Affordable health care access is on the line in upcoming Supreme Court case
These past months have prompted millions of Americans to worry about both their physical and financial health. Never has quality, accessible, affordable health care been more of a priority for patients, employees and benefits providers — including small businesses, unions, and state and local governments.
America’s pharmacy benefit managers (PBMs) work every day with employer-sponsored health plans across the country to lower prescription drug costs and improve access to those drugs. PBMs recognized the pressing health care challenge posed by COVID-19 and took leadership early on in the pandemic, recommending multiple approaches to help the patients stay safely at home through reliable, convenient access to their needed prescription drugs — including promoting pharmacy staffing flexibility and temporarily waiving proof-of-receipt signature requirements where possible.
Now, as the health care system and prescription drug supply chain slowly return to pre-pandemic levels where possible — and adjust to a new normal where not — additional regulations and further disruption is the last obstacle employers, taxpayers and patients should be facing.
But a decision in the coming weeks by the U.S. Supreme Court in Rutledge v. Pharmaceutical Care Management Association could fundamentally alter employer-sponsored health plans — both in the way they use plan funds to reimburse for health care services to enrollees, and the work PBMs are able to do to drive down costs. A decision that erodes important federal protections that have been in place for decades could take us backward, making health coverage more expensive for employers and employees across the country.
At the heart of Rutledge v. Pharmaceutical Care Management Association is a misguided Arkansas law that will raise costs for patients and payers. Because this law mandates reimbursements for pharmacies based on the invoice price of a given drug — regardless of the availability of less expensive supplies of the same drug — those paying for health care will be forced to pay more. Moreover, the law allows pharmacists to turn away patients if the pharmacists don’t believe they are paid enough to dispense the drugs, despite contractually agreed-to rates. This not only interferes with access to affordable medications, it ignores a patient’s right to receive benefits under his or her health plan.
As with most cases that make their way to the Supreme Court, the potential fallout on this case reaches beyond Arkansas. In recent years, as competition among pharmacies has heated up, nearly 40 state legislatures have passed laws that seek to restrict employer strategies to manage pharmacy benefits and protect pharmacies from competition.
The practical consequence of these laws, but for the federal Employee Retirement Income Security Act (ERISA), would be more red tape for employers and higher costs for patients. Congress anticipated this issue more than 40 years ago when it passed ERISA. Congress’s goal was to allow for a single nationwide regulatory scheme for employer-provided health, retirement, and other employee benefits. ERISA allows employers to provide their employees uniform benefits by relieving employers of the obligation to comply with a patchwork of inconsistent state laws that could create disparities for plan members and divert plan resources to plan administration instead of benefits.
The Arkansas law in question raises a host of questions for employees and employers relying on ERISA’s federal protections. For example, why should an employee in Arkansas be turned away by a pharmacy that’s unwilling to obtain drugs at low prices, while another employee in that same company just a few miles away in Oklahoma can rely on getting a prescription filled every time she presents it at a pharmacy? Why should a multi-state employer be forced to provide different benefits and different coverage, at higher cost, to its employees in Arkansas compared to its employees in other states?
The courts have upheld these federal protections for workers and their employer-sponsored coverage in the face of many legal challenges. However, if the Supreme Court were to upend precedent this year, it would hit American employers, employees, and their families hardest. While this law applies to payments to pharmacies, Arkansas and other states could enact laws dictating complicated plan administration requirements that result in higher payments to doctors, hospitals, and laboratories. Health care coverage, already expensive, will be even more costly, and employers will be buried in unnecessary red tape, diverting resources from benefits to a growing administrative burden. Ultimately, higher and unnecessary costs threaten an employer’s ability to provide affordable, quality-focused health benefit programs.
Either way, the Supreme Court’s decision in Rutledge v. PCMA will have lasting legal and economic implications for the many employees relying on employer-provided health coverage. That’s why groups representing businesses, health insurers, and pharmacists, including J.B. Hunt, the United States Chamber of Commerce, the American Benefits Council, America’s Health Insurance Plans, the Society of Human Resource Managers, Employers Health Purchasing Corporation, and the Academy of Managed Care Pharmacy all filed briefs and/or penned communications supporting an employer’s ability to administer a nationally uniform benefit program.
Here’s what they had to say:
- “What’s at stake when the Court hears Rutledge v. PCMA in the coming weeks is the foundation of employer-sponsored coverage… If the Supreme Court decides to upend this longstanding [ERISA] precedent, the consequences for employers and patients will be far-reaching. First, health care costs for employers and employees will increase; that’s a fact. Second, employers’ administrative burdens will become even more onerous.” — Christopher Goff, CEO and general counsel of Employers Health, a company that provides administrative support to health plan sponsors, in a recent op-ed.
- “For 180 million American workers and their families who depend on personalized coverage for their health and financial security, the Employee Retirement Security Act of 1974 (ERISA) is the cornerstone of their insurance… Yet, recent legal challenges to ERISA, including the case of Rutledge v. PCMA pending in front of the U.S. Supreme Court, threaten to upend the backbone of the employer-sponsored insurance program and the coverage that American workers have come to rely on during the latest public health emergency.” — The U.S. Chamber of Commerce, which represents 300,000 members plus the interests of 3 million+ companies and professional organizations, in a recent blog post.
- A ruling for Arkansas would result in “oppressive and conflicting state regulation” of prescription benefits, and mandates that employers take on the daunting task of complying with “every state’s unique regime,” including the punitive risk of failing to comply. — J.B. Hunt, a multistate trucking company that covers 33,000 Americans.
- If Arkansas wins and establishes new legal precedent, then this law as well as future similar laws “would cause upheaval in the administration of ERISA-governed prescription drug claims.” — America’s Health Insurance Plans (AHIP).
PBMs advocate for employees and their employers to reduce prescription drug costs. We believe that protections should remain in place for employers to be able to provide high quality, affordable health coverage to their employees across the country, without wasting scarce health care dollars on overhead costs.
JC Scott is the president and CEO of the Pharmaceutical Care Management Association, the national association representing America’s pharmacy benefit managers.
