Small and independent pharmacies received a jolt of good news from the nation’s highest court yesterday when the Justices handed a win to the State of Arkansas in its efforts to regulate the PBM industry in the State. The unanimous decision in Rutledge v. Pharmaceutical Care Management Association paves the way for other states to regulate PBMs and curb business practices that have harmed small, independent pharmacies as well as consumers.

The case hinged on the high court’s interpretation of the preemption provisions of the federal Employee Retirement Income Security Act (ERISA) and the abilities of the states to regulate the amount that PBMs pay to pharmacies to fill prescriptions for drugs that are paid for under employer-sponsored health plans. The Pharmaceutical Care Management Association (PCMA) representing the voice of the PBMs, argued that Arkansas (and any other state that wanted to) could not regulate PBM business dealings – that only ERISA applied and that federal preemption prevented state regulation. Arkansas, supported by the attorneys general of 47 other states, prevailed when the Supreme Court agreed with its interpretation—that ERISA preempts the states’ ability to regulate employee benefit plans but NOT other entities in the healthcare supply chain, including PBMs.

Scott J. Knoer, executive vice president and CEO of the American Pharmacists Association remarked, “For years PBMs have threatened the sacrosanct relationship between pharmacists and their patients, and have never been forced to answer to any authority for their actions. This opinion redresses that imbalance and returns the power to protect the interest of patients to the states and other local authorities, where it belongs.”