SCOTUS Opinion: Court Upholds Arkansas Pharmacy Law Against ERISA Challenge

In 2015, Arkansas passed a law requiring pharmacy benefit managers, as intermediaries between pharmacies and prescription-drug plans, to reimburse pharmacies for drugs at a price equal to or higher than the pharmacy’s wholesale price, allowed pharmacies an administrative appeal procedure on those prices, and other items meant to keep drug prices low. Some of the managers sued, arguing that the law was pre-empted by the Employee Retirement Income Security Act of 1974, which governed the administration of certain employee benefit plans. The district court and the Eighth Circuit held that the state law was pre-empted by ERISA.

The Court, in an 8-0 decision by Justice Sotomayor (Justice Barrett recused), reversed, holding that Arkansas’ law was merely a form of price regulation that did not dictate ERISA plan choices, nor did it affect how those plans operated. The majority also held that the administrative procedures contained in the state law did not interfere with the administration of ERISA plans, even if a pharmacy declined to fill a prescription because the it felt the reimbursement rate was too low. Justice Thomas filed a concurrence arguing his belief that the Court’s ERISA pre-emption jurisprudence has ranged beyond its statutory moorings.

A link to the decision in Rutledge v. Pharmaceutical Care Management Ass’n is here: