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The California Attorney General along with a bipartisan coalition of 32 Attorneys General, filed an amicus brief in the United States Supreme Court supporting states’ rights to regulate and address the rising cost of prescription drugs.

In Rutledge v. Pharmaceutical Care Management Association, the Attorneys General argue that in order to protect the well-being of consumers, States must regulate pharmacy benefit managers, also known as PBMs. PBMs act as gatekeepers between pharmacies, drug manufacturers, health insurance plans, and consumers for access to prescription drugs. The brief argues that regulation of the prescription drug market, including PBMs, is a critical tool for States to address access and affordability of prescription drugs and protect residents.

In 2015, the state of Arkansas implemented a law that regulated PBMs by setting standards for generic drug prices. Under the law, PBMs must raise their reimbursement rate for a drug if that rate falls below the pharmacy’s wholesale costs. The law also created an appeals process for pharmacies to challenge these reimbursement rates.

The law was challenged by the Pharmaceutical Care Management Association, who argued that the Employment Retirement Income Security Act (ERISA) prevents the State of Arkansas from implementing the law.

The Eighth Circuit Court of Appeals, in a unanimous three judge decision, last June, ruled in favor of the Pharmaceutical Care Management Association’s (PCMA) challenge (PCMA vs. Rutledge) to Arkansas law, Act 900, which restricted pharmacy benefit management (PBM) tools, and required employers and consumers to pay higher rates to independent drugstores for prescription drugs.

The federal Court of Appeals’ decision strikes down Act 900 for Medicare Part D drug plans by reversing a lower court’s decision that the law was not preempted by Medicare Part D. The appeals court also upheld the lower court’s earlier decision, in favor of PCMA, which held that the law was preempted by the Employee Retirement Income Security Act (ERISA).

This is a landmark ruling on behalf of the PBM industry. PBMs are part of the solution to high drug prices and use many tools to reduce prescription drug costs,” said PCMA President and CEO Mark Merritt. “This federal appeals court decision sends an important signal that states can’t impose costly mandates that raise costs on employers, unions, public programs as well as consumers.”

Arkansas has asked the U.S. Supreme Court to hear the case.

The Attorneys General argue that state laws regulating pharmacy benefit managers are not restricted by federal law. Regulation is critical to the states’ ability to improve the transparency of prescription drug marketplaces and to protect consumers’ access to affordable prescription drugs, especially those in underserved, rural and isolated communities.

In addition, the Attorneys General assert that the regulation of pharmacy benefit managers promotes healthcare access and affordability for residents – taking away a State’s ability to regulate would create confusion and uncertainty in the market and harm patients.

Joining the California Attorney General are the attorneys general from Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Texas, Utah, Vermont, Virginia, Washington, Wyoming, and the District of Columbia.