SCOTUS Upholds Limits on Pharmacy Benefits Managers

J Clin Pathways. 2021;7(6):16.

In December 2020, pharmacists breathed a sigh of relief when the Supreme Court of the United States (SCOTUS) decreed in Rutledge v Pharmaceutical Care Management Association (PCMA) that an Arkansas law that limited the power of pharmacy benefit managers (PBMs) was legal, opening the door for other states to pass their own laws. Now, another case before the Court is poised to build upon the precedent set by Rutledge and expand states’ ability to regulate PBMs themselves.

Following SCOTUS’ unanimous decision last December, the “next frontier” in the ongoing war by the PBM industry against states seeking to enact legislation regulating PBMs opened in North Dakota with PCMA v Wehbi. The Community Oncology Alliance (COA), along with the Alliance for Transparent and Affordable Prescriptions and American Pharmacies, has filed an amicus brief supporting North Dakota in this case. 

Prior to these two cases, PBMs operated with little to no regulation at the federal or state level. They are the shadowy giants of the health care industry. Three companies control more than three-quarters of prescription claims in the country, but most consumers are unaware that they exist. The power and opaque structure of the PBM industry has allowed it to operate in relative secrecy, skirting the outrage directed at care providers, pharmacists, and drug companies for skyrocketing drug prices. In reality, many common issues like price, out-of-network drugs, pharmacy consolidation, and unsafe drug handling practices can be traced directly back to PBMs. Pharmacists, who already operate on thin margins, are at the mercy of PBMs when they “claw back” already issued rebates. Many times, pharmacists end up in the red or are forced to pass these costs on to patients. Rather than work to make prescriptions safer and easier for patients to access, PBMs have created a structure to reward themselves by promoting more expensive drugs that net higher rebates. 

Far from being a niche case watched only by policy wonks and doctors, the PCMA v Wehbi case in North Dakota is the logical endpoint of states taking the lead on transforming and repairing the nation’s health care system. States have taken notice of the unethical actions of PBMs and, acting as laboratories of democracy, are pushing back to protect citizens from predatory corporate giants. In the past year, 42 state legislatures introduced more than 100 bills to regulate PBM activity. 

These bills and cases are particularly meaningful to oncology, where treatments are tailored to each patient and can be costly. Depending on various health factors, including genetic mutations and adverse reactions, an oncologist may recommend a certain drug to treat a specific patient’s cancer over another. If that drug is not on the PBM’s formulary, patients face a difficult choice of paying out-of-pocket, choosing to use another drug, or even opting out of treatment. The PBM also may require the patient to pick up their drug from a certain pharmacy that is far away or ship the drug directly to the patient—both options inconvenience patients, and the second option potentially could ruin sensitive drugs. That’s unacceptable for any patient, but especially heinous for patients with cancer.

COA has long worked with its members, state societies, and other stakeholders on local issues. Whether it’s PBMs, ease of access, affordability, or other various issues, COA is proud to put its weight behind causes they support and, if needed, bring those causes to the national stage. Initiatives like the COA Patient Advocacy Network put the spotlight back on those who deserve it the most: the patients, survivors, and advocates who have lived through the experience of fighting cancer; sometimes fighting the health care system along the way.

Going forward, COA is making a major investment in its state policy resources. Rather than continue to react to state activity, COA plans to take an active role in shaping state policy so that effective, affordable cancer care is always available to those who need it. As more and more states realize that change is possible, COA will be prepared to offer support where it is needed.