Pharmaceutical Care Management Association v. District of Columbia

Case Updates

The DC Circuit ruled that key provisions of District of Columbia's AccessRx Act, which requires pharmacy benefit managers (PBMs) to act as employee benefit plan fiduciaries and to disclose conflicts of interest, are preempted by ERISA. In its opinion, the DC Circuit explained that the vast majority of insured Americans get their drug benefits through PBMs. The court also explained that PBMs offer administrative convenience to employers and reduced drug costs to insured employees because the PBMs' aggregate purchasing power allows them to negotiate reduced drug costs by contracting for rebates from manufacturers on bulk purchases.

In its second brief in this case, NCLC urged the DC Circuit to affirm a district court decision holding that the District of Columbia's AccessRx Act (“the Act”) is preempted by ERISA, the federal law governing the uniform administration of employee benefits. The Act significantly increases the regulation of pharmacy benefits managers (PBMs), which function as intermediaries between health care benefit providers, pharmaceutical manufacturers, and pharmacies and negotiate reduced drug costs by contracting for rebates from manufacturers on bulk purchases. In its brief, NCLC argued that the District law interferes with the efficient administration of prescription drug benefit plans governed by ERISA, and is thus preempted by ERISA. NCLC warned that the heavy administrative burdens placed on PBMs will increase the cost of prescription drugs, even though the law was designed to lower prescription drug costs for consumers.

The DC Circuit permitted the Pharmaceutical Care Management Association (PCMA) to proceed with a claim that federal law preempts the District of Columbia’s AccessRx Act.

In its first brief, NCLC urged the DC Circuit to overturn a district court decision upholding DC’s AccessRx Act imposing a fiduciary duty on PBMs in their relationships with their customers and requiring PBMs to disclose financial information to clients.