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<< Older News  |  January 23, 2021

News

All News > Prescription Drug Costs

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Supreme Court's PBM Ruling Will Impact ERISA Plans for Years to Come
MZQ Consulting, LLC Link to more items from this source
Jan. 20, 2021

"SCOTUS seems to have opened the door to direct state-level regulation of PBMs and other vendors that provide services to self-funded plans, like third-party claims administrators.... The earlier standard allowed provider regulation that has an indirect impact on an employer plan costs. Now, SCOTUS is saying that state laws that regulate the amount PBMs pay for prescriptions directly but do not reference ERISA plans specifically are not preempted. The Rutledge opinion also weakens the longstanding holding that regulatory uniformity is a core ERISA principle." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Health Plan Design  •  Prescription Drug Costs

SCOTUS Greenlights State Regulation of Pharmacy Benefit Manager Drug Reimbursement
Ropes & Gray LLP Link to more items from this source
Jan. 14, 2021

"The Court's decision provides a potential avenue for states to increase regulation of PBMs and other service providers that help administer ERISA-regulated group health plans ... It also lays the foundation for states to play an even greater role in regulating drug pricing and reimbursement activities of various entities involved in the pharmaceutical supply chain." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Prescription Drug Costs

New Year Brings More Price Hikes from Big Pharma
America's Health Insurance Plans [AHIP] Link to more items from this source
[Opinion]
Jan. 14, 2021

"Drug manufacturers have already raised the price of at least 582 brand-name drugs this year, with an average increase of 4%. Pfizer, for example, increased the prices of more than 130 drugs, including Xeljanz, a popular treatment for rheumatoid arthritis. GlaxoSmithKline raised prices on more than 30 drugs, including Zejula, a cancer treatment, while Sanofi raised prices on more than a dozen drugs."

Tags: Prescription Drug Costs

Walgreens to Sell Drug Wholesale Business
Modern Healthcare Online; free registration required Link to more items from this source
Jan. 6, 2021

"Walgreens Boots Alliance will sell its pharmaceutical wholesale business to AmerisourceBergen in a $6.5 billion cash and stock deal. Pharmaceutical wholesalers essentially act as middlemen, purchasing drugs from manufacturers and then distributing them to customers like drugstore chains. Walgreens says it will now have the flexibility to invest in and focus on its retail business which, like others, has been rattled by the COVID-19 pandemic."

Tags: Prescription Drug Costs

Supreme Court Holds That ERISA Does Not Preempt Arkansas PBM Law: The Impact on Employer Sponsored Group Health Plans
Mintz Link to more items from this source
Jan. 4, 2021

"The decision gives the green light for state-by-state regulations of PBM networks and payment practices. The impact of Rutledge on employer-sponsored group health plans, particularly multi-state arrangements, is difficult to underestimate. Employers will need to grapple with the inevitable proliferation of state PBM laws that, while purporting to regulate the relationship between a PBM and a pharmacy, will in all likelihood have unintended and unwelcome consequences for their group health plans." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Prescription Drug Costs

New Health Plan Reporting Required for Pharmacy Benefits and Drug Costs
Winston & Strawn LLP Link to more items from this source
[Guidance Overview]
Dec. 30, 2020

"Given the volume of information and the expectation that reporting will be required before the end of 2021, plan sponsors and health plan issuers will need to begin considering putting in place mechanisms to ensure the appropriate data will be collected in order to complete the required reporting. In addition, it is likely that vendor agreements, such as pharmacy benefit management and administrative services agreements, will need to be revisited to ensure data collection and reporting expectations are appropriately reflected and necessary protections are in place."

Tags: Health Plan Administration  •  Prescription Drug Costs

2020 in Review: PBMs Continue Integration, Face More Regulatory Challenges
AISHealth Link to more items from this source
Dec. 28, 2020

"The PBM space has consolidated to the point that five firms ... manage the lion's share of the pharmacy benefits offered to U.S. health plan members. Beyond their deepening integration with the payers that own them, these firms are working to expand their data and direct-to-consumer operations."

Tags: Health Plan Administration  •  Prescription Drug Costs

Open the Floodgates: Supreme Court Decides ERISA Does Not Preempt Arkansas State Law Regulating PBMs
Hall Render Link to more items from this source
Dec. 28, 2020

"Many view the ruling as a blow to PBMs, as PBMs have often taken the position that ERISA preempts the myriad of state laws seeking to regulate PBM practices, particularly with respect to PBMs' negotiated rates with pharmacies. This decision will likely pave the way for a flood of new state-level PBM regulating legislation in 2021 and beyond. In the meantime, the Supreme Court's decision in this case is instructive when analyzing whether ERISA preempts certain state laws regulating PBMs." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: Health Plan Design  •  Prescription Drug Costs

Second Circuit Sends PBM 'Clawback' Litigation Plaintiffs Back to the Drawing Board
Akerman Link to more items from this source
Dec. 22, 2020

"The Second Circuit's most recent decision adds to the growing body of case law addressing the question of whether PBMs owe a fiduciary duty to ERISA plan participants when entering into arrangements that may result in PBMs receiving clawback payments.... The Second Circuit agreed with the district court that Anthem was not acting as a fiduciary when it sold the NextRx Companies to Express Scripts.... In addition, the Second Circuit also determined that the district court correctly held that Express Scripts was not a fiduciary." [Doe v. Express Scripts, No. 18-346 (2d Cir. Dec. 7, 2020)]

Tags: Health Plan Design  •  Prescription Drug Costs

Editor's Pick Comprehensive Explanation of the Medicare Part D Prescription Drug Benefit
Congressional Research Service [CRS] Link to more items from this source
Dec. 22, 2020

76 pages. "Medicare Part D has cost less than originally forecasted, due in part to lower-than-predicted enrollment and increased use of less expensive generic drugs. However, the Medicare Trustees project spending on Part D benefits will accelerate over the next 10 years due to the expectation of further increases in the number of enrollees, costs associated with the elimination of the out-of-pocket cost coverage gap in 2020, changes in the distribution of enrollees among coverage categories, a slowing of the trend toward greater generic drug utilization, and an increase in the usage and prices of specialty drugs." [R40611, updated Dec. 18, 2020]

Tags: Medicare  •  Prescription Drug Costs

Supreme Court Holds Arkansas Statute Regulating PBMs Not Preempted by ERISA
Arent Fox Link to more items from this source
Dec. 21, 2020

"The Court's opinion reinforces that ERISA preemption does not have as broad of a sweep as the statute's language might suggest. State laws that may indirectly impact a plan's costs or a participant's benefits, that 'establish[] a floor for the cost of the benefits that plans choose to provide,' ... do not impact 'central matters of plan administration' and so are not preempted. The Court's ruling will no doubt embolden states seeking to regulate pharmacy and PBM conduct, and will be relied upon by parties seeking to protect state law-based rights in court, with respect to prescription drug reimbursement or otherwise." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Prescription Drug Costs

The Implications of Rutledge v. PCMA for State Health Care Cost Regulation
Erin C. Fuse Brown and Elizabeth Y. McCuskey, via Health Affairs Blog Link to more items from this source
Dec. 21, 2020

"The decision opens up further avenues beyond PBMs to broader state health reforms aimed at reigning in the costs of health services and prescription drugs, protecting consumers, and expanding affordable access to more people.... Most immediately, Rutledge puts PBM regulations passed by more than 45 states on much firmer footing. These laws do different things, but they are all aimed at reigning in prescription drug costs." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Prescription Drug Costs

Marketplace Pulse: Prescription Drug Benefits
Robert Wood Johnson Foundation Link to more items from this source
Dec. 21, 2020

"There are major differences between ACA plans and large group employer coverage when it comes to drug benefits. Individual and small group plans both have more formulary tiers than large group plans. Nearly all (95%) of individual market and 93 percent of small group plans have four or more tiers compared with 54 percent of traditional employer plans and 36 percent of high deductible employer plans. More tiers translates into higher out of pocket costs, since patient cost-sharing is higher for brand and specialty drugs."

Tags: Health Plan Design  •  Prescription Drug Costs

Boost to Independent Pharmacies -- Supreme Court Sides with State Regulation of PBMs
Crowell Moring Link to more items from this source
Dec. 17, 2020

"The case is an interesting contrast to [Gobeille v. Liberty Mutual Ins. Co.] where the Court found that ERISA preempted a Vermont law requiring health plans to disclose certain plan cost information to the state. The Court determined that gathering and reporting such information were matters central to plan administration such as recordkeeping, disclosure and reporting -- areas preempted by ERISA. Had [the Arkansas law] mandated a similar duty on PBMs to track and report certain cost information the result may have been different." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Health Plan Design  •  Prescription Drug Costs

Prohibited Transactions, Exemptions and Enforcement for Pharmacy Benefit Managers Under ERISA
Newport Group Link to more items from this source
Dec. 17, 2020

"While the [DOL] typically has not provided clear or comprehensive guidance to hospital systems seeking to use affiliates to provide services to medical plans, there is limited guidance in the form of individual prohibited transaction exemptions (PTEs) that apply only to specific in-house providers. These individual exemptions ... offer additional insight into the DOL's perspective on affiliated service providers in the context of prescription drug plans."

Tags: Health Plan Design  •  Prescription Drug Costs

Editor's Pick Findings on the State of the PBM Industry: 2020 Report
National Alliance of Healthcare Purchaser Coalitions Link to more items from this source
Dec. 16, 2020

28 pages. "This 2020 Report includes a cross-section of PBMs, with large and small, 'carve-out' and 'carve-in' organizations ... [The] report publicly identifies the Participating PBMs' comparisons in graph form for each section [and includes] educational articles ... ranging from Opioid treatment to maximizing PBM Audits, and understanding CoPay Assistance programs.... [By] sharing their policies, programs, and results, [the] participating PBMs are already demonstrating a degree of transparency[.]"

Tags: Health Plan Design  •  Prescription Drug Costs

Supreme Court Finds ERISA Does Not Preempt State Prescription Drug Pricing Law
Ballard Spahr LLP Link to more items from this source
Dec. 15, 2020

"Act 900 in Arkansas regulates the price paid by PBMs for the cost of drugs purchased at retail pharmacies through mechanisms designed to ensure that the pharmacy would at least recover the cost that it is able to negotiate with a typical wholesaler selling the drug.... The Supreme Court ruled that Act 900 ... does not 'immediately and exclusively' affect ERISA plans but is a form of cost regulation that will not so acutely affect the benefits and operation of employee benefit plans as to warrant preemption." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Health Plan Policy  •  Prescription Drug Costs

Supreme Court Rules That ERISA Does Not Preempt State Law Regulating PBM Reimbursements
Robinson & Cole LLP Link to more items from this source
Dec. 15, 2020

"Concluding that '[Arkansas Act 900] is merely a form of cost regulation[,]' the Court found that forcing PBMs to pay higher costs for some drugs, and passing those costs along to plans, did not interfere with a central matter of plan administration [nor] with national uniformity. The Court rejected the argument that Act 900 affects plan design by mandating a particular pricing methodology for pharmacy benefits, finding 'that argument is just a long way of saying that Act 900 regulates reimbursement rates.' " [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Prescription Drug Costs

Supreme Court Rejects Challenge to States’ Authority to Regulate Pharmacy Reimbursements
SCOTUSblog Link to more items from this source
[Opinion]
Dec. 14, 2020

"It is at least possible that Rutledge will undermine the cost-containment pressures that have driven insurers to rely so heavily on PBMs, and so it might even lead to some cognizable increase in insurance premiums. On the other hand, it should come as no surprise that the Supreme Court has no interest in stepping in to protect a market that almost all of the states regard as functioning so poorly as to warrant legislative intervention. If Congress disagrees, it certainly could amend ERISA to compel a different arrangement." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Health Plan Policy  •  Prescription Drug Costs

Arkansas PBM Law Upheld By Supreme Court
Quarles & Brady LLP Link to more items from this source
Dec. 14, 2020

"Some ways that the Rutledge decision may change the landscape of PBM regulation or PBM-pharmacy relationships include: [1] States may enact similar legislation. Of note, 47 State Attorneys General made a bipartisan effort to support Arkansas in this litigation.... [2] [S]tates and pharmacy lobbyists may more aggressively explore ways they can expand upon [the concepts in the Arkansas statute] and still avoid pre-emption.... [3] The decision may reinvigorate interest in use of any willing provider laws.... [4] PBMs will face an increasingly complex patch-work quilt of state requirements[.]" [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Prescription Drug Costs

Supreme Court Gives Nod to States Regulating Pharmacy Benefit Managers Reimbursement
BakerHostetler Link to more items from this source
Dec. 14, 2020

"With the Court's unanimous decision ... states received a playbook for how to regulate PBMs and pharmacy reimbursement.... The 8th Circuit, which the Court reversed here, recently held that ERISA preempts a North Dakota law that regulates the fees PBMs and third-party payers charge pharmacies, limits what copayments PBMs or third-party payers may charge, and dictates the quality metrics PBMs and third-party payers may use to evaluate pharmacies. The [Rutledge] ruling ... that ERISA does not preempt a state law regulating the price at which PBMs reimburse pharmacies may set the stage for another reversal of the 8th Circuit." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Health Plan Policy  •  Prescription Drug Costs

Supreme Court: ERISA Does Not Preempt Arkansas Regulation of PBMs
Faegre Drinker Link to more items from this source
Dec. 11, 2020

"The Court held that 'Act 900 is merely a form of cost regulation' that applies equally to all PBMs and pharmacies in Arkansas, and therefore is not impermissibly connected with an ERISA plan. A statute refers to ERISA when it 'acts immediately and exclusively upon ERISA plans or where the existence of ERISA plans is essential to the law's operation.' The Court concluded that Act 900 does not refer to ERISA because it applies to all PBMs without regard to whether the PBM manages an ERISA plan." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Health Plan Design  •  Prescription Drug Costs

Supreme Court Rules That States Can Regulate PBMs
Pharmaceutical Commerce Link to more items from this source
[Opinion]
Dec. 11, 2020

"The unanimous (8-0) decision ruled in favor of the interests of community pharmacies' favor, who have been fighting for several years to regulate pharmacy benefit managers (PBMs) ... The ruling is a win for 45 states, led by Arkansas, who now have more authority to protect local businesses and their patients from PBM overreach." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., No. 18-540 (S. Ct. Dec. 10, 2020)]

Tags: ERISA Preemption  •  Prescription Drug Costs

Text of Supreme Court Opinion: ERISA Does Not Preempt Arkansas Statute Regulating PBMs (PDF)
Supreme Court of the United States Link to more items from this source
Dec. 10, 2020

19 pages. "Arkansas' Act 900 regulates the price at which pharmacy benefit managers reimburse pharmacies for the cost of drugs covered by prescription-drug plans.... The Court holds that the Act has neither an impermissible connection with nor reference to ERISA and is therefore not pre-empted.... [N]ot every state law that affects an ERISA plan or causes some disuniformity in plan administration has an impermissible connection with an ERISA plan. That is especially so if a law merely affects costs.... ERISA does not pre-empt state rate regulations that merely increase costs or alter incentives for ERISA plans without forcing plans to adopt any particular scheme of substantive coverage.... Like the New York surcharge law in Travelers, Act 900 is merely a form of cost regulation.... Indeed, Act 900 is less intrusive than the law at issue in Travelers, which created a compelling incentive for plans to buy insurance from the Blues instead of other insurers. Act 900, by contrast, applies equally to all PBMs and pharmacies in Arkansas. As a result, Act 900 does not have an impermissible connection with an ERISA plan." [Rutledge v. Pharmaceutical Care Mgmt. Assoc., Nos. 17-1609 and 17-1629 (8th Cir. Jun. 8, 2018; S. Ct. No. 18-540, oral arg. Oct. 6, 2020)]

Tags: ERISA Preemption  •  Health Plan Design  •  Prescription Drug Costs

New Transparency Rules Mean Health Plans, PBMs Must Disclose Their Accumulators, Maximizer Programs
Managed Healthcare Link to more items from this source
Dec. 10, 2020

"Plan members use coupons to cover their copays and out-of-pocket costs. The savings may be a huge relief, but members haven't always realized that because their health plan or its PBM was using an accumulator, the value of the coupon not counting toward the deductible. The shock comes when the value of the coupon runs out.... [T]he new transparency rules for health plans issued by CMS in October include a provision that, effectively, requires health plans and PBMs to disclose to their beneficiaries that they are using accumulators or maximizers."

Tags: Prescription Drug Costs


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