PBM Lobby Has 8th Circuit Win Vacated & Remanded

The U.S. Supreme Court ruled in a February 22, 2021 decision against the Pharmaceutical Care Management Association (PCMA); the Washington D.C. based trade group that represents pharmacy benefit managers (PBMs). 

The Court described the merits of Dirk Wilke, Interim State Health Officer of North Dakota, et al., Petitioners v. Pharmaceutical Care Management Association below:

In Rutledge v. Pharmaceutical Care Management Association, No. 18-540 (U.S.), this Court granted a writ of certiorari to decide whether the Employee Re- tirement Income Security Act of 1974 preempts an Arkansas law that regulates the rates that pharmacy benefit managers (PBMs) reimburse pharmacies for dispensing generic drugs. In that case, the Eighth Circuit had held that Arkansas’s law made a prohib- ited “reference to” ERISA plans and had a forbidden “connection with” such plans.

In this case, Respondent sought to enjoin two North Dakota laws that regulate, among other things, certain fees that PBMs charge pharmacies, which drugs pharmacists are allowed to dispense, and what pharmacists are allowed to say to their pa- tients. These laws apply the same standards regard- less of whether PBMs are providing services to an ERISA or non-ERISA plan.

In ruling in Respondent’s favor, the Eighth Cir- cuit applied its decision in Rutledge to do two things. First, it held that, under Rutledge’s logic, North Da- kota’s laws make an impermissible “reference to” ERISA plans because they apply to PBMs serving plans that “include[]” ERISA plans. Second, the court held that a finding of preemption under ERISA nullifies a State law “in its entirety”—even as ap- plied to non-ERISA plans. Because of the first hold- ing, the Eighth Circuit elected not to decide whether North Dakota’s laws also had a forbidden “connection with” ERISA plans. And because of the second hold- ing, the Eighth Circuit stated that it did not reach Respondent’s separate claims of preemption under Medicare Part D.

The questions in this case are: 1) Whether, contrary to decisions of this Court and every other court of appeals that has addressed the issue, ERISA preempts a State law simply be- cause it is broad enough to “include[ ]” ERISA plans among those affected by the law; 2) Whether, contrary to the text of ERISA and deci- sions of this Court and every other court of ap- peals to consider the issue, ERISA preempts a State law “in its entirety”—even as that law ap- plies to non-ERISA plans.

The Court granted the petition then vacated the prior Court’s decision and remanded the case for further consideration in light of Rutledge v. Pharmaceutical Care Management Assn. Rutledge was a December 2020 unanimous decision that ruled ERISA did not preempt Arkansas’ law on reimbursing pharmacies below acquisition costs, ruling that ERISA does not preempt rate regulations.  

Lanton Law was quoted by Law360’s article describing the Court’s Rutledge decision. 

Lanton Law is a national boutique law and government affairs firm that closely monitors and counsels clients on legislative, regulatory and legal developments in the LTC, specialty and retail pharmacy space. If you are in industry stakeholder with questions about strategy or simply need advice,contact us today.

Apple Gets Legislative Victory in North Dakota For Now

The North Dakota senate voted in opposition of advancing a bill that would have required app stores to enable software developers to use their own payment processing software. This bill directly addressed fees charged by both Google and Apple.

So what would the bill have addressed? 

The proposal applies to a digital application distribution platform for which cumulative gross receipts from sales on the digital application distribution platform to residents of this state exceed ten million dollars in the previous or current calendar year which uses:

• The platform to provide an application that was created by a person domiciled in this state to a user; or

• The platform to provide an application to a resident of this state.

A provider of a digital application distribution platform may not:

a. Require a developer to use the provider's digital application distribution platform as the exclusive means of distributing a digital product to a user. 

b. Require a developer to use the provider's digital transaction platform or in- application payment system as the exclusive means for accepting payment from a user to download the developer's software application, or purchase a digital or physical product or service created, offered, or provided by the developer through a software application.

c. Retaliate against a developer for choosing to use another digital application distribution platform, digital transaction system, or in-application payment system. 

d. Refuse to allow a developer to provide the provider's application or digital product to or through the provider's platform or system or refuse to allow a user access to the developer's application or digital product through the provider's platform or system, on account of the developer's use of another platform or system. A violation of this subdivision is considered retaliation under this section.

If the North Dakota bill would have advanced through the Senate and into the House, this may have spurred other states to take similar measures, as we have seen with legislation that addresses landmark major policy issues. For example Arizona is considering similar legislation.

Now the title of this blog post is “Apple Gets Legislative Victory in North Dakota For Now.” If you listen to the 2/16/21 CNBC interview with State Senator Kyle Davison (R-ND), Senator Davison states something along the lines of if the bill is defeated in the vote today then nothing is really dead until the legislative session is over.

We at  Lanton Law have seen several times in multiple states that when ideas are deemed to be dealt with through a legislative defeat, sometimes that “dead” bill  comes back during the same session in a companion bill, a budget bill or some other “rider.” Many times it comes down to how determined the legislator is at seeing something accomplished. 

This bill is a prime example of how technology stakeholders and stakeholders in other similar sectors are finding that they have to increase their awareness of state and federal policy in order to remain cognizant of fast moving trends and to ultimately ensure compliance. 

We at Lanton Law can help. Our legal and lobbying tools can help offer your organization a clear path forward to navigate what will be changing policies for technology, healthcare and clean energy stakeholders. We are a D.C. based firm with no state boundaries as we are active nationwide. Contact us today to discuss your options.