From staff reports In September 2020, the Oklahoma Insurance Department began an investigation into transaction fees that CVS Caremark charged Oklahoma pharmacists and pharmacies, which the department believed violated the Patient’s Right to Pharmacy Choice Act.
The Western District federal court in Oklahoma City ruled largely in favor of Oklahoma and Insurance Commissioner Glen Mulready in April 2022, upholding most of the state statute against a federal pre-emption challenge.
“This is a significant decision for the Oklahoma Insurance Department, as it affirms that the department can enforce the Act against pharmacy benefit managers (PBMs), especially in regard to Employee Retirement Income Security Act (ERISA) insurance plans,” Mulready said.
Pharmaceutical Care Management Association (PCMA), a national trade association that represents 16 PBMs, sued in 2019 to prevent enforcement of the Patient’s Right to Pharmacy Choice Act. That law was created by the Legislature in House Bill 2632 and was signed by Gov. Kevin Stitt in May 2019.
Oklahoma is one of several states that have sought to regulate PBMs. Among its provisions, HB 2632:
• Imposed access standards on retail pharmacy networks.
• Prohibited pharmacy benefit managers from taking certain actions.
• Required PBMs to allow a pharmacy to participate in any pharmacy network if the pharmacy accepted the terms and conditions.
• Prohibited health insurers or PBMs from restricting an individual’s choice of in-network prescription drug provider.
• Authorized the Insurance Commissioner to monitor PBMs to ensure compliance.
Initially the PCMA litigation prevented the state Insurance Department from enforcing the Act, but after several legal hurdles, Mulready was able to proceed with enforcement in September 2020.
Three months later the U.S. Supreme Court unanimously upheld an Arkansas PBM law, explaining that ERISA is primarily concerned with pre-empting laws that require providers to structure health plans in a particular way, as opposed to laws that are merely forms of cost regulation or cost uniformity.
The Tenth Circuit Court of Appeals in Denver released an opinion in Pharmaceutical Care Management Association v. Glen Mulready that would severely diminish Oklahoma’s ability to effectively regulate pharmacy benefit managers. The appellate decision was handed down on Aug. 15, 2023.
The Patient’s Right to Pharmacy Choice Act was passed by the Oklahoma Legislature with the stated purpose of establishing minimum and uniform access by patients to pharmacy providers.
That purpose was in part achieved by four provisions of the Act known as Access Standards, the Discount Prohibition, the Any Willing Provider provision, and the Probation Prohibition, which act in concert to enhance the bargaining power of independent pharmacies with PBMs and ensure patients’ access to their pharmacies of choice.
Those four provisions were the subject of the federal litigation PCMA v. Glen Mulready.
In its decision, the Tenth Circuit concluded that the four challenged provisions are preempted by ERISA and Medicare Part D, and therefore cannot be applied when self-funded employer- sponsored health plans and Medicare plans cover prescription drug costs.
“The decision from the Tenth Circuit bolstering the power of PBMs in the prescription drug market is disappointing and will be appealed,” Mulready said. His petition was accepted by the Supreme Court of the United States on May 10, 2024.
“I believe it is in the best interests of Oklahomans to appeal this ruling,” Attorney General Gentner Drummond said in agreement. “I believe it is clear that the U.S. Supreme Court’s unanimous decision in Rutledge v. PCMA allows states to regulate pharmacy benefit managers and hold them to account when appropriate.”