Oklahoma City, K– Earlier this week, the U.S. District Court for the Western District of Oklahoma ruled largely in favor of Oklahoma and Insurance Commissioner Glen Mulready in PCMA v. Mulready, upholding most of Oklahoma’s Patient’s Right to Pharmacy Choice Act against a federal preemption challenge. This is a significant decision for the Oklahoma Insurance Department as it affirms that the Department can enforce the Act against Pharmacy Benefits Managers (PBMs), especially in regard to Employee Retirement Income Security Act (ERISA) insurance plans.
“This court ruling will help increase transparency for pharmacists and patients and broaden the path forward for our state’s health care cost control efforts,” Mulready said. “We will continue to work hard to ensure companies fully comply with our PBM laws to protect consumers and other businesses.”
In October 2019, PCMA, a trade association of PBMs, sued to enjoin enforcement of the Patient’s Right to Pharmacy Choice Act. Initially, the litigation prevented the Insurance Department from enforcing the Act. After several legal hurdles, Commissioner Mulready was able to proceed with enforcement in September 2020. Three months later, the U.S. Supreme Court unanimously upheld an Arkansas PBM law in Rutledge v. PCMA, explaining that ERISA is primarily concerned with pre-empting laws that require providers to structure health plans in a particular way, as opposed to laws that are merely forms of cost regulation or cost uniformity.
In deciding PCMA v. Mulready, the district court here held that all of PCMA’s ERISA preemption claims fail as a matter of law because, the Court concludes, “[w]hile these provisions may alter the incentives and limit some of the options that an ERISA plan can use, none of the provisions forces ERISA plans to make any specific choices.” Thus, none of the provisions of Oklahoma’s Patient’s Right to Pharmacy Choice Act are preempted by ERISA and the State may continue to proceed with enforcement. With respect to Medicare Part D, the court found that about half of PCMA’s preemption claims failed, while about half were meritorious.
“Overall, the court’s ruling provides much needed guidance for enforcement and clarity for processes in the industry as a whole,” Mulready said. “While it is certainly possible that PCMA may appeal their loss to the Tenth Circuit, the Oklahoma Insurance Department’s enforcement efforts, with respect to the Act’s provisions, will continue on surer footing, having gained even more precedential authority upon which to stand.”
If you have questions about other insurance issues, please contact the Oklahoma Insurance Department at 1-800-522-0071 or visit our website at www.oid.ok.gov.