Rutledge v. Pharmaceutical Care Management Association

In Rutledge v. Pharmaceutical Care Management Association, the U.S. Supreme Court reviewed Arkansas Act 900, which regulates pharmacy benefit managers (PBMs) by requiring them to reimburse pharmacies at or above the pharmacy's wholesale drug cost. The Act mandates timely updates to maximum allowable cost lists, provides an administrative appeal process for pharmacies, and permits pharmacies to refuse dispensing drugs if reimbursement is below cost. PCMA, representing the largest PBMs, challenged the law, arguing it was preempted by ERISA. The district court and Eighth Circuit held for PCMA. The Supreme Court reversed, holding that Act 900 is not preempted by ERISA because it is a cost regulation that neither connects with nor refers to ERISA plans.

The Supreme Court reversed the Eighth Circuit's decision in an 8-0 ruling (Justice Barrett did not participate), holding that Arkansas Act 900 is not preempted by ERISA. Justice Sotomayor delivered the opinion of the Court.

Whether the Employee Retirement Income Security Act of 1974 (ERISA) preempts Arkansas Act 900, a state law regulating pharmacy benefit managers' reimbursement rates to pharmacies.

The decision significantly narrows ERISA preemption and gives states broader authority to regulate pharmacy benefit managers and drug pricing, potentially affecting prescription drug costs, pharmacy reimbursement, and the administration of ERISA-covered health plans. It may lead to increased state legislation and further litigation over cost regulation and plan administration.