In 2014 Iowa enacted a statute requiring pharmacy benefit managers (PBMs) to disclose pricing methodologies to their network pharmacies and to the State Insurance Commissioner. Is the statute “a patchwork of costly mandates on employers and unions,” as the national PBM association argues, or is it an effort to “bring transparency to a PBM industry that has exploited secrecy to reap record profits,” as the National Community Pharmacists Association says?
That is the issued argued by the two sides in the press, but it is not the issue addressed in the case decided by the Eighth Circuit on Jan. 11. The case originated when the PBM association asked the U.S. Court for the Southern District of Iowa to declare that the statute was invalid because it was preempted by ERISA.
The District Court didn’t buy that argument and, in fact, granted the State’s motion to dismiss for failure to state a claim. But on appeal the Eighth Circuit took a different view. It had no trouble whatever ruling that the statute was preempted by ERISA. After all, the court noted, ERISA states on its face that it preempts “any and all State laws as they may now or hereafter relate to any employee benefit plan.”
The ruling wasn’t a surprise, having been foreshadowed by last year’s ruling on a Vermont statute by the U.S. Supreme Court in Gobielle v. Liberty Mutual, 136 S.Ct. 936.
The Eighth Circuit reversed the District Court’s dismissal of the case and remanded it with instructions to enter judgment for the PBM association.
The case is Pharm. Care Mgmt. Ass’n. v. Gerhart, No. 15-3292 (8th Cir. 2017).
