The Challenge
Health plans and their supporting vendors are facing a widespread, coordinated attack across the nation. Participants of these plans hire assistance from companies to negotiate fair and regulated drug costs. It is crucial for union and labor leadership to acknowledge the profound impact on union health plans.
Protecting our health benefit is = to protecting our climate.
We have a lot to be thankful for. As labor leaders, we appreciate all efforts to improve the quality of life for every generation.
Our benefit plans are one of our best organizing tools. Our members don't worry about healthcare when they get ill or have a loss. As an active union member - Healthcare is a first responder for our members.
We will fight for our benefits . It's part of who we are!
The Threat is Real.
PCMA v. Glen Mulready et al.,
U.S. Court of Appeals for the 10th Circuit
PCMA v. Wehbi, 18 F.4th 956 (8th Cir. 2021)
Rutledge v. PCMA, 141 S. Ct. 474 (2020)
Erisa Foundation in the line of fire...
For nearly 50 years, federal law and legal precedent has prevented state legislators from preempting federal laws governing self-funded ERISA plans. Health plans are offered by employers, labor-management trusts as well as local, state and federal governments. With roughly 60 percent or more of the health plans offered by ERISA protected entities, these protected plans could expect consistency across state lines and a fair regulatory climate. Now, lobbyists for Big Pharma and independent pharmacists are looking to increase their profits by ignoring federal law and undermining the cost-savings in self-funded plans.
ERISA Plans are being threatened.
Under ERISA’s express preemption clause, states may not constrain the substantive design or structure of the benefits that a trust plan offers. One of the most important elements of benefit design is the shape and structure of provider networks. By forbidding PBMs from using accreditation standards in network design, they are directly regulating the substance of plan benefits. That is textbook ERISA preemption.
The case for Medicare preemption is also strong. Medicare is a federally funded, federally regulated program as to which state laws do not apply.
The Pharmaceutical Care Management Association (PCMA) is committed to fighting for plan choice. With the court decisions listed, the states have become emboldened to legislate
Rutledge v. PCMA, 141 S. Ct. 474 (2020)
PCMA v. Wehbi, 18 F.4th 956 (8th Cir. 2021)
PCMA v. Glen Mulready et al.,
U.S. Court of Appeals for the 10th Circuit
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On December 10, 2020, Referring to the Rutledge decision, PCMA stated: “We are disappointed in the Court’s decision that will result in the unraveling of federal protections under the Employee Retirement Income Security Act of 1974 (ERISA).
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Arkansas
Rutledge v. PCMA, 141 S. Ct. 474 (2020)
In 2015, Arkansas enacted a MAC law (Act 900) that regulates PBMs and their clients’ relationships with pharmacies.
Specifically, the law requires PBMs, on behalf of their health-plan clients, to
(1) reimburse pharmacies at or above pharmacies’
drug acquisition costs;
(2) update MAC lists within 7 days of an increase in a
pharmacy’s acquisition cost; and
(3) establish an appeals process for pharmacies to
challenge reimbursements, including disclosures of plan i
nformation to pharmacies;
• allows pharmacies to
(1) reverse and rebill below-cost transactions and
(2) decline to dispense a drug, at the time of sale, if
they believe they would lose money on the transaction.
• Federal preemption is the idea that federal law overrides state law.
Congress included express preemption provisions in both ERISA and Medicare. The provisions are intended to ensure that health plans operating across multiple States do not face a patchwork of inconsistent state laws.
On June 8, 2018, the U.S. Court of Appeals for the Eighth Circuit ruled that Act 900 is preempted and thus unenforceable as applied to ERISA-covered health plans and Medicare Part D plans.
• Arkansas asked the Supreme Court to review the Eighth Circuit’s decision, limited only to the ERISA preemption question. The State’s petition was supported by a friend-of-the-court brief signed by 33 other states. The United States filed a brief at the Court’s direction. The U.S. urged the Supreme Court to hear the case because the courts of appeals are conflicted on the issue and because, in the government’s view, the Eighth Circuit erred in finding Act 900 preempted.
North Dakota
PCMA v. Wehbi,
18 F.4th 956 (8th Cir. 2021)
On November 17, 2021, the Eighth Circuit issued its decision in PCMA v. Wehbi, which the Supreme Court had remanded for reargument following Rutledge v. PCMA.
While the Webhi decision favorably defined the applicable legal framework, it included unfavorable rulings for PCMA’s ERISA and Medicare preemption challenges. As a result, the case is likely to further embolden the independent pharmacy lobby and certain state lawmakers to impose new restrictions on PBMs.
Nevertheless, neither Webhi nor Rutledge substantially disrupts fundamental ERISA and Medicare preemption principles, which should still offer strong protection against overbroad state laws impacting drug benefits.
This case concerns two North Dakota laws that bar health benefit plans and their PBMs from using particular terms in the design and structure of pharmacy networks. Under the settled preemption doctrine, these laws are preempted as applied to plans covered by ERISA and offered under Medicare Part D. Nonetheless, the U.S. Court of Appeals for the Eighth Circuit recently held that they are not preempted and may be enforced against ERISA and Part D plans.
That decision is wrong, its practical implications are sweeping, and waiting for a future case to challenge the Eighth Circuit’s holding would present risks.
(Webhi)It is about ensuring that beneficiaries receive low-cost, high-quality care through carefully calibrated provider networks.
Oklahoma
PCMA v. Glen Mulready et al
U.S. Court of Appeals for
the 10th Circuit (2022)
In May of 2022, PCMA filed an appeal of the Oklahoma district court’s ruling in PCMA v. Mulready to the U.S. Court of Appeals for the 10th Circuit.
In the appeal, PCMA contends that four provisions in the Oklahoma law (i.e., the “Retail-Only Pharmacy Access Standards” (36 O.S. § 6961(A)-(B)); the “Any Willing Provider (AWP) Provision” (§ 6962(B)(4)); the “Probation-Based Pharmacy Limitation Prohibition” (§ 6962(B)(5)); and the “Cost-Sharing Discount Prohibition” (§ 6963(E))) are preempted under ERISA and that the AWP Provision is also preempted under the Medicare statute.
A ruling for Oklahoma would require a radical overhaul of current preemption jurisprudence through the rejection of current precedent, adopting of new legal standards and creation of one or more circuit splits. It would erode decades-old distinctions between ERISA and non-ERISA plans and commercial and Medicare plans and allow for states to intrusively restrict these plans’ benefits, even on core matters like provider network design. This would disrupt the settled expectations of employer and Part D sponsors, who would be penalized with increased costs and administrative burdens (due to compliance with patchwork of differing state laws), and reduced management flexibility. The increased costs of ERISA exempt plan sponsors would further boost health care inflation, enhance premiums, and lead to decreases in benefit and wellness offerings, with impacts to beneficiary health and convenience.
Update: PCMA is currently asking the Court to hold that Oklahoma must stay within well-established ERISA and Medicare preemption guardrails set by Congress on state regulation of plan benefits.
We contend that these provisions operate to eliminate or heavily restrict many common pharmacy network arrangements, which are core aspects of health plan benefit designs. The AWP provision also intrudes on the Medicare statute, which has rules and standards relating to the size, scope, and access to Part D plan pharmacy networks, including standards that permit Part D plans to limit participation in their preferred pharmacy networks. (2022)