Minnesota AG pushing for U.S. Supreme Court review on pharmacy benefit manager rules

Minnesota Attorney General Keith Ellison is leading a bipartisan group of 32 attorneys general asking the U.S. Supreme Court to review a case that could otherwise limit state regulation of pharmacy benefit managers (PBMs).

These companies are hired by health insurers to manage drug benefits within heath plans, which includes everything from setting co-pays for medications to creating pharmacy networks where patients can fill prescriptions.

Minnesota, Oklahoma and other states say PBM practices, in some cases, have enriched insurance companies, hurt independent pharmacies and made it harder for patients to afford and access their medicines.

In August 2023, an appellate court sided with the Pharmaceutical Care Management Association, a trade group for PBMs, in a legal challenge to certain regulations for how companies can manage pharmacy networks in Oklahoma.

“Review by this court is therefore necessary to ensure that states continue to be able to enforce needed consumer protections and prevent the blatant abuses that PBMs would otherwise engage in,” the attorneys general said in an amicus brief filed Monday with the Supreme Court.

The Pharmaceutical Care Management Association said it would continue to defend the appellate court’s decision.

“The Oklahoma law is designed to regulate how employers and unions structure their prescription drug benefits,” Greg Lopes, a spokesman for the trade group, said in a statement to the Star Tribune. “Requiring plan sponsors to include unsafe or inefficient pharmacies in their provider networks, and forbidding health plans from using common cost-containment tools like preferred networks, will increase prescription drug costs for plans and patients.”

Minnesota is home to two of the nation’s largest PBMs.

OptumRx, which is a division of Minnetonka-based UnitedHealth Group, handles pharmacy benefits for UnitedHealthcare and other health insurers. Prime Therapeutics, which is based in Eagan, works with a number of Blue Cross and Blue Shield health plans across the country.

In 2019, the Minnesota Legislature passed a law to regulate PBMs, which also negotiate prices that health plans pay drug manufacturers and pharmacies. These payments come through a complex system of rebates and/or administrative fees that has been criticized for lacking transparency.

The state Commerce Department last year levied a $500,000 fine against Rhode Island-based CVS Caremark, alleging the company used strategies not allowed under Minnesota law for steering consumers to its own pharmacies. CVS Caremark denied the allegations and did not admit liability.

The Oklahoma case dealt with self-insured employer health plans, which are primarily regulated by the federal government. The appellate court ruled that federal law preempted state rules that effectively pushed PBMs to create broader networks of pharmacy providers.

Oklahoma has asked for the U.S. Supreme Court to review the case. The brief filed Monday by Ellison and the other attorneys general supported the state’s request.

Last year’s ruling in the Oklahoma case conflicts with an earlier ruling where the court found “PBMs cannot evade state consumer-protection regulations under the cloak of ERISA pre-emption,” the Minnesota Attorney General’s Office said in a news release. ERISA is the federal law that governs self-insured health plans, where employers take the financial risk for the cost of medical claims.

“The result [with last year’s ruling] is nationwide uncertainty for regulators, a corresponding increase in consumer harms and a substantial likelihood of continued litigation on the topic in light of the deep circuit split,” the attorneys general wrote in their brief filed Monday.

Ellison’s office said the Department of Commerce has reached settlements or issued cease and desist orders in 12 cases since Minnesota passed its law for PBM regulation.