Foley Hoag LLP represented the Pharmaceutical Care Management Association (PCMA) in its challenge of Oklahoma's Patient's Right to Pharmacy Choice Act. The law restricted how health plans, including employer- and union-sponsored health plans and Medicare Part D prescription drug benefit plans, design and structure the pharmacy networks at which beneficiaries can use their prescription drug benefits.
In the appeal, PCMA, the trade organization for pharmacy benefit managers, asked the 10th Circuit to find that four provisions of the law were preempted by the Employee Income Retirement Security Act of 1974 (ERISA) and that one provision of the law was preempted by the Medicare Part D program. In a unanimous decision, the 10th U.S. Circuit Court of Appeals ruled in favor of the PCMA in all respects, and invalidated the challenged provisions of the Oklahoma law with respect to ERISA and Medicare Part D plans.
"Importantly, the ruling confirms the breadth of ERISA preemption, which has been the linchpin for employer- and union-sponsored benefits in America," said Jack Linehan, General Counsel for PCMA. "It has allowed multi-state businesses to offer affordable, uniform, and equitable health coverage – including for prescription drugs – for their beneficiaries, regardless of where they live."
PCMA initially sued to invalidate the Patient's Right to Pharmacy Act in October 2019, shortly after it was passed by the Oklahoma legislature. While the district court ruled in PCMA's favor that six provisions of the law were preempted by Medicare Part D, the district court also held the law was not preempted by ERISA and certain other provisions were not preempted by Medicare Part D. PCMA appealed this aspect of the district court's decision in 2022. The 10th Circuit issued its opinion on August 15, 2023, reversing the district court and granting PCMA's challenge of the Oklahoma law. A more detailed alert and analysis on the matter can be found here.
"The 10th Circuit decision clarifies the limits of the Supreme Court's decision in Rutledge," said Kristyn Bunce DeFilipp, Litigation Department co-chair at Foley Hoag and lead attorney on this matter. "Our entire team is very pleased with this decision for our client, and for the industry, as a whole. Going forward, the Mulready decision is likely to serve as a warning to the increasingly large number of states that are aggressively regulating employee-benefit plans and Medicare Plans."
Foley Hoag attorneys Kristyn Bunce DeFilipp, Dean Richlin, Andrew London, Seth Reiner, and Jacqueline Chávez represented PCMA in the appeal.
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About PCMA
The Pharmaceutical Care Management Association (PCMA) is the national association representing America's pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 275 million Americans who have health insurance from a variety of sponsors including: commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, managed Medicaid plans, and others.