) and N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 US 654 (1995), that implicit reference to ERISA does not include regulating entities that have, amongst other types, ERISA plans or customers with ERISA plans. Petitioner further argues the statute is basic rate regulation and that this Court held in Travelers that “ERISA was not meant to pre-empt basic rate regulation” for medical services.