The Supreme Court and Implications for Lowering Rx Costs

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As Americans head into the holiday season with a renewed sense of hope for 2021, they also carry with them lingering concerns about the affordability and accessibility of safe, quality prescription drugs. While a group of new COVID-19 vaccines provides some much-needed relief and a slow path back to normalcy, many families are still struggling under the financial toll of the pandemic, making the work of lowering healthcare costs as important as ever.

That’s why PCMA recently argued, on behalf of pharmacy benefit managers (PBMs) serving employer-sponsored health plans, against an Arkansas law that would increase prescription drug costs for patients and make it harder for large and small businesses to provide quality healthcare plans for their employees.

In a short opinion last week upholding that law, the U.S. Supreme Court created a new risk for job-creators and the families who rely on the health care benefits they provide. While disappointing, importantly, the Court’s opinion only narrowly applies to states’ authority to set prices for paying pharmacies. Thankfully, this ruling will not stop PBMs from continuing their efforts to drive down the costs of providing affordable and accessible prescription drug coverage to millions of Americans.

In the opinion, the Court upheld an Arkansas law regulating the maximum allowable cost (MAC) lists that PBMs use to keep prescription drug costs low for employers and employees. By allowing the state law to stand, the Court puts at risk an important tool used to incentivize pharmacies to stock the most affordable prescription drug options — and at the same time lets pharmacies refuse to serve patients if they feel they will not be paid enough on a particular generic drug.

Yet, there is some hope for employers, benefits providers, and hard-working Americans who deserve quality, affordable coverage. The Court’s decision simply upholds the Arkansas law as a type of “rate regulation,” which traditionally states have always had the power to enforce.

The ruling, however, does not allow unfettered state power to restrict the types of tools employers — through PBMs — can use to provide robust prescription drug benefits at a reasonable cost. Indeed, as PBMs work with plan sponsors on prescription drug benefits for employees, they continue to do so under the federal protections provided by the Employee Retirement Income Security Act of 1978 (ERISA). As it has done for decades now, ERISA continues to protect multi-state employers from having to comply with an ever-expanding patchwork of disparate and conflicting state laws.

Importantly, the Court’s decision on MAC reimbursements did not endorse a proliferation of laws that would make the healthcare system even more complicated and costly than it already is for employers and employees. States should consider this narrow ruling carefully and keep one important goal in mind: increasing accessibility to prescription drugs and lowering costs for consumers and patients. That goal should remain fundamental to any state legislative and regulatory efforts on drug costs.

PBMs will continue working with employers and others in the healthcare supply chain to make prescription drugs more affordable for hard-working Americans by reducing costs from both drug manufacturers and pharmacies. PBMs have been a leader in decreasing cost and increasing accessibility during the 2020 COVID-19 pandemic. And they will continue to lead as the nation tackles the tough road back to health and economic stability in 2021.

Written by

JC Scott is the President & CEO of the Pharmaceutical Care Management Association (PCMA), the association representing America’s pharmacy benefit managers

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