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Arkansas Drug-Pricing Law Will Get Supreme Court Review

Jan. 10, 2020, 9:48 PM

The U.S. Supreme Court will hear a case that could decide the validity of at least 38 states’ laws regulating how companies like Express Scripts and CVS Health make money off prescription drugs.

The justices agreed Friday to take a case asking whether an Arkansas law regulating pharmacy benefit managers is preempted by the federal Employee Retirement Income Security Act. The Pharmaceutical Care Management Association, a trade group representing PBMs, successfully challenged the law on ERISA preemption grounds in the Eighth Circuit.

The court’s decision to hear the case came at the urging of U.S. Solicitor General Noel J. Francisco, who argued that the Arkansas law doesn’t reference ERISA plans or have an impermissible connection with them.

At least 38 states have passed laws regulating how pharmacy benefit managers make money off prescription drugs. The states say the laws in question seek to tamp down on ever-increasing prescription drug costs by making the relationships between pharmacies, pharmacy benefit managers, and consumers more transparent.

The PCMA has challenged several of these laws by arguing that they interfere with ERISA or Medicare statutes. The Eighth Circuit has twice agreed with the PCMA, striking down state laws in both Arkansas and Iowa, with a challenge to North Dakota‘s law pending. Outside the Eighth Circuit, the PCMA is challenging an Oklahoma regulation in federal district court.

California, New York, and 30 other states also urged the Supreme Court to take this case.

McDermott Will & Emery LLP represents the PCMA.

The case is Rutledge v. Pharm. Care Mgmt. Assoc., U.S., No. 18-540, certiorari granted 1/10/20.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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