WASHINGTON (NEXSTAR) — The U.S. Supreme Court heard arguments remotely Tuesday over an Arkansas law that regulates the middlemen between pharmacies and insurance providers in determining the cost of prescription drugs.
These pharmacy benefit managers (PBMs) negotiate deals to find the lowest prices possible, but many independent pharmacists have argued for years that their reimbursement rates are too low, forcing them to lose money and in some cases, go out of business.
“It has left many communities without a pharmacist,” said Arkansas Solicitor General Nicholas Bronni.
Bronni defended his state’s law before the justices, arguing it “regulates the price of drugs that a plan has already decided to cover.” While the law means less money for PBMs, he said it doesn’t mean patients will ultimately have to pay more.
“It may be true that some PBMs choose to pass on those costs, some do not,” Bronni said. “But ultimately, that’s up to the PBMs.”
Bronni said the regulations protect communities with only one available pharmacy, but the attorney representing the Pharmaceutical Care Management Association, the PBM’s national trade organization, argued the Arkansas law and dozens of others like it across the country hurt consumers.
“Employees of the same company will have unequal benefits from one state to another,” said Seth Waxman.
Waxman argued the same patient could even go to the same pharmacy chain for the same drug in a different state and be turned away.
“That pharmacy has the right to refuse to give you that benefit,” he said.
Waxman warned a ruling in Arkansas’s favor could make providers stop using PBMs and drive up costs.
“As a practical matter, yes,” he said. “They definitely would reconsider.”
But pharmacists argue a ruling against Arkansas could force them to continue to cut hours and jobs, or close their doors.
The justices will determine whether the federal law that regulates self-insured plans, the Employee Retirement Income Security Act (ERISA), preempts the state law. The decision, expected next year, could impact at least 40 states that regulate PBMs in some way.