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Member, Beacon International Group, Ltd.
WASHINGTON—A 2004 District of Columbia law that would have made pharmacy benefit managers “fiduciaries” was ruled invalid Friday by a three-judge panel of a federal appeals court.
The July 9 ruling by the U.S. Court of Appeals for the District of Columbia in Pharmaceutical Care Management Assn. vs. District of Columbia upheld a 2009 ruling by the U.S. District Court for the District of Columbia that held states and municipalities cannot impose such requirements on PBMs.
Both courts found that because PBMs provide claims administration services for self-insured employers, they are governed by the federal Employee Retirement Income Security Act, which pre-empts state and municipal laws affecting employee benefit plans.
The District of Columbia Council passed the AccessRx Act in 2004 in response to rising prescription drug prices. Title II of the act had sought to regulate PBMs by imposing fiduciary duties on the companies and requiring them to disclose certain financial information including rebates, discounts and similar payments. However, the law never went into effect because of the litigation that ensued immediately after its enactment.
The Pharmaceutical Care Management Assn., a national trade association based in Washington that represents PBMs, had filed suit shortly after the law’s passage, arguing that it was pre-empted by ERISA. It also argued Title II is pre-empted by the Commerce Clause and violates the First Amendment and the Takings Clause of the Fifth Amendment of the U.S. Constitution.
In its July 9 ruling, the appellate court agreed that the law was pre-empted by ERISA. However, it remanded the case to the district court to consider PCMA’s constitutional challenges.
WASHINGTON--A trade group representing pharmacy benefit managers is appealing a federal court ruling that upheld fiduciary duty provisions of a District of Columbia law regulating PBMs.