Oklahoma Pharmacy Benefit Manager Law Trimmed by Judge

An Oklahoma law regulating pharmacy benefit managers got mixed reviews in court when a federal judge invalidated certain provisions as preempted by Medicare Part D rules while rejecting a PBM industry group’s challenges to other provisions.

Oklahoma can’t place geographic restrictions on the retail pharmacies in a PBM’s network because federal regulators have established standards governing network pharmacy access under Medicare Part D, Judge Bernard M. Jones of the U.S. District Court for the Western District of Oklahoma said Monday. State provisions regulating price negotiations are also preempted by Part D’s standards, Jones said.

Jones also rejected a handful of administrative regulations passed in connection with the Oklahoma law, finding them inconsistent with the text of the statute. But he allowed other provisions to survive, including rules governing preferred pharmacy networks and contract monitoring.

The lawsuit is one of several efforts by the Pharmaceutical Care Management Association to have courts invalidate state laws regulating PBMs like Express Scripts and CVS Health, which manage prescription drug benefits for health plans. The PCMA has argued that these laws are preempted by both Medicare Part D and the federal Employee Retirement Income Security Act, but in 2020 the U.S. Supreme Court held that an Arkansas PBM regulation wasn’t preempted by ERISA.

Jones similarly declined to hold the Oklahoma law preempted by ERISA.

Foley Hoag LLP and Crowe & Dunlevy represent the PCMA. The Oklahoma attorney general’s office defended the law.

The case is Pharm. Care Mgmt. Ass’n v. Mulready, W.D. Okla., No. 5:19-cv-00977, 4/4/22.